Before the Inter-American Commission on Human Rights

Transcription

1 Before the Inter-American Commission on Human Rights MEMORIAL AMICUS CURIAE OF CHEVRON CORPORATION IN OPPOSITION TO REQUEST FOR PRECAUTIONARY MEASURES INDICATED TO THE REPUBLIC OF ECUADOR, AND FILED BY PLAINTIFFS' LEGAL REPRESENTATIVES IN AGUINDA et al. v. CHEVRON CORP. ON FEBRUARY 9, 2012 James Crawford SC Matrix Chambers CITay'sInn,London England WCIR 5LN R. Doak Bishop KING & SPALDING 1100 Louisiana, Suite 4000 Houston, TX (713) (713) (Facsimile) Douglass Cassel University of Notre Dame School of Law 2142 Eck Hall of Law Notre Dame, IN (574) Edward G. Kehoe KING & SPALDING 1185 Avenue of the Americas New York, NY (212) (212) (Facsimile) February 22, 2012

2 I. INTRODUCTION AND OVERVIEW 1. Chevron Corporation ("Chevron"), by its undersigned counsel, I submits this Memorial Amicus Curiae, together with Appendices A and B attached hereto, in opposition to the Request for Precautionary Measures dated February 9, 2012, which was presented by the Plaintiffs' Legal Representatives in the litigation known as Aguinda et al. v. Chevron Corp. pending in the courts of Lago Agrio, Ecuador (the "Lago Agrio Litigation") and Aaron Marr Page of Forum Nobis. 2. The Request broadly and vaguely asks the Commission to grant precautionary measures sufficient to assure that the Republic of Ecuador "refrain from taking any action that would contravene, undermine, or threaten the human rights of the Afectados...," and also that Ecuador "take all appropriate measures to affirmatively protect the Afectados' rights...,,2 However, the only alleged threat to human rights stated in the Request, and the only discernible object of the requested precautionary measures, is a delay in implementation of an Ecuadorian judgment issued by the Lago Agrio courts for the monetary sum of US$ 18.2 billion (the "Judgment"). 3. The Request should be denied because it fails to allege, much less to show, any imminent threat of serious and irreparable harm to persons or to the subject matter of human rights proceedings, as required by Article 25 of the Commission's Rules of Procedure for the grant of precautionary measures. 4. In 1964, Ecuador granted oil exploration and production rights in Ecuador's Oriente region to Texaco Petroleum Company ("TexPet") (a later-acquired subsidiary of Chevron) and the Ecuadorian Gulf Oil Company through a concession contract,3 and the venture came to be known as the "Consortium." By 1976, Ecuador s state-owned oil company, Petroecuador (formerly CEPE), had acquired a 62.5% majority interest in the Consortium, with TexPet retaining a 37.5% minority interest. 4 TexPet was the operator for the Consortium until 1990, when Petro amazonas (a Petro ecuador subsidiary) took over that role. As operator, TexPet adhered to standard industry practices of the time related to environmental management, as later independent environmental audits confirmed. In 1992, the concession contract expired, the Consortium ended, and Petro ecuador became sole owner of all of the fields and installations. Petroecuador has continued to operate the wells and produce from the fields as sole owner since After its participation ended in 1992, TexPet negotiated a settlement agreement with Ecuador and Petro ecuador in 1995 whereby TexPet assumed responsibility for specified environmental remediation projects corresponding to its minority ownership interest and was 4 Counsel are duly authorized by Chevron to represent it in this proceeding. If the Commission requests, counsel will promptly forward signed powers of attorney. Request at 6. Concession Contract between the Government of Ecuador and TexPet Feb. 2 I, Agreement between the Government of Ecuador and Ecuadorian Gulf Oil Company and Texaco Petroleum Company, Aug. 6, 1973 at 52; Agreement among the Government of Ecuador, CEPE and Ecuadorian Gulf Oil Co., May 27,1977.

