A distinguished international law jurist from Latin America has issued a letter to United Nations Secretary General Ban Ki-moon, asking for a review of Chevron’s “egregious misuse” of an investor treaty to evade its $18 billion liability in Ecuador for creating one of the world’s worst oil-related disasters in the Amazon rainforest, according to a letter released to thousands of arbitration specialists around the globe.

Jose Daniel Amado, a leading law scholar in Peru and a specialist in international arbitration, told the Secretary General that Chevron’s latest attempt to deny the legal claims of the rainforest communities to be decided by an arbitration panel that meets in secret “stands in direct violation of international law” and would “quash” the fundamental human rights of the 30,000 citizens who initially brought suit against Chevron in the United States in 1993.

Chevron shifted that lawsuit to Ecuador in 2002 after praising the country’s judicial system and promising to abide by any judgment there, subject only to narrow enforcement defenses that did not include international arbitration. ”Chevron has constructed what appears to be a calculated plan to manipulate a commercial investment dispute system to evade the outcome of a private litigation,” wrote Amado, who has served as a consultant to the Ecuadorian plaintiffs.

Amado asked the Secretary General to conduct a review of the matter “to ensure that the BIT arbitration system is not used by Chevron to undo international law protections guaranteeing access to justice.”

In January, after a nine-year legal proceeding, a three-judge panel of the Ecuador appellate court confirmed an $18 billion award against Chevron for the deliberate dumping of billions of gallons of toxic waste into Amazon waterways that local inhabitants relied on for drinking water.  The Ecuador trial court found evidence that Chevron’s contamination decimated indigenous groups and caused an outbreak of cancer and other oil-related diseases.

The trial in Ecuador produced 220,000 pages of evidence and more than 64,000 chemical sampling results from independent laboratories which proved that dozens of Chevron oil production facilities suffer from extensive levels of life-threatening heavy metals and toxins, according to the findings of the Ecuador court.

On January 4, the day after the Ecuador appellate court decision, Chevron petitioned a private arbitration panel convened under the U.S.-Ecuador Bilateral Investment Treaty (“BIT”) to order Ecuador’s executive branch to interfere in its independent judiciary and block the ability of the Ecuadorian citizens to enforce their judgment in countries around the world.  Chevron had stripped its assets from Ecuador to avoid paying the judgment.

Lawyers for the Ecuadorians say the arbitration panel does not have such authority, and that in any event Ecuador’s government is obligated to ignore its orders given its own binding legal obligations under the Ecuador Constitution and various international treaties protecting the human rights of its citizens.

The arbitration panel prohibits the Ecuadorians from appearing before it and takes no steps to inform them (or the public) of the status of its proceedings or when or where it is meeting.  Nor does it release its decisions in a system that clearly lacks due process of law, said Aaron Page, who represents the Ecuadorians and who has represented governments in the arbitral proceedings.

Some commentators have like ecuadorians end the secret arbitration panel to a “kangaroo court” rife with conflicts of interest and imbued with a pro-business culture.

The arbitrators are private sector lawyers who generally rule in favor of investors and against sovereign governments — a fact which in recent years has led several countries to withdraw or threaten to withdraw in recent years from the arbitral system, said Page. ”Chevron’s radical request for relief in this case potentially undermines the credibility of the entire investor arbitral regime,” Page said.

In the letter to Ban Ki-moon, Amado noted that a recent “interim” order by the arbitration panel asking Ecuador’s government to freeze the environmental case “makes a travesty of the bilateral commercial treaty system” and represents an “illegal expansion of arbitral powers with wide-ranging implications for well-settled principles of international law, including fundamental human rights and state sovereignty.”

“Such a result is simply untenable under international law — BIT arbitral panels cannot be called on by investors to set aside countries’ constitutional systems and sovereignty, which are essential components of modern democracies,” he added.

Concern over Chevron’s latest stratagem, Amado pointed out, is shared by a U.S. federal appellate court which ruled last year that the longstanding legal claims of the Ecuadorians “cannot be settled” through the BIT arbitration given that they are not a party to those proceedings.

