Watching the Globe
There has been quite a legal battle brewing south of the border, in the country of Ecuador specifically. Dan Slater, who writes the Legal Blog for the Wall Street Journal, explains the situation this way: “The group (Ecuador) reportedly hopes to hold Chevron accountable for alleged environmental abuses committed by Texaco, which Chevron bought for $35 billion in 2001. Texaco spent 30 years in the region, pumping billions of gallons of oil hundreds of miles west over the Andes to Ecuador’s port cities for shipment to the U.S.”
Chevron has been extremely proactive with their feelings on the situation, this past week in a broadly distributed press release, they intoned, “By issuing these baseless indictments, it is clear the government of Ecuador is trying to intimidate Chevron into forfeiting its legal rights. This outrageous tactic won’t work. Chevron intends to continue pursuing the rights it is owed under the law and its agreements with the government of Ecuador. Recent events in Ecuador leave no doubt that there is improper collaboration between the government and plaintiffs’ lawyers. The systematic denial of Chevron’s right to a fair trial is obvious, and it is clear that the proceeding has been thoroughly corrupted. By persecuting Chevron’s counsel and collaborating with the plaintiffs to undermine Chevron’s legal rights, Ecuador’s government has intervened in the legal proceeding. The Ecuadorian state continues to call into serious question the legitimacy of its judiciary and its commitment to the rule of law.”
The opposing group, the Amazon Defense Coalition, issued a statement saying, “An independent court-appointed expert in Ecuador has found that 42 out of 46 toxic waste pits inspected in the Amazon rainforest operated exclusively by Chevron contain high levels of toxins in violation of environmental norms in both Ecuador and the U.S. The findings are a devastating blow to Chevron’s legal strategy in a class action trial in Lago Agrio, Ecuador filed in 2003 by 30,000 Amazonian residents. The court expert recently assessed damages at between $7.2 and $16.3 billion. A final decision on liability is expected in the coming months. For years, Chevron has used the prior clean-up as its primary defense in the trial. New evidence – which includes sampling results from several pits Chevron claims to have remediated — has prompted Ecuador’s national prosecutor to open a fraud investigation against two Chevron employees and former Ecuadorian officials involved in the remediation.”
This legal dispute is currently still in progress, and this post is not meant to be a commentary on the situation itself, instead its focus is on global operations. I have worked for several International companies that have offices in multiple countries around the world, and in each instance it was vital to first perform as much due diligence as possible to prevent any type of legal clashes. So if you are looking to exand globally, make sure you establish positive relationships with the government and local legal systems before you make your move.