3 released from liability for any environmental impact falling outside the scope of the specified projects (the "1995 Settlement Agreement"). 5 TexPet spent approximately US$ 40 million over several years to fund environmental remediation, carried out by a leading international contractor, as well as community development projects. All competent agencies of the Ecuadorian government inspected the remediation work and confirmed that it was completed in accordance with the settlement agreement, and in 1998 Ecuador and Petro ecuador executed an agreement releasing TexPet, its affiliates and principals from all liability for environmental impact in the former concession area (the "1998 Final Release,,).6 Ecuador and Petroecuador retained responsibility for any remaining impact caused by the Consortium's pre-1992 activities as well as any future impact caused by Petroecuador's own ongoing operations in the former concession area. TexPet also entered into similar settlements and releases with the four main municipalities that comprised the former concession area, the Province of Sucumbios, and a Consortium of Municipalities ofnapo (the "1996 Municipal and Provincial Releases,,,7 together with the 1995 Settlement Agreement and the 1998 Final Release, the "Settlement and Release Agreements"). 6. In May 2003, a group of Ecuadorians commenced the Lago Agrio Litigation against Chevron, seeking redress for alleged environmental impact arising from the activities of the oil consortium. The Lago Agrio Plaintiffs did not assert any individual personal injury or property damage claims. Rather, they purported to act in a representative capacity and asserted public claims to remediate the former concession area as well as oil production facilities owned and controlled by Ecuador's State oil company, Petro ecuador. 7. On September 23,2009, Chevron and its affiliate TexPet initiated an international arbitration proceeding against the Republic of Ecuador, under the Bilateral Investment Treaty between Ecuador and the United States (the "Treaty"), as a result of the Lago Agrio Litigation and events arising from it. To preserve the status quo during the pendency of the arbitration, the international Arbitral Tribunal issued an Interim Measures Order dated February 9, 2011, ordering Ecuador to "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment against [Chevron] in the Lago Agrio Case." The Lago Agrio Court entered the US$ 18.2 billion judgment five days later on February 14, On January 4, 2012, the day after the appellate panel affirmed the Judgment, Chevron and TexPet made a further application to the BIT Tribunal for interim measures, seeking a directive requiring Ecuador to suspend the enforceability of the Lago Agrio Judgment. The Arbitral Tribunal scheduled an emergency hearing for February 11-12, 2012 and, pending that hearing, converted the Interim Measures Order into a First Interim Award on Interim Measures on January 25,2012 ("First Interim Award"). s 6 7 Contract for Implementing of Environmental Remedial Work and Release from Obligations, Liability and Claims between the Republic of Ecuador and Texaco Petroleum Company, May 4, Final Certification Between the Republic of Ecuador, Petroecuador, PetroProducci6n and TexPet, Sept. 30, Settlements of Municipalities of Lago Agrio, Shushufindi, La Joya de los Sachas, OreIIana, and the Province of Sucumbfos. 2

4 9. On February 16, 2012, the Arbitral Tribunal issued a Second Interim Award on Interim Measures ("Second Interim Award"), attached as Appendix A hereto, ordering Ecuador, "whether by its judicial, legislative or executive branches," to: "take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador of the judgments" in the Lago Agrio Litigation, "preclude any certification by the Respondent [Ecuador] that would cause such judgments to be enforceable" against Chevron, and keep the Tribunal informed of the measures taken to implement the Second Interim Award The Tribunal also determined that Chevron (and its subsidiary, TexPet) will be "legally responsible, jointly and severally" to Ecuador, in the event that any losses or damages result from Ecuador's compliance with the Second Interim Award. For that contingency, the Tribunal ordered Chevron and TexPet to deposit the amount of US$ 50 million with the Permanent Court of Arbitration on or before March 19, Chevron released the funds by wire transfer for deposit into the Permanent Court of Arbitration today. 11. A more detailed factual background concerning the Lago Agrio Litigation and the Treaty arbitration is set forth in Appendix B attached hereto. 12. The Request by the Lago Agrio Plaintiffs' counsel contends that the prospect of suspending enforcement of the Lago Agrio Judgment poses a "serious and urgent" threat to the human rights of the Afectados to life, physical integrity, health and the environment, as well as to their rights to fair trial, judicial protection, remedies, equal treatment under the law, and their right to access information However, the Request fails to specify how suspending enforcement of the Lago Agrio Judgment poses a serious and imminent threat of irreparable harm to any of these rights. I I That omission is understandable, because there is no such threat for the following reasons: (1) The Lago Agrio Judgment is only for monetary compensation, not injunctive relief. (2) The delayed enforcement of the Judgment equally could have been the result of the operation of Ecuadorian law, had Chevron posted a bond pending a cassation appeal. A delay in enforcing the Lago Agrio monetary Judgment cannot amount to irreparable harm to the 8 9 Appendix A, Second Interim Award at 3. Id. at Request at I, 5. II Article 25 of the Commission's Rules of Procedure. 3

