ISDS Tribunal says Ecuador must pay the cost of Chevron’s pollution of indigenous communities

September 13, 2018: On August 30, 2018, a 3-person ISDS panel sitting in The Hague ruled that Ecuador’s judicial system had no right to deal with a claim for damages brought by indigenous communities against the Chevron oil company for pollution of the Amazon and damage to the health of local communities by its subsidiary, Texaco, in the period 1964-92. 

In 2011, the Ecuador Supreme Court ruled in favour of the claims of pollution by the Lago Agrio communities, and eventually awarded damages of US$9.5 billion against Chevron. 

From May 2012 onwards, the Lago Agrio communities fought legal delays by Chevron as they sought to enforce and execute the Lago Agrio Judgement against Chevron and associated companies. 

In 2013, Chevron initiated an ISDS claim against the government of Ecuador under the bilateral investment treaty between the United States and Ecuador, alleging that an agreement signed with the Ecuador government in 1995 should have ensured no claims for environmental damage would arise. 

After five years, the Tribunal has decided that it had jurisdiction, that the 1995 agreement did require the government to stop the Lago Agrio claim going to court, and that the government of Ecuador must now stop any action to enforce the 2011 court judgement in favour of the aggrieved communities and must pay back Chevron any funds that had been collected. 

Chevron is claiming billions in compensation and costs, and the Tribunal will decide in 90 days on the amount Ecuador must pay. The Tribunal is operating under the rules of UNCITRAL, the United Nations Commission on International Trade Law. 

This ruling demonstrates once again that Investor-State Dispute Settlement enables giant corporations to sue governments over laws which attempt to protect people and the environment.  Chevron does not have to pay for its polluting activities and instead taxpayers must pay Chevron because a local community successfully claimed compensation.