Constitutional Law

2nd Circuit Nixes Injunction 3 Days After Hearing, Lifts Ban on Pursuing $18B Award Against Chevron

After losing an environmental case in Ecuador in which $18 billion was awarded to the plaintiffs, Chevron Corp. filed a civil racketeering lawsuit in federal court in the United States. It contended that the lawyers for the plaintiffs conspired to fabricate evidence.

Earlier this year, a federal judge overseeing the Southern District of New York case issued a preliminary injunction barring the plaintiffs from collecting on the Ecuador court’s $18 billion award until the racketeering suit is tried. But yesterday, the New York City-based 2nd U.S. Circuit Court of Appeals vacated the order by U.S. District Judge Lewis Kaplan in the Manhattan case and put the case itself on hold, according to Bloomberg and the Wall Street Journal (sub. req.).

Yesterday’s summary order came just three days after a three-judge panel heard oral arguments in the case and expressed doubt about Kaplan’s power to countermand a foreign court’s judgment, the New York Law Journal notes.

However, the 2nd Circuit declined the plaintiffs’ request to remove Kaplan from the case.

The court said an opinion will issue “in due course,” reports the Financial Times (reg. req.).

Meanwhile, the status quo, it appears, essentially hasn’t changed, because an order by the Permanent Court of Arbitration at The Hague reportedly remains in force barring enforcement of the Ecuador judgment.

Attorney Jim Tyrrell represented the Ecuadoreans in the 2nd Circuit case. “We are very excited that the court has reached this decision,” he tells the Financial Times. “It represents a triumph of the rule of law over the sensationalism created by Chevron’s PR department.”

In a written statement provided to Bloomberg, the oil company said it “remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct.”

The damage at issue in the environmental case relates to work done by an affiliate of Texaco, which Chevron subsequently purchased.

Earlier coverage: “2nd Cir OKs Temporary Ban on Plaintiffs’ Collection Efforts re $18B Enviro Judgment Against Chevron” “2nd Circuit Is Dubious re Claim That a Federal Judge Can Strike a Foreign Country’s $18B Judgment”

We welcome your comments, but please adhere to our comment policy and the ABA Code of Conduct.

Commenting is not available in this channel entry.