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Monday, August 26, 2013

Chevron Remains Tenacious Amid Legal Struggle

An interesting post in last month's Wall Street Journal went inside Chevron's reaction to a perceivedly unfair decision by the court. The court decision was the result of a case involving Texaco, who was reportedly responsible for considerable environmental damage in Ecuador. Texaco has since been purchased by Chevron, and plaintiffs are attempting to bring the case against the purchasing entity and into the United States; plaintiffs in the case enjoyed a temporary victory against the energy titan in Ecuadorean court to the tune of $18 billion.

The extensive litigation has been kept at bay by Chevron's legal team since the decision in Ecuador, with Chevron making attempts at overcoming the legal notion that international court decisions should be honored in American courts as long as there are no signs of abuse or fraud. And while contest from large corporations against foreign judgment is common, the case with Chevron is exceptional in the way that it has responded to the plaintiffs. Particularly, an arbitration filing by Chevron under a treaty between the two countries allowed it special discovery of documents that were owned by plaintiffs. According to Chevron, the documents contain evidence of collusion between the presiding court in Ecuador, as well as he plaintiffs; plaintiffs, their counsel, Patton Boggs (the law firm) and even the expert witnesses were subsequently sued by Chevron under the RICO (Federal Racketeer Influenced and Corrupt Organizations) Act.

Fortunately, Chevron's resistance to the litigation has paid off in some ways: the plaintiffs' expert witnesses and even a judge presiding over the case have agreed that some of Chevron's defense is valid. Nevertheless, Chevron can't escape the Patton Boggs litigation, especially as the law firm continues attempts to salavage its reputation amidst the racketeering charges suggested by Chevron, and even a contingency fee required by the Ecuadorean courts that could ultimately cost the firm well over $400 million.

Some estimates hold that Chevron has utilized more than two thousand lawyers in this specific case, and no doubt amassed an enormous legal bill. Still, the oil giant's tenacity amidst harsh judgment in Ecuador could possibly protect it in the future by discouraging litigious parties from taking Chevron to court.

Other instances of international courts having a cow over judgment.