3/9/11 chevron lago agrio appeal

[initials] [CERT.GEOTEXT] 1

TO THE ACTING CHIEF JUDGE OF THE SUCUMBIOS PROVINCIAL COURT: I, Adolfo Callejas Ribadeneira, Legal Counsel for CHEVRON CORPORATION in summary oral proceeding No. 002-2003, brought against my client by María Aguinda et al., whereby it is within the term pursuant to Articles 324 and 306 of the Code of Civil Procedure, respectfully appear before you and state:

I disagree with the judgment of February 14, 2011, at 8:37 a.m., clarified and extended by the order of March 4, 2011, at 3:10 p.m., and therefore I hereby formulate the following APPEAL against said decision and the referenced clarifying and amplifying order, insofar as it was unfavorable to me; this, without prejudice to the arguments made in the text of the present writing, and the arguments of nullity that are part of this appeal, in accordance with the provisions of Art. 3201 of the Code of Civil Procedure.

The appeal will be heard and decided by the Sole Chamber of the Sucumbíos Provincial Court, as specified in the law.

In order to facilitate consideration of this appeal, I include the following Table of Contents:

TABLE OF CONTENTS

I. APPEALED JUDGMENT:.........................................................................................................................................7

II. REMEDIES SOUGHT: ..............................................................................................................................................7

III. INTRODUCTION:......................................................................................................................................................7

IV. I BASE MY MAIN CLAIM ON THE NULLITY OF THE ENTIRE PROCEEDING BEING DECLARED

ON THE GROUNDS OF A LACK OF JURISDICTION AND, SUBSIDIARILY, ON THE LACK OF

COMPETENCE BASED ON THE FOLLOWING ARGUMENTS OF FACT AND LAW: .............................10

A. NULLITY ON THE GROUNDS OF A LACK OF JURISDICTION ON THE PART OF THE ECUADORIAN JUDGES OVER

CHEVRON.................................................................................................................................................................11

1. The Republic of Ecuador does not exercise universal jurisdiction. .............................................................................12

2. Incoherent statement and confusion on the part of the lower court Judge between the lack of jurisdiction and the

absence of a legitimate adversary party.......................................................................................................................13

3. The fact of the merger and the alleged fusion of assets and the piercing of Texaco’s as well as Chevron’s corporate

veils that the trial Judge relies on in his opinion as justification of verdict it imposes on my client are false and

without legal basis and cannot serve as grounds to assert jurisdiction over Chevron..................................................15

a) Regarding the absence of a “merger” between Texaco and Chevron ......................................................................................... 17

1 “Art. 320.- The law establishes the remedies of appeal, cassation and petition for review of denial of an

appeal, without prejudice to the possibility of claiming nullity of the process in filing them.”

b) Legal impossibility of the lower court Judge to pierce TexPet and Texaco’s corporate veil. ..................................................... 21

4. Conclusion...................................................................................................................................................................25

B. ALTERNATIVELY TO THE ABOVE, I ARGUE THE LACK OF COMPETENCE OF THE LOWER COURT JUDGE AND OF

THIS PROVINCIAL COURT OF JUSTICE OF SUCUMBÍOS IN THIS CASE.......................................................................25

[1.] Piercing the corporate veil violates the principle of confinement to the pleadings [ne ultra petita]. The lower court

Judge has satisfied claims not present in the complaint for which he has no competence. .........................................25

[2.] Alternatively to the above, I allege the Lower Court Judge’s lack of competence to hear legal actions for contingent

damages provided for in the Civil Code, as well as improper joinder of actions brought by the plaintiffs. ................27

[3.] Alternatively to the above: nullity of the proceedings lack of competence of the Judges due to general unawareness,

in this lawsuit, of the provisions of Public Law.- Arrogation of jurisdiction that pertains to the Administrative

Branch.- Invasion of the sphere of powers and duties of the Executive Branch:.........................................................29

C. ALTERNATIVELY TO THE ABOVE, NULLITY OF THE PROCEEDINGS DUE TO PROCEDURAL FRAUD AND VIOLATION

OF THE GUARANTEES OF DUE PROCESS. .....................................................................................................................30

1. Nullification due to falsification of plaintiffs’ signatures on the complaint: The judgment is nothing but the

culmination of a process marred by defects going back to the complaint itself and should also be declared null and

void. .............................................................................................................................................................................35

2. Nullification of the complaint due to failure to appear before the Clerk of the lower Court by those who do not know

how to read and write in order to place their fingerprints:...........................................................................................38

3. Nullification due to lack of representative capacity and insufficient power of attorney of plaintiffs’ common

representative:..............................................................................................................................................................39

4. Nullification due to procedural fraud. The case has been manipulated and the Administration of Justice has been led

into deceit by the plaintiffs during the course of the proceedings: ..............................................................................39

5. The lower court Judge acted in complicity with the plaintiffs with regard to the corruption in the global expert

report: ..........................................................................................................................................................................43

6. The plaintiffs were the true authors of the global expert assessment. Procedural fraud and intentional

misrepresentation before the Judge of the case. Lack of action by the lower court judge upon evidence of the fraud.

Judicial inaction as it pertains to the authors of the fraud............................................................................................45

7. The expert reports attached by the plaintiffs to their “legal brief” projected the fraud in time while the lawsuit lasted

in the court of the first instance. Illegal reform of the judicial process in Ecuador. Advance disclosure of opinion.

Illegal replacement of evidence by the opinion of the plaintiff: ..................................................................................53

8. The judgment should also be vacated, or revoked, for violating due process, as the Judge used information not in the

record as the basis for the decision: .............................................................................................................................55


9. The lawsuit was further flawed by the improper conduct of Judge Juan Núñez. His conduct in the proceeding is in

breach of the Constitution and causes the nullity of all of his actions. The fraud generated by the report of Engineer

Cabrera, should not have been concluded: ..................................................................................................................57

D. CONCOMITANTLY TO WHAT IS STATED IN SECTION C ABOVE, AND ALTERNATIVELY TO ALL OF THE ABOVE:

NULLITY OF THE PROCEEDINGS FOR VIOLATION OF THE RIGHT TO DUE PROCESS DERIVED FROM TO THE

RETROACTIVE APPLICATION OF THE ENVIRONMENTAL MANAGEMENT ACT..........................................................59

1. The non-retroactivity principle prohibits the imposition of damages in accordance with the Environmental

Management Act because the operations of the Consortium ended years before the enactment of the Environmental

Management Act—Nullity due to violation of the right to due process: .....................................................................60

a) Actions existing before 1990: ..................................................................................................................................................... 60

b) Rights and Actions established after 1990:................................................................................................................................. 62

c) Key changes incorporated into Ecuadorian Law via the Environmental Management Act: ....................................................... 64

V. I BASE MY SUBSIDIARY REQUEST FOR THE REVERSAL OF THE JUDGMENT UNDER APPEAL

AND THE RULING WHICH SOUGHT TO CLARIFY AND ELABORATE ON IT FOR THE ISSUANCE

OF ANOTHER FINAL ORDER IN ITS PLACE DISMISSING THE COMPLAINT, SUSTAINING ANY

ONE OF THE DEFENSES RAISED BY MY CLIENT.........................................................................................65

A. THE COMPLAINT IS IMPROPER DUE TO THE EFFECT OF RES JUDICATA BECAUSE IT RAISES CLAIMS FOR DIFFUSE

INTERESTS WHICH WERE ALREADY CLAIMED AND SETTLED BY THE STATE AND THE CORRESPONDING

MUNICIPALITIES:........................................................................................................................................................65

1. Background and scope of the settlement agreements. .................................................................................................67

2. The Settlement Agreements Signed with the Government of Ecuador and the Local Governments Are Res Judicata

.....................................................................................................................................................................................76

3. Conclusion: The plaintiffs’ claims are barred from prevailing due to the effect of res judicata..................................81

B. THE JUDGMENT MADE BY THE COURT OF THE FIRST INSTANCE RATIFIES AND AGGRAVATES THE SYSTEMATIC

VIOLATION OF CHEVRON’S DUE PROCESS THAT OCCURRED THROUGHOUT THE LAWSUIT. THE PROCEEDING IS

NULL AND VOID ON THESE GROUNDS: ........................................................................................................................82

1. The Judge refused to consider critical evidence submitted by Chevron.- Illegal renunciation of various inspections

and analogous application of evidence.- Failure to comply with rules of evidence.- Failure to comply with rules

regarding essential error.- Legal and technical speculation of the judge of the first instance.- Violation of process and

denial of Justice: ..........................................................................................................................................................83

2. In an arbitrary manner, the lower court Judge omitted legally accepted means of evidence and relied on the filing of

September 16, 2010, at 5:15 p.m. from plaintiffs’ “specialist consultant[s]” in his judgment. The Judge acted against

an express legal rule—possible breach of public duty:................................................................................................90


3. The use of summary oral proceedings was arbitrary, and the Court prevented a suitable defense of Chevron’s rights -

Chevron was unable to make a counterclaim against the plaintiffs: ............................................................................93

4. Invalidation due to lack of sufficient power to waive judicial inspections, since the Judge did not have the

authorization of each one of the plaintiffs to do so:.....................................................................................................96

5. Any action taken by Judge Ordóñez in the proceedings after August 26, 2010, at 2:45 p.m., is null and may have no

legal effect whatsoever: ...............................................................................................................................................99

C. THERE IS NO LEGAL BASIS FOR THE JUDGMENT BY VIRTUE OF THE CIVIL CODE OR ANY OTHER LAW THAT MAY

HAVE EXISTED AT THE TIME OF CONSORTIUM OPERATIONS. .................................................................................101

1. There is no legal basis for the Judgment by virtue of Articles 2214 or 2229 of the Civil Code ................................101

2. Articles 2214 and 2229 of the Civil Code are not applicable, because no individual damages were claimed,

demonstrated or adjudicated:.....................................................................................................................................101

3. All claims by virtue of Articles 2214 and 2229 of the Civil Code would also be subject to the principle of

prescription ................................................................................................................................................................103

D. THE CONSTITUTION DOES NOT PROVIDE FOR THE LAWSUIT FILED BY THE PLAINTIFFS FOR ALLEGED

ENVIRONMENTAL CONTAMINATION.........................................................................................................................106

E. THERE IS NO LEGAL BASIS FOR THE JUDGMENT RENDERED BY VIRTUE OF ARTICLE 2236 OF THE CIVIL CODE: 107

F. THE LOWER COURT JUDGMENT MUST BE REVERSED GIVEN THAT THE JUDGE IGNORED THE LIMITS OF THE

PRINCIPLE OF CONGRUENCE.....................................................................................................................................108

1. The Judge did not have the authority to consider, much less find in favor of the plaintiffs on, several aspects not

included in the lawsuit. ..............................................................................................................................................109

2. The lower court judge did not apply the principle of congruence. The Judge below illegally disregarded it via his

generalized redefining of “environmental damage,” and violated the Law by sentencing my client to pay punitive

damages. ....................................................................................................................................................................110

G. THE JUDGE A QUO CONCLUDED INCORRECTLY AND WITHOUT FOUNDATION THAT THE PLAINTIFFS HAD PROVEN

THE ELEMENTS OF EXTRACONTRACTUAL CIVIL LIABILITY: ...................................................................................111

1. Contrary to what is indicated in the judgment, TexPet’s practices did not violate its duty to be diligent as

Consortium Operator. ................................................................................................................................................112

a) Application of objective liability to TexPet is illegal: .............................................................................................................. 113

b) TexPet’s activities were not negligent nor did they constitute deliberate, much less fraudulent, violations:............................ 118

2. The evidence on which the lower court Judge based his ruling was improperly produced in the case and the

weighing of the evidence in the judgment violates the provisions of the Code of Civil Procedure. The judgment is

illegal. ........................................................................................................................................................................128


a) The Weighing of Certain Specific Evidentiary Items. .............................................................................................................. 132

b) Characteristics of the alleged assessment of the evidence in the appealed judgment.- Absence of adequate justification: .... 138

3. The Judge incorrectly concluded that the plaintiffs had legally proven the existence of damages in the operating area

of the former Petroecuador-Texpet Consortium. Abuse of scientific and technical reason on the part of the lower

court Judge.................................................................................................................................................................142

a) The plaintiffs have admitted that their evidence is inadequate ................................................................................................. 143

b) The Judge below is mistaken in stating that contamination exists in the former Concession area ........................................... 145

c) Analysis of the conclusions of the Judge below regarding the chemicals................................................................................. 146

d) The judge improperly gave weight to the samples collected by the plaintiffs’ experts, while ignoring evidence in the record

that these samples were improperly analyzed by an unaccredited laboratory. .............................................................................. 151

e) The Judge below inappropriately ignored matters concerning the culpability of third parties.................................................. 153

4. The analysis of causality in the appealed ruling misapplied the Law and ignored the absence of proof of causality.

...................................................................................................................................................................................155

a) The ruling misinterpreted and erroneously applied the Law with respect to causality.............................................................. 156

b) In Addition To Ignoring Valid Evidence of Causation, The Judgment Makes No Causal Link Between TexPet And The

Alleged Damage. .......................................................................................................................................................................... 161

H. EVEN ASSUMING THE EXISTENCE OF LIABILITY REGARDING THE PLAINTIFFS’ CLAIMS, SOMETHING THAT MY

CLIENT DOES NOT ACCEPT, THE JUDGMENT IN TERMS OF COMPENSATION IS NOT LEGALLY JUSTIFIED.....................

...................................................................................................................................................................................167

1. The awarding of compensation for damages in the lower court judgment for several categories of alleged

“environmental damages” is speculative and is not supported by any valid evidence: .............................................168

a) “Principal measures” concerning soil remediation (US$ 5.396 billion). ........................................................ 170

b) “Principal measures” concerning groundwater (US$ 600 million)................................................................. 174

c) “Supplementary measures” for restoring flora, fauna, and aquatic life (“at least” US$ 200 million).............. 175

d) “Supplementary measures” concerning potable water systems (US$ 150 million). ........................................ 176

e) “Mitigation measures” concerning public health in general (“at least” US $ 1.4 billion). ............................. 177

f) Additional public-health “mitigation measures” to address cases of cancer (US$ 800 million) ..................... 178

g) “Mitigation measures” for “a community rebuilding and ethnic reaffirmation program” (US$ 100 million). 179

2. The lower court Judge clearly acted in violation of the law by imposing a possible payment against the defendant for

punitive damages. ......................................................................................................................................................180

I. IN THE COURT ORDER OF MARCH 4, 2011 WHICH CLARIFIES AND EXPANDS UPON THE JUDGMENT, THE JUDGE

COMPOUNDED THE MYRIAD ERRORS IN THE ILLEGITIMATE APPEALED JUDGMENT. ..........................................185


VI. PETITIONS. ............................................................................................................................................................186

A. PRINCIPAL PETITION. NULLIFICATION OF THE ENTIRE PROCEEDING: .................................................................187

B. FIRST SUBSIDIARY PETITION. PARTIAL NULLIFICATION OF THE PROCEEDINGS: .................................................188

C. SECOND SUBSIDIARY PETITION. OBLIGATION FOR THE COURT TO RECUSE ITSELF:...........................................188

D. THIRD SUBSIDIARY PETITION. PLAINTIFFS’ LACK OF STANDING:.........................................................................188

E. FOURTH SUBSIDIARY PETITION. VIOLATIONS BY THE JUDGE IN THE ADMISSION AND WEIGHING OF THE EVIDENCE,

WHICH OBLIGATE THE SOLE CHAMBER OF THE PROVINCIAL COURT TO REVOKE THE JUDGMENT AND IN ITS PLACE TO

RENDER ANOTHER ONE THAT DISMISSES THE LAWSUIT ON THE GROUNDS OF LACK OF EVIDENCE: ............................... 190

* * * * *

********************************


I. APPEALED JUDGMENT:

The judgment of February 14, 2011, at 8:37 a.m., clarified and/or extended via the order of March 4, 2011, at 3:10 p.m.