“The international legal community was shocked by this [interim] Order, which Chevron interpreted to force the Ecuadorian executive branch affirmatively to interfere in a judicial process and limit Ecuador’s sovereignty vis-a-vis a case that has been in the courts for 18 years,” he said.

The Amado letter was emailed to 7,000 arbitrators around the world by the Peruvian Arbitration Institute, which said it considered the letter to “of high interest” to the international arbitration community.

Amado is a graduate of Harvard Law School and the founding partner of Miranda & Amado, one of Peru’s leading law firms.  He has published numerous articles on international law topics, has lectured in various countries, and has represented both private investors and governments before BIT arbitration panels.

Amado is also a member of the American Chamber of Commerce in Peru and is President of the Energy Legal Committee of Peru’s National Mining, Oil and Energy Society.

The three arbitrators hearing the Chevron claims — all private lawyers who represent investors before other arbitration panels in the same treaty system — stand to personally reap millions of dollars in fees if they grant jurisdiction over the case, which in itself is a hotly contested issue given that Chevron left Ecuador five years before the U.S.-Ecuador BIT took effect in 1997, Page said.

R. Doak Bishop, an American from the firm King & Spalding who is Chevron’s lead lawyer in the Ecuador matter, has served as an arbitrator in numerous cases convened under the BIT process while he simultaneously represents private clients in the same system.  Ecuador’s American lawyers are only putting up a nominal defense, essentially leaving the Ecuador plaintiffs without representation before the panel, said Karen Hinton, the U.S. spokesperson for the plaintiffs.

In any event, it is clear that any “award” from the panel will lack legitimacy in countries that observe the rule of law and will not be an obstacle to enforcement of the Ecuador judgment, said Amado.

“This is a far-fetched strategy by Chevron that has little chance of working,” said Amado.  “But it is our duty as international lawyers to prevent it from causing collateral damage to the international legal order that protects the human rights of all peoples worldwide.”

Image Courtesy of   http://www.flickr.com/photos/rainforestactionnetwork/

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While indigenous groups in Ecuador’s Amazon face possible death and grave illness from Chevron’s “Rainforest Chernobyl” disaster, several prominent U.S. law firms and their well-known partners are billing the oil giant hundreds of millions of dollars to forestall a clean-up that could save thousands of lives, according to court documents.

Chevron’s lead outside law firm in the U.S., Gibson Dunn & Crutcher, has 60 lawyers working extensively on the case, a recent court filing revealed. The filing also showed that Chevron has paid almost 500 attorneys and paralegals from 39 different law firms since the celebrated case was filed in U.S. federal court in 1993.

The litigation was shifted to Ecuador at Chevron’s request in 2002, with a subsequent eight-year trial resulting in an $18 billion judgment against the oil giant for causing what experts believe could be the world’s worst oil-related contamination.

The Ecuador litigation represents the first time that indigenous groups have successfully sued a large oil company for harm caused to their health and ancestral lands, said Karen Hinton, the U.S. spokesperson for the Ecuadorians.  Evidence from independent health evaluations concluded that more than 9,000 rainforest dwellers face the risk of contracting cancer absent a rapid cleanup of the damage.

In all, Gibson Dunn was billing Chevron an estimated $250 million per year in 2010 and 2011 as the company launched lawsuits against the plaintiffs in 16 different federal courts, helped to litigate an international arbitration action against Ecuador’s government, filed a fraud case against the Ecuadorians and their lawyers in U.S. federal court, and supervised Chevron’s battery of local lawyers in Ecuador as they faced multiple setbacks that culminated in the adverse judgment against Chevron, said Hinton.

“Chevron’s environmental destruction in Ecuador is the best thing that ever happened to the bottom line of Gibson Dunn,” said Hinton, who noted the firm reported a 20% increase in per-partner profits in 2010 during a downturn in the economy as dozens of its lawyers worked full-bore on the Ecuador matter.