5 Plaintiffs simply because it would be effectuated at the Arbitral Tribunal's directive, rather than by operation of Ecuadorian law. (3) Substantial environmental remediation has taken place already and continues to take place today, and delayed enforcement of the money Judgment against Chevron does not pose a serious and imminent threat of irreparable harm to Ecuador's environment. (4) Any claim that potential delays in additional remediation would amount to imminent and irreparable harm is inconsistent with past positions taken by the Plaintiffs' lawyers (including signatories of the Request), who repeatedly attempted to halt ongoing environmental remediation work. (5) The Plaintiffs' lawyers rely upon outdated reports, which did not take into account TexPet's remediation, as support for their assertion that the Afectados are exposed daily to "Chevron's contamination." (6) The Commission has never granted precautionary measures under circumstances such as these. (7) The Lago Agrio Judgment is illegitimate, involves fundamental due process violations, and was not the product of independent and impartial judges, and as such, a delay in enforcing it cannot constitute a serious and imminent threat of irreparable harm. 14. For these reasons, the Commission should deny the Plaintiffs' Request for Precautionary Measures. II. THERE IS NO SERIOUS AND IMMINENT THREAT OF IRREPARABLE HARM TO THE PLAINTIFFS' PERSONS OR HUMAN RIGHTS 15. Several rights invoked by the Request- the rights to fair trial, judicial protection, remedies, equal protection of the laws, and access to information- are not the type of rights whose violations, by themselves, constitute irreparable harm such as to warrant protection by precautionary measures under Article 25 of this Commission's Rules of Procedure. If and when the Plaintiffs' counsel file a Petition on the merits (undersigned counsel are not aware that they have done so to date), there will be time enough for the Commission to consider these claims, assuming that they are presented in a Petition meeting the requirements of admissibility. 16. Other rights invoked by the Request- to life, physical integrity, health and the environment- are rights whose violations, by themselves, are capable of causing irreparable harm. However, there are at least seven reasons why these rights do not face a serious and imminent threat of irreparable harm should Ecuador suspend enforcement of the Lago Agrio Judgment to preserve the status quo as the international arbitration case proceeds. 17. First, the Lago Agrio Judgment is only for monetary compensation, not for injunctive relief. Monetary injuries are rarely (if ever) irreparable by the Commission's stringent 4

6 standards under Article 25, which in practice nearly always requires an imminent threat to life, limb, or liberty.12 Moreover, under Ecuadorian law, the Lago Agrio Judgment accrues interest. 13 In the unlikely event that the Judgment were to survive ultimate scrutiny, the monetary costs of any delay in paying it would be remedied by a higher eventual recovery. 18. Second, if Chevron had posted a bond with the Ecuadorian court pending cassation appeal, enforcement of the Judgment would have been suspended. 14 In a decision of February 17,2012, the first instance appellate court refused to suspend enforcement of the Lago Agrio Judgment because Chevron had not posted a cassation appeal bond. The court stated: "In fact, as a matter of law, the sole legal effect of such bond is the suspension of the enforcement of the judgment appealed, so it becomes evident that in the event the appellant decided not to exercise this right, the only foreseeable consequence shall be that the possibility to enforce the judgment is not suspended.,,15 Suspending enforcement of the money Judgment at the Arbitral Tribunal's directive-rather than by posting a monetary bond with the Ecuadorian court--cannot create a serious and imminent threat of irreparable harm under the Commission's Article Third, delayed enforcement of the Judgment does not pose a serious and imminent threat of irreparable harm to the Plaintiffs' rights, because substantial environmental remediation has taken place already and continues to take place today, without regard to the Judgment. TexPet spent approximately US$ 40 million over several years to fund extensive environmental remediation, carried out by a leading international contractor, of TexPet's agreed, approximately one-third share of the pits opened during its pre-1992 participation in the consortium with Ecuador's State oil company, Petroecuador. 16 All competent agencies of the Ecuadorian government inspected the remediation work and confirmed that it was completed in accordance with agreed terms. I? 20. Moreover, in 2002, Petroecuador created the Project for the Elimination of Pits in the Amazon District (PEPDA). As Ecuador's National Director of Environmental Protection Management (DINAPA), Manuel Munoz, testified to Ecuador's Congress in 2006, 'Texaco in its own way, worked on the remediation of the respective pits; this was 33% of the total. However, for over 30 years Petroecuador has not done anything regarding the ones that were the stateowned company s responsibility to remediate.,, 18 That year, after much criticism in the press for delay in implementing the PEPDA program, Petroecuador publicly acknowledged its responsibility and plans for remediating the remaining pits in the former concession by running a 12 See, e.g., Omoa v. Honduras, PM 17/10 (2011) (concerning an imminent risk of a gas explosion at a storage facility located on a geological fault line). 13 Article 1575 of the Ecuadorian Civil Code. 14 Ecuadorian Law on Cassation and Appeal, Official Gazette (Supplement) No. 299, Mar , Art. II. IS Maria Aguinda et al v. Chevron Corp. Provincial Court of Justice of Sucumbios, Order, Feb. 17, 2012, at 3 :39 pm. 16 See Appendix B at ld 18 Appearance of Manuel Mufloz, Director of the National Environmental Protection Management - Ministry of Energy, before the Extraordinary Session of the Congress' Permanent Specialized Commission on Health, Environment and Ecological Protection, May 10,

