ECUADOR DIGESTU.S. warns Ecuador about ending investment treaty; Court upholds Chevron verdict but reduces the penalty

Ecuador’s possible scrapping of a bilateral investment treaty with the United States could lead to loss of American investment in the country, Washington’s envoy warned Monday.

"If the bilateral investment treaty is canceled that would obviously have a negative effect because U.S. companies would be afraid to invest," Ambassador Adam Namm said in an interview published in the local economic weekly Lideres.

Namm comments referred to the government’s recent decision to carry out a review of its 26 international accords in response to concerns they undermine Ecuador’s economic sovereignty.

A commission conducting the review is due to report its findings in mid 2014.

The government had already indicated it considers certain similar agreements with France, Germany, Britain, Ireland and Sweden to be over.

This, Namm added, "generates protection and confidence."

Correa, however, sees such US or European-based tribunals as biased in favor of multinational companies and has proposed the creation of arbitration centers in South America.

In September, an arbitration panel in the Hague gave US oil giant Chevron an important procedural victory in its battle against a $19 billion fine by Ecuador for polluting the Amazon basin region.

Correa has called for a global boycott of the California-based company and warned of the risk of a state bankruptcy if the panel decides in favor of it.

Washington, often criticized by Correa, is Ecuador’s main trading partner with exchanges in 2013 that could reach $17 billion, according to Namm.

According to the State Department, the two countries have had a bilateral investment treaty in force since 1997.

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Court upholds Chevron verdict, reduces judgment

Ecuador's highest court affirmed an environmental verdict against Chevron Corp. but cut the judgment against the oil giant in half.

Ecuador's National Court of Justice ruled late Tuesday that Chevron must pay $9.5 billion to plaintiffs in the country's rainforests over decades-old contamination. The verdict had stood at $19 billion, but the court tossed out punitive damages that were imposed in 2011 after Chevron refused to apologize for causing the pollution.                                                                                                                                                                                 

The ruling is unlikely to end the 20-year-old litigation, which is being waged on multiple continents, as the plaintiffs seek to collect the judgment and Chevron tries to discredit it. Another trial is unfolding in New York federal court, where Chevron is suing the Ecuadorians and their lawyers for racketeering.

Despite the reduction of the verdict, Chevron blasted the ruling as illegitimate, while representatives of the plaintiffs called it a victory.

The judgment "is as illegitimate and unenforceable today as it was when it was issued two years ago," Chevron said. The oil company says that the Ecuadorian plaintiffs and their lawyers used fraudulent means to influence the judgment, including secretly writing an opinion presented by a court-appointed expert and agreeing to pay off a judge.

Representatives of the plaintiffs deny Chevron's claims and accuse the company of improper conduct, leveling their own accusations of bribery.

Christopher Gowen, a spokesman for the plaintiffs, said Tuesday's ruling was "reasonable, fair and a clear victory for environmental justice."

Chevron has never operated in Ecuador. It inherited the lawsuit with its 2001 acquisition of Texaco Inc. The company is seeking to block the judgment by appealing it to an international tribunal, arguing that previous settlements between Texaco and Ecuador have released it of any liability for contamination. The Ecuadorians who sued Chevron, for their part, are attempting to collect the judgment in courts in Canada, Brazil and Argentina.

In New York federal court, Chevron is wrapping up its side in the racketeering trial of Steven Donziger, a lawyer who represented the Ecuadorean plaintiffs in their lawsuit against the company. Chevron says that Mr. Donziger and others on his team fabricated evidence and ghostwrote much of the verdict—charges both Mr. Donziger and the judge who issued the judgment against Chevron, Nicolas Zambrano, deny.

Last week Mr. Zambrano, who has since been dismissed from his judicial position, testified in federal court in Manhattan that he alone was the author of the judgment, though he was unable to recall key portions of it. Earlier in the trial, a Chevron witness—another former Ecuadorean judge named Alberto Guerra —testified that he was paid to ghostwrite a number of Mr. Zambrano's rulings in the Ecuador case.

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