“Clearly, Gibson Dunn and several other firms are profiting from rainforest destruction,” Hinton added. “These lawyers have proven that fighting to deny the human rights of indigenous groups can be a very profitable business model.”

Gibson Dunn clearly has sold Chevron on its willingness to engage in questionable tactics and push the ethical envelope, said Hinton.  The firm boasts that it engages in “recuse operations” for clients in trouble and that if the law is in the way it is willing to maneuver around it to achieve client objectives. Several judges have sanctioned Gibson Dunn lawyers for trying to intimidate witnesses and for filing frivolous lawsuits on behalf of Chevron, and one well-known partner has been accused of trying to mislead the Congress about the case.

A federal judge in Oregon fined Chevron after a team of Gibson Dunn lawyers had harassed the executive director of a respected environmental organization that had filed a brief in support of the Ecuadorians.

Gibson Dunn also uses cookie cutter lawsuits, Hinton said, where defenders of human rights victims and their supporters are always accused of “fraud” for trying to hold wrongdoers like Chevron accountable for their misconduct.

“The basic Gibson Dunn template is to attack victims to distract from the evidence,” said Hinton.  “When that doesn’t work, the firm resorts to outright intimidation to silence any lawyer or advocate who stands up to the firm.”

Gibson Dunn’s approach also has created numerous problems for Chevron in Ecuador, the fifth-largest oil producing nation in South America.  Chevron’s legal team in Ecuador is said to be furious with the Gibson Dunn lawyers for losing the case because of their arrogant treatment of Ecuadorian judges, said Hinton.

Chevron lawyers in Ecuador working closely on the case with Gibson Dunn’s “rescue” team have been sanctioned repeatedly for filing frivolous motions (once filing a motion eighteen times in 30 minutes), threatening the presiding judge with jail time if he didn’t rule in Chevron’s favor, and paying a Chevron contractor to secretly videotape a judge to try to entrap him in a trumped-up bribe scandal.

The Ecuador court imposed a large punitive damages award on Chevron in large part for its abuse of the judicial process in Ecuador, according to the judgment.

In the meantime, the case has become a financial bonanza for several other large law firms who represent Chevron. The list of 39 law firms disclosed by the company in a U.S. court action also includes the prominent criminal defense firm of Arguedas, Cassman & Headley; Jones Day; King & Spalding; Akin, Gump, Strauss; Hauer & Feld; Holland & Knight; Jones Day; Steptoe & Johnson; and Williams & Connolly.

The all-star cast of attorneys who have worked on some aspect of the case for Chevron include Theodore Olson of Gibson Dunn, a former Solicitor General of the United States; Brendan Sullivan of Williams & Connolly, who reportedly represented a Chevron executive who faced potential criminal liability in Ecuador; Greg Craig of Skadden Arps, President Clinton’s impeachment lawyer who Chevron reportedly hired to explore settlement;

Mickey Kantor of Mayer Brown, the former U.S. Trade Representative under Clinton who spearheaded a Chevron effort to cut trade preferences for Ecuador; David Boies , whose firm helps the oil giant fight discovery actions in the U.S. designed to expose its corruption in Ecuador; and Alan Vinegrad , a former U.S. Attorney who represented a Chevron lawyer indicted on criminal charges of fraud for lying to Ecuador’s government about the results of a sham remediation.

Chevron also has used six public relations firms to push talking points denying the company caused any environmental damage in Ecuador, even though the judgment is undergirded by extensive scientific evidence and the allegations have been confirmed by numerous independent news accounts.

After an eight-year trial, the Ecuador trial court in 2011 found the oil giant systematically discharged billions of gallons of toxic waste into the rainforest, decimating indigenous groups and causing an array of oil-related health problems. An Ecuador appellate court affirmed the judgment in early January, potentially opening up Chevron to standard collection actions against its assets in jurisdictions around the world unless its posts a bond in Ecuador.