7 full page advertisement in EI Comercio, an Ecuadorian newspaper: "Through a 1995 agreement between the Ecuadorian State and Texaco, the company started an Environmental Remediation Plan in order to correct the effects of its operations by remediating 165 pits. The State-owned PETROECUADOR, through its subsidiary Petroproduccion, continues with the cleanup of the remaining 264 pits which were not treated by Texaco.,, On June 21, 2009, Ecuador's Ministry of the Environment announced a comprehensive remediation plan to replace PEPDA. The new program is focused on all areas in Ecuador impacted by petroleum production, including former Consortium sites, and will be conducted from 2009 to 2013 at an expected total cost ofus$ million?o On November 7, 2009, President Correa stated that Petro ecuador will remediate environmental impacts at all remaining sites in the Oriente over the next seven to ten years. 21 As recently as December 2011, Petroecuador announced its plans to spend US$ 70 million "to clean up the environmental pollution from all the petroleum areas currently operated by Petroecuador.,,22 Petroecuador's general manager, Marco Calvopina, admitted that "[t]he pollution is in areas assigned to us and we've got the obligation to clean them up," and that "[w]e're going to record all the cleaning up that we do because we obviously know that there's a court case going on.,,23 Even the Lago Agrio Judgment admits that, while it retroactively imposes much higher remediation standards on Chevron, Petroecuador's ongoing environmental remediation meets the standards of Ecuadorian law To date, of the 264 pits which Petro ecuador admitted as its responsibility to remediate, at least twenty-one pits have certification from Ecuador's Environmental Agency, DINAP A, approving pit remediation,2s and at least another thirty-six pits have been remediated and are awaiting DINAPA certification. 26 More than 145 pits are in various stages of remediation, for a total of 202 pits that either have been reported as fully remediated or are in the process ofremediation. 27 When coupled with the 162 pits remediated by TexPet pursuant to the 19 Petroecuador, Petroecuador Special Supplement: Petroecuador will eliminate 264 contaminated pits in the Amazonia, EL COMERCI0, Oct. 5, State Assumes Environmental Remediation, EL UNIVERSO, June 21, Presidential Weekly Radio Address at Joya de los Sachas, Nov. 7, Mercedes Alvaro and Isabel Ordonez, Petroecuador: To Spend $70 Million Cleaning Amazon Jungle Oil Pollution, Dow Jones Newswire, Dec. 16, 20 II. 23 Victor G6mez, Ecuador limpiara zonas en caso contaminaci6n Chevron, REUTERS, Dec. 14, Lago Agrio Judgment at 91. 2S PEPDA 2007 Annual Report, attached as Annex A to Chevron's motion dated Sept. IS, 2008 at 2:14 p.m., Record at , ; PEPDA 2008 Annual Report, at 16; Supplemental Report of Expert Barros, filed Apr. 29,2010 at 5:00 p.m., Lago Agrio Case Record at v (hereinafter "Record'). 26 PEPDA 2007 Annual Report, attached as Annex A to Chevron's motion dated Sept. 15,2008 at 2:14 p.m., Recordat , , ; PEPDA 2008 Annual Report at 18' Environmental Audit of Petroproducci6n's Oil Field Operations 2003, attached as Annex G.3 to Chevron's motion filed Jan. 29, 2010 at 3:30 p.m., Record at at , and Some of the pits on PEPDA's original list of pits to be remediated by 2010 (PEPDA 2007 Annual Report, attached as Annex A to Chevron's motion dated Sept. 15, 2008 at 2: 14 p.m., Record at ,

