Top court to hear Chevron-Ecuador feud

October 28, 2009 09:45:37 AM

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US oil giant Chevron opened a new front in its bitter dispute with Ecuador on Thursday, announcing a top global trade panel would probe part of a multi-billion-dollar claim against the firm.

Chevron, which faces fines of 27 billion dollars for allegedly polluting the Ecuadoran Amazon, said it had asked the Permanent Court of Arbitration in The Hague to investigate whether Ecuador breached international law.

The California-based firm said it had filed a claim against Ecuador "citing violations of the country's obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law.

"The complaint stems from the government of Ecuador's exploitation of the going lawsuit against Chevron in Ecuador, as well as the government's failure to uphold its duties under decade-old contracts."

The firm is accused of being responsible for damage to Amazon indigenous communities caused by oil extraction between 1964 and 1990 by Texaco, a company it bought in 2001.

In Quito, the government's top lawyer said Ecuador had received notification from The Hague panel and questioned its competence in hearing the case.

"The state in its entirety and with judicial solidity, will defend itself," said Diego Garcia.

"The environmental claims should be resolved by competent courts and between the parties, not through arbitrage in which those concerned are not even represented."

Chevron says Ecuador's courts are politically influenced and so unfit to hear the case.

Chevron recently posted videos on its website apparently showing members of President Rafael Correa's ruling Alianza Pais party promising a three-million-dollar bribe to the judge overseeing the case.

The video's emergence prompted the judge to recuse himself and drew furious protests from Ecuador's government.

The case comes against the backdrop of increasingly tense relations between Ecuador's left-leaning president and foreign oil companies in the country, who are reassessing their operations.