Argentine Judge Freezes $19 Billion Chevron Assets

on Nov 8, 2012

On 7 November 2012, The Financial Times reported that an Argentine judge had ordered the seizure of all assets of the US oil giant Chevron Corp (NYSE:CVX) in the country to enforce a $19 billion (£11.9 billion) Ecuadorian court order in the latest episode of a two-decade long legal saga now spanning across several countries.

**Argentine Judge Enforces Ecuadorian Court Order**
The FT quotes Enrique Bruchou, a lawyer representing Ecuadorean plaintiffs in a lawsuit over pollution in the Amazon rainforest as saying that the Argentinean civil judge Adrian Elcuj Miranda had ordered an immediate freeze of the Argentinean assets of Chevron. The court order covers the US oil company’s Argentinean stock, worth some $2 billion, all of its dividends, Chevron’s entire stake in the oil pipeline company Oleoductos del Valle, 40 percent revenue from oil sales as well as 40 percent of Chevron’s Argentine bank accounts.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Mr Bruchou pointed out that the measure was for “immediate compliance,” adding that court officials had already been dispatched to enforce it. Chevron would have to appeal before the Argentinean judge who ordered the seizure of assets, who would then transfer the request to Ecuador.
Bloomberg reports that on October 31, the Ecuadorian plaintiffs said they had filed an attachment order in a Court of Justice in Buenos Aires to enforce the $19 billion award against Chevron, in line with an international treaty signed by Ecuador, Argentina and Colombia speeding up attachments.

**Chevron Says Judgement Unenforceable**
!m[The Ruling Part Of Two-Decade Long Legal Saga ](/uploads/story/746/thumbs/pic1_inline.png)Bloomberg quotes James Craig, a spokesman for the California-based Chevron as saying that that the company was unaware of a court order in Argentina. “The plaintiffs’ lawyers have no legal right to embargo subsidiary assets in Argentina and should not be allowed to disrupt Argentina’s pursuit of its important energy resources,” Mr Craig pointed out. At the end of October, Chevron said in a press release that the Ecuador judgement was a product of bribery and fraud. “The company does not believe that the Ecuador judgement is enforceable in any court that observes the rule of law,” pointed out Chevron.

**The Ecuadorian Saga**
The FT reports that Chevron inherited the Ecuador dispute as early as 2001, when it bought Texaco Petroleum. While the plaintiffs accuse Chevron of malpractice which has led to severe environmental damage and multiple cases of cancer, Chevron argues that Texaco fulfilled its clean-up responsibilities under a 1995 agreement with Ecuador, and in turn blames the state-owned oil company Petroecuador for much of the contamination.

Chevron, however, is likely to face more attachment requests with Ecuadorian plaintiffs also filling suits in Canada, Brazil and Columbia. “Our next step will be [to file suits] in a country in Europe, Asia or Oceania,” noted Mr Bruchou, as quoted by the FT. “This will be successful.”
Reuters notes that Chevron filed for arbitration in 2009, accusing Ecuador of violating a treaty with the US requiring the OPEC-member state to guarantee Chevron a fair trial. The US oil company has also accused the plaintiffs, their legal team and their advisers of fraud in a US court, with the trial scheduled to begin in October 2013.
**Argentinean Shale Partnership**
And while the resolution of the Ecuadorian saga does not seem likely in the near-term, the embargo, if enforced, may have a negative impact on Chevron’s operations in Argentina. On September 14, the US oil giant signed a memorandum of understanding with YPF SA (NYSE:YPF), Argentina’s biggest energy company, to explore a partnership for developing the vast Vaca Muerta shale reserve. As reported by the FT, the Argentinean energy company was taken by surprise by the court order and believed that the enforcement order would not scupper the shale gas deal.


Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals™.

Learn more
Commodity Energy Energy & Power Stock Market