8 Settlement and Release Agreements,28 there are at least 364 pits where remediation has been completed or is underway. PEPDA's actual unit cost of remediation was approximately US $85,000 per pit in 2007 dollars. 29 These numbers are consistent with international standards for environmental remediation. 3o 23. Fourth, any claim that potential delays in additional remediation would amount to imminent and irreparable harm is inconsistent with past positions taken by the Plaintiffs' lawyers, who repeatedly attempted to halt PEPDA's remediation efforts. As documented by an between the Plaintiffs' lawyers, later obtained by Chevron under court order, even they were privately troubled by their inconsistency: "we claim that we are just looking for an environmental restoration and we are opposing to it.,,31 In June 2007, the Plaintiffs' U.S. lawyer Steven Donziger met with Petroecuador to "confront" them regarding the remediation, explaining that he was only able to get the meeting because "there's a new government and they're forcing the meeting on Petroecuador.,,32 Donziger's stated goal at that meeting was "to get some sort of control over what they [PEPDA are] doing... maybe even stop them -- from doing their cleanup operation[. ],,33 The Plaintiffs thereafter renewed their request to halt the PEPDA remediation, evidencing their continuing efforts to terminate the very remediation they initially sought. 34 In a June 21, with the subject line "WORRISOME," the Plaintiffs' lawyer Fajardo (one of the signatories of the Request) warned his colleagues about Ecuador's comprehensive remediation plan to replace PEPDA. Fearful that Chevron would "say that the State finally assumed its duty and is going to clean up what it ought to," Fajardo called on his ) have been used by the Plaintiffs for public relations purposes. For example, dignitaries and international media have visited sites such as Aguarico 4 (AG-4), Shushufindi 38 (SSF-38), and Shushufindi 61 (SSF-61). Remediation was begun by Petroecuador at these sites by the end of 2007, but remediation efforts have been suspended at SSF-61 and AG-4. Expert Cabrera's request to halt Petroecuador remediation, filed on July 12, 2007 at 10: 15 a.m., Record at ; Order of Oct. 3, 2007 at II :00 a.m., Record at , I 32849v. Remediation at SSF-38 was delayed until late PEPDA 2008 Annual Report; Report on the Progress ofpepda's pit remediation: 2010, investigation conducted by Chevron's field team, Oriente Region Ecuador, attached as Annex E to Chevron's motion filed on May 21, 2010 at 4: I 0 p.m., Record at , Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final Report, Volume I, dated May 2000, at 3-2, attached as Annex 44 to Chevron's Motion filed Sept. 16,2010 at 4:35 p.m., Record at , Robert Hinchee, Rebuttal of the Method Used by Mr. Cabrera to Determine the Supposed Necessity and Cost of Remediation, Aug. 9, 2008, at 21 (noting that PEPDA s costs are among the "best and most credible" source of pit remediation in the Oriente), Table 4: Oilfield pit remediation costs in Ecuador at 12 and n Robert Hinchee, Rebuttal of the Method Used by Mr. Cabrera to Determine the Supposed Necessity and Cost of Remediation, Aug. 9, 2008, Table 5: Summary of unit costs for pit and crude-impacted soil remediation from various locations around the world, at from Manuel Pallares to Steven Donziger, June 8, 2007 [DONZ I) at Crude Outtakes, June 7, 2007, at CRS CLIP Crude Outtakes, June 7, 2007, at CRS CLIP Letter to the Lago Agrio Court, June 4, 2008, No ; Crude Outtakes, Mar. 3, 2007, at CRSI93-00-CLiP 01. 7

9 colleagues to act. 35 Donzifer responded in an "You have to go to Correa to put an end to this... once and for all.,,3 24. Fifth, in support of their assertion that the Afectados "suffer the effects of Chevron's contamination on their lives and health every single day,,,37 the Plaintiffs cite outdated Commission reports that did not take into account TexPet's extensive US$ 40 million remediation of its agreed, approximately one-third share of the pits opened during its pre-1992 participation in the consortium with Ecuador's State oil company, Petroecuador. 38 Both the Commission's 1994 press release and 1997 country report (covering the period prior to September 1996) on which the Plaintiffs rely39 were issued two to four years after TexPet ceased oil operations in Ecuador, and two to four years before TexPet completed the environmental remediation agreed upon with Ecuador and Petroecuador. Any environmental impacts that the Commission observed in 1996-even assuming that it came from pre-1992, joint Petro ecuador TexPet operations, rather than from Petroecuador's post-1992 operations-was observed before TexPet completed its remediation. This is not evidence even of TexPet's responsibility for environmental impacts, let alone of an alleged serious and imminent threat of irreparable harm fifteen years later. 25. Sixth, this is not a case like any in which the Commission previously has granted precautionary measures to protect communities from imminent development projects. This case does not involve ongoing police violence related to the project, as in Rapa Nui Indigenous People v. Chile, PM 321/10 (2011). TexPet's oil operations in Ecuador ended twenty years ago. Nor does this case involve a threat to the very survival of an indigenous community because of a planned project, as in Xingu River Basin v. Brazil, PM 382/10 (2011), or because of an ongoing project, as in Maho Indigenous Community v. Suriname, PM 395/09 (2010). There is no claim in the instant Request that a current project threatens future environmental impacts, as in Sikapense and Mam v. Guatemala, PM 260/07 (2010), or that continuing transport of lead threatens lead poisoning, as in Puerto Nuevo v. Peru, PM 199/09 (2010). Unlike all of those cases, the allegedly imminent threat of which the Plaintiffs complain here relates not to the actual project (oil operations that ended twenty years ago), but only from a delay in the execution of a related judgment for monetary compensation. 26. Finally, the lack of legitimacy of the Lago Agrio Judgment vitiates the Plaintiffs' contention that delay in executing the Lago Agrio Judgment will deprive the Afectados of judicial protection and judicial remedies to which they are entitled as a matter of human rights. No one is entitled to the financial benefits of executing upon a sham judgment. 35 from Pablo Fajardo to Juan Pablo Saenz Steven Donziger and others, June 21, 2009 [DONZ ]. 36 from Steven Donziger to Juan Pablo Saenz, Pablo Fajardo, and others, June 22, 2009 [DONZ ] at I. The full sentence was as follows: "You have to go to Correa to put an end to this shit once and for all." 37 Request at I. ] 8 See Appendix B at g Request at I, notes 6 and 7, citing Report on the Situation of Human Rights in Ecuador (1997), Chapter I, Background, p. I. 8

