Chevron loses bid to have Ecuador case heard by U.S. Supreme Court

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Chevron Corp. has lost a bid to have the U.S. Supreme Court consider its call for a worldwide ban on attempts to collect on a controversial $19-billion (U.S.) environmental judgment levelled against the company in Ecuador.

The decision comes with lawyers in Canada poised to battle in a Toronto courtroom next month over an attempt by the Ecuadorean plaintiffs to seize Chevron's considerable Canadian assets to cover at least part of the massive judgment – a judgment the oil giant dismisses as fraudulent.

In the latest twist in a tangled legal saga, Chevron was trying to revive a preliminary injunction issued last year by a federal judge in New York. That injunction was later overturned on appeal. It purported to block the plaintiffs and their lawyers from trying to enforce the 2011 Ecuadorean court ruling not just in the U.S., but anywhere outside of Ecuador.

The U.S. Supreme Court refused on Tuesday to hear the case. It issued no reasons, as is customary, leaving the appeal court decision that quashed the injunction in place.

The news comes as lawyers for the plaintiffs – a group of villagers in the Amazon rainforest – have stepped up their campaign to force the oil company to pay for environmental damage from oil pollution in the Lago Agrio area of Ecudaor.

Chevron, based in San Ramon, Calif., has said it has virtually no assets remaining in Ecuador, and the plaintiffs have vowed to chase the company's assets elsewhere. Their first stop, earlier this year, was Canada.

In May, they announced they had retained prominent Toronto lawyer Alan Lenczner, of Lenczner Slaght Royce Smith Griffin LLP, to try to have the judgment recognized by the Ontario Superior Court and force Chevron to fork over its Canadian assets, which include oil sands holdings. The plaintiffs have also filed a similar collection effort in Brazil.

In sprawling litigation in the United States, both sides have accused each of fraud and bribery in connection with the Ecuadorean ruling, allegations they both deny.

Chevron said Tuesday in an e-mailed statement that the company was disappointed with the decision but "will continue to defend against the plaintiffs' lawyers' attempts to enforce the fraudulent Ecuadorean judgment, and to further expose their misconduct in our pending [litigation] in New York and other proceedings."

The plaintiffs' say the ruling is the latest in a series of defeats for Chevron in U.S. courts.

"Chevron's latest loss before the Supreme Court is an example of the company's increasingly futile battle to avoid paying its legal obligations in Ecuador," Aaron Marr Page, a lawyer for the Ecuadoreans, was quoted as saying in an e-mailed statement.

Chevron had asked the U.S. Supreme Court, with briefs filed in support from the U.S. Chamber of Commerce and other business groups, to review a U.S. Second U.S. Circuit Court of Appeals ruling from August, 2011, that overturned the original wide-reaching injunction.

The appeals court had ruled that Chevron could not pre-emptively launch a defence before the plaintiffs had actually tried to enforce their judgment. And the decision said a New York judge could not "declare a foreign judgment null and void for all purposes in all countries."

But the appeal court did not rule on the merits of Chevron's allegations that the plaintiffs' lawyers engaged in fraud to obtain the judgment – allegations the plaintiffs deny.

The mammoth legal battle dates back to 1993, when residents of northeast Ecuador first sued Texaco Corp. in a New York court over what they alleged were decades of pollution in the Amazon jungle from oil wells drilled by the company. Chevron merged with Texaco, and inherited the legal fight, in 2001.

An Ecuadorean court recently increased the original $18.3-billion award to $19-billion.