II. REMEDIES SOUGHT:

I appeal all that is unfavorable to me in the judgment and the order that decided our motion for clarification and amplification. And with regard to the specific remedies sought in this appeal, I respectfully request that the Sole Chamber of the Sucumbíos Provincial Court consider the following:

A. Principal remedy: That the Court declare the nullity of all proceedings for lack of jurisdiction, lack of competence, violations of due process, procedural fraud and any other defect of nullity affecting the entire proceeding, from the filing itself of the complaint and that would have prevented the judge from assuming jurisdiction of the present case, for not meeting the legal requirements and for the above-mentioned lack of jurisdiction and competence.

B. And, in the event (which we do not accept) that the Sole Chamber of the Sucumbíos

Provincial Court does not nullify the proceedings, I seek as a subsidiary remedy: That the Court rescind the original ruling and the order deciding my client’s motion for clarification and amplification and instead issue another ruling that dismisses the suit, admitting one or more of the objections raised by my client in answering the complaint and taking into consideration the arguments of violation of due process and other constitutional rights that I have raised and proven throughout the proceedings.

C. In accordance with what I requested in answering the complaint, I request that the

plaintiffs be ordered to pay costs. Furthermore, I ask that the plaintiffs be found reckless and in bad faith and that what is stipulated in Art. 283 of the Code of Civil Procedure be followed.

I provide the following grounds for Chevron Corporation’s appeal: III. INTRODUCTION:

The size and the improper justification supporting the appealed judgment—over US$ 18 billion—is outrageous, unjustified and caused severe injuries to the rights of my client. Issued less than two months after the lower court Judge requested the case file in order to reach a decision and purportedly commenced review of a record that spans 206,000 pages, and just fifteen days after Judge Zambrano announced that he still had more than 50,000 pages to review, it is evident that the decision is not the product of deliberative review. Rather, the decision is a work of sophistry that elides the critical issues, and its length only serves to conceal this fact. It is evident that arguments were selected a priori in order to construct an argument which justifies a preconceived ruling, announced before the completion of the evidentiary phase. Any fair review of the record would have resulted in dismissal of the case, which has been irretrievably tainted by fraud of the plaintiffs by presenting forged evidence, among other reasons. In reaching its


unprecedented decision, the Judge simply ignored, among other things, the overwhelming evidence of fraud and corruption, the plaintiffs’ acknowledgment that they had “su[ed] the wrong party,” the plaintiffs’ admission that their evidence was nothing but “smoke and mirrors and bullshit,” (literally) and the plaintiffs’ concession that, under the law, their case was heading “inexorably towards dismissal.”

The acknowledged factual and legal impediments to the plaintiffs’ case are what led them to engage in an incredible succession of ever-more egregious acts of procedural fraud and misconduct—to play “dirty,” in the words of the plaintiffs’ U.S. team leader. They believed that they could get away with such tactics, because as they point out, as the recently revealed evidence submitted into the record reveals, judges in Ecuador “make decisions based on who they fear the most, not based on what the laws should dictate.” The content of the appealed decision only confirms the plaintiffs’ beliefs.

At each stage of the case, from its inception until the judgment itself, the Judge below consistently failed to investigate, sanction and refer to the appropriate legal authorities the acts of fraud brought to his attention, so that they would investigate and sanction the various acts of corruption, manipulation, and procedural fraud perpetrated by the plaintiffs and their representatives. When my client’s position on the key technical issues was confirmed by the “settling experts,” who were charged with resolving discrepancies between the party-nominated experts, the Judge below ceased requesting settling expert reports. When the judicial inspections to which the parties had jointly agreed returned results that exposed the emptiness of the plaintiffs’ wild allegations, the lower court Judge, pressured by the plaintiffs, agreed to cancel them. When the plaintiffs sought to replace the transparent judicial inspections with a global expert examination carried out by an unaccountable ad-hoc expert, the Judge below appointed a man whom, as shown by the evidence presented to the Court, the plaintiffs had already carefully vetted for his willingness to “play ball” with their scheme. When the evidence submitted from discovery proceedings carried out by Chevron before the courts of the United States revealed how this purportedly “independent” expert had signed off on a scientifically vacuous report written by a combination of the plaintiffs’ lawyers, paid consultants and activists affiliated with the cause of the plaintiffs, the Judge below permitted the plaintiffs to try a third time to prove their case, this time by surreptitiously submitting an ad hoc damages assessment subject to no scientific controls.

The plaintiffs’ pattern of procedural fraud and misconduct tainted the entirety of the proceedings. They falsified the reports of (at least) one of their nominated experts, Dr. Calmbacher, when he reached conclusions that supported Chevron. As shown by the evidence presented to the Court, the plaintiffs pressured the judicial-inspection experts they nominated with threats to “find contamination.” They covertly selected and then forced the lower court Judge, with threats, to appoint


an expert for the global examination, Mr. Cabrera, who had already participated in their meetings to design a strategy for the global damages assessment, substantially different from the original evidence request, and agreed to go along with their plan to extract a massive judgment from my client. The plaintiffs wrote the work plan for Mr. Cabrera which he submitted unchanged; and then they fed him a biased and baseless report composed by a secret team of lawyers, consultants, and activists, which Mr. Cabrera just signed and passed off as his own work. Subsequently, they hired a U.S. firm to recycle the tainted data and conclusions from the “Cabrera” report, under new names, once their collusion and procedural fraud were exposed.

Without properly weighing the evidence or interpreting the applicable law and expressly avoiding taking into account the fraud of the plaintiffs and how it affected the entirety of the proceedings, the lower court Judge proceeded to award them the largest verdict in the history of Ecuador. Incredibly, the Judge below refused to even investigate the unimpeachable evidence of plaintiffs’ fraud. After deferring Chevron’s requests to do so for months, the Court said in its decision that the summary verbal proceeding did not allow any inquiry into the reliability of plaintiffs’ evidence. But this alleged inadequacy of the procedural rules is hardly a valid excuse for the deprivation of the right of due process of my client. The only response of the lower court Judge to the overwhelming evidence of procedural fraud was to deny reliance upon the Calmbacher and Cabrera reports. But this was just an erroneous argument put forth to try to cover its intentional failure to declare nullity of the latter report, which the plaintiffs described as “the most important evidence we have in the case,” and the broader implications arising from the nature of plaintiffs’ fraud, which went to the core merits of their case. If a case based upon science and valid evidence could have been made against Chevron, the plaintiffs would have had no need to resort to procedural deceit and corruption. Yet the lower Court continued to rely upon plaintiffs’ other evidence without assessing its reliability and trustworthiness, including the technical criteria presented as attachments to the plaintiff’s brief of September 16, 2010, the authors of which admitted that they relied on the Cabrera report. Other incidents harming the reliability of the trial are the improper meetings between the plaintiffs and lower court Judges and the US$ 3 million attempted bribery scheme implicating one of the lower court judges, as reflected in evidence duly presented in the case, which was simply ignored. Furthermore, the decision gives the false impression that Steven Donziger acted alone, failing to acknowledge the scope of the misconduct of the Frente de Defensa de la Amazonía, Pablo Fajardo, and Luis Yanza, among others.

Moreover, the conclusions of the Judge below regarding the alleged contamination in the former Concession area are not based on real information or evidence. Considered appropriately, the evidence shows conclusively that there is no health risk associated with the environmental conditions in the former Concession area. The attempt by the Judge below to identify the alleged contamination ignores proper legal and scientific analysis. In fact, omitting the only valid and relevant evidence, the Judge below proceeded to seek in the case file samples which allegedly support the plaintiffs’ version. In this process, the Judge below misused samples which did not


reveal contamination to conclude that there was contamination, inflated from ten to one thousand times the results of the sampling, and inexplicably was unable (and did not attempt) to distinguish between impacts resulting from the Petroecuador operations and the alleged contamination supposedly related to the activities of the former Consortium. The Judge below compounded his error by extrapolating the results of isolated samples from the sites of the former concession to the entire area, without a scientific or statistical analysis which concludes that such samples were representative.

Thus, for the multiple reasons indicated and supported below, the Court ad quem must declare the nullity of the entire proceedings, and, in furtherance thereof, revoke the appealed decision and, in any event, dismiss plaintiffs’ complaint, with an express assessment of costs.2

IV. I BASE MY MAIN CLAIM ON THE NULLITY OF THE ENTIRE PROCEEDING BEING DECLARED ON THE GROUNDS OF A LACK OF JURISDICTION AND, SUBSIDIARILY, ON THE LACK OF COMPETENCE BASED ON THE FOLLOWING ARGUMENTS OF FACT AND LAW:

In order for a proceeding to validly commence, the filing of the complaint is not enough, as this has to meet essential requirements designated by the law, which legal literature calls procedural requirements, which are: a) the legal capacity of the plaintiff or its legal representative or judicial counsel, depending on the case (legal personality); b) jurisdiction of the judge, and this makes reference to having the corresponding designation and holding the office; c) competence of the judge, with regard to territory, subject matter, the persons and degree, and d) proper compliant, meeting the requirements of Art. 71 of the Code of Civil Procedure, and including the submission of the documents designated by Art. 72. (CIVIL AND COMMERCIAL DIVISION. Official Gazette. Year XCIX. Series XVI. No. 14. Page 3953. (Quito, January 14, 1999)).

These requirements are beyond the will of the judge, since for a complaint to be admitted and for the proceeding to begin, the meeting or concurrency of those procedural requirements is a sine qua non condition. For the valid formation of the legal procedural relationship, in addition to the complaint, it is also necessary that certain essential requirements be met in order for it to be considered by the judge and in turn require him to initiate the proceeding. These requirements determine the valid beginning of the proceeding, its development and its normal ending with the judgment; without this having to necessarily reach a decision on the

2 As this Court should already be aware, on February 9, 2011, an international arbitration tribunal in a

dispute between Chevron and the Republic of Ecuador under the United States-Ecuador Bilateral Investment Treaty, issued an order against the Republic of Ecuador ordering it “to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment against the [Chevron] in the Lago Agrio Case . . . .” This court is an instrument of the Republic of Ecuador. For this reason, Chevron asks this court to honor and abide by the measures that the BIT Tribunal issued and to take any and all measures necessary to implement these orders.


origin or fate of the claim, and least of all, that this should favor that claim, since these two circumstances depend on other requirements: material or substantive. (CIVIL AND COMMERCIAL DIVISION. Official Gazette. Year XCIX. Series XVI. No. 14. Page 3953. (Quito, January 14, 1999)).

Therefore, it involves assumptions which are prior to the process or requirements without which this may not begin in a valid way, and must, therefore, be met when formulating the complaint, in order for the judge to be able to admit it or initiate the proceeding; or procedural requirements so that the proceeding may advance in a valid and normal fashion, once it has been initiated. (CIVIL AND COMMERCIAL DIVISION. Official Gazette. Year XCIX. Series XVI. No. 14. Page 3953. (Quito, January 14, 1999).

Regarding Jurisdiction: Pursuant to Art. 1 of the Code of Civil Procedure, “Jurisdiction, i.e., the power to administer justice, is the public authority to decide and enforce decisions in a specific matter, and this authority belongs to the courts and judges established by law.” Jurisdiction is a government function, part of the sovereignty of the State that guarantees or takes measures to ensure that law is respected. It is a complementary or additional activity of the legislative branch. (Ángel Alarcón vs. Víctor Platón, Cassation Ruling, Supreme Court of Justice, First Civil and Commercial Division, Case 250-98, Mar. 23, 1998, published in R.O. 319, May 18, 1998).

Regarding competence: In view of the fact that one jurisdictional entity cannot handle all the cases filed in the country, the Constitution and the law have created multiple entities, among which the exercise of jurisdictional authority has been distributed, precisely noting or limiting the scope of that authority, which is what is meant by competence. (Ángel Alarcón vs. Víctor Platón, Cassation Ruling, Supreme Court of Justice, First Civil and Commercial Division, Case 250-98, Mar. 23, 1998, R.O. 319, May 18, 1998).

To be precise, pursuant to Art. 1 of the Code of Civil Procedure, “competence is the measure within which said power is distributed among the various courts, by virtue of territory, subject matter, persons and degrees of appeal.”

The Judge’s competence is a procedural requirement, i.e. a formal requirement for legally beginning and continuing proceedings. According to our procedural legislation, it is a substantive requirement, the omission of which annuls the proceedings if said violation influenced or could have influenced the judgment in the case (Article 355 <346>, second rule, Article 358 <349> of the Code of Civil Procedure) (Ángel Alarcón v. Víctor Platón, Cassation Ruling, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Case 250-98, Mar. 23, 1998, published in R.O. 319, May 18, 1998).

A. Nullity on the grounds of a lack of jurisdiction on the part of the Ecuadorian Judges over CHEVRON.

The scope of application of the laws of Ecuador and, therefore, of the judicial activity of Ecuadorian Judges are determined by Articles 13 and 15 of the Civil Code. The first legal provision deals with persons and the second with property and contracts. With respect to persons, Article 13 reads: “[a]ll inhabitants of the Republic are compelled to uphold the law, including


foreigners, and ignorance of the law does not excuse anyone;” while Article 15 reads: “property located in Ecuador is subject to Ecuadorian laws, even if its owners are foreign nationals and reside in another nation . . . for the purposes of contracts, when they must be performed in Ecuador, they shall be subject to Ecuadorian law.”

As was demonstrated during the proceedings, Chevron has never been domiciled nor operated in Ecuador.3 Moreover, Chevron was never part of the Petroecuador-Texaco Consortium nor did it have any relationship whatsoever with TexPet’s activities as the operator of the Consortium, which TexPet ended in 1990, over a decade before Texaco merged with Keepep Inc.4 Plaintiffs have not and could not present any evidence that Chevron was ever qualified to do business in Ecuador, that it ever owned property here, that it ever employed workers here, or that it otherwise did business here.5 Rather, the evidence shows that Chevron was incorporated in 1926 under the laws of the State of Delaware, U.S.A.6

Chevron has no domicile or activity in Ecuador; therefore, the rule of Article 13 of the Civil Code is not applicable to it. It neither has property in Ecuador, nor has it entered into contracts that must be performed in our Country. Therefore, the rule of Article 15 is likewise not applicable to it.

