On Thursday, the U.S. Court of Appeals for the Second Circuit cleared the way for Chevron to proceed with an investment arbitration action against Ecuador in which the oil giant is waging a collateral attack on the $18 billion pollution verdict won in February by indigenous residents of the Amazon. Chevron has asked the arbitrators for an order that Ecuador reimburse Chevron for any damages, and a declaration that Chevron is not liable for damages.
The plaintiffs had argued that arbitration should be stayed because Texaco, Chevron’s predecessor, had previously agreed to respect any Ecuadorian court judgment, subject only to its defenses under a New York state law called the Recognition of Foreign Country Money Judgments Act. Texaco had made this promise in 2001, as a condition of the dismissal of plaintiffs’ original U.S. action on forum non conveniens grounds.
