US top court rejects Ecuador challenge

The US Supreme Court has rejected Ecuador's appeal against a $96 million award it has been ordered to pay Chevron in a dispute over the development of oil fields in exchange for cheap domestic crude.

The eight justices sitting on the short-handed bench let stand a lower court ruling denying the South American country's challenge to a 2011 award by an international arbitration panel based in The Hague.

At issue were seven breach-of-contract cases that Texaco Petroleum -- which Chevron bought in 2001 -- filed against Ecuador in the early 1990s, saying the country had "overstated its domestic oil-consumption needs, and appropriated more crude oil than it was entitled to acquire at the reduced price," a court petition read.

Chevron claimed that Ecuador had violated the 1993 US-Ecuador Bilateral Investment Treaty, which entered into force in 1997, because it was allowing the case to languish in courts too long.

Chevron welcomed the Supreme Court's move at a time the California-based company faces losses and a decline in its credit rating due to the continued drop in oil prices.
The oil firm is "pleased" that the high court rejected the appeal, and that "Ecuador will be held accountable," spokesman Morgan Crinklaw said, noting that the country actually owes Chevron $106 million after interest.

In Washington's decision in favor of Chevron, the US Court of Appeals had upheld a previous ruling from a federal district judge and validated the findings of the three-member arbitration tribunal in The Hague.

- Battle over? -

The high court's decision should end a battle that has lasted more than two decades.

Still, Ecuador said it would not make the payment, pointing to an order by a judge in the country freezing Chevron's assets during separate litigation over environmental damage in the Amazon.

"This fact makes it impossible for Ecuador to make any payment in the case," the Ecuadoran Embassy in Washington said in a statement.

In the environmental damage case -- brought by the indigenous people of Ecuador's Lago Agrio region to win compensation for the mass dumping of oilfield waste between the 1970s and 1990s -- an Ecuadoran court ordered Chevron to pay $9.5 billion in damages.

The environmental destruction was allegedly carried out by Texaco, which Chevron bought in 2001.

However, a US court found that the plaintiffs' legal team conspired to win the case by "egregious fraud," including bribing a judge, writing the court's verdict themselves and secretly paying the authors of an ostensibly independent report.

Source: AFP