Supreme Court denies Chevron appeal in Ecuador case

A lower court threw out an injunction blocking enforcement of the judgment. CHEVRON (CVX.NY)appealed to the Supreme Court, which rejected the appeal without explanation.

Justice Samuel Alito did not participate in the decision.

On January 26, the 2nd U.S. Circuit Court of Appeals in New York said Chevron had been premature to challenge the judgment, which residents of Ecuador's Lago Agrio region won in February 2011 over pollution of the Amazon jungle and resulting damage to their health.

In July, damages in the case were increased to $19 billion.

Chevron claimed that the judgment was fraudulent and unenforceable under New York law.

But the 2nd Circuit said the oil company, based in San Ramon, California, could challenge it "only defensively, in response to attempted enforcement," which the Lago Agrio residents had not attempted and might never attempt.

In its appeal, Chevron said the 2nd Circuit ignored "well-settled" precedents allowing it to raise an anticipatory defense under the federal Declaratory Judgments Act.

It also said such defenses are necessary in light of the "disturbing trend" in which lawyers win big money judgments against U.S. companies in corrupt foreign courts, and then seek to enforce them in countries where the companies operate.

The judgment stemmed from environmental contamination from 1964 to 1992 by Texaco, which Chevron bought in 2001.

The judgment included $8.6 billion of environmental damages, which an Ecuador court more than doubled because Chevron failed to make a public apology.

The case is Chevron Corp v. Naranjo et al, U.S. Supreme Court, No. 11-1428.

(Reporting by Terry Baynes and Jonathan Stempel; editing by John Wallace)