10 27. The underlying bases for the Judgment's monetary compensation expose the Judgment as an unreliable and improper basis for precautionary measures. Nearly half of the US$ 18.2 billion Lago Agrio Judgment-some US$ 8.6 billion-is a "punitive" penalty, ordered because Chevron declined to issue a "public apology" and accept liability within 15 days following the Judgment. 4o Even if an apology could conceivably be worth almost US$ 9 billion, there can be no imminent and irreparable harm from a delay in paying such a penalty. 28. Most of the remaining awarded damages-us$ 5.4 billion for soil, US$ 600 million for groundwater, US$ 200 million for flora and fauna, or a subtotal of US$ 6.2 billionis for environmental remediation. Yet, as noted above, in 1998 TexPet already completed, and Ecuador certified, extensive remediation for its agreed share of the oil pits, costing about US$ 40 million,41 and Ecuador is currently in the midst of a further US$ million remediation program, begun in 2009 and reportedly scheduled to last until Even if one were to credit the towering sums awarded by the trial court, and were to assume further that all remediation costs are attributable to TexPet and none to Petroecuador's continuing operations over the last 20 years (which reportedly led to 1,400 oil spills during 2000 to 2008 alone),43 extensive remediation has already been done and further extensive remediation is currently underway. Any harm from delay in yet further remediation is neither imminent nor irreparable. Even in the unwarranted hypothetical case that the Lago Agrio Judgment were to be implemented soon, a lengthy planning process would be required before further remediation could begin. By contrast, if implementation of the Judgment is delayed pending careful review, as the Arbitral Tribunal has ordered, the ongoing remediation already underway will continue. In the event that a fair review were ultimately to conclude that additional remediation is warranted, and that Chevron rather than Petroecuador should pay for it, any harm caused by the time taken for such a review would be reparable. Chevron has sufficient funds to cover reasonable remediation costs-as opposed to the outlandish sums ordered by the Lago Agrio Court-and the Judgment, as noted, will in any event accrue interest. 30. A further portion of the Lago Agrio Judgment is for health improvement and monitoring (US$ 1.4 billion) and for reparation for cancer cases (US$ 800 million).44 Yet in a revealing contrast to the detailed itemization of compensatory damages set forth in judgments of the Inter-American Court of Human Rights, the following is the Lago Agrio Court's justification of the US$ 1.4 billion health figure: "This health system, to cover the health needs created by the public health problem occasioned by the acts of the defendant, will need at least ONE BILLION FOUR HUNDRED MILLION DOLLARS (USD$I,400,000,000.00) to function in a permanent and sufficient manner.,,45 While the State has a duty to attend to the health needs of 40 Lago Agrio Judgment at See supra para. 5 and Appendix B at See supra para. 21 and Appendix B at Petroecuador Diagnoses Environmental Damage Caused by Crude Oil, EI Universo, Feb. 28, 2009; see also Spending on Environmental Remediation Fell in 2008, EI Telegrafo, Feb. 9, Lago Agrio Judgment at S [d. at