Chevron stripped its assets from Ecuador and has vowed never to pay for a cleanup, even though reports indicate it contacted the plaintiffs recently in an attempt to explore settlement possibilities. Ultimately, one must wonder how much Chevron shareholders are getting in return for these expensive legal services, she said.

In the last three years, since Gibson Dunn’s “rescue” operation was launched, Chevron was hit with the $18 billion judgment, the largest ever for an environmental case; the judgment was confirmed by a three-judge panel; multiple courts sanctioned the company for its unethical litigation tactics; and a U.S. appellate court in New York prevented Chevron from seeking a worldwide injunction to block enforcement of the judgment.

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Chevron has lost yet another legal round over its increasingly furious effort to evade paying an $18 billion judgment in Ecuador for causing environmental damage in the Amazon rainforest, according to a decision released by a U.S. federal judge.

Just days after an appellate panel in Ecuador, U.S. federal judge, Lewis A. Kaplan, denied the company’s motion to attach the assets of the Ecuadorian plaintiffs.

The decision also comes just weeks after Chevron was exposed for trying to bribe Ecuador’s government to quash the case by making a “donation” to an environmental project, and reports surfaced that the company tried to corrupt the court process in Ecuador by using a secret lab.

Kaplan also denied a request by Chevron for a restraining order preventing the Ecuadorians and their lawyers from selling any portion of the claims, so they could finance the litigation. The Ecuadorians had argued that Chevron’s motion was nothing more than an attempt to dry up support for their 18-year case, thereby denying them legal counsel and the ability to enforce the Ecuador judgment.

“This decision is another rebuke for Chevron, and it comes on the heels of a devastating defeat in the appellate court of Ecuador,” said Karen Hinton, the U.S. spokesperson for the 30,000 Ecuadorians who have accused the oil giant of dumping billions of gallons of toxic waste into their ancestral lands.

Chevron had argued to Kaplan that the Ecuador judgment was based on “fraud” and, therefore, was not entitled to be enforced, even in countries outside the U.S.  Chevron stripped its assets from Ecuador and has said it will not comply with the judgment.

Lawyers for the rainforest communities had argued that Chevron’s motion had no legal basis and that the judgment in Ecuador is based on a wide body of scientific evidence. The company caused one of the worst environmental disasters in history, decimating five indigenous groups and causing an outbreak of cancer.

The communities also argued that Chevron had the ability to block any enforcement actions by the Ecuadorians by simply posting a bond while it appeals to Ecuador’s highest court. Chevron reported profits of roughly $30 billion in 2011 and total assets of more than $204 billion.

“The relief Chevron seeks is improper and unprecedented,” argued Craig Smyser, a U.S. lawyer for the Ecuadorians, in a letter to Judge Kaplan. Smyser noted that the remedy sought by Chevron had never been granted in U.S. history under similar facts.

“Chevron’s latest histrionics and hysteria justify neither a temporary restraining order, nor an order of attachment,” Smyser said in his letter, which was submitted before Kaplan issued his decision.

Chevron faces another problem — its lead outside law firm in the Ecuador matter, Gibson Dunn & Crutcher, has come under increasing attack for orchestrating a string of legal setbacks that imperil the interests of company shareholders, according to a recent blog in the Huffington Post.

The blog noted that since Gibson Dunn entered the matter two years ago, Chevron has been hit with an $18 billion judgment at the trial court in Ecuador, lost the appellate decision in Ecuador, and was reversed by a U.S. federal appeals court last September in its unprecedented effort to seek a worldwide injunction to block enforcement of the Ecuador judgment.

Gibson Dunn also faces mounting ethical questions about its sharp-edged litigation practices in the Ecuador matter, which recently led a federal court to sanction and fine Chevron after finding that a Gibson Dunn lawyer harassed a witness in the Ecuador matter.

In Ecuador, the trial court imposed a punitive damages award to the plaintiffs after finding Chevron’s lawyers tried to delay and undermine the proceedings by threatening a judge with jail time if he did not rule in the company’s favor.

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