NY court loss for Chevron on Ecuador pollution

(Reuters) - A federal court judge on Friday denied a Chevron Corp bid to prevent Ecuadorean plaintiffs from collecting on an $18 billion damages award against the U.S. oil giant over pollution in the Amazon jungle.

The oil company in November had asked Manhattan federal court judge Lewis Kaplan to freeze the plaintiffs' assets in order to be assured payment in the event it were to win its fraud lawsuit in federal court against the Ecuadoreans.

An Ecuadorean appeals court on Tuesday upheld a ruling that CHEVRON (CVX.NY)should pay the $18 billion damages award.

The plaintiffs accused Texaco, which was acquired by Chevron in 2001, of dumping oil-drilling waste in unlined pits, polluting the forest and causing illness and deaths among indigenous people.

Friday's ruling came in a U.S. case Chevron has been pressing simultaneously with the proceedings in Ecuador. Chevron says the plaintiffs and their lawyers are guilty of racketeering and fraud in obtaining the South American judgment.

Judge Kaplan had previously sought to freeze the original judgment against Chevron, but the decision was overruled on appeal in September.

In his ruling on Friday, Kaplan said that Chevron's move to freeze the assets had come too early because it had not proven its fraud case, nor had Chevron shown that it had already paid any amount to the plaintiffs, and would therefore potentially be entitled to future damages.

"The court ... decided the motion on very narrow grounds and did not question the strength of Chevron's fraud evidence," a Chevron spokesman said in a statement. "Clearly the court has left the door open to a future attachment filing."

A spokeswoman for the Ecuadorean plaintiffs said that Chevron's move was a legal tactic designed to stymie any enforcement of the judgment.

"This decision is another rebuke for Chevron and it comes on the heels of a devastating defeat in the appellate court of Ecuador," said spokeswoman Karen Hinton.

Chevron has accused the Ecuadoreans and their long-time legal adviser, Steven Donziger, of illegally pressuring the Ecuadorean legal system to render a judgment in their favor. International arbitrators are expected to decide this month if they will weigh in on what has become a landmark international legal dispute.

The case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691.

(Reporting by Basil Katz; Editing by Gary Hill)