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CHEVRON LOSES APPEAL CASE AGAINST ECUADOR

Unanimous 3-0 decision by New York-based U.S. Court of Appeals finds oil company’s case to be “without merit.”

Washington, DC. A unanimous panel of the U.S. Court of Appeals for the Second Circuit today summarily rejected as “without merit” ChevronTexaco’s appeal in which the corporation sought to shift the responsibility of payment of any adverse judgment in the Lago Agrio environmental case from itself to the Republic of Ecuador.

ChevronTexaco argued that Ecuador’s state-owned oil company (Petroecuador, formerly known as CEPE) was a party to a 1965 Joint Operating Agreement (JOA) between Texaco (ChevronTexaco’s predecessor) and Gulf Oil corporation. In a demand for arbitration in New York, and again in U.S. District Court since 2004, ChevronTexaco claimed that this agreement required Ecuador to indemnify ChevronTexaco for any judgment or losses incurred by the company in the lawsuit brought by 30,000 members of Ecuador’s indigenous population currently pending in the town of Lago Agrio. ChevronTexaco took this position even though neither the state oil company nor any member of the Ecuadorian Government had ever signed the 1965 JOA.

The Court of Appeals decision affirmed in its entirety the “careful and well-reasoned” June 20, 2007 decision of the United States District Court, which had likewise rejected ChevronTexaco’s argument.

In the Lago Agrio lawsuit, the plaintiffs contend that Texaco failed to adhere to environmental norms during its operations there from 1965 to 1992. The Lago Agrio court has conducted dozens of judicial inspections to determine the damage caused by Texaco to the environment. Plaintiffs are asking the Lago Agrio court to order Texaco to pay for environmental clean up and to compensate those who have suffered illness as a result of Texaco’s actions. Earlier this year, a court-appointed expert in the Lago Agrio case found that an adverse judgment may require damages in the amount of $7 billion to $16.3 billion. The U.S. appellate court’s decision is a setback to Texaco’s efforts to avoid paying the Lago Agrio plaintiffs by shifting responsibility to the Republic of Ecuador.

“The Republic of Ecuador appreciates the consideration of both the U.S. District Court and the U.S. Court of Appeals for their careful analysis and decision,” said Ecuador’s Solicitor General Diego García Carrión. “We are pleased that this dispute was resolved through the appropriate judicial channels.”