At this point, readers may have already heard about the extremely contested $18.2 billion dollar environmental Chevron Ecuador judgment handed down against Chevron in February by a judge in the Sucumbíos province of northeastern Ecuador. The judgment was entered in the rough-and-tumble oil outpost known as Lago Agrio on behalf of Ecuadorians who live in the area where Texaco, acquired by Chevron in 2001, drilled for oil from 1964 to 1990.
However, unfortunately for the plaintiffs, this case and its resultant judgment are looking more and more like the products of fraud. Referring to e-mails, memos, depositions, and, most remarkably, video of the plaintiffs’ lawyers’ meetings, Manhattan federal Judge Lewis Kaplan found “ample evidence” that the plaintiffs had fabricated evidence, intimidated judges, colluded with Ecuadorian officials to bring trumped-up criminal charges against Chevron in-house lawyers, and committed an elaborate multi-year fraud to bring about the judgment. Furthermore, he found that they had planned and ghostwritten “all or much of” a key evidentiary report that was claimed to be written by an expert instead of a party with a vested interest in the Chevron Ecuador judgment.
Another controversy at the heart of this case is financing. Many investors don’t even realize they’ve been helping win the judgment for the plaintiffs by financing their case.
The unknowing supporters working toward the Chevron Ecuador judgment vary between American or British high rollers who place their money into aggressive hedge funds and British mums and dads who hold mutual funds managed by trusted names like Fidelity International, Invesco Perpetual, Baillie Gifford, or Scottish Widows. These six institutions together own about 80% of a publicly listed investment firm called Burford Capital. Burford, in turn, invested $4 million in the Ecuadorians’ case as it attempted to win the case last November in exchange for a 1.5% stake in any recovery, with the stated goal of increasing its outlay to $15 million, entitling it to a 5.5% share.
Although at one point litigation financing was seen as illegal, today the rules have changed. England and Australia have embraced litigation financing enthusiastically, and it has played a role in the Chevron Ecuador judgment.
There are, of course, many more questions than answers surrounding the ethics and ideas surrounding litigation funding, in general as well as specifically as related to the Chevron Ecuador judgment.
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Chevron Ecuador Judgment : Article on Incnewstoday.com