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Ontario Court Sides With Chevron in Ecuadorean Environmental Case

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Ontario Court Sides With Chevron in Ecuadorean Environmental Case

An Ontario court rejected an attempt by Ecuadorean plaintiffs to collect a multibillion-dollar environmental award from Chevron Corp. in Canada, giving the oil company a fresh victory in a legal battle that has sprawled far beyond the Amazonian jungles where it began.

The Ecuadoreans sued Chevron for contamination in the South American country, and in 2011 a court in Ecuador awarded them a verdict that has risen to $19 billion after appeals. Chevron has refused to pay, arguing it isn't responsible for the contamination and attacking the ruling as illegitimate. Since Chevron doesn't have assets in Ecuador, plaintiffs have sought to collect the judgment against Chevron subsidiaries in Canada, Brazil and Argentina.

On Wednesday, Judge D.M. Brown of the Superior Court of Justice of Ontario dealt a blow to the Ecuadoreans, ruling that that Chevron's subsidiaries are legally separate from the company and not subject to the Ecuador court's verdict.

The San Ramon, Calif.-based parent company has no assets in the court's jurisdiction, the judge wrote. "The evidence disclosed that there is nothing in Ontario to fight over," the court order stated.

The plaintiffs said Wednesday they would appeal. "It cannot be right that a multinational company that operates entirely through subsidiaries is immune from the enforcement of a judgment in Canada," Alan Lenczner, a lawyer representing the Ecuadoreans in Canada, said in a statement.

Chevron called the ruling "a significant setback to the Ecuadorean plaintiffs' worldwide enforcement strategy," noting that its legal actions target Chevron subsidiaries.

The ruling is the latest obstacle plaintiffs face in collecting the award, among the largest in environmental verdicts ever. But their arguments have had some preliminary success in Argentina, where in October an Argentine judge froze some of the assets of Chevron's subsidiaries in the country. Chevron has appealed the ruling.

As Chevron combats plaintiffs' efforts to collect the judgment in countries where it operates, it has also gone after the plaintiffs and their lawyers, accusing them of fraud and racketeering in New York federal court. The plaintiffs deny Chevron's claims.

Recently, Chevron's aggressive legal strategy has induced some of its former legal adversaries to side with the company. Last month, the company introduced evidence in the New York case from a firm that had helped bankroll the plaintiffs' legal fight, and another firm that conducted research for the plaintiffs, who now criticize the actions of the lawyers for the Ecuadoreans.

Representatives of plaintiffs say the defections have no bearing on the Ecuador verdict.

The Ecuadoreans first brought the lawsuit in 1993 against Texaco Inc. Chevron, which has never operated in Ecuador, inherited the case when it acquired Texaco in 2001.

Copyright (c) 2012 Dow Jones & Company, Inc.

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