MercoPress. South Atlantic News Agency

Argentine court confirms setback for Chevron in 20-year old dispute with Ecuador

We are very pleased with the resolution that is well founded”, said Enrique Bruchou, lead attorney for the plaintiffs

An Argentine appeals court has upheld an embargo on the assets of Chevron Corp.'s local subsidiary, a legal setback for the company, which had said the embargo compromised its operations in the country. A lower court judge issued the embargo last year as part of a decades-old legal dispute involving claims that Chevron is responsible for environmental contamination in Ecuador.

“We are very pleased with the resolution of the Court of Appeals, which is well founded,” said Enrique Bruchou, lead attorney for the plaintiffs in Argentina.

An Ecuadorian court had previously awarded 19 billion dollars to indigenous people who said they had been harmed by pollution. Chevron has denied the allegations and said the ruling is based on fraudulent evidence, which the plaintiffs deny.

“Chevron respectfully disagrees with the court's decision,” the company said Wednesday in a statement from California. “Chevron Argentina intends to pursue all available legal remedies to reverse the interim measure.”

The Argentine embargo applies to 100% of Chevron's capital in Argentina, 100% of dividends, all of Chevron's stake in pipeline operator Oleoductos del Valle SA, 40% of Chevron's oil sales to Argentine refineries and 40% of the money Chevron has or may eventually have in Argentine banks.

The court order says the embargo will remain in place until Chevron has paid off the Ecuador award in full. Last year, Mr. Bruchou estimated that Chevron's assets in Argentina amounted to about 2 billion dollars. The proceeds from Chevron Argentina's oil production, valued at 600 million in 2010, are also subject to the embargo until the legal claim is settled, Mr. Bruchou said at the time.

Chevron doesn't have significant assets in Ecuador, so the plaintiffs have been trying to seize the company's assets in other countries to enforce settlement on the judgment.

The Argentine court's embargo ruling cited a treaty between Argentina and Ecuador that allows judges in one country to enforce court orders from the other.

In a full-page ad placed in Argentina's leading newspapers last November, Chevron Argentina said the claims against it have no legal foundation and that the embargo has broader consequences for the entire country.

“The judicial embargo compromises Chevron's capacity to operate and reinvest given that the order affects more than 90% of its income through crude sales,” the company said.

The lawsuit in Argentina is the latest development in an almost 20-year legal dispute over claims that Texaco Inc., which Chevron bought in 2001, contaminated parts of Ecuador's Amazon region when it was operating in the country.