U.S. Appeals Court Rejects Ecuador Challenge to $96 Million Chevron Award

A U.S. appeals court on Tuesday rejected Ecuador’s challenge to a $96 million international arbitration award in favor of energy giant Chevron Corp, marking the latest twist in a decades-long dispute over the development of oil fields in the South American country.

The dispute stemmed from a 1973 deal that called for Texaco Petroleum Co, later acquired by Chevron, to develop oil fields in exchange for selling oil to the Ecuadorean government at below-market rates. Texaco filed several lawsuits in the 1990s accusing Ecuador of violating the contract.

The District of Columbia U.S. Circuit Court of Appeals upheld a 2011 award from The Hague’s Permanent Court of Arbitration in the Netherlands.

The Ecuador Attorney General’s office said in a statement that it was reviewing the decision and evaluating options, which could include an appeal.

The decision is not part of a separate legal battle brought by a group of Ecuadorean villagers who claim Texaco caused billions of dollars in pollution damage when it began exploring oil deposits in the 1960s.

In the case at hand, Chevron initiated an arbitration proceeding at The Hague in 2006, claiming the Ecuadorean courts failed to resolve the lawsuits in a timely manner, violating a treaty between Ecuador and the United States. A panel awarded Chevron $96 million, which was subsequently upheld by the Dutch court system.

Chevron then filed a federal lawsuit in Washington, seeking a judgment confirming the panel’s decision in order to collect the award. After a federal judge affirmed the award in 2013, Ecuador appealed to the D.C. Circuit.

Ecuador says the arbitration tribunal has no jurisdiction in the case because the bilateral trade agreement took effect five years after Texaco ended operations in Ecuador in 1992

“In signing the (treaty), Ecuador agreed to arbitration of precisely this type of action,” Circuit Judge Robert Wilkins wrote on Tuesday for a three-judge panel.

In a statement, a Chevron spokesman said the company was “pleased” and pegged the award at $106 million, including interest.

Chevron continues to fight claims from the Ecuadorean villagers, who have filed lawsuits in Canada, Brazil and Argentina seeking to enforce a $9 billion judgment rendered in Ecuador against Chevron.

In March 2014, a U.S. judge in New York issued a scathing ruling finding that the villagers’ American lawyer, Steven Donziger, committed fraud in securing that judgment.

Donziger, who denies any wrongdoing, has appealed.

(Reporting by Joseph Ax; Additional reporting by Alexandra Valencia in Emeraldas, Ecuador; Editing by Bill Rigby and Cynthia Osterman)