1. The Republic of Ecuador does not exercise universal jurisdiction.

Notwithstanding what was demonstrated and not disputed by the plaintiffs, the trial Judge reaches the conclusion that he has jurisdiction over the case because he has been designated Judge by the competent entities of the Judicial Branch. This conclusion implies the judicial statement that any foreign individual who is sued in Ecuador must necessarily appear in trial and wait for the higher court’s enforceable judgment to be passed in order to know whether he is subject or not to the jurisdiction of the judges and tribunals of Ecuador. The laws of our Country do not contemplate this possibility, but indicate that irrespective of the proceeding rules, every

[initials]

3 See Answer as Read into the Record § I.1, filed Oct. 21, 2003 at 9:10 a m., Record at 243-67, 243;

Superintendent of Companies Response to Request for Production (“RFP”), filed Apr. 30, 2004 at 4:15 p m., Record at 7279.

4 See Answer as Read into the Record §§ I.1.5-6, filed Oct. 21, 2003 at 9:10 a m., Record at 243-67, 244; see Agreement of Feb. 26, 1986 between Corporación Estatal Petrolera Ecuatoriana (CEPE) and Texaco Petroleum Company Concerning the Operation of the Trans-Ecuadorian Pipeline, filed Apr. 27, 2004 at 2:40 p.m., Record at 7259-62.

5 See Affidavit of Frank G. Soler, dated Mar. 26, 2010 ¶¶ 17-18, submitted as Annex 18 to Chevron’s Motion, filed Oct. 29, 2010 at 5:20 p.m.

6 See Certificate of Good Standing of ChevronTexaco Corporation, dated Aug. 7, 2003, attached as Annex 7 to Chevron’s Motion filed October 15, 2003 at 5:10 p m., (record at 196-241, 232-33, 236); see also the Certificate of Good Standing of Chevron Corporation, dated Feb. 22, 2010, attached as Exhibit 1 of Annex 18 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p m.

[CERT.GEOTEXT] 12

Judge must be certain of having jurisdiction over the respondent before accepting a complaint, especially when the respondent is a foreign person which is not subject to the laws of the Country. Now, Your Honorable Members of the Sole Chamber of the Sucumbíos Provincial Court of Justice have the responsibility to verify the jurisdiction over Chevron remembering that the source and the legality of your appointments as Judges are not enough to ensure the jurisdiction over Chevron in the present case, as Ecuadorian Judges do not exercise universal jurisdiction.

The fact of the merger and the alleged fusion of assets and the piercing of the corporate veil both in Texaco and Chevron that the lower court Judge indicates in his judgment, as the basis for the sentence imposed on my client, are false facts and have no legal basis, which I will analyze below.

2. Incoherent statement and confusion on the part of the lower court Judge between the lack of jurisdiction and the absence of a legitimate adversary party

Chevron expressly argued as its principal defense (pursuant to Articles 99 and 100 of the Code of Civil Procedure) that the judges and courts of Ecuador lack jurisdiction to hear the complaint for the following reasons: (1) Chevron never operated in Ecuador7; (2) only Texaco agreed to submit to Ecuadorian jurisdiction8 and Chevron is not the legal successor to Texaco9; (3) Texaco did not control TexPet’s operations10; and (4) Texaco did not consent to the suit filed by the plaintiffs.11

In principle, the appealed decision did not address the impact that these arguments had on the lack of jurisdiction raised by my client. In the First Whereas, the Judge below simply states that “[t]he

[initials]

7 Answer, submitted at the Settlement and Answer Hearing held on October 21, 2003 at 9:10 a m., Record

at 243-267, § I.1.1 (page 243). 8 Answer, submitted at the Settlement and Answer Hearing held on October 21, 2003 at 9:10 a m., Record

at 243-267, § I.1.4 (page 243v). 9 Answer, submitted at the Settlement and Answer Hearing held on October 21, 2003 at 9:10 a m., Record

at 243-267, § IV.2.3 (page 265). 10 Answer, submitted at the Settlement and Answer Hearing held on October 21, 2003 at 9:10 a.m., Record

at 243-267, § IV.1.8 (page 244v). 11 See Chevron Brief, submitted on January 6, 2011 at 5:55 p m. on pages 36 to 38; Deposition of Lydia I.

Beebe, Secretary of the Board of Directors of ChevronTexaco Corporation, attached to Chevron’s Power of Attorney, filed Oct. 14, 2003, Record at 196-241, (page 199) (translation into Spanish at 202 to 203) Answer submitted at the Settlement and Answer Hearing held on Oct. 21, 2003 at 9:10 a.m., Record at 243-267, §§ IV-IV.5.9 (pages 265-266); see also Chevron’s motion filed Dec. 20, 2010 at 5:50 p.m.

[CERT.GEOTEXT] 13

lack of competence alleged by the defendant has been argued by reason of the company, Chevron Corporation’s statement that it is not the successor of Texaco Inc.”12

The Decision further indicates on this point that:

“the alleged fact that Chevron Corporation is not successor of TEXACO INC. does not prevent the competence of this Court, but rather eventually, should the alleged fact be true, would constitute a lack of legitimate opposing party, defense that has been alleged as first subsidiary defense in the answer to the complaint . . . .”13

The appealed decision contains an error when pointing out the fact that Chevron not being a successor of Texaco only constitutes absence of a legitimate adversary party and involves an illegal reduction of the concepts and allegations [by] the lower court Judge, manipulating them, for which he lacked any legal authorization.

The lower court Judge was required to directly deal with the motion [to dismiss] for lack of jurisdiction in the way it was submitted by my client in the answer to the complaint, since as the Ecuadorian case law states, jurisdiction is a sine qua non procedural requisite—that is, a requisite prior to the process or a requirement without which this cannot be validly initiated and, therefore, must be met when the complaint is filed so that the Judge may accept it or initiate the process, or a procedural requirement so that the proceeding may advance in a valid and normal fashion once it is initiated. See, for example, CIVIL AND COMMERCIAL DIVISION. Official Gazette. Year XCIX. Series XVI. No. 14. Page 3953. (Quito, January 14, 1999).

Therefore, the judgment does not have a statement on the part of the lower court Judge about the motion [to dismiss] for lack of jurisdiction as regards Chevron, which causes his decision to lack proper justification. Justification is an essential element in due process, since it eliminates judiciary arbitrariness and allows the parties to know the way in which the Judge of the case builds his decision about the aspects under his Authority. Strictly speaking, without justification, there is no judgment. We would be witnessing an arbitrary use of the powers granted by the Constitution and the Law to the Judges of the Republic.

Article 76, no. 7, literal l) from the Constitution, stipulates that “[r]easons must be stated for all rulings by the public authorities. The reasons shall be deemed unstated if the ruling does not set forth rules or legal principles on which it is based and does not explain why they are relevant to the facts. Administrative acts, orders or rulings that do not state the grounds on which they are based shall be deemed null and void. The responsible public servants shall be sanctioned.”

Moreover, justification has been the focus of an extended procedural discussion, and the Supreme Court of Justice has been clear and emphatic as regards the nullity of a decision which

[initials]

12 See Decision at 5. 13 See Decision at 6.

[CERT.GEOTEXT] 14

is unsupported, unduly supported or supported in a contradictory manner. Therefore, in case number 133-04, the Third Civil and Commercial Division of the former Supreme Court of Justice states: “Justification should meet several requirements: it should be express, clear, complete, legitimate and reasonable; about this requirement, it is stated that the Judge must observe in the judgment the rules of proper human understanding for the rational elaboration of thoughts. . . . However, lack of justification is not only present when in the judgment or proceeding there has been a partial or total omission of the regulations or legal principles in which they are based, and the applicability to the factual background has not been explained, but also when the reasons are absurd.”14

“Justification . . . is a necessity and an obligation that has been imposed in regards to effective judicial protection . . . . Indeed, it is a right-duty of judicial decisions. Duty because it inevitably links the judiciary and the law, of public matter and subjective nature, because all of the citizens who access the courts with the objective of obtaining effective judicial protection of their rights and their legitimate interests are the holders of the same.” Nov. 9, 1999 (Case No. 558-99, First Division, Official Register 348, Dec. 28, 1999).

3. The fact of the merger and the alleged fusion of assets and the piercing of Texaco’s as well as Chevron’s corporate veils that the trial Judge relies on in his opinion as justification of verdict it imposes on my client are false and without legal basis and cannot serve as grounds to assert jurisdiction over Chevron.

In answering the complaint, my client argued that the case at hand had been wrongly filed against Chevron and submitted forceful evidence proving that (i) Chevron did not have, and does not have any connection to Ecuador15 ; (ii) Chevron Corporation maintained no commercial relationship whatsoever with Texaco or TexPet during the period that TexPet operated in Ecuador 16 ; (iii) Chevron is not the legal successor of Texaco 17 ; (iv) TexPet is an indirect subsidiary of Texaco that, like Chevron, has maintained its own identity, independent legal capacity and separate assets18; (v) Texaco did not control the operations of TexPet19; and (vi) Texaco did not consent to the suit filed by the plaintiffs.20

14 Case, 133-04, Third Civil and Commercial Division of the Supreme Court of Justice, Official Record, Supplement, number 367, June 25, 2008, page 5.

15 Answer as Read into the Record, § I.1.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 243. 16 See Answer as Read into the Record, §§ I.1.1-I.1.5, I.1.7, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-

67, 243-244v. 17 Answer as Read into the Record, § IV.2.3, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 265. 18 See Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m., at 5-6, 173; Certificate of Good Standing of

ChevronTexaco Corporation, dated Aug. 7, 2003, attached as Annex 7 to Chevron’s Motion filed October 15, 2003 at 5:10 p.m.,


The plaintiffs for their part have presented no evidence to contradict these facts, despite the fact that it was their procedural obligation pursuant to Article 114 of the Code of Civil Procedure: “each party is required to prove the facts that he alleges, except for those that can be presumed pursuant to law.” On the contrary, as plaintiffs’ own representatives have admitted internally, as contained in the record, the plaintiffs committed a grave error in “su[ing] the wrong party in the lawsuit.”21

Consequently, the appealed decision itself indicated that Chevron’s arguments regarding the lack of a legitimate adversary party, with which the action was brought, were sufficiently proven. The decision expressly states that “Chevron Corporation is not the successor of TEXACO INC.”22 and that “the record shows duly certified documentary evidence proving that Texaco Inc. maintains legal status and consequently legal life.”23 The decision further establishes that it was “proven” that the alleged and nonexistent merger between Chevron and Texaco Inc. argued by the plaintiffs “actually occurred between Texaco Inc. and Keepep Inc.”24

Failure in the burden of proof cannot benefit the litigant reluctant to comply with its obligations, but this is precisely what happened in this case, in which the lower court Judge, assuming the position of the party, has baselessly sought to cure the material procedural breach of the plaintiffs, disregarding his own conclusions about the relationship between Chevron and Texaco, creating sua sponte a weak argument, which seems more like a plea by one of the parties than a decision, to then arrive at a completely wrong conclusion that: (i) there is a merger between Chevron and Texaco and even the more ridiculous conclusion that this merger implied a fusion of Chevron and Texaco assets; (ii) the corporate veil of both Texaco and

[initials]

record at 196-241, 232-34, 236; Certificates of Good Standing of Chevron Corporation and Texaco Inc., dated Feb. 22, 2010, attached as Annex 18 to Chevron’s motion filed Oct. 29, 2010 at 5:20 p.m.; Affidavit of Frank Soler, dated Mar. 26, 2010 ¶¶ 4, 9, 15, 16 and attached Exhibit 2, submitted as Annex 18 to Chevron’s Motion, filed Oct. 29, 2010 at 5:20 p m.

19 Answer as Read into the Record, § IV.1.8, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 244v. 20 See Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m., at 36-38; Declaration of Lydia I. Beebe,

Corporate Secretary of ChevronTexaco Corporation, submitted as part of ChevronTexaco Corporation Power of Attorney, dated Aug. 13, 2003, attached as Annex 1 to Chevron’s Motion filed October 14, 2003 at 5:10 p m., Record at 196-241 (199) (tranlsation in Spanish at 202-203); Answer as Read into the Record § I.8, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, Chapter IV-IV.5.9 (265-266); see also Chevron’s motion filed Dec. 20, 2010 at 5:50 p.m.

21 Diary of Steven Donziger, entry dated Jan. 24, 2006, attached as Annex 1 to Chevron’s Motion, filed Dec. 20, 2010 at 4:30 p m. (DONZ00036246).

22 Decision at 6. 23 Id. 24 Id.

[CERT.GEOTEXT] 16

TexPet can be pierced to get to Chevron, and therefore, that Chevron is subject to the jurisdiction of the Ecuadorian courts.

This is unacceptable. Below I analyze and refute the grounds on which the lower court judge constructed his wrong conclusion.

a) Regarding the absence of a “merger” between Texaco and Chevron

The Arbitrary Use of Press Publications: Based on publications in the press and the interpretation of documents that do not constitute evidence according to Article 121 of the Code of Civil Procedure, the Judge below determined that Chevron and Texaco Inc. entered into a “legal transaction that has been called merger in English, and that combined the net assets of both companies.”25

The lower court Judge’s conclusion is arbitrary, because he himself indicates in the decision that there is evidence on record in the form of notarized instruments, which are a means of proof in Ecuadorian Civil Procedural Law, that Texaco is currently a legally existing company. This notarized instrument evidence cannot be evaded and replaced with information from the media, on which speculative interpretation is possible; which, because of their limited scope as press releases or electronic information, are not valid evidence according to law; and because logically, not to mention obviously, the complexity of corporate processes such as mergers are not identifiable through press releases or electronic information interpreted by a judge who is not versed in foreign law, which has not been proven, applicable to legal acts he purports to adjudicate.

The lower court Judge’s baseless conclusion on the merger and union of assets was undermined by the sole fact of the evidence of Texaco’s current legal existence. Nevertheless, the lower court Judge refused to see the reality of the legal facts and took a wrong turn with regard to the “merger.”

It is wrong because if Texaco exists and has current legal identity, there is neither a merger nor a company that has replaced it in its rights and obligations. It would seem that the conclusion is simple, obvious. But the lower court Judge chose to construct a false conclusion based on an arbitrary syllogism.

The Arbitrary Application of the Ecuadorian Companies Act: The other incorrect element in the construction of the lower court Judge’s legal conclusion on this point is the arbitrary use of the Ecuadorian Companies Act for a corporate process supposedly conducted in a foreign country. The Ecuadorian Companies Act does, in fact, contemplate two types of company mergers: simple merger or union of companies and merger by takeover. In any of these events, the Ecuadorian Companies Act takes it for granted that the result is a new company which replaces the merged companies, or only one of the companies survives. In other words, the Ecuadorian Act does provide for the replacement of companies due to mergers; but that Act is not applicable in this case for two significant reasons: first, because it does not apply to the merger between Texaco and Keepep since it did not take place in Ecuador; and second, because the mere existence of Texaco as an autonomous

[initials]

25 Decision at 10.

[CERT.GEOTEXT] 17

legal entity, differentiated from Chevron, shows that the step provided for in the Ecuadorian Companies Act did not occur, which is the termination of the legal identity of the companies involved in takeovers or simple mergers: Ergo: there is no merger.

