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Tribunal presses Ecuador to halt Chevron case enforcement

By Braden Reddall

Feb 8 (Reuters) - An international tribunal arbitrating Chevron Corp's long-running legal dispute over pollution in Ecuador has found the country violated the panel's previous order to do all it could to prevent enforcement of a contested $19 billion judgment against the company.

The tribunal, acting under The Hague's Permanent Court of Arbitration, said the Ecuador government should have stopped plaintiffs in the case from going to courts in Brazil, Argentina and Canada to try to collect the judgment handed down by an Ecuadorean court in 2011.

The ruling by the panel came a year after it reaffirmed its original 2011 finding that the Quito government "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any

judgment against (Chevron) in the Lago Agrio case."

The Ecuadorean court ruled in February 2011 that Chevron should pay billions to plaintiffs living in the region around Ecuador's Lago Agrio, who had sued the company over pollution in the country's rain forest.

That judgment came a decade after Chevron bought Texaco, and 18 years after Texaco was first accused in a New York court of polluting the Ecuadorean rain forest and sickening people there. The case was moved to Ecuador after Texaco argued for a change in venue.

Chevron has contested the Ecuador court judgment, saying it uncovered through U.S. courts evidence of fraud by lawyers for the Ecuadorean plaintiffs, allegations the lawyers deny.

The company launched action in 2009 through the Permanent Court of Arbitration, charging that Ecuador had breached a trade agreement with the United States by not ensuring a fair trial.

The second-largest U.S. oil company is pursuing racketeering and fraud charges against the lawyers for the Ecuadorean plaintiffs, in a case due to go to trial in New York in October.

Ecuador's attorney general contends the three-person arbitration tribunal has no jurisdiction because Quito's bilateral trade agreement with Washington took effect five years after Texaco ended operations in Ecuador in 1992.

The country has also said it cannot control the actions of private plaintiffs. Ecuador's attorney general was not available for comment on Friday.

Chevron argued before the tribunal in November that the plaintiffs' lawyers had the support of Ecuador's Foreign Ministry to pursue legal action outside the country.

In its ruling on Thursday, the Hague tribunal cited the rain forest plaintiffs' legal actions in Argentina, Canada and Brazil to collect the $19 billion award. The plaintiffs took the actions abroad because Chevron has no assets in Ecuador.

The tribunal said it wanted to prevent the plaintiffs' enforcement actions from "causing irreparable harm" to Chevron.

A court in Argentina last week upheld a freeze on Chevron assets there related to the enforcement efforts.

Chevron said in a statement that the tribunal would next consider compensation and whether Ecuador should pay for any enforcement-related damages that the company had incurred.

'DECISIVE PHASE'

Karen Hinton, spokeswoman for the Ecuadorean plaintiffs, who are not part of the tribunal proceedings, said courts hearing enforcement actions would likely pay little attention to the tribunal since it was not binding on the rain-forest communities.

"The latest order changes nothing about the respective positions of the various parties, all of which have been clear for some time," she said in an emailed statement.

At a symposium on the two decades of litigation hosted by Stanford Law School, Graham Erion, who works for the plaintiffs on the enforcement action, said the case had entered a new and decisive phase. He cited a Chevron statement about fighting the case "until hell freezes over."

"I’m from Canada. I know what ice looks like," he said. "We’re on the ice right now, and that’s where this case is being fought."

The international arbitration panel includes a Chevron-named member, Horacio Grigera Naon of the American University law college; one named by Ecuador, Oxford Professor Vaughan Lowe; and London lawyer V.V. Veeder, chosen by the other two.

The U.S. fraud and racketeering case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691.

The panel's ruling, posted online by Chevron on Friday can be found at ((http://www.theamazonpost.com/wp-content/uploads/Fourth-Interim-Award-on-Interim-Measures.pdf ))

(Reporting by Braden Reddall in Stanford, Calif.; Additional reporting by Eduardo Garcia in Quito; Editing by Matthew Lewis and Peter Cooney)

((braden.reddall@thomsonreuters.com)(+1 415 677 2543)(Reuters Messaging: braden.reddall.thomsonreuters.com@reuters.net))

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