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Ecuador fights Chevron in Canada over environmental damage

Chevron's long battle to beat back a $9.5bn Ecuadorian judgment against it over environmental damage in the Amazon has taken one step forward and another back

The company reached a settlement with a former foe in the case, but lost an important decision in Canada's Supreme Court that will allow the Ecuadorian plaintiffs to pursue Chevron through that country's legal system.

Chevron scored an important victory in reaching a settlement with the legal advisory firm H5, which had provided legal discovery services and played a key role in arranging funding for the plaintiffs' legal team led by the lawyer and activist Steven Donziger. According to the terms of that settlement, H5 will withdraw from the case and assign its 1.25% interest in any proceeds from the judgment to Chevron, an amount that could exceed $100m if Chevron is ever forced to pay the judgment in full.

Donziger has led a 20-year legal fight against Chevron over claims that it is responsible for oil spills that caused extensive damage to the environment and local communities. Chevron, which inherited the case when it bought Texaco in the 1990s, has bitterly fought the case and sought to pin blame on the Ecuadorian government and its state-owned oil companies.

Donziger won a major victory in 2011 when an Ecuadorian judge found Chevron liable for $18bn in damages related to the case, though that amount was later halved.

Since that ruling, Chevron has been on the offensive and in 2014 won an extraordinary ruling in a New York court that found Donziger had corrupted the Ecuadorian legal process and engaged in fraud, bribery, witness tampering, blackmail and extortion.

Armed with that ruling, Chevron has pledged to go after Donziger and those that helped to fund and argue the case for damages, which has led to several former allies turning on Donziger.

H5, which counts Duke Energy, DuPont and Koch Industries among its clients, is the latest company to abandon the case under pressure from Chevron. It cited the New York ruling in its decision.

"Last year, Chevron obtained a ruling in its favor from US District Judge Lewis A. Kaplan in New York. Although H5 was not a party to that lawsuit, H5 has reviewed judge Kaplan's extensive findings. In view of those findings, among other reasons, H5 has decided it does not want to profit from the Ecuadorian judgment and is therefore relinquishing any interest in the judgment," the company said in a statement. H5 denied any wrongdoing in the case.

While Chevron has turned the tide its way, the case is still marching ahead with no end in sight. Because Chevron does not have any assets in Ecuador that can be seized to enforce the judgment, prosecutors have pushed cases in courts in Argentina, Brazil, Colombia and Canada to force Chevron to pay.

On 4 September, the Canadian Supreme court opened the door for the case to go ahead there. It ruled that the assets of Chevron's Canadian subsidiary can be pursued as part of the case. It didn't, however, rule on the merits of the $9.5bn Ecuadorian judgment against Chevron. Those arguments will now move to a lower court in Ontario, setting up what will be a lengthy process.

The Canadian ruling, though, was a major setback for Chevron. It has billions of dollars of assets in Canadian oilfields, pipelines and other facilities that could be used to pay off the Ecuadorian judgement.

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