On this point, the appealed decision is extremely unacceptable. We are not dealing with a mere error of the lower court Judge, but rather erroneous justification and blatant ignorance of elementary rules for the application of laws in space, regarding a fairly simple legal problem: the Companies Act applies to mergers that take place in Ecuador and the proven existence of Texaco’s legal personality eliminates the possibility of anyone succeeding it in its obligations. The rights and obligations of corporate entities are transferred when the companies are terminated; not when the companies exist.

The merger between Texaco and Keepep took place based on the laws of the State of Delaware, and although it indicates, as part of Section 259(a) of the General Corporation Law, that a merger or consolidation of companies results in the consolidation of two companies into one, with the “debts, liabilities and duties of the respective constituent corporations” becoming part of the absorbing corporation,26 the lower court judge was not empowered to overlook that, under the plain terms of the Agreement and Plan of Merger, Texaco merged with the Keepep27—not with Chevron—so nothing in Delaware law transferred the obligations of Texaco to Chevron. Rather, Texaco simply became a Chevron subsidiary, maintaining its own identity and assets.

What is surprising about this part of the decision is also that, in the proceedings, the lower court Judge lacked evidence of the foreign law, in this case the law of Delaware, which was essential for the Judge to understand the legal facts of the transaction as a whole and not venture into conclusions based on mere speculation void of logic or basis.

Inasmuch as plaintiffs relied in their complaint as one of the findings of fact that Chevron and Texaco merged in such a way that the latter was absorbed by Chevron, what should have been proven in this case was the fact of the merger (which was already analyzed above); as well as that the foreign law on which the merger was based determined that Texaco was absorbed by Chevron. But the plaintiffs also failed to meet that burden of proof, which was incumbent upon them pursuant to Article 189 of the Code of Civil Procedure.

An objective analysis of the facts up to this point shows that not only did the plaintiffs outrageously fail to meet their obligation to prove the alleged merger and the foreign law, but also that, despite the fact they did not do that, the lower court Judge benefited them with the sua sponte construction of the random and speculative argument regarding a non-existent merger.

[initials]

26 Delaware Corporation Laws Annotated § 259 (2010). 27 Agreement and Plan of Merger, dated October 15, 2000, § 1.1, attached as Annex B to Chevron’s Second

Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166680-751 (166693).

[CERT.GEOTEXT] 18

My client considers it important to make the facts of the transaction transparent due to the respect deserved by the Judges comprising the Sole Chamber: Delaware code, which applies to both Chevron and Texaco, provides that certain conditions must be met to give effect to a merger, including the filing of a certificate with the Secretary of State.28 Indeed, a court in the United States reviewed the same 2001 transaction between Chevron and Texaco and confirmed, as a matter of law, that Chevron did not merge with Texaco or acquire its liabilities as a result of that transaction. 29 In that decision, Bonnifield v. Chevron Corp., the U.S. Court accurately recognized that Chevron merely acquired the stock of Texaco without assuming rights or obligations or having the transaction constitute a de facto merger. In response to one party’s argument that public statements describing a “merger” of Chevron and Texaco might provide grounds for a finding that Chevron is liable for Texaco’s obligations—reasoning almost identical to the erroneous decision of the lower court judge—the U.S. court ruled unequivocally that such statements are “not certificates that satisfy the statutory prerequisites to an effective merger” and are thus not evidence of a merger of the companies.30

The decision of the lower court Judge further suggests that the transaction, which he calls “reverse triangular merger” (transcribing what was said by Atty. J. Prieto in one or more judicial inspections), through which Texaco merged with Keepep and became a Chevron subsidiary was somehow improper. This conclusion disregards well-established corporate legal protections and precedent; apart from the fact that there is no court decision whatsoever declaring the merger fraudulent. This is another unfortunate speculative error of the lower court Judge, which unnecessarily offends through gratuitous defamation of two world-renowned companies, Chevron and Texaco.

Reverse triangular mergers are recognized in other countries as legitimate legal structures through which shareholders acquire corporate entities without receiving the assets and liabilities of the newly acquired subsidiaries; in any event, this concept does not exist in Ecuadorian Law. Therefore, the lower court Judge ruled suspiciously when he cited the Ecuadorian Companies Act to assess the non-existent merger between Chevron and Texaco and conclude that it was a reverse triangular merger. If this concept does not exist in the Companies Act, it is striking that the Judge used it in the decision to assess an act he is unfamiliar with and the law governing that act, which he is also unfamiliar with, because there is no evidence in the record that it was proven, as was necessary in order for the judge to apply the law of the State of Delaware to it.

The lower court Judge speculated and erred; and with his error, he unfairly and illegitimately dragged Chevron into these proceedings, which should have never been initiated and should be declared null and void.

[initials]

28 Delaware Corporation Laws Annotated § 251(c) (2010). 29 See Bonnifield v. Chevron Corp., Case No. B206255, 2009 WL 1111601 at *5-*8 (Cal. Ct. App. Apr. 27,

2009) (unpublished decision). 30 See Bonnifield v. Chevron Corp., Case No. B206255, 2009 WL 1111601 at *5-*6 (Cal. Ct. App. Apr. 27,

2009) (unpublished decision).

[CERT.GEOTEXT] 19

The arbitrary use of the principle of good faith: The appealed decision purports to justify the error committed by the plaintiffs in suing the wrong party by shielding them behind the principle of good faith: According to the principle of good faith used by the lower-court Judge, any citizen, whether Ecuadorian or American, who heard the public statements made by Chevron and Texaco would have inevitably come to believe that there was a merger between these companies. According to the lower-court Judge, this same belief appears to be what led the plaintiffs to file their action against the new company that resulted from the merger of the other two, since this conclusion would be the result of having relied on the information that both companies publicized through their legal representatives and official channels.31 This argument ignores the fact that the complaint was filed by competent attorneys who are highly reputed in Ecuador, one of whom, Dr. Alberto Wray, has been a renowned university professor at several prestigious Ecuadorian universities; but who, it must be acknowledged, erred when they did not check the public records of the State of Delaware in Ecuador and see that Texaco is currently a legally existing company.

To think that the plaintiffs committed a good faith error is simply a fantasy. Attorneys Alberto Wray, Mónica Pareja, Pablo Fajardo, etc., not only erred when they pointed to the merger as the fact that justifies their right to sue Chevron, but also misfiled the complaint, despite the fact that Texaco’s lawyers formally notified the plaintiffs’ lawyers that Texaco had designated an “authorized agent for service of process for claims filed against Texaco, Inc. in Ecuador.”32 With that, along with the publicly available and official documents concerning the “merger,” the plaintiffs were aware that Texaco continued to exist as a corporate entity distinct from Chevron and could have been sued in this lawsuit. A minimum of professional prudence on the part of these attorneys would have led them to check on Texaco’s legal existence before filing the complaint against Chevron. Furthermore, my client directly pointed out plaintiffs’ error at the onset of litigation in its answer to the complaint.33 Given such repeated notice, plaintiffs’ continued claims against Chevron prove plaintiffs’ bad faith.

This is not a good faith error as the lower court Judge says. It is professional negligence. The Judge was not able to salvage this professional negligence by accusing Chevron of having deceived the plaintiffs’ naïve attorneys. Quite simply, there is no decision in the history of Ecuador in which the attorney’s negligence in wrongly suing is salvaged by the Judge in the decision using the most illegal and speculative argument possible: transferring the liability for the plaintiffs’ error to the defendant due to the plaintiffs’ alleged good faith.

[initials]

31 Decision at 11. 32 October 11, 2002 Letter from King and Spalding, filed Oct. 19, 2004 at 4:05 p m., Record at 10327-28

(the translation in Spanish is included in the Record at 10329); January 2, 2003 Letter from King and Spalding, filed Oct. 19, 2004 at 4:05 p.m., Record at 10330-31.

33 Answer as Read into the Record § I, filed Oct. 21, 2003 at 9:10 a m., Record at 243-67, 243-245.

[CERT.GEOTEXT] 20

The lower court Judge’s omission of the legal facts of the “merger” and appealing to the plaintiffs’ good faith is not a naïve act, on the contrary, it is an obvious desire to resolve a procedural error of the plaintiffs, for which the Judge is not authorized. The plaintiffs’ error in suing Chevron, and not Texaco, should have resulted in acceptance of the corresponding motion and therefore rejection of the complaint. Legally, that is the only consequence of the plaintiffs’ error.

On this point, it must be concluded that the lower court judge overstepped his bounds, once again being guilty of vicio de incongruencia [defect for lack of confinement to the pleadings, “ne ultra petita”], by purporting to justify the blundering of the plaintiffs and their attorneys, action that further evidences that the Judge below, since it was not a party to the lawsuit, did not have the capacity to rule on TexPet’s corporate veil.

b) Legal impossibility of the lower court Judge to pierce TexPet and Texaco’s corporate veil.

The lower court Judge’s decision appeals to United States case law on piercing the corporate veil, and not to Ecuadorian law. This is yet another error of the lower court Judge and a grave one, not only because no one has proven the case law mentioned by the judge at trial as indicated in Article 189 of the Code of Civil Procedure, but also, and to make the ruling even more embarrassing, the case law cited by the lower court Judge does not quote key issues for the case, like what the Supreme Court of the United States, the highest U.S. judicial body, has pointed out:

“It is a general principle of corporate law deeply ‘ingrained in our economic and legal systems’ that a parent corporation (so-called because of control through ownership of another corporation’s stock) is not liable for the acts of its subsidiaries. Thus it is hornbook law that ‘the exercise of the “control” which stock ownership gives to the stockholders…will not create liability beyond the assets of the subsidiary. That “control” includes the election of directors, the making of by-laws . . . and the doing of all other acts incident to the legal status of stockholders. Nor will a duplication of some or all of the directors or executive officers be fatal’.” 34

The Judge below improperly accepted plaintiffs’ late and baseless claim and found significance in minimal parts of statements of Ricardo Reis Veiga commenting at a judicial inspection about his employment responsibilities at various times with different Chevron-owned

[initials]

34 U.S. v. Bestfoods, 524 U.S. 51, 61 (1998) (citations omitted); see also James D. Cox & Thomas Lee

Hazen, Corporations, § 7.07 at page 271 (“[n]o principle is more engrained in corporate law than that shareholders enjoy limited liability. Indeed, limited shareholder liability is not simply a principle of corporate law but a cornerstone of capitalism”) (2nd ed. 2003).

[CERT.GEOTEXT] 21

entities.35 The Court ignored the obvious facts that Mr. Veiga was not being asked about the alleged merger of Chevron and Texaco, that his statements loosely described the relationships between Chevron, Texaco, and TexPet, and that plaintiffs’ counsel confirmed Mr. Veiga’s statements to have been trivial when he declined to ask for any clarification at the time. The lower court judge similarly adopts plaintiffs’ defective reliance on the act of a former Texaco agent, Rodrigo Pérez Pallares, who never worked for Chevron, for the mere fact of having made a payment related to this case.36 Nothing about that supposed event indicates any confusion about the separate corporate personalities of Chevron, Texaco, or TexPet, and nothing in Ecuadorian law precludes an agent from acting for two principals, even simultaneously. It is also worth stressing that the Judge, Dr. Zambrano, ignored the rest of Mr. Veiga’s testimony, completely relevant to the case.

The lower court Judge is especially mistaken by ignoring that evidence must be used in a logical and weighted manner. A merger, much less the union of assets, is not proven by judicial deposition or testimonial statements. Legal facts such as corporate acts are demonstrated by the contracts containing them and by the acts of the Authorities that attest to them. The Judge’s distortion of the facts is broader and also legally more serious, as he supposes the “merger” based on press releases, web information and statements taken out of context; but he fails to assess the direct, complete and sufficient evidence that there was no merger or union of assets, such as is Texaco’s current legal existence proven through public documents whose authenticity and legality are presumed by operation of law. This single corporate situation, fully demonstrated at trial, eliminates the need for the lower court Judge’s arbitrary digression on the alleged, and non-existent, transfer of obligations from Texaco to Chevron because of the supposed “merger.”

The Judge below inaccurately contends that “this litigation being the only known scenario in which Chevron Corp. debates the existence of the merger with Texaco Inc.”37 To the contrary, Chevron consistently has asserted its independence from Texaco and has had that separateness recognized each time that it was erroneously mentioned during these proceedings. Moreover, Chevron asserted the issue in the Bonnifield v. Chevron Corp. decision discussed above. Chevron also raised the issue before the United States Third Circuit Court of Appeals in Kehm Oil Company v. Texaco, Inc., resulting in a 2008 decision recognizing the undisputable fact that the 2001 transaction involving Chevron and Texaco resulted in Chevron becoming a parent corporation of Texaco and, thus, the two entities remained separate and independent.38 Similarly, Chevron raised the issue before the United States District Court for the Eastern District of Louisiana in IMC Exploration Company v. Texaco, Inc., resulting in the

[initials]

35 Decision at 12. 36 Id. 37 Decision at 12-13. 38 See Kehm Oil Company v. Texaco, Inc., 537 F.3d 290, 300 (3d Cir. 2008) (“The merger between

Chevron and Texaco was accomplished in such a way that Chevron is now the parent of Texaco.”).

[CERT.GEOTEXT] 22

2005 rejection of a plaintiff’s argument that Chevron was somehow a successor in interest by merger to Texaco Inc. The court in the IMC Exploration Company case correctly noted that Chevron and Texaco were at the time—as they are now—merely separate companies within a group of related but independent corporate entities.39 In fact, Chevron has consistently asserted its independence from Texaco and Courts have consistently recognized that distinction in several opportunities. The lower court decision ignores those facts, and the suggestion of the Judge below that Chevron only questioned the existence of a merger with Texaco, Inc. for purposes of this litigation is plainly false and wrong.

On the other hand, the lower court Judge committed a number of unjustifiable legal and logical slip-ups in the grounds for these conclusions, all erroneous.

Contrary to what the appealed decision implies, it was demonstrated in the present case that Texaco never controlled the operations of TexPet in Ecuador.40 As timely maintained and proven by my client, this argument was already litigated and completely rejected in the Aguinda case in New York.

The Aguinda case in New York was brought by the same representatives of the plaintiffs that appear in this case. Many of the plaintiffs were the same plaintiffs as in this case, and it was a putative class action on behalf of 30,000 residents in the region. It is worth mentioning that it was the plaintiffs who cited the New York case as a factual precedent in their complaint, not my client. The Judge in the New York case rejected the argument that Texaco controlled the operations of TexPet in Ecuador and concluded:

[T]he plaintiffs, after taking numerous depositions and obtaining responses to no fewer than 81 document requests and 143 interrogatories, were unable to adduce material competent evidence of meaningful Texaco involvement in the misconduct complained of—to the point that plaintiffs essentially stipulated as much.41

[initials]

39 See IMC Exploration Company v. Texaco, Inc., Index No. Civ. A 04-1004, 2005 WL 161178, at *2 (E.D.

La. Jan. 24, 2005) (“it appears that ChevronTexaco and Texaco, Inc. are merely in the same corporate family. . . . ChevronTexaco is merely the highest parent in the parent-subsidiary relationship tier that exists among the Chevron and Texaco entities.”).

40 Deposition of Lydia I. Beebe, Corporate Secretary of ChevronTexaco Corporation, submitted as Annex 1 to Chevron’s Motion filed October 15, 2003 at 5:10 p.m., Record at 196-241, 199-200, 202-203. (Spanish translation, Record at 202-204).

