By Jim Lobe
WASHINGTON, Oct 23 2003 (IPS)

A court case that began in a small town in Ecuador this week could establish a procedure where multinational corporations that exploit weaknesses in the justice systems of poor countries to escape liability for actions abroad are held accountable by courts at home.

The landmark class-action lawsuit by Ecuadorian peasants and Indians, who claim that ChevronTexaco poisoned their health and environment for more than two decades, bounced around U.S. federal courts for much of the past decade before finally beginning this week in the small town of Lago Agrio in Ecuador’s Oriente province.

In an unprecedented procedure, a U.S. federal appeals court will be playing close attention to the case.

The U.S. Second Circuit Court of Appeals in New York ruled last May that it will enforce any judgment rendered by the Ecuadorian court against the company or send the case to a trial court in the United States if it believes that the plaintiffs do not get a fair hearing in Ecuador courts.

At stake is not only a one-billion dollar complaint by the 30,000 plaintiffs, who claim that the oil company systematically destroyed the local environment and damaged the health of area residents and stock animals through massive dumping of toxic fluids and crude oil over a 21-year period that ended in 1992, says one lawyer.

"This case has the potential to establish a new accountability for U.S. oil companies that think they can operate abroad without adhering to responsible environmental practices," according to Cristobal Bonifaz, the lead attorney for 88 named plaintiffs.

It has also contended that TexPet was a minority partner in a consortium led by PetroEcuador, the state oil company, and that its clean-up was certified by the government as satisfying its obligations in 1998.

ChevronTexaco also argued that it did not violate any laws that were in force during the period of operations and that a new law – under which the case has been filed – requiring mining companies to clean up their pollution cannot be applied retroactively.

But in the view of plaintiffs’ attorneys, TexPet’s performance in the region was particularly egregious.

Over the 21 years, it dumped almost 500 million barrels of wastewater containing crude oil and cancer-causing heavy metals. It also left behind nearly 350 open waste pits – some just a few feet from the homes of residents – that sickened and eventually killed hundreds of people and animals over the past three decades.

The waste pits now blanket much of the northern Amazon region, and their contents have leeched into groundwater and rivers that residents rely on for drinking water and bathing, according to the complaint.

It also cites a study of one small community in the affected area by the London School of Epidemiology, which found that cancer rates were many times higher than historical norms and that the incidence of larynx cancer in particular was 30 times higher than the norm for males.

Three indigenous tribes – the Cofan, Secoya and Siona – have been especially hard hit. Many members have contracted cancer and died, and most of the rivers in their ancestral lands are so polluted that many of the survivors have moved elsewhere.

The Cofan, who in 1971 – when the consortium first began operating on their lands – numbered 15,000, have seen their population in the area plunge to less than 300 today.

"We believe that what ChevronTexaco did in the Ecuador rainforest was not only negligent, but might rise to the level of reckless behaviour," Joseph Kohn, another of the plaintiffs’ attorneys, told IPS.

"The company claims it was fine because it did not violate any of Ecuador’s laws at the time, but at the time, Ecuador had no environmental laws governing oil extraction because it had no oil industry," he said.

The complaint alleges that the company failed to adhere to accepted clean-up standards followed by the industry at the time, even if those standards were not incorporated into law.

The major issue that made the case controversial in the United States, where it was originally brought, was whether U.S. courts could assert jurisdiction given the fact that the alleged tortuous behaviour took place in Ecuador and that the plaintiffs were all Ecuadorian.

The Second Circuit’s ruling to essentially retain jurisdiction while the case is tried in Ecuador appeared designed to ensure that the plaintiffs would get their full day in court.

Multinational corporations frequently prefer to have cases of this kind brought against them in local countries, where they can use procedural delays and, in some cases, even bribery to avoid unfavourable judgments.

In those cases where judgments have eventually been rendered against them, companies have at times claimed they did not receive due process and refused to pay, counting on their economic weight in the country where they were sued to ensure that its government does not move to enforce the decision.

The frequency with which such manoeuvres have taken place apparently played a key role in persuading the Second Circuit to retain jurisdiction over the case and to pledge to enforce any judgment against the company.

"The United States court has levelled the playing field by ruling that a small court in a remote town of Ecuador has the same power over a 99- billion-dollar multinational corporation as a federal court in Manhattan," said Bonifaz after the appeals court decision was handed down last May. "This alone is a breakthrough."

The case is being pursued at a time when U.S.-based energy and mining companies operating in Latin America are coming under growing attack for the environmental and social damage their operations have caused.

Projects such as the Crude Oil Pipeline (OCP) in Ecuador, and the Camisea gas project in neighbouring Peru, financing for which was denied by the U.S. Export-Import Bank last summer, have proven so controversial that underwriters have had difficulties raising funds to complete them.

In addition, Latin American courts are increasingly permitting "class actions" by workers against multinational corporations for environmental and health damages caused by their operations.

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