Claimants' Supplemental Memorial on the Merits

IN THE MATTER OF AN ARBITRATION UNDER THE RULES OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW ________________________________________________________________________ CHEVRON CORPORATION and TEXACO PETROLEUM COMPANY, CLAIMANTS, v. THE REPUBLIC OF ECUADOR, RESPONDENT. ________________________________________________________________________ CLAIMANTS’ SUPPLEMENTAL MEMORIAL ON THE MERITS ________________________________________________________________________ TABLE OF CONTENTS I. INTRODUCTION....................................................................................................................1 II. FACTUAL BACKGROUND .....................................................................................................3 A. The Lago Agrio Judgment is Fraudulent ............................................................3 1. The Plaintiffs Colluded With the Court to Draft the Judgment................4 2. The Judgment’s Legal Analysis Evidences Bias and Bad Faith ............12 a. Petroecuador’s Operations, Liability, and Remediation..........12 b. The Court’s Lack of Jurisdiction ...............................................18 c. The Res Judicata Effect of the Settlement and Release Agreements ...................................................................................20 3. The Judgment’s Determination of Damages Is Arbitrary, Biased, and Based on the Fraudulent Cabrera Reports.......................................24 a. Extra Petita Damages (Nearly US$ 1 Billion) ............................25 b. Soil Remediation (US$ 5.4 Billion) .............................................30 c. Groundwater Contamination (US$ 600 Million) ......................34 d. Ecosystem (US$ 200 Million) ......................................................36 e. Healthcare System (US$ 1.4 Billion) ..........................................37 4. The Judgment Constitutes and Contains an Unenforceable Penalty.....39 B. A Trust For the Benefit of the Amazon Defense Front and Supervised by the Lago Agrio Court Will Administer the Judgment Funds..........................40 C. The Lago Agrio Judgment Is Based on Gross Due-Process Violations and Fraudulent Proceedings ...............................................................................42 1. The Court Ignored Fraud in the Initiation of the Lawsuit .....................43 a. Plaintiffs’ Counsel Agreed Not to Sue Ecuador or Petroecuador In Exchange for the Government’s Assistance......................................................................................43 b. Plaintiffs’ Counsel Forged the Signatures of at Least 20 Nominal Plaintiffs on the Complaint..........................................47 2. The Court Accepted Key Evidence from the Plaintiffs That Was Falsified.....................................................................................................48 3. The Government and the Court Itself Participated in the Plaintiffs’ Fraud ........................................................................................................58 a. Improper Collusion Between the Judges and the Plaintiffs.....59 b. Public Pressure and Anti-Chevron Sentiment ..........................67 i c. Political Pressure on the Court by the Plaintiffs and Government Officials...................................................................69 D. The Lago Agrio Appellate Process Violates Ecuadorian Law, General Standards of Due Process, and Ecuador’s Obligations Under International Law ................................................................................................72 1. Ecuador Manipulated the Appointment of the Appellate Panel in a Highly Irregular and Non-Transparent Process ..................................72 2. The Appellate Panel Upheld the Fraudulent Judgment Without Considering the Evidence .........................................................................77 3. The Appellate Court Has Continued to Deny Chevron Due Process .....81 E. Ecuador Is Unable To Provide Chevron an Impartial Tribunal.....................86 1. The Executive Branch’s Recent Threats Against Judges .......................86 2. President Correa’s May 2011 Referendum..............................................90 3. Corruption and Government Influence in the El Universo Case...........92 4. Declaration of a Judicial State of Emergency .........................................94 5. Ecuadorian Public Opinion......................................................................96 III. THE CONDUCT OF ECUADOR AND THE LAGO AGRIO JUDGMENT CONSTITUTE A DENIAL OF JUSTICE UNDER CUSTOMARY INTERNATIONAL LAW................................97 A. Denial of Justice Defined.....................................................................................97 B. The Conduct of Ecuador Throughout the Lago Agrio Litigation Constitutes a Denial of Justice..........................................................................100 1. Fraud and Corruption ............................................................................100 2. Fundamental Breaches of Due Process.................................................103 3. Governmental Interference.....................................................................109 4. Arbitrariness............................................................................................112 5. Discrimination, Bias, or Prejudice.........................................................115 6. Excessive Public Pressure ......................................................................118 7. Illegitimate Assertion of Jurisdiction.....................................................119 C. The Lago Agrio Judgment Itself Constitutes a Denial of Justice ..................122 D. International Law Requires This Tribunal to Hear Claimants’ Denial-of-Justice Claim .....................................................................................125 1. Claimants Are Not Required to Seek Any Further Remedies in Ecuador ...................................................................................................126 2. It Would be Futile for Chevron to Continue Seeking Relief in Ecuador ....................................................................................130 ii IV. THE LAGO AGRIO LITIGATION AND JUDGMENT CONSTITUTE VIOLATIONS OF THE TREATY ....................................................................................................................131 V. RELIEF REQUESTED ........................................................................................................131 iii I. INTRODUCTION 1. On February 14, 2011, the Lago Agrio Court issued a US$ 18.2 billion judgment against Chevron, based on the alleged environmental effects of a State-controlled Consortium in which a Chevron subsidiary held a minority interest over 20 years ago. That Judgment—the largest environmental-damage award in world history—is fraudulent and based on serious violations of due process and Ecuadorian law. It is the work of a handful of U.S. lawyers and consultants, in concert with Ecuadorian judicial and government officials, who manipulated a court system susceptible to corruption and political pressure. Ecuador’s courts and officials are thus willing accomplices of the Plaintiffs, their lawyers, and their shell organization (the Amazon Defense Front or “Frente”) in a multi-billion-dollar fraud against Claimants. 2. This Supplemental Memorial updates the facts of this dispute with events that have transpired since Claimants filed their Memorial on the Merits on September 6, 2010, and adds a claim for denial of justice under customary international law to the claims asserted in the Memorial on the Merits. Ecuador’s violations of the Treaty and international law are evidenced most clearly by the Republic’s conduct in the Lago Agrio Litigation and resulting Judgment, the appellate process leading to the first-level decision on appeal, and the overall deterioration of the judiciary, which has deprived Chevron of the ability to obtain a fair trial in Ecuador. New evidence confirms that: The Plaintiffs’ representatives ghostwrote portions of the Judgment issued by the Lago Agrio Court;1 Despite its statements to the contrary, the Judgment relies on the Plaintiffs’ fraudulent evidence, including the discredited Cabrera Reports;2 The Government and the Frente, not the named Plaintiffs, will exercise control over Judgment proceeds through a trust scheme jointly orchestrated by the Court and the Plaintiffs;3 Years before the Plaintiffs filed the Lago Agrio Litigation, their counsel signed a quid pro quo agreement with the Government, agreeing not to bring any claims 1 See infra § II.A.1. 2 See infra § II.A.2, 4. 3 See infra § II.B. 1 against Ecuador and Petroecuador in exchange for the Government’s assistance, and offering the Government assurances that it would receive or administer the Judgment’s proceeds;4 Ecuador’s courts violated their own constitution, laws, and due-process obligations throughout the first-instance appellate process;5 After the US$ 18.2 billion Judgment was confirmed on appeal, two judges who presided over the Lago Agrio Litigation (including Judge Zambrano, who allowed the Plaintiffs to ghostwrite the Judgment in his name) were removed from their posts for misconduct that took place during Judge Zambrano’s tenure as a Lago Agrio judge;6 President Correa directly pressured the Lago Agrio Court. The President “asked the attorney general to do everything necessary to win the trial” and had “asked his team to urgently work on

Load more