One of the things I love about being an international attorney is the potential to effect change at the global level.
Whether it’s representing victims of oppressive government regimes, exposing corrupt ministerial officers or hunting down secret Swiss bank accounts for defrauded pensioners, the work can be extremely gratifying.
I mention this because of recent developments in the massive class action lawsuit filed by a group of Ecuadorian plaintiffs against Chevron over contamination of the Amazon rainforest basin.
The case is a prime example of how an international attorney, in this case Steve Donziger, can force multibillion dollar companies change the way they do business around the world.
Last year, after a 17-year legal battle, a court in Ecuador found Chevron liable and levied an $18.2 billion judgment against it.
To collect on the judgment, the plaintiffs filed a claim in the Superior Tribunal of Justice in Brazil. The plaintiffs chose Brazil because of Chevron’s ongoing operations there–it produces 33,000 barrels of crude oil and 13 million cubic feet of natural gas a day.
The country is Chevron’s second largest production market in Latin America and one of the top ten markets in the world for the oil giant’s capital spending. Chevron announced in 2011 that it planned to invest an additional $3 billion in Brazil by 2014.
Chevron’s investments, however, have proved costly. It already faces legal challenges in Brazil, where a small spill in its offshore operations caused an uproar and has brought criminal charges which the company is fighting.
The plaintiffs’ efforts to levy on Chevron’s assets in Brazil should be straightforward.
Brazil and Ecuador are signatories to a treaty that facilitates reciprocal enforcement of judgments among countries in Latin America. This potentially streamlines the enforcement process and limits the ability of a defendant to re-litigate issues already decided by the court that conducted the trial.
Further bolstering Plaintiffs prospects in Brazil is the allowance of interest.
Brazil allows interest to run on a foreign judgment during the pendency of the enforcement process, potentially adding substantial costs to Chevron should it adopt its traditional strategy of trying to delay the proceedings.
The Brazilian lawsuit is the second filed by the plaintiffs, who last May filed an action in Canada to seize assets belonging to Chevron in that country. You can read reports in Fox Business News, Reuters and in Marketwatch.
The filing of the second enforcement action also comes at a time when Chevron shareholders are rebelling against company management over the risk posed by the Ecuador court judgment.
Last month, Chevron CEO John Watson suffered a stunning reprimand when investors holding over 38% of the company’s shares (representing $73 billion worth of stock) voted for a resolution that directly challenged his authority because of the Ecuador case.
Recently, 40 institutional shareholders representing $570 billion under management – including the New York state pension fund – urged the company to settle the Ecuador litigation.
Even with an $18 Billion judgment against it, it remains to be seen whether Chevron will act in the best interest of its shareholders.
No matter the outcome, this massive class action lawsuit is an excellent example of how an international attorney can influence and shape the way multinational corporations do business around the world.
You can read my earlier posts on this long running legal sags below:
Ecuador Class Action Plaintiffs Strike Back at Chevron’s Cynical Game of Musical Jurisdictions.
Chevron Files International Arbitration Claim Against Ecuador: Forum Shopping in the Hague?
Chevron’s Missteps: How Not to Handle Foreign Litigation.