11 its citizens, no reasonable or rational calculation shows that a health program in a relatively unpopulated area of the Amazon would cost US$ 1.4 billion. Far from irreparable harm in delaying such a payment by Chevron, a reasonable delay in execution of the Judgment promises to avoid a massive diversion of funds. 31. With regard to the additional US$ 800 million fund for individual cancer cases, the Lago Agrio Judgment admits that its judicial record contains no "individualization" of any victims and that "the reparation of particular cases of cancer has not been demanded, nor are such cases identified, thus they are not remediable.,,46 Nonetheless the Lago Agrio Court awarded damages of US$ 800 million for cancer care, with no budgetary justification whatsoever for the imagined costs, and without the slightest effort to allocate any responsibility to Petroecuador based on its operations over the last two decades Another striking component of the Judgment is a ten percent "bounty" for the Amazon Defense Fund. 48 Piled on top of items like the foregoing, it comes to the incredible sum of US$ 865 million. 49 A delay in paying such an extravagant bonus can hardly be characterized as serious or irreparable. 33. Not only the unsubstantiated jackpots awarded by the Lago Agrio Judgment, but also compelling collateral evidence demonstrate a lack of legitimacy in the Judgment. so This includes inappropriate collusion between the Plaintiffs' counsel and consultants, and the Lago Agrio Court. Over the seven-year course of the case, the Plaintiffs maintained improper and direct contact with the various judges who presided over the Lago Agrio Litigation. 5 I 34. For example, according to several s between the Plaintiffs' counsel, obtained by Chevron under court order, the Plaintiffs' counsel met secretly with the Lago Agrio judge at the time, Judge Yanez, at least seven times- sometimes in covert locations such as abandoned warehouses- to coordinate the appointment of a supposedly independent expert who was later appointed by Judge Yanez to assess damages. 52 The Plaintiffs handpicked the "expert," met with him secretly and secretly wrote his report for him, despite the fact that he took an oath of impartiality and independent toward the parties. The Plaintiffs' lawyers even developed a system of code words in an ultimately unsuccessful effort to conceal their improper activities, sending such messages as the following: 46 Id. at Id. 48 Id. at The calculation is as follows: US$ 6.2 billion for remediation US$ 1.4 billion for health and US$ 800 million for cancer, plus US$ 150 million for water systems (Lago Agrio Judgment at 183) and US$ 100 million for community construction and ethnic reaffirmation programs (Id. at ) yields a subtotal of US$ 8.65 billion. The further ten percent share of that subtotal comes to US$ 865 million for the Amazon Defense Front. so See generally Appendix Bat SI See Appendix B at 6-8. S2 See Appendix B at

12 "Today the cook [the Judge] met with the waiter [the supposedly independent expert] to coordinate the menu [the plan for the allegedly neutral expert's report]" at "the restaurant [the COurt].,, In addition, outtakes of a documentary film, commissioned by the Plaintiffs' counsel but also obtained by Chevron under court order, reveal that the Plaintiffs' counsel worked secretly with the supposedly independent expert, helpfully drafting his report and supplying him with "data.,,54 Only when the risk of exposure became clear did one of the Plaintiffs' counsel, in an obtained by Chevron under court order, express misgivings: "I wonder whether we do better by explaining that we authored the ['independent' expert's] reportrather than letting Chevron tell that story...,, There is substantial evidence that not only did the Plaintiffs' counsel secretly write the independent expert report, but also significant portions of Judge Zambrano's Lago Agrio Judgment itself. 56 For example, much of the Judgment tracks the Plaintiffs' own internal, unfiled work product word-for-word, citing figures from the Plaintiffs' internal database that did not form part of the record, and copying errors and idiosyncratic reference citations. 57 Moreover, the Judgment directly relies on the allegedly independent expert report, secretly written by the Plaintiffs, by awarding eight categories of damages for which that expert's report is the sole expert opinion These are the sorts of grave improprieties and irregularities in the Lago Agrio Litigation and the resulting Judgment that exude, inter alia, both lack of "fair and equitable treatment" and "arbitrary or discriminatory conduct regarding investment," that the Arbitral 53 from Pablo Fajardo to Steven Donziger, Mar. 26,2007; In reapplication o/chevron Corp., No. lo-mc , U.S. District Court for the Southern District of New York, Deposition of Steven Donziger, Jan. 29, 2011, at 3819:6-3829: See Appendix B at 6-S. 55 from S. Donziger to Jonathan S. Abady, and others, June 15, 20 I O. 56 See Appendix B at Forensic linguistic analysis revealed "multiple instances of verbatim copying of word strings" from an internal draft memorandum co-authored by Aaron Marr Page, a signatory of the instant Request to the Commission. See Appendix B at 9, note 56. A U.S. court found that the Judgment includes "a virtualline-by-line entry on many occasions" of text from the Plaintiffs' unfiled memorandum. Chevron Corp. v. Page, RWT-II-1942 Dkt. 33 at 73 (D. Md. Sept. 27, 2011). 58 Compare Expert Report of Richard Cabrera Vega, Apr. I, 200S, at 6 (recommending damage awards for "remediation of soil," a "healthcare system," "indigenous population impacts," a "potable water system," "excessive deaths from cancer," "ecosystem losses," and "unfair profits") and Supplemental Cabrera Report at 12-14,53 (recommending a damages award for the remediation of groundwater), with Lago Agrio Judgment at (awarding $5,396,160,000 to "recover the natural conditions of the soil;" $1.4 billion for a "health system;" $100 million for a "community reconstruction and ethnic reaffirmation program" and to redress "cultural harm;" $150 million for regional potable water systems; $800 million for "treatment for the persons who suffer from cancer;" $200 million ''to recover the native flora, fauna, and the aquatic life of the zone;" $8.646 billion in punitive damages based, in part, Texaco's "economic benefit" and 'the benefits obtained through the wrong, as would be greater profits obtained by a lower cost of oil production;' and $600 million for 'the cleanup of groundwater. "). 11