41 Decision of the District Court for the Southern District of New York in Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001) at 4, affirmed by the Court of Appeals for the Second Circuit, 303 F.3d 470 (2d Cir. 2002), Record at 9465-610, 9524 (the Spanish translation appears in at Record at 152880-912, 152822-83).

[CERT.GEOTEXT] 23

The record before the Court . . . clearly establishes that all of the Consortium’s key activities, including the decisions and practices here at issue, were managed, directed, and conducted by Consortium employees in Ecuador. By contrast, no one from Texaco or, indeed, anyone else operating in the United States, made any material decisions as to the Consortium’s activities and practices that are at issue here.42

The appealed decision relies on sophisms to undermine this forceful nature. Likewise, the lower court judge characterizes both the conclusions and the nature of the New York Court’s decision43 in such a way that the interpretation and assessment of these facts as proof of Chevron’s defense be rejected in order to be able to proceed with the construction of the justification that is in line with its preconceived decision. The truth is, nonetheless, that the plaintiffs have failed to present evidence in this lawsuit to refute what has been resolved by the New York court.

On the other hand, a point that must be made clear and that will be addressed again later on is that not only is it incorrect to say that Chevron Corp. assumed Texaco Inc.’s obligation to subject itself to the jurisdiction of Ecuador since, as was demonstrated during the proceeding and acknowledged in the ruling, Chevron Corp. and Texaco Inc. continue to be two separate companies, but it is also incorrect to say that Texaco Inc. subjected itself to the jurisdiction of the Ecuadorian courts to answer the lawsuit the ruling in which is now the subject of this appeal. This erroneous premise is fundamental in Judge Zambrano’s reasoning.

What was sought in the lawsuit filed against Texaco Inc. in the New York courts in 1993 was compensation for damages allegedly suffered by the plaintiffs to their persons and their assets, in other words, a claim based on individual rights. It was not, as this case is, a claim of diffuse rights due to alleged negative effects on the environment. When Texaco Inc., a company which retains legal personality and, consequently, legal life, agreed to subject itself to the jurisdiction of the judges and courts in Ecuador, it did not do so in a general manner, but specifically for the matter with respect to which a claim had been filed in 1993 in the Aguinda v. Texaco case, and in accordance with the terms set forth by the courts in charge of said case.

In accordance with what was said before, to affirm as Judge Zambrano does now in his ruling, that Chevron Corp. assumed the obligation to subject itself to the Ecuadorian courts in order to answer claims based on diffuse rights due to alleged damage to the environment, thus results in a double

[initials]

42 Decision of the District Court for the Southern District of New York in Aguinda v. Texaco Inc., 142 F.

Supp. 2d 534 (S.D.N.Y. 2001) at 31, affirmed by the Court of Appeals for the Second Circuit, 303 F.3d 470 (2d Cir. 2002), Record at 9465-610, 9551 (the translation appears in at Record at 152880-912, 152901).

43 See Decision at 17.

[CERT.GEOTEXT] 24

falsehood, since Chevron Corp. did not assume Texaco Inc.’s obligations and Texaco Inc. did not agree to submit itself to the Ecuadorian Courts to answer claims based on diffuse interests.

4. Conclusion

Since the requirements of the national Law itself, in Art. 13 as well as in Art. 15 of the Civil Code, for a foreign company to be subjected to Ecuadorian Laws and Judges were not verified, it has been established that Ecuadorian Judges and Courts have no jurisdiction over Chevron and, as a result, this case meets the requirements for nullity in accordance with the provisions of Article 349 of the Code of Civil Procedure (CPC), which reads: “Judges and courts may declare nullity even though the parties have not alleged any omission, in cases involving formalities 1, 2, 3, 4, 6, and 7 of Art. 346,” with the first substantial solemnity of all lawsuits being the lack of jurisdiction of the court hearing the case.

The Court Ad quem must, therefore, declare the nullity of the entire proceeding.

On a subsidiary basis to what has been stated with respect to the lack of jurisdiction, my client deems it appropriate in any case to refer to the lack of competence of the lower court Judge and of the SOLE Division of the Provincial Court of Justice of Sucumbíos for the following reasons.

B. Alternatively to the Above, I Argue the Lack of Competence of the Lower Court Judge and of This Provincial Court of Justice of Sucumbíos in this case.

[1.] Piercing the corporate veil violates the principle of confinement to the pleadings [ne ultra petita]. The lower court Judge has satisfied claims not present in the complaint for which he has no competence.

As indicated throughout this case, these proceedings should have been governed by the principle of the initiative of the parties. Therefore, in order to resolve the case, the Judge below was only able to bear in mind those matters submitted to him by the parties in the complaint and the answer to the complaint. Article 273 of the Code of Civil Procedure contains this mandatory principle: “The judgment shall decide only the issues regarding which the case was filed . . . .” The same restriction is imposed by Art. 19 of the Organic Code of the Judicial Branch. In dealing with this idea of “procedural congruence,” both case law and doctrine are consistent in [pointing out] that the judge, in deciding a disputed matter, is not able to consider facts or questions not argued or proven by the parties when the lawsuit was initiated. To rule on matters beyond the petition results in a decision that violates the principle of procedural “congruency” [confinement to the pleadings] that requires identity between the ruling and the claims and objections made by the parties.

In this regard, the appealed decision stated that, in this case, “the lawsuit has been defined with the plaintiff’s claims and the defenses propounded by the defendant in the conciliation hearing.”44

[initials]

44 Decision at 6.

[CERT.GEOTEXT] 25

Now then, the lower court Judge is not competent to rule on piercing the corporate veil because there is no record of this claim in the plaintiffs’ complaint, nor have the prerequisites for piercing the corporate veil been met, to wit: the existence of fraud through corporate forms and a complaint in an ordinary proceeding, and before a Civil Judge, who proceeds to declare the fraud or abuse of the corporate forms and sentence those responsible to pay for the damages caused. Article 17 of the Companies Act states in this regard that for “frauds, abuses or non-legal recourses committed on behalf of companies and other natural or legal persons the following will be personally and jointly liable: 1. The ones who order or execute them, without prejudice to the liability that could affect those persons; 2. The ones who would benefit from that, up to the value of it; and 3. The holders of assets for the reimbursement.”

None of the factual grounds of said regulation have been alleged by the plaintiffs of the claim. Moreover, there is no evidence to prove that the merger was found fraudulent by any authority, and even worse, that there is a fraudulent “order” or “implementing” act from my client. The only valid facts in the proceeding prove that Texaco informed the plaintiffs of its legal existence, which was further proven by Chevron, which undermines any possible fraud.

But the discussion is sterile, since the piercing of the corporate veil cannot be part of an environmental action. It could be in a civil action before an ordinary Judge, but, in any case, this is another discussion that has nothing to do with the facts of this case, and the lower court Judge acted incorrectly by ruling on the same, since he lacks competence to do so because of the nature thereof.

The other important procedural factor that the Judge blatantly omitted is that TexPet has not been sued in this trial, even though it is its corporate veil which would be pierced. In this process, there are no reasons to pierce TexPet’s corporate veil, but it is not appropriate to discuss that either, since the affected company is not a party to the proceedings. In these types of legal actions, it is the company whose legal veil is to be pierced that must be sued, which in this case would be TexPet, and possibly, Texaco, as well as its shareholders, administrators and all other supposed beneficiaries of the fraud and abuse of the law.

The lower court Judge is not a Civil Judge; it was not one of the causes of action for which the case was brought, nor was it requested in the complaint, to pierce TexPet’s corporate veil; furthermore, TexPet was not even sued in this case; and no one has alleged, much less proven, that the elements for this specific action exist: fraud or abuse of the law; damage to third parties, and benefit for those who caused it.

It is important to also highlight that the plaintiffs failed to argue or prove that TexPet or Texaco have “no assets,” as the lower court Judge simplistically holds. Furthermore, the plaintiffs did not argue or prove that the merger between Texaco Inc. and Keepep Inc. was structured to defraud the plaintiffs or third parties. Nothing in plaintiffs’ proof suggests that Chevron committed any kind of fraud, let alone the type of misconduct that Ecuadorian law would recognize as justifying disregard of the several layers of corporate boundaries that exist between Chevron and Texaco, and further between Texaco and TexPet.


It is impossible to claim fraud or any other deceptive conduct in any of this, particularly considering that Texaco communicated to plaintiffs after the transaction and before the filing of the lawsuit, that it stood ready to receive service in Ecuador.

[2.] Alternatively to the above, I allege the Lower Court Judge’s lack of competence to hear legal actions for contingent damages provided for in the Civil Code, as well as improper joinder of actions brought by the plaintiffs.

[initials]

ct.

In its answer to the complaint, Chevron argued that the complaint contained an improper joinder of actions.45 In fact, the plaintiffs have based their complaint both on the provisions of the Civil Code and on the provisions of the Environmental Management Act, and this situation generates what legal scholarship refers to as the problem of concurrent rules for determining liability.46 In this regard, the decision sustains that the plaintiffs’ substantive right “to seek damages is guaranteed by the Civil Code, as the complaint states, in its Articles 2241 and 2256.”47 The same decision indicates, however, that the plaintiffs also seek environmental damages pursuant to the Environmental Management A 48

The same Judge Dr. Zambrano recently held that environmental claims under the Environmental Management Act cannot be joined with other civil claims. The plaintiffs, in the case known as “Red Amazónica,” claimed environmental damages in a summary verbal proceeding under the Environmental Management Act, and also requested civil compensation as owners of certain properties allegedly affected by hydrocarbon operations. The Division of this Court that heard the case, in which the Judge below was part of, held that this constituted an inappropriate joinder of environmental and civil actions. 49 Article 24 of the Code of Civil Procedure provides: “[e]very person has the right to not be sued except before the competent judge determined by the law.” Environmental and civil actions, according to the Judge below, defend completely different legal interests, so they must be heard in different proceedings.50 Only environmental, not civil, claims can be heard in a summary verbal proceeding, such as were initiated against OCP

45 See Answer submitted at the Settlement and Answer Hearing held on October 21, 2003 at 9:10 a m. §

IV.3.1, (page 265) (“[I]nappropriate accumulation of actions, they have presented in the summary verbal proceeding actions that require distinct substantiation and whose knowledge does not correspond to you, Your Honor.”).

46 This issue is generally analyzed by scholars as the “problem of concurrence of liabilities.” See ALONSO TRAVIESA, María Teresa, “The Problem of Concurrent Liability, A Chilean Law Perspective”, LexisNexis, Santiago de Chile, 2d ed., 2007 (containing an extensive study on the subject).

47 Decision at 28 48 See Decision at 27. 49 Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of Justice of

Nueva Loja, dated July 29, 2009, Case 218-2008. 50 Ibid., at numeral 5.

[CERT.GEOTEXT] 27

(Oleoducto de Crudos Pesados) and in this case against Chevron. Specifically, claims divisible by alleged individual injuries, cannot be made through summary verbal proceedings. The Court, in the Red Amazónica case, held that any matter related to civil damages was not admissible in the environmental lawsuit, and that, consequently, it was without authority to consider any claim related to compensation for civil damages.51

The appealed decision is silent with respect to the analysis adopted by the lower court judge in the Red Amazónica case. On the contrary, the limited justification offered in rejection of the motion submitted by my client simply indicates that the abovementioned provisions of the Civil Code make no “reference to the procedure to be used or to the competent Judge, thus, the assertion that these actions should or must be processed ‘ordinary trial’ (sic) before the competent Civil Judge lacks legal basis.”52 This conclusion of the lower court Judge is contrary to law, because the very Article 59 of the Code of Civil Procedure he cites states that, in the absence of a special procedure, the claim must be prosecuted before a Civil Judge and in an ordinary proceeding.

The lower court Judge deliberately mixes up the concepts and reaches the erroneous conclusion that [in] the absence of a specific procedure for the claim for contingent damages and others included in the Chapter on Civil Crimes and Offenses, the special procedure for the action to which it is added or joined must be followed, which in this case would be the summary verbal proceeding provided for in Article 43 of the Environmental Management Act.

Now, through his analysis of Article 59 of the Code of Civil Procedure, the Judge reached the conclusion exactly opposite the one indicated by this provision: that in case of absence of provision on the proceedings route, it is not the ordinary proceeding.

There is not a single legal, doctrinal or case law provision that supports the so-called theory created by the lower court Judge in his decision. This is illogical and arbitrary justification, and therefore this conclusion is contrary to law.

This obvious lack of necessary and sufficient grounds for the decision shows that there is no legal basis for allowing the improper joinder of actions that the Judge below attempted to admit; therefore, I respectfully, and alternatively to my previous petitions, request that the proceedings be declared null and void due to the lack of competence of the Judge in this case.

[initials]

51 Ibid. at numeral 10; see also Art. 24 of the Code of Civil Procedure provides: “Every person has the

right only to be sued before the court of competent jurisdiction as determined by law.” 52 Decision at 26.

[CERT.GEOTEXT] 28

[3.] Alternatively to the above: nullity of the proceedings lack of competence of the Judges due to general unawareness, in this lawsuit, of the provisions of Public Law.- Arrogation of jurisdiction that pertains to the Administrative Branch.- Invasion of the sphere of powers and duties of the Executive Branch:

The legal provisions cited by the Judge in his decision, in order to justify the existence of alleged damage to the environment and health, as well as the alleged fault of TexPet, entail the arrogation of powers on the part of the lower court Judge of jurisdiction that the Laws set forth exclusively for certain civil servants who work for the Executive Branch.

The Health Code, the Waters Act, the Hydrocarbons Act and the Technical Regulations for Petroleum Works, for the Exploration and Production of Hydrocarbons and Hydrocarbon Operations are all cited by the Judge in his decision. These laws grant jurisdiction to various civil servants who work for the Executive Branch to judge and declare violation of its regulations, to control environmental pollution, and, in particular, to sanction those who violate its regulations, including those who impact the environmental as a result of their hydrocarbon operations.

None of these regulations grants jurisdiction to the common Judges of the Judicial Branch except to hear and resolve challenges of administrative acts carried out by civil servants with jurisdiction in the exercise of the duties assigned to them by each of these Laws and Regulations. In this latter case, the Judges with jurisdiction are the Administrative Courts and the Administrative Division of the National Court of Justice.

There is no possibility that a common Judge may hear the same matter that make up the powers and duties assigned to civil servants by these Laws and Regulations, including the legal capacity to declare violation of these same laws and regulations.

The Health Code assigns jurisdiction to the Minister of Health, the National Health Office, Provincial Health Offices and Health Commissioners.

The Waters Act assigns jurisdiction to Waters Judges and employees of the Ministry of Natural Resources.

The Hydrocarbons Act assigns jurisdiction to the Ministry of Energy and Mines, the National Director of Hydrocarbons and the National Office of Environmental Protection.

This system of jurisdictions prevents the lower court Judge from declaring a violation of the laws and regulations indicated above, since this is an aspect of Public Law exclusively reserved for the Executive Branch. Therefore, the statements of the lower court Judge that TexPet committed an infraction of the Laws and Regulations indicated above, in the absence of a prior explicit declaration by the authorities with jurisdiction over the same, represents an arrogation of powers and an incursion by the Judge in the case into the sphere of authority of the Executive Branch.


