Remarks by Lucinda Low

By Low, Lucinda | Proceedings of the Annual Meeting-American Society of International Law, Annual 2012 | Go to article overview

Remarks by Lucinda Low

Low, Lucinda, Proceedings of the Annual Meeting-American Society of International Law

I would like to speak about the public international law claims and remedies that have been invoked in this case, in particular the second claim filed by Chevron and Texaco under the U.S.-Ecuador Bilateral Investment Treaty (BIT), and the now withdrawn request for precautionary measures filed by the Lago Agrio plaintiffs against Ecuador before the Inter-American Commission on Human Rights (IACHR), and their interaction with the domestic law claims in the case.

I am not personally involved in the case. My law firm represents Chevron in other contexts, but I am not speaking on Chevron's behalf or on my firm's behalf, but in my personal capacity, based on extensive legal experience with the extractive industries.

Before doing so, however, I want to focus on some of the factual aspects of the case that previous speakers have not highlighted. The theme of this Annual Meeting is complexity, and one of the dimensions of this case that is important to the issue of legal responsibility is factual complexity.

In reviewing the voluminous history of this dispute, three aspects struck me as having received insufficient attention:

(1) The "empty chair" at the table. The concession at issue in this case dates back to 1964. It is thus a very old concession, likely differing in significant respects from contracts or concessions for resource extraction that would be given today. During the entire time that Texaco, through its Ecuadorian subsidiary Texaco Petroleum Corporation (referred to herein for convenience as Texaco), was involved in Ecuador, it held a minority interest in a consortium that held the concession. From 1976, the concession was majority-owned by the state of Ecuador through its state-owned enterprise (SOE) PetroEcuador.

Although Texaco was operator of the concession from 1974 to the time of its departure from Ecuador in 1990, decisions regarding the activities of the consortium would have been taken or approved by the consortium as a whole. Moreover, after Texaco left Ecuador in 1990, PetroEcuador took over as operator of the project and has since held 100% ownership. PetroEcuador has operated the project for more than two decades now. PetroEcuador is reported to have caused hundreds of spills during its tenure as operator. Yet the plaintiffs have targeted only the foreign investor, not the SOE. The judgment of the Ecuadorian courts makes no effort to determine or allocate responsibility, either among consortium members during the period Texaco was involved, or during the period after Texaco departed Ecuador and PetroEcuador was the sole owner and operator.

(2) Remediation. After Texaco exited Ecuador in 1990, while Aguinda was still pending in the United States, agreements were reached between Texaco, the Ecuadorian government, and PetroEcuador allocating responsibilities for remedial work in the project area among them. It appears Texaco performed the work it contractually undertook to do, and was formally released by the state and PetroEcuador in 1998 (although Ecuador in 2008 sought to criminally impeach the lawyers for the company who signed certifications regarding the completion of remedial work which triggered the release). Texaco also sought and obtained releases from several municipalities in the project area. I have looked at these releases; they do not appear to cover anything but claims of the parties thereto; nor is there any right of indemnity. With 20/20 hindsight regarding what has since transpired (including the adoption of the legislation described below), Texaco might today draft the release somewhat differently than it did in 1995, but it probably thought at the time it had protected itself fairly well.

(3) Environmental standards. It also appears that the basis of the Lago Agrio claim is legislation that was adopted in 1999, years after Texaco exited the country, and after it was released from liability by the state, creating for the first time a private right of action for environmental damage. …

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