Supreme Court rules against Chevron

By GREG STOHR
Bloomberg News
June 29, 2009

The U.S. Supreme Court rejected an appeal by Chevron Corp., the second-largest U.S. energy company, in a fight with the Ecuadorean government over potentially tens of billions of dollars in liability for environmental damage.

The justices, without comment, today let stand a lower court ruling that blocked Chevron’s effort to force arbitration with state-owned PetroEcuador.

Chevron contended that a 1965 joint operating agreement requires PetroEcuador to pay a share of any award in a pending environmental lawsuit against the U.S. company. A court- appointed expert has recommended that Chevron be forced to pay more than $27 billion. Chevron has denied wrongdoing.

PetroEcuador and the Ecuadorean government contended in court papers that the state-owned company isn’t bound by the 1965 accord, signed by two private companies including one that is now part of Chevron. PetroEcuador became a partner in the operations in the 1970s and took them over in 1992.

Chevron is based in San Ramon, California.

The case is ChevronTexaco Corporation v. Republic of Ecuador, 08-1123.