13 Tribunal will be called upon to examine under the U.S.-Bilateral Investment Treaty.59 The Tribunal is composed of eminent jurists: its President, V.V. Veeder QC, a barrister at Essex Court Chambers in London, England, selected by the Permanent Court of Arbitration in The Hague, and its members Professor Vaughan Lowe QC of Oxford University, England, and Dr. Horacio Grigera Na6n of Ar~entina and a professor at American University in Washington D.C.. They are well up to the task Although the Request labors to invent a supposed conflict between the Commission and the Arbitral Tribunal,61 nothing the Arbitral Tribunal does intrudes on human rights. Nor do anyone's human rights preclude the Arbitral Tribunal from suspending enforcement-to preserve the status quo-of a national money judgment that raises as many questions as does the Lago Agrio Judgment. 39. By ordering that enforcement of domestic judicial proceedings be suspended pending its review, the Arbitration Tribunal's Award does no more than has been done in the past, both by this Commission,62 and by the Inter-American Court of Human Rights. 63 Just as interim measures awarded by the Commission and Court endeavor to shield parties from apparently unjust domestic court orders pending full review, so, too, the Arbitral Tribunal suspends the execution of an apparently unjust judgment, pending full review. And it is not the first Arbitration Tribunal to order suspension or even termination of domestic judicial proceedings To the extent that the objection rests on the characterization of the Lago Agrio Judgment as having been entered in a private litigation to which the State is not party, that characterization exalts form over substance. As discussed above, this case was litigated pursuant to a compact between the State and the Plaintiffs. Under their agreement, the Plaintiffs agreed not to seek damages from the State--<iespite the State oil company's extensive exposure in the alleged environmental damage. In return, the State assisted the Plaintiffs, both publicly and 59 Treaty Between the United States of America and the Republic of Ecuador Concerning the Encouragement and Reciprocal Protection ofinvestment, Aug. 27, 1993, KA V 3699, entered into force, May 11, 1997, arts. 1I(3)(a) and 11(7). 60 For background on the Tribunal proceedings, see Appendix B at Request at 3-4, Int.-Am.Ct.H.Rts., Emilio Palacio et 01. vs. Ecuador, MC-406-II, Feb. 21, 2012, in which the Commission, as a precautionary measure pending further review by the Commission, asked Ecuador "que suspenda de inmediato los efectos de la sentencia delis de febrero de 2012" (to suspend immediately the effects of the judgment of February 15, 2012); Provisional Measures Requested by the Inter-American Commission in the Matter of the Republic of Costa Rica (La Nacion Case), Order of Sept. 7,2001, par. I (I), noting the Commission's request for an Order to ' suspend execution of the November 12, 1999 conviction handed down by the San Jose First Circuit Criminal Trial Court until such time as the Commission has examined the case... " 63 Int.-Am.Ct.H.Rts., Provisional Measures Requested by the Inter-American Commission in the Matter of the Republic of Costa Rica (La Nacion Case), Order of Sept. 7, 2001, par. 5 and Resolving pars. I and E.g., ATA onstruction v. Jordan, ICSID Case No. ARB/08/2, Award dated May 18, 2010, par That arbitration tribunal (one of whose members, Professor Michael Reisman, is a former Chair of the Inter American Commission), decided as follows: "To order that the ongoing Jordanian court proceedings... be immediately and unconditionally terminated, with no possibility to engage further judicial proceedings in Jordan or elsewhere on the substance of the dispute." /d. 12

14 through covert, illegitimate collusion. To pretend that the State was not in every real sense a party to the Lago Agrio Litigation is to close one's eyes to reality. m. CONCLUSION 41. For the foregoing reasons, Chevron as amicus curiae submits that the Plaintiffs' attorneys' Request for Precautionary Measures should be denied for failure to meet the Commission's standards. The Plaintiffs' attorneys have neither specified nor shown any imminent and serious threat of irreparable hann arising from the Arbitral Tribunal's Second Interim Award ordering suspension, pending further examination, of the highly dubious Lago Agrio Judgment. They have not shown any such hann because there is none. Their Request should be denied accordingly. February 22, 2012 Respectfully submitted, DOI1lV'I:U(!Iu ' KING PALDING 1100 Louisiana, Suite 4000 Houston, TX (713) (713) (Facsimile) Edward G. Kehoe KING & SPALDING 1185 Avenue of the Americas New York, NY (212) (212) (Facsimile) James Crawford SC Matrix Chambers crray'sinn,london England WeIR 5LN Douglass Cassel University of Notre Dame School of Law 2142 Eck Hall of Law Notre Dame, IN (574)