Moreover, the administrative procedures that these Laws and Regulations prescribe for the declaration of violation of their provisions by TexPet or any other person are specifically regulated by the Laws and Regulations indicated above, as well as by the By-Laws of the Administrative Legal Regime of the Executive Branch, and it must be noted that said legal body was not in effect at the time of the operations of the former Consortium. No such procedures were followed to establish TexPet’s liability for alleged damage to the environment during its hydrocarbon operations in the Concession area, nor did the health or water authorities indicate any liability whatsoever of TexPet for its operations in the former Concession area. The lower court Judge could thus hardly assume the role and authority reserved for those government administrative bodies, to state, on his own, what had not been declared by the administrative authorities.

This inadmissible arrogation of powers by the lower court Judge results in the nullity of the entire proceeding and with the potential commission of malfeasance by the lower court Judge.

Added to this is the fact that the administrative authorities with jurisdiction over hydrocarbons exonerated TexPet from all liability and blame. This is why the conduct of the lower court Judge is precisely the opposite of that of the authorities with jurisdiction, which leads to an unfortunate and unconstitutional collision of legal interests between the Executive Branch and the decision handed down by the lower court Judge. As stated above, this results in the nullity of the entire proceeding carried out by the lower court Judge.

C. Alternatively to the above, nullity of the proceedings due to procedural fraud and violation of the guarantees of due process.

As the Constitutional Court has determined in several decisions, due process is “the core of procedural validity,” and the absence of due process results in the nullification of the judicial proceeding. 53 In the words of the Professor Couture, due process is the materialization of the guarantee of the protection of the courts per se: “The right to due process consists, ultimately, of not being deprived of life, liberty or property, without the guarantee entailed in the processing of a case conducted in the manner established by law . . . .” 54 Due process, among other things, includes the right to present a defense; the right to have sufficient time and means to prepare a defense; a public process; the ability to submit evidence and to refute evidence submitted by the other party; the

[initials]

53 Decision of the Constitutional Court, dated May 14, 2009, Case 003-2009-SEP-CC, published in Official

Gazette Supplement 602 of June 1, 2009, on pages 71 to 72. The Constitutional Court, in the decisions adopted in special actions for precautionary measures, has held that a violation of constitutional norms regarding due process nullifies the proceedings as of the time at which the violation occurs. See Decision of the Constitutional Court dated February 24, 2010, Judgment 0004-10-SEP-CC, Case 388-09-EP, on page 11. Once the violation is established, everything is turned back to the time of said violation. See Decision of the Supreme Court of Justice, Second Chamber for Civil Matters, Case 32, published in Official Gazette 82 of May 15, 2003, on page 11 (“The effect of nullification is to turn things back to the state that existed prior to occurrence of the grounds for nullification, and therefore the nullification of the judgment handed down by the Fourth Chamber of the Superior Court of Guayaquil in the full-trial proceedings for nullification of judgment entitled Municipality of Playas vs. Inmobiliaria ORS S.A.”)..

54 COUTURE, Eduardo. Studies on Civil Procedural Law. Third Edition. Editorial Ediciones Depalma. Buenos Aires. 1998. Volume I. p. 51.

[CERT.GEOTEXT] 30

possibility to orally question experts and witnesses; the right to be tried by an independent, impartial judge with competent jurisdiction; the requirement that the grounds for judicial decisions be duly stated; and the opportunity to appeal judicial decisions.55 Furthermore, in order to have legal effect, the acts of the members of the judiciary56 must be consistent with these constitutional rights that comprise due process.57 Certainly, one of the principal duties of a judge is to ensure the validity of the process, 58 so as to guarantee that the due process rights of all parties are respected. 59

My client put before the Court extensive and irrefutable evidence that the plaintiffs engaged in fraudulent conduct throughout the trial as part of their unscrupulous effort to overcome the factual and legal flaws in their lawsuit and the lack of merit of their case.

As shown in evidence before the Judge below, plaintiffs knew that from its inception, their case was heading “inexorably towards dismissal”60 because they attempted to bring an already settled claim that was barred by established principles of res judicata and non-retroactivity, and because they admittedly “su[ed] the wrong party.” 61 In addition to recognizing that these legal impediments were sufficient to have their complaint rejected, plaintiffs internally acknowledged their failure to prove the merits of their case with competent evidence, noting that their science was “spotty,” 62 “screwy,” 63 and consisting of nothing more than “smoke and mirrors and bullshit.”64 Accordingly, they attempted to manufacture a case where there was none, submitting fabricated and falsified evidence to the Judge below and engineering a massive fraud to corrupt the work of the supposedly independent and neutral global expert. And to ensure that the Judge below would accept their “smoke and mirrors” evidence, plaintiffs embarked on an

[initials]

55 See Art. 76 of the Constitution of 2008. See also Art. 24 of the Constitution of 1998 and Art. 19(16) of

the Constitution of 1978. 56 See Art. 129(1) of the Organic Code of the Judiciary. 57 See Art. 424 of the Constitution of 2008. 58 See 129(9) of the Organic Code of the Judiciary and Article 349 of the Code of Civil Procedure. 59 See 130(1) of the Organic Code of the Judiciary. 60 E-mail from Cristobal Bonifaz to Alejandro Ponce Villacis, et al., dated Jun. 4, 2006 at 1:27 p m., at 2,

attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028557).

61 Diary of Steven Donziger, entry dated Jan. 24, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p m. (DONZ00036246).

62 E-mail from Joe Berlinger to Mike Bonfiglio and Alyse Spiegel, dated January 28, 2008 at 2:08 p m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00092079-83).

63 Diary of Steven Donziger entry dated Mar. 7, 2006, at 5, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p m. (DONZ0027256).

64 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010, at 2:50 p.m., (CRS 195-05-01).

[CERT.GEOTEXT] 31

unprecedented pressure campaign to have this case resolved by factors outside the courtroom and outside the rule of law. There was and is but one appropriate response to such misconduct and such meritless claims—nullity of the proceedings and subsequent dismissal of the complaint, now by reversal of the lower court’s decision.

This misconduct demanded the immediate dismissal of the case and punishment of all involved. Yet the Judge below refused to take any action against the plaintiffs and their attorneys “due to a lack of time” because “no incidental proceeding can suspend the verbal summary proceeding.”65

If this conclusion of the lower court Judge were acceptable, even with regard to the procedural fraud and violation of constitutional rights, this would serve to confirm that the summary verbal proceeding is incapable of respecting the guarantees of due process, as my client has repeatedly argued. Plaintiffs’ fraudulent scheme should have been fully investigated by the lower Court, and its refusal to do so even after the scheme was exposed through discovery in the United States deprived my client of critical evidence available only in Ecuador. Given that the plaintiffs’ fraud became the backbone of their case and tainted all the evidence they submitted at trial, it is impossible to explain how they managed to have the decision favor their interests.

Given the scope and extent of plaintiffs’ fraud, it is no solution to simply ignore the Cabrera and Dr. Calmbacher reports (but use the data contained therein) and proceed as if nothing happened, as the Judge below did. By plaintiffs’ own admissions, the Cabrera report was “the most important evidence we have in the case.”66 Without that report, which plaintiffs’ technical team spent so long secretly drafting, there is no evidence on several critical issues, including causation. The Court, as noted, inexplicably continued to rely upon the supplemental reports submitted by plaintiffs in their brief of September 16, 2010, at 5:15 p.m., which were premised primarily upon the fraudulent Cabrera report. And the falsified Dr. Calmbacher reports were but one aspect of the plaintiffs’ manipulation of science throughout the proceeding.

[initials]

65 Decision at 51. 66 Transcript of Crude Outtakes, attached as Annex 1 of Chevron Motion, filed Sept. 16, 2010 at 4:35 p.m.

(CRS 187-01-02); E-mail from Steven Donziger to Pablo Fajardo, et al., dated Feb. 16, 2007 at 4:54 p.m., at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p m. (DONZ00024227) (describing the Cabrera Report as “the most important thing in the case, the basis for [Chevron] to pay millions of dollars.”).

[CERT.GEOTEXT] 32

Indeed, plaintiffs viewed the judicial-inspection process as “choreographed,” “all about politics and arguing and bullshit and show,”69 and “legally . . . almost irrelevant.”70 The Judge below nonetheless based his decision on the work of experts nominated by plaintiffs who were “instruct[ed]” to find contamination by attorneys whose stated ethos is to “make facts . . . that help us.”71 The Judge below simply ignored the cumulative effect of plaintiffs’ misconduct. He also ignored the broader implications arising from the nature of plaintiffs’ fraud, which went to the core merits of their case. If a case based upon science and the evidence could have been made against Chevron, the plaintiffs would not have needed to resort to deceit and corruption.

In yet another attempt to avoid acknowledging the extent of the procedural fraud and its calamitous consequences for the trial, the Judge below attempted to transfer the entire weight of the malfeasance to Steven Donziger,72 and straightaway maintained that the plaintiffs cannot assume the consequences of Donziger’s actions. Both the premise and the conclusion reached by the Judge are erroneous. Although Mr. Donziger was a key member of the conspiracy to corrupt the proceedings, the fraud was perpetrated by numerous individuals, including several of the Ecuadorian attorneys with power of attorney to act in the trial. Anticipating that the evidence of fraud obtained in the United States would be presented to the Judge below, plaintiffs’ acting Ecuadorian counsel in this proceeding, Mr. Prieto, wrote to Mr. Donziger:

“[T]he problem compañero is that the effects will potentially be devastating in Ecuador (besides destroying the case, all your lawyers could go to jail).”73

68 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 069-02-03).



71 See Official Transcript of Deposition of Dr. Charles W. Calmbacher at 52:13-18, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p m., Record at 168998 (the Spanish translation is included in Record at 169097v); Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p m. (CRS 375-00-05).

72 Steven Donziger is the lead lawyer for the Plaintiffs in the United States. 73 E-mail from Julio Prieto to Steven Donziger and others, dated March 30, 2010 at 5:02 p m., attached as

Annex 2 to Chevron’s motion filed on Feb. 3, 2011 at 4:24 p m. (DONZ00055225).


Given that plaintiffs’ Ecuadorian counsel—including their lead counsel, Mr. Fajardo—were intimately involved in the procedural fraud, plaintiffs must face the consequences of the fraud per the reasoning of the Judge below regarding Mr. Donziger.74

Although this renders irrelevant the question of whether plaintiffs are bound by the particular actions of Mr. Donziger, it is clear that they must bear the procedural consequences of the fraud because the fraud was committed within the process, corrupting it to the extent that it is impossible to save it. As the Judge below himself acknowledged, “his link—Mr. Donziger’s—to the plaintiffs’ “legal team” is somewhat obvious,”75 whereby the plaintiffs end up benefiting from his illegal actions. Indeed, even after the judgment was issued, the plaintiffs’ lead attorney, Mr. Fajardo, admitted that Mr. Donziger “is part of our legal team . . . he is part of the team and he has never stopped being part of this team at any time.”76

In sum, in this matter, as in many others, the Judge below abstained from redressing a grave injustice.

But my client hopes that a legitimate and supported decision in the case will also reveal what was said by Professor Osvaldo Alfredo Gozaíni:

“In summary, the intention to deceive and use the process by diverting it from its natural aim presupposed and characterizes procedural fraud, which may be defined as follows: every tall story, every artifice, every affection that makes a defense impossible for the adversary, thereby making the judge unable to make a just decision.”77

The Court ad quem must now issue the only decision consistent with due process: reversal of the lower court decision, and instead ordering the nullity of the entirety of the proceedings with the subsequent dismissal of the complaint and sanction of plaintiffs’ counsel.

Additionally, my client continues to investigate evidence which suggests that the final decision was written by someone with access to the databases controlled by the Plaintiffs and which are not part of the record. In fact, there are powerful reasons to think that the final decision, issued only a few weeks after requesting the case file in order to render a decision, was not the independent product of the Judge below. For example, parts of the decision appear to be the work of someone using the Selva Viva database, which is controlled by the attorneys for the Plaintiffs and is not part of the record. Those

[initials]

74 See Code of Civil Procedure, Art. 1453 (“Obligations arise . . . from the voluntary act of a person who

obligates himself (as in . . . all quasi-contracts)”); Code of Civil Procedure, Art. 2186 (“Management of another person’s affairs without a power of attorney is a quasi-contract by which a person manages another person’s affairs without a power of attorney, obligates himself to such person and obligates the person in certain cases.”).

75 Decision at 51. 76 Transcript of Press Conference. Amazon Defense Front. CIESPAL (Feb. 15, 2011). 77 GOZAINE, Osvaldo Alfredo. Temerity and Malice in Proceedigns. Ed. Rubinzal-Culzoni. ed 2002. p.

318.

[CERT.GEOTEXT] 34

portions would have been written either by someone on Plaintiffs’ legal team or by their consultants, or by the judge in the case using information which Plaintiffs provided directly and without my client’s knowledge, since it is not part of the public record in this case.

1. Nullification due to falsification of plaintiffs’ signatures on the complaint: The judgment is nothing but the culmination of a process marred by defects going back to the complaint itself and should also be declared null and void.

The judgment pronounced on February 14, 2011, at 8:37 a.m., is the final act of a process marred by defects ab initio. Had the judge properly assessed the entirety of the clear and convincing evidence submitted by my client, the declaration of nullification of the entire proceedings would have been the only possible alternative. Nonetheless, the Judge preferred to ignore that evidence and granted the plaintiffs a scandalous ruling for an exorbitant sum of money, which has all the signs of being a clear attempt by the plaintiffs to extort my client. With this action, the Judge has turned into a true facilitator of the claims of the plaintiffs and their Attorneys, and has therefore breached his principal obligation of establishing the truth in the proceedings and acknowledging it in the judgment.

We are reminded that, as is clearly demonstrated in the motion filed on December 20, 2010 at 8:50 a.m.,78 twenty of the plaintiffs’ signatures were surely falsified in a document in which the complaint was ratified and Dr. Alberto Wray was designated as common representative for the plaintiffs. This constitutes countless procedural grounds for nullification based on violation of due process and of substantial procedures such as the lack of the judge’s competency, legitimacy of the representative capacity of the common representative, but also the absolute nullification of the entire procedure, given that it is a fraud committed in relation to the complaint.

