I didn’t see this one coming! Recall that after winning the Lago Agrio case, the plaintiffs had attached Chevron’s assets in Ecuador to satisfy the judgment. One of those assets was the right to payment of $96 million on account of a treaty arbitration pending between Chevron and Ecuador. As I noted last week, Ecuador, out of options to challenge the award, finally paid up. My view was that this was not necessarily detrimental to the LAPs, since the attachment still stood, and whatever payments the Ecuadoran government made to Chevron, it would still be on the hook to the LAPs. I figured that in making the payment to Chevron, Ecuador was probably assuming the risk that it would have to make the payment twice.
Not so fast! Apparently the government is not that eager to pay Chevron and the LAPs. According to a press release that Roger Parloff reported on yesterday, the lead Ecuadoran lawyer for the Amazon Defense Coalition, Pablo Fajardo, “lifted the embargo order … against Chevron assets in Ecuador to make it easier for Ecuador’s government to make a controversial payment of $112 million to the company.” He acted “without the permission” of the group, the Coalition said. It has “suspended ties” with Fajardo.
What happened? I reached out to Fajardo and his (erstwhile?) colleague, Steven Donziger, for a comment but did not hear back. The press release says that Fajardo was acting “at the behest of individuals in Ecuador’s government that wanted to pay Chevron.” It probably would be unjournalistic to speculate, but how can one avoid assuming that Fajardo was either pressured by the government or paid off? Either way, it’s bad news for the LAPs. For one thing, they may have lost their entitlement to some money in Ecuador, which was the easiest money available to them in the case. For another thing, it’s difficult to see how the LAPs themselves can really go after the Ecuadoran government or even Fajardo too vigorously, because they surely don’t want to to prove that the government acted badly, as that could influence the perception of the Ecuadoran judiciary and government in foreign countries whose courts are being asked to recognize and enforce Ecuadoran judgment over Chevron’s claims of fraud, political interference, and the like.