MercoPress. South Atlantic News Agency

Ecuadorian court orders seizure of 200m dollars in Chevron oil assets

Texaco, purchased by Chevron is accused of placing drilling waste in unlined pits, causing contamination of the area and illness amongst local tribes

As part of an ongoing lawsuit between US Chevron oil and plaintiffs from various Amazonian villages, an Ecuadorian court has ordered the seizure of approximately 200 million dollars worth of the company's assets.

From the 200 million, roughly 96 million is money that the Ecuadorian government owed Chevron, which had been held in Ecuadorian bank accounts by the company and licensing fees accrued from the use of Chevron’s trademarks in the country.

This most recent ruling comes as a further blow to the giant company, which was found liable for 19 billion dollars worth of damages incurred by Texaco (purchased by Chevron in 2001). Between 1964 and 1992, Texaco was accused of placing drilling waste in unlined pits, causing contamination of the area and illness amongst the locals.

The ruling has been hailed by the plaintiffs' lead lawyer as “a huge first step for the rainforest villagers on the road to collecting the entire 19 billion dollars judgement”.

Chevron has fought hard to get the case dismissed, but the US Supreme court overruled a recent attempt to block enforcement of the Ecuadorian ruling in the US. The company claims that the plaintiffs’ case is fraudulent and has even begun a racketeering case against one New York-based lawyer and his clients.

A spokesman for Chevron, James Craig, was quoted as saying that the “order is not surprising, since the plaintiffs have shown they are able to get any order they wish granted by the Lago Agrio court. In the past the plaintiffs’ lawyers have been involved in ghost-writing orders for the court.”

Chevron also has plans to challenge the ruling under via an international panel convened as part of a trade agreement between the US and Ecuador.

In related news Ecuador President Rafael Correa said over the weekend that his government will fight not to pay Occidental Petroleum Corporation compensation that was ordered by an international tribunal for canceling a contract in 2006.

“We will continue fighting to not pay a single penny from the Ecuadorian people to this abusive transnational company that tried to defraud the country” Mr. Correa said during his weekly media address.

Ecuador canceled Occidental's operating contract in May 2006, alleging that the company broke its terms by transferring a 40% stake to Encana Corp. (ECA, ECA.T) without obtaining approval from the country's energy ministry.

Occidental filed for arbitration with the Washington D.C.-based International Center for Settlement of Investment Disputes, or Icsid, under the U.S.-Ecuador bilateral investment treaty.

Early this month Icsid released a ruling, ordering Ecuador to pay Occidental 1.77 billion dollars, plus pre- and post-award interest.

Last week Ecuador filed an appeal to overturn the Icsid ruling, arguing Icsid has no jurisdiction in the case.

“We won't allow that this money leaves from the country,” Mr. Correa said. He added that the US company broke its contract and the Ecuadorian law.

Ecuador expects the process of trying to overturn the Icsid ruling could take one to two years.