Now, the Judge in the decision ignored this extremely severe defect, because he maintains that it is not possible: “a handwriting inconsistency cannot be used as an argument to claim a forgery that the very author of the signature denies.”79 Although the lower Court purported to find that some of the alleged “signers” stated a posteriori that the signatures attributed to them are true, it is important to point out that there is no evidence of this in the record. The so-called ratification is not found in the court’s file, but only in the press statements of plaintiffs’ attorneys, which are not valid evidence for this process and cannot serve as the base for the judge’s decision. The evidence that nearly half of the plaintiffs’ signatures attached to the complaint were forged remains undisputed. Moreover, even if the plaintiffs had submitted evidence of the alleged ratification—which would be clearly in their interest—this in no way implied that those signatures are authentic and that this irreparable defect of nullity was resolved. Thus, the Judge

[initials]

78 See Chevron’s motion of Dec. 20, 2010 at 8:50 a.m. 79 Decision at 56.

[CERT.GEOTEXT] 35

erred when he stated that Chevron’s objection “is extremely reckless and evidence of bad faith toward the Court and the opposing party.” 80

Calling the judge’s attention to falsified documents cannot be considered reckless, and even less, disloyal, except from the point of view of the plaintiff. The judge should only be loyal to the search for truth and justice. A painstaking analysis performed by Expert Gus Lesnevich allowed him to unequivocally conclude that 20 signatures were forgeries, including the conclusion that the forger practiced at least one signature before beforehand.81

Reckless and disloyal is asserting something regarding a supposed ratification (not of the 20, but of a few) otherwise inadequate, which is not contained in the record, but only in the press statements of plaintiffs’ attorneys. This is an unusual statement by the Judge below with a marked bias intended to benefit the plaintiffs.

As my client indicated at the appropriate time, 82 these falsifications as well as the nullification resulting from such unlawful acts cannot be ratified or remedied, because there is nothing valid to ratify. Here, what is involved is not a simple forgotten formality that has to be corrected. Rather, it is an affirmatively false or non-existent expression of will, on account of which the act with nonexistent consent of the persons whose signature was falsified legally disappears. What is involved is a fraudulent complaint.

A prominent jurist addressing this issue explains that

“[i]n procedural matters, the requirement of a signature in legal documents results in those documents giving shape to inexistent procedural acts when documents not signed or signed by third parties imitating the signature of the interested party—at his request—are attached to the case file. A ratification or subsequent authentication of the interested party is not relevant.”83

The forged signatures cannot serve as the expression of consent of the alleged signers. The Civil Code states that, “in order for a person to be bound by an act or statement of intent,” “the following conditions shall be met. . . [that] [h]e must consent to the act or statement.”84 The omission of an indispensable legal formality occurs when signatures are falsified, since falsification is not a legal means to express the consent of a party. Article 1698 of the Civil Code states that this

[initials]

80 Id.

81 Declaration of Gus. R. Lesnevich, dated Dec. 13, 2010, submitted with Chevron’s motion filed Dec. 20, 2010 at 8:50 a m.

82 See Chevron’s motion filed Dec. 20, 2010 at 8:50 a.m. 83 BUERES, Alberto J. and HIGHTON, Elena I. “The Civil Code and Supplementary Norms. Analysis of

Jurisprudence and Case Law” cited by the Appellate Court for Civil and Commercial Matters of Posadas, province of Misiones, Argentina, Chamber II, judgment pronounced on Feb. 23, 2006.

84 Art. 1461 of the Civil Code.

[CERT.GEOTEXT] 36

defect leads to an “absolute nullity.”85 Said nullification “can and must be declared by the judge” and “cannot be cured by having the parties ratify the contract.”86 Therefore, a document that has falsified signatures is not a valid legal act; it is null and void in-and-of-itself and cannot satisfy any legal requirement of substance or of form. Furthermore, the falsification of signatures on court documents is an unlawful act that makes it nonexistent, given that it lacks consent. There is no act without consent; and when the act lacks consent, it becomes absolutely null and void, or nonexistent, because the act lacks one of the essential requirements for its legal life to commence.

Also of note is the fact that Article 339 of the Penal Code establishes that “[a] sentence of six to nine years in a minimum security penitentiary shall apply to anyone else that has falsified public instruments, . . . pleadings or any other judicial record: Whether by false signatures.”87 As a consequence, any person who falsifies and/or uses signatures is subject to a criminal penalty. It is obvious that a crime cannot satisfy any legal requirement in substance or in form: no crime has procedural validity. This is not a defect that can be cured; it is not the mere absence of a formality that the trial-court Judge may deem “ratified” according to the best of his understanding. It is a crime that the trial-court Judge has tolerated, with the enormous procedural repercussion that had the Judge abided by law, he was obligated to declare the nullification of the complaint and order the commencement of the corresponding criminal prosecutions.

My client so informed the Judge with a notice of this constant knowledge of a crime, which disclosed that one of the ratification documents for the complaint and designation of Alberto Wray, Esq. as common representative that the plaintiffs submitted together with the complaint contains twenty false signatures. The crimes committed due to the falsehood of the signatures placed on those two pleadings would be at least: (1) for the perpetrators of the forgery, contemplated in Article 339 of the Penal Code transcribed above; and, (2) for those who make use of those documents with forged signatures in the litigation, even if they are not the authors thereof, as contemplated in Article 341 of the Penal Code: “In the cases mentioned in the preceding articles, whoever made use, with criminal intent, of the false document, shall be punished as if he were the forger.”

Based on the above and pursuant to Article 292 of the Penal Code, the Judge below was under the obligation to deliver the required “notice” to the Prosecutor’s Office with respect to the fact that the offenses defined in Articles 339 and 341 of the Penal Code may have been committed in this lawsuit. The Judge, to the contrary, has chosen to become a possible accomplice to a crime committed in these proceedings; and to possibly be subject to the criminal provisions of Article 292 of the Penal Code.

The Civil Code, the Organic Code of the Judiciary, the Code of Civil Procedure and the Penal Code all reach the same conclusion: If a court document is submitted with falsified signatures, it is not valid with regard to substance or form, and has no value or legal effect other than the penalty applicable for the commission of that crime. Since it is a material violation of Civil Law, Procedural Law and Criminal

[initials]

85 Art. 1698 of the Civil Code. 86 Art. 1699 of the Civil Code. 87 Art. 339 of the Penal Code.

[CERT.GEOTEXT] 37

Law, the falsification reported and proven by my client deprives a motion or court document of any and all legal effect.

2. Nullification of the complaint due to failure to appear before the Clerk of the lower Court by those who do not know how to read and write in order to place their fingerprints:

The Judge, in a brief reference of his extensive decision, attempted to deal with the extremely serious defect objected to by my client in a timely fashion88 with respect to the failure to appear before the Court Clerk to express consent to sue Chevron in the terms set forth in the complaint. Thus, the Judge quickly rejected the same by applying the same “reasoning” that he applied to the report of falsified signatures.89 Moreover, the Judge went so far as to state that “the lack of this formality is understood to have been remedied with the plaintiffs’ subsequent acts, since a formality of this type can in no way hinder the administration of justice.”90 This is no longer a sign of naivety, but of an unjustified willingness to be involved in a crime.

As I indicated in the motion filed on December 22, 2010 at 3:49 p.m., the failure to appear before the Clerk of the lower Court by the plaintiffs who were unable to or did not know how to sign, in order to place their fingerprints on the complaint, as well as on the pleading containing the designation of Alberto Wray, Esq. as their common representative, leads to the nullification of the entire proceedings, since on account thereof both the complaint and the designation of Dr. Wray as common representative are legally nonexistent acts, given that they fail to meet the requirements contemplated in the Civil Code.

Article 1010 of the Code of Civil Procedure requires that “when a person does not know how to or is unable to sign and appears for the first time at trial. . . . he shall appear before the clerk of the court and shall stamp his fingerprint at the bottom of the filing.”

Pursuant to the above-referenced Article 1010, the plaintiffs who were unable to sign or did not know how, were obligated to appear before the Clerk to place their fingerprints when they ratified the complaint. In accordance with Article 69 of the Code of Civil Procedure, the lower court Judge should not have admitted the complaint to be heard, since it did not meet the requirements established in Articles 67 and 68 of the Code of Civil Procedure in order to be admissible.

The same offense regarding lack of the plaintiffs’ fingerprints on the motion designating Mr. Wray as plaintiffs’ common representative likewise violates Article 1010 of the Code of Civil Procedure, as well as Article 40(2) of the same Code, and therefore, under Article 346(3) of that same Code, in keeping with Article 344 thereof, Mr. Wray’s appearance at trial and all his acts are plagued with the defect of lack of representative capacity and must be declared null and void and of no value whatsoever.

[initials]

88 See Chevron’s motion filed Dec. 22, 2010 at 3:49 p m.

89 Decision at 56. 90 Id.

[CERT.GEOTEXT] 38

3. Nullification due to lack of representative capacity and insufficient power of attorney of plaintiffs’ common representative:

Without any explanation whatsoever, the Judge below concluded in his judgment that “[t]he above also leads us to reject the accusations of false legal representation against the attorneys who have acted for the plaintiffs, Dr. Alberto Wray and Attorney Pablo Fajardo, who have appeared duly empowered by the plaintiffs and the Law in accordance with art. 40 of the Code of Civil Procedure.”91 At this point, this “conclusion” of the Judge comes as no surprise, since it responds to the mere capriciousness of his nonexistent “reasoning.”

Nonetheless, Article 43 of the Code of Civil Procedure, in keeping with Article 346(3) of that same Code, states that all attorneys who act in representation of another person must provide proof of their representative capacity as of the time they first appear in the case.92 The Supreme Court (now the National Court) has been categorical in indicating that nullification should be declared when “a person appears who claims to be counsel and lacks power of attorney”; when “the power of attorney that counsel displays is insufficient”; or, when “a person intervenes on behalf of another without a power of attorney but with an offer of ratification (agent) and his intervention is not ratified.”93 To avoid nullification, the Judge must make sure that all the attorneys appearing have sufficient power of attorney granted by the parties they say they represent.

Attorney Pablo Fajardo, who says he is common representative of the plaintiffs, failed to comply with this material formality on two occasions, and the Judge below did not require him to comply with it.

Attorney Fajardo has acted without power of attorney in this case, which means that all his requests have not been made with sufficient power of attorney, and thus become irremediably null and void. Likewise the services of process made with respect to the opening of the evidentiary period; everything concerning the taking of evidence; the waiver of several court-ordered inspections; the pleading of September 16, 2010 at 5:15 p.m., and the judgment itself, issued without having complied with an inexcusable duty of the Judge, are null and void.

Also, attorney Fajardo, for the same reasons set forth above, cannot file any appeal whatsoever that would be valid, nor can the attorneys whom he has authorized to participate in the lawsuit.

4. Nullification due to procedural fraud. The case has been manipulated and the Administration of Justice has been led into deceit by the plaintiffs during the course of the proceedings:

In March 2010, sworn testimony in the United States from one of the plaintiffs’ nominated experts, Dr. Charles W. Calmbacher, revealed that the two reports submitted to the Court in his

[initials]

91 Id. 92 Art. 346 states: “The following are essential procedural formalities common to all proceedings and

levels: . . . 3. Legitimacy of the right of representation.” See also Art. 43 of the Code of Civil Procedure. 93 Decision of the Supreme Court of Justice, First Chamber for Civil and Commercial Matters, of October

25, 2004, Case 245-2004, published in Official Gazette 41 of June 17, 2005, p. 23.

[CERT.GEOTEXT] 39

name to the Judge below, regarding the judicial inspection of the Sacha-94 and Shushufindi-48 sites, were falsified documents that he had never seen, never authorized, and never signed.94

Dr. Calmbacher, who testified under oath pursuant to a subpoena obtained by Chevron in discovery proceedings in the United States, explained that the reports were not only falsified, but they also directly contradicted the conclusions he had reached.95 Dr. Calmbacher affirmed in his testimony that he never “f[oun]d that any of the sites that [he] inspected had contamination of such an extent that it would endanger human health”; that he never “f[oun]d that any of the sites that [he] inspected required any further remediation”; never “conclude[d] that TexPet had failed to adequately remediate one of the sites”; and that he never “conclude[d] that any particular site posed a risk to human health or the environment.”96

The plaintiffs’ agents, including Mr. Donziger, knew that the submitted expert reports were falsified because Dr. Calmbacher personally relayed to them his actual conclusion. 97 But apparently they took Dr. Calmbacher’s signature from other documents, or from blank pages which he signed, and attached it instead to reports with findings contrary and contradictory to those of Dr. Calmbacher.98

The submission of falsified expert reports is an outrageous act of fraud and corruption which nullifies these proceedings; it discredits not only the two reports submitted in Dr. Calmbacher’s name, but also all of the other evidence submitted by the experts nominated by the plaintiffs for the judicial inspections, due to lack of credibility.

Documents recently handed over to Chevron by Dr. Alberto Wray, one of the plaintiffs’ attorneys, as part of the judicial discovery proceedings before the U.S. courts, corroborate Dr. Calmbacher’s testimony regarding the plaintiffs’ willingness to pressure and distort expert

[initials]

94 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 112:1-8, 116:3-18, dated Mar. 29,

2010, attached as Annex 5 to Chevron’s Motion, (hereinafter “Deposition of Dr. Charles W. Calmbacher”) filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169028, 169030 (the Spanish translation is included, Record at 169072-157, 169127v, 169129v).

95 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 113:2-25, 117:6-20, Record at 169128, 169130. (the Spanish translation is included at Record at 169072-157 (169128, 169130).

96 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 113:19-25, 115:19-24, Record at 169028v, 169029v (the Spanish translation is included at Record at 169072-157 (169128, 169129).

97 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 114:22-115:2, 118:15-119:1, Record at 169029-29v, 169031-31v (the Spanish translation is included at Record at 169072-157) (169128v-29v, 169130v-31).

98 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 114:1-21, 116:3-117:20, Record at 169029, 169030-30v (the Spanish translation is included at Record at 169072-157) (169128v, 169129v to-30).

[CERT.GEOTEXT] 40

work.99

In fact, there are additional reasons to believe that other reports submitted by experts nominated by the plaintiffs were similarly fraudulent. Outtakes from the documentary Crude, a film recorded at the request of plaintiffs’ attorneys, show Mr. Donziger plotting to fraudulently manufacture scientific evidence. In the footage, experts from the plaintiffs’ technical team advise Mr. Donziger that there is no evidence regarding the extent of groundwater contamination.104 Mr. Donziger dismisses their concerns, saying,

“Hold on a second, you know, this is Ecuador. You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want . . . . [T]his is all for the Court just a bunch of smoke and mirrors and bullshit.” 105

See Official Transcript of Deposition of Dr. Charles W. Calmbacher, dated Mar. 29, 2010, at 92:18 - 94:17 & Ex. 7, attached as Annex 5 to Chevron’s Motion filed Apr. 14, 2010 at 3:42 p m., Record at 169072-158, 169083v (the English original is in the Record at 168970-169071v, 168984).

104 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion of Aug. 6, 2010 at 2:50 p.m. (CRS 195-05-01).

105 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion of Aug. 6, 2010 at 2:50 p.m. (CRS-195-05-01).


When one of the consultants continues to explain that “there is not enough information on that ground water,” Mr. Donziger says, “I got to make a point to these guys [the experts], but I can’t get this on camera,” and the clip ends.106

Not only did the Judge below fail to address the full scope of the fraud represented in the facts indicated above, he sought to minimize the malfeasance with respect to Dr. Calmbacher:

First, the Judge below noted an “apparent contradiction with public statements” attributed to Dr. Calmbacher in an El Universo article dated August 17, 2004. 107 But the statement of Dr. Calmbacher was not quoted, and, whatever the precise statement, it was made before he had performed any testing, which did not take place until after the article was published. Additionally, it is worth mentioning that same argument was provided by the plaintiffs when they defended before the media the validity of the reports made by expert Calmbacher. There is therefore no contradiction with the conclusions Dr. Calmbacher reached after performing his analysis, which are the conclusions that plaintiffs purposefully altered.

