Ecuador’s Legal Battle With Chevron Foreshadows Global Corporate Coup D’état

In the past 50 years, the lives of Indigenous people in the Ecuadorian Amazon have been completely transformed. Since the arrival of Texaco in 1964, extensive environmental damage wrought by the extraction of oil and dumping of toxic waste has devastated the land, water and natural resources on which the Indigenous tribes of these regions have depended for more than 8,000 years.

Today, two of these tribes have ceased to exist due to the deaths of all their members, and others are at risk of being wiped out soon. In the remaining tribes, community members have suffered extensive and irreversible health problems: toxic exposure has generated a health crisis involving cancer, birth defects, miscarriages and leukemia.

Texaco’s operations included drilling and systematically dumping crude in the Amazon. During its operations between 1964 and 1990, it left 880 pits of solid waste, poured 60 billion gallons of toxic water into local water sources and spilled 650,000 barrels of crude oil in the jungles and pathways. Perhaps the most striking feature in the case of Texaco is that the damage caused was not accidental but deliberate, a result of cutting costs on safety regulations and environmental technologies in order to maximize profits.

This case also reflects the racism inherent in the history of colonialism and capitalism. Texaco shunned Indigenous communities, and their livelihoods and ecological resources were treated as the terra nullius of the colonial era: land seen as belonging to nobody and going to waste. Such beliefs, in turn, have provided the justification for corporations like Texaco to appropriate these resources and convert them into commercial goods. It was only in 1997 that the Ecuadorian government recognized that there were in fact Indigenous tribes living in the Amazon.

In the face of the devastation of their lands and ecological resources, local communities did not quietly give up and abandon their ways of life. In 1994, peasant and Indigenous communities joined together to form the Amazon Defense Coalition, now called the Union of People Affected by the Oil Operations of Texaco (UDAPT), in order to protect their environment from devastation. They insist that their campaign is not only about material compensation, but a quest for justice and defense of an entire way of life in harmony with natural resources. Pablo Fajardo, the main lawyer of UDAPT, emphasized, “We have to understand the damage is not only material. It is holistic, environmental, social, cultural, economic and religious. It is damage to people and their ecosystems.”

In 1993, peasant and Indigenous communities began a class-action suit against Texaco. Since then, the corporation has used a host of strategies to evade these communities’ search for justice, ranging from claiming that oil does not have a harmful impact on people’s health, to lobbying, court cases and attacks on the legal team, as well as the Ecuadorian legal system. One representative told a reporter that Chevron would “fight until hell freezes over […] and then we’ll fight it out on the ice.”

“The company only sees the economic dimension of this. They only came to make money,” explained Humberto Piaguaje of the Siekopai Indigenous tribe and coordinator of UDAPT. “[In contrast,] justice for us is to live in harmony with nature, people and our surrounding environment.”

One strategy Texaco adopted to resist the campaign for justice was to take advantage of Ecuador’s subordinated position in the world system. In the mid-1990s, Ecuador was in the throes of its worst economic crisis in history, characterized by economic contraction, soaring levels of inflation, poverty and political instability, with seven presidents in the course of 12 years. Texaco took advantage of the scenario to attempt to evade prosecution, signing a remediation process with the Ecuadorian foreign minister who was desperate to attract foreign direct investment. The so-called act of liberation declared that no one could sue the company for environmental or social damage. In 2001, Texaco was absorbed by Chevron, which also took on all of its assets.

In 2011, following an extensive environmental investigation and 22-year legal process, Ecuadorian courts found Chevron guilty of environmental and social damage in the Amazon. The judge ordered the company to pay $9.5 billion in damages and issue a public apology; if the company failed to do so, the judge said, the company should pay the full $19 billion.

Chevron’s response was to launch a campaign accusing the Ecuadorian government of lying, meddling and corruption in the proceedings. It refused to pay the damages, pulled all its assets from Ecuador and stashed them in other countries, such as Canada, Brazil and Argentina. It is for this reason that the UDAPT has continued its quest for justice in Canada, visiting Toronto in September 2016 in order to seek enforcement of the judgment. Despite the continued attempts of Chevron to evade responsibility, including an appeal to the Supreme Court, which was overruled, now, in a historic legal case, Chevron will be tried in a Toronto court for the environmental, social and cultural damage caused in the Ecuadorian Amazon.

Chevron has tirelessly fought to resist justice by wielding its power in the global institutional architecture. In 2006, it embarked on its most dramatic procedure to date, bringing Ecuador to the permanent court of arbitration at The Hague, a court set up to settle investment disputes by the World Bank under the authority of a bilateral investment treaty signed in 1997 between Ecuador and the US. Despite the fact that the treaty did not even exist when the arbitration began, the process is nonetheless being applied retroactively, with Chevron claiming they did not act within the confines of the treaty.

The World Bank’s private tribunal granted itself the power to override the decisions of the courts in Ecuador — supposedly a sovereign nation — and ruled in favor of Chevron. It ordered Ecuador to stop all efforts in the country to collect the $9.5 billion judgment, and to prevent all efforts to pursue Chevron in other countries where its assets are stashed. The court also ordered the Ecuadorian state to pay a $112 million fine to Chevron.

In contrast, for the Indigenous communities there is no international court with the authority to sue Chevron for crimes against the environment and human rights. Despite recent progress in the International Criminal Court (ICC) showing willingness to apply its laws to crimes involving environmental destruction, we are still a far cry from a comprehensive international framework that would make corporations like Chevron liable for the consequences of their environmentally-based atrocities.

The Coming Global Corporate Coup D’État

The proceedings of this case are emblematic of the injustices of a system organized to protect the profits of big capital and increase its leverage over the rights of people and the environment as well as nation-states. In 2008, under Ecuadorian President Rafael Correa, a new constitution was drafted through popular consultation with Ecuadorian citizens in the constitutional assembly, which also recognized the rights of nature. However, cases like that of Chevron reveal how the world institutional architecture has limited the possibilities for the Ecuadorian government to implement initiatives like these serving the needs of its people and the environment. It is part of the drive by corporations to take away the ability of a government to defend the public and to build social and political organizations that promote the common good.

The case is also representative of the new direction of the global institutional infrastructure that has increasingly taken hold in the past two decades. There are currently 4,000 bilateral investment treaties in operation, and in the past decade, there has been an incremental growth in multimillion-dollar lawsuits against states on the basis of such treaties. Between 2000 and 2012, there were a total of 480 claims made by investors against states, in comparison to just 38 in the previous 12 years. Of these, it is Latin America that concentrates the highest number of lawsuits, primarily as a result of decisions by these governments to renationalize public services and natural resources, impose environmental regulations or uphold human rights claims, such as the guarantee of access to water, health or public services. These treaties offer unprecedented levels of protection for private investment, and privilege the rights of investors over decisions of governments and the rights of citizens and the environment in their home country. Ecuadorian President Correa has denounced these treaties, arguing that they have handed over sovereignty over national decision-making to transnational corporations and that space for making public policy has been curtailed.

It is not just countries in the Global South that are at stake in this system. New agreements like the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TiSA) would further push the boundaries of this international architecture. The aim is to force through agreements to set in place rules that will ensure the rights of corporations over people, the environment and national governments. They allow corporations to override governments by imposing enforceable sanctions through secret tribunals, thereby further reinforcing the power inequalities between people and big capital. Like the case of Chevron in Ecuador, these tribunals can declare unlawful human rights and environmental protections or any other law that impedes projected profit, subjecting them to fines for noncompliance. It defies domestic governments in establishing a system of governance in favor of big capital, where corporate profit trumps the common good.

This global institutional infrastructure represents the attempts of corporations to turn the world’s natural resources into commodities to be appropriated and destroyed at will, devastating human civilizations and ecosystems in their wake. The only response is sustained mobilization, both at home and in solidarity with peoples’ struggles abroad.

This article is based on talks and interviews given by Pablo Fajardo and Humberto Piaguaje in Toronto, as well as the documentaries Crude (2009) and The Empire Files: Chevron vs. the Amazon (2016).