Second, the Judge below gives a commentary that is subjective and impertinent to his role as judge on Dr. Calmbacher’s testimony by stating that “it is obvious that he has been left with a sense of resentment on a personal level against the plaintiffs’ team due to labor and money issues,” which seems more like an argument by a party than a consideration of a judge when reaching a decision.108 But the Judge below cites no evidence for this assertion, and even if it were true, it lacks any value in view of the overwhelming evidence that plaintiffs did, in fact, alter Dr. Calmbacher’s conclusions. This highlights the decision by the Judge below to shirk his responsibility by not investigating any aspect of the procedural fraud committed by the plaintiffs.

The lower court Judge notes that Dr. Calmbacher “has not been able to be reexamined” and that the “issue that it has not been possible to clarify,”109 but ironically ignores that it was the Judges themselves who refused my client’s repeated requests to obtain this precise information and clarifications. The purported justification by the Judge below for this failure, that “no incidental proceeding can suspend the verbal summary proceeding,”110 ignores his obligation to guarantee the constitutional rights of due process and that, moreover, the right to question the expert is part of the production of evidence, and not a collateral issue.

In light of this evidence that the plaintiffs fraudulently tainted the judicial-inspection process of this case, none of the data gathered by the plaintiffs during that phase should have been relied

106 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion of Aug. 6, 2010 at 2:50

p.m. (CRS-195-05-01). 107 Decision at 48-49. 108 Decision 49. 109 Id. 110 Decision 51.


upon by the Judge below, whether directly or indirectly. Yet that is precisely what the Judge below did. This is sufficient reason to declare the nullity of the proceedings.

5. The lower court Judge acted in complicity with the plaintiffs with regard to the corruption in the global expert report:

[initials]

ed

After the report by the settling experts regarding the judicial inspection of the Sacha-53 site reached a result unfavorable to the plaintiffs,111 the plaintiffs’ lawyers succeeded in obtaining the appointment of a single expert, instead of two experts, one nominated by each party, to perform the global expert examination of all the fields operated by the Consortium. 112 There is documentary evidence that shows that the appointment of Mr. Cabrera was planned by the plaintiffs, who from the start sought to ensure the appointment of an expert who would be susceptible to their control. On July 25, 2006, when Mr. Fajardo argued that we “agree to one perito, to get rid of the dirimente issue,” Mr. Donziger wondered in his diary: “But how can we control this perito?” 113 He soon devised a way to guarantee such control. Mr. Donziger personally interviewed potential candidates for the position. On December 16, 2006, he had “a one hour interview” with Fernando Reyes, a prospective global expert, to do “a hard vet,” and specifically to ask Reyes “if he could be comfortable slamming [Texaco] with a 10 b[illion] judgment.”114 Two months later, on February 12, 2007, Mr. Donziger wrote that Mr. Cabrera was one of two real possibilities for the global expert position, and recorded that he had “met with Richard and Reyes on Sat afternoon in the Hotel Quito.”115 Mr. Donziger’s vision involv

“using E-tech to give [the expert] cover, but he has to totally play ball with us and let us take the lead while projecting the image that he is working for the court.”116

Once Mr. Donziger had decided upon Mr. Cabrera as the global expert who would conform to that vision, the plaintiffs imposed heavy and illegal pressure on the presiding judge, until

111 Settling Experts’ Report on Sacha-53, filed Feb. 1, 2006 at 5:00 p.m., Record at 92492-685, 92522. 112 See Plaintiffs’ Motion filed July 21, 2006 at 9:10 a m., Record at 116431-35, 116434, Plaintiffs’ Motion,

filed Dec. 4, 2006 at 5:20 p m., Record at 123454-55; 123454. 113 Diary of Steven Donziger, dated Jul. 25, 2006, attached as Annex 1 to Chevron’s Motion, filed Dec. 20,

2010 at 4:30 p m., at 41(DONZ00027256). 114 Diary of Steven Donziger, entry dated Dec. 16, 2006, attached as Annex 1 to Chevron’s Motion, filed

Dec. 20, 2010 at 4:30 p m., at 22 (DONZ00027256). 115 Diary of Steven Donziger, entry dated Feb. 12, 2007, attached as Annex 1 to Chevron’s Motion, filed

Dec. 20, 2010 at 4:30 p m., at 13 (DONZ00027256). 116 Diary of Steven Donziger, entry dated Dec. 16, 2006, attached as Annex 1 to Chevron’s Motion, filed

Dec. 20, 2010 at 4:30 p m., 22 (DONZ00027256).

[CERT.GEOTEXT] 43

Mr. Fajardo was “100% sure the judge would appoint [Cabrera].”117 Among other things, the plaintiffs engaged in blackmail.

we “wrote up a complaint against [Judge] Yanez, but never filed it, while letting him know we might file it if he does not adhere to the law and what we

118need.”

essure Judge Yánez to appoint Mr. Cabrera.119 Even Mr. Donziger has admitted that the judge:

done [the appointment] had we not really pushed him”

Outtakes from the documentary Crude also reference a series of collusive and inappropriate ex parte meetings during which plaintiffs’ representatives successfully pr

“never would have (at those meetings).120

a list of well-known experts.” This conclusion is irreconcilable with the evidence on record.

On account of his repeated ex parte meetings with plaintiffs under inappropriate circumstances and his evident partiality, all of Judge Yánez’s decisions in this case should have been declared null and void.121 The Judge not only refused to do so, but incredibly maintained—in the face of plaintiffs’ admissions to the contrary—that “there were no defects in the appointment of expert Cabrera” because “the expert was named by this Court and not at a party’s suggestion, directly by the President of the Court from among 122

117 Diary of Steven Donziger, entry dated Feb. 27, 2007, attached as Annex 1 to Chevron’s Motion, filed

Dec. 20, 2010 at 4:30 p m., at 8 (DONZ00027256). 118 Diary of Steven Donziger, entry dated Sept. 13, 2006, attached as Annex 1 to Chevron’s Motion, filed

Dec. 20, 2010 at 4:30 p m., at 39 (DONZ00027256). 119 See Transcript of Crude Outtakes, attached as Annex 5 to Chevron’s Motion filed Sept. 14, 2010 at

11:10 a m. (CRS-158-02-06); see also Transcript of Crude Outtakes, attached as Annex 5 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a m., (CRS-347-00-01); Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-158-02-07).


121 See Chevron Motion, filed Dec. 21, 2010 at 10:50 a m.; Chevron Motion, filed Sept. 23, 2010 at 9:50 a.m.; see 2008 Constitution, Article 76(7)(a), (k); see also Organic Code of the Judiciary Article 9.

122 Decision at 50.


6. The plaintiffs were the true authors of the global expert assessment. Procedural fraud and intentional misrepresentation before the Judge of the case. Lack of action by the lower court judge upon evidence of the fraud. Judicial inaction as it pertains to the authors of the fraud.

The Expert appointed by the lower court Judge, Richard Cabrera, did not write the report and acted neither impartially nor independently in carrying out his duties. Thus, his expert report amounts to procedural fraud.

The most outrageous evidence of this conspiracy originates in the footage deliberately omitted from the film “Crude.” This footage shows Mr. Donziger explaining, prior to the appointment of Engineer Cabrera as Expert, that the Judge below, because of “typical Ecuador bullshit” (was going to) “appoint someone from the court” to replace the judicial inspection experts. Worse yet, Mr. Donziger affirmed, even from that first moment, that

“our people would do the basic work and give it to this guy” (Engineer Cabrera).

According to what Mr. Donziger explained on another occasion, “[t]he judge is going to appoint a guy in Ecuador . . . but really, you know, we’ll be supporting him with the work—our people, E-Tech, whoever we choose to use.” 123 Furthermore, Mr. Donziger made clear that this was not to be a scientific or technical process, but rather a process led by the attorneys in order to “expedite” the case to a (preordained) judgment.124 “Science has to serve the law practice”; Mr. Donziger also indicated that “the scientists are not the ones who will determine what we do . . . it is the attorneys because they have to handle the case.” 125

This explanation, in fact, soon became a reality. For instance, the footage deliberately omitted from the film “Crude” shows that Mr. Cabrera attended a meeting with the plaintiffs’ representatives and consultants to discuss the global expert assessment. Said meeting took place about two weeks prior to Judge Yáñez publicly appointing Mr. Cabrera, supposedly at random,

123 Transcription of outtakes not used in the documentary Crude, submitted as Annex 1 to Chevron filing of

September 16, 2010 at 4:35 p m. (CRS 138-02-01). 124 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35

p.m., (CRS 158-02-09). 125 Ibid. Mr. Donziger’s view is that “science is very malleable” and so the lawyers “need to find the

person who’s gonna sort of to stand up to scrutiny as an objective scientist . . . but also can play ball with you.” Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Motion filed Dec. 8, 2010 at 4:21p m. (CRS 375-00-16). Likewise, plaintiffs had no respect for the evidentiary process before Ecuadorian courts, noting that “[i]t’s not like a US court in that respect, things are really loose here. . . . Rules of evidence are, like, not even close to what they are in the US. People can just say whatever the ‘f’ they want.” Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Motion filed Dec. 8, 2010 at 4:21p m. (CRS 042-14-05). Mr. Donziger also explained to some of plaintiffs’ consultants, “the lawyers will control the scope [of the process], not the science people.” E-mail from Richard Kamp, dated Feb. 12, 2007 at 3:49 p.m., forwarding e-mail from Steven Donziger to Mark Quarles, dated Feb. 7, 2007 at 10:52 p.m., attached as Annex 7 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec.8, 2010 at 4:21 p m. (KAMP-NATIVE001786-001793, 001789).


as the sole expert. In one section of the ongoing notes in his personal diary, Mr. Donziger described how at the meeting

“[he] spent all day making comments, directed primarily at Richard. We presented our entire case and legal theory: so helpful! We need to do the same thing with the judge.”126

Attorney Fajardo points out that “the work isn’t going to be the expert’s. All of us bear the burden.”127 When one of the attendees asks whether the final report will be crafted solely by the expert, attorney Fajardo says that

“[w]hat the expert is going to do is . . . sign the report and review it. But all of us . . . have to contribute to that report.” 128

Then, a consultant asks, “[t]ogether,” and Mr. Fajardo confirms it. The consultant again asks, “[b]ut not Chevron,” to which everyone laughs, demonstrating their complicity in the conspiracy.129

Further evidence obtained by Chevron shows that plaintiffs’ representatives, their paid consultants and their affiliated activists carried out their plan to collaborate with Mr. Cabrera. As part of a Discovery proceeding in a U.S. Court, consultant Douglas Beltman testified that he had personally met with Mr. Cabrera, without the knowledge and participation of my client, in early 2008 in Quito, a meeting also attended by the plaintiffs’ representatives (including Mr. Donziger) and other Consultants (including Ann Maest from Stratus). 130 Later, on February 22, 2008, Mr. Beltman informed his colleagues that “write, over the next 2 to 3 weeks, probably the single most important technical document for the case,” a report which will “make recommendations for the court to consider in making its judgment.” 131 A later e-mail, sent a few days later, confirmed that this “technical document”

126 Steven Donziger Diary, of March 7, 2007, at pg. 5, attached as Annex 1 to Chevron filing of Dec. 20,

2010 at 4:30 p m. (DONZ00027256). 127 See Transcription of outtakes not used in the documentary Crude, submitted as Annex 1 to Chevron

filing of Aug. 6, 2010 at 2:50 p m. (CRS-191-00-03). 128 See Transcription of outtakes not used in the documentary Crude, submitted as Annex 2 to Chevron

filing of Aug. 6, 2010 at 2:50 p m. (CRS-191-00-03). 129 See Transcription of outtakes not used in the documentary Crude, submitted as Annex 2 to Chevron

filing of Aug. 6, 2010 at 2:50 p m. (CRS-191-00-03). 130 Official Certified Transcription of Deposition of Douglas John Beltman of Oct. 6, 2010, pg. 33 from line

19 to page 34 line 14, submitted as Annex 12 to Chevron filing of Oct. 29, 2010 at 5:20 p m. 131 E-mail from Douglas Beltman to Science Group et al., of Feb. 22, 2008 at 6:24 a m. (STRATUS-

NATIVE043232), filed as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.


was nothing less than the “Peritaje Global report.” 132 That e-mail outlined Engineer Cabrera’s report and assigned parts of its writing to several Stratus employees, 133 while another document confirmed that Stratus had requested “to prepare both Spanish and English versions of the report and annexes.” 134 Two weeks later, Mr. Beltman sent the “main report” to be translated into Spanish.135

The work and writing carried out unlawfully by plaintiffs’ representatives, their paid consultants and affiliated activists was not secondary or accessory to the report. The e-mails show that they wrote the entire report, including Engineer Cabrera’s summary “Declaration of Findings,” which was translated into English, along with the text of the report annexes. 136 The drafts written by Stratus included the name of Engineer Cabrera at the top and were dated “March 24, 2008,” the date when Mr. Beltman believed that Engineer Cabrera had to submit the report to the Judge below.137 From all of the evidence that my client has obtained by way of the Discovery proceedings, there is nothing that shows that Engineer Cabrera reviewed, much less edited, questioned or changed the material that was provided to him. The draft reports crafted by Stratus “were used just as they were” in Engineer Cabrera’s report. 138

The plaintiffs’ representatives, their paid consultants and affiliated activists wrote not only Engineer Cabrera’s initial report, but also the answers by Engineer Cabrera to the questions that were posed by the plaintiffs. 139 According to an internal e-mail at Stratus, some of these

[initials]

132 E-mail Douglas Beltman to Michael Carney et al., of Feb. 26, 2008 at 10:05 a m. (STRATUS-NATIVE043849), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.

133 E-mail from Douglas Beltman to Michael Carney et al., of Feb. 26, 2008 at 10:05 a m. (STRATUS-NATIVE043849 to 043850), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p m.

134 E-mail from Douglas Beltman to Ann Maest et al., of March 18, 2008 at 9:11 a.m. (STRATUS-NATIVE053439), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.

135 E-mail from Douglas Beltman to the translator, of March 12, 2008 at 10:11 a m. (STRATUS-NATIVE058388), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.; see also the official certified transcript of the deposition of Douglas John Beltman of Oct. 6, 2010 at pg. 148 lines 15 to 18, submitted as Annex 12 to Chevron filing of Oct. 29, 2010 at 5:20 p m.

136 E-mail from Douglas Beltman to Ann Maest and Brian Lazar, of April 1, 2008, at 1:53 p.m. (STRATUS-NATIVE065493), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.

137 Official certified transcript of the deposition of Douglas John Beltman of Oct. 6, 2010, at pg. 135 lines 3 to 18; pg. 198 starting at line 12 to page 199 line 11 and at pg. 209 lines 14 to 17, submitted as Annex 12 to Chevron filing of Oct. 29, 2010 at 5:20 p m.

138 Official transcript of the Deposition of Douglas John Beltman at pg. 194 lines 18 to 21, of Oct. 6, 2010, attached as Annex 8 to Chevron filing of Dec. 8, 2010 at 4:21 p.m.

139 E-mail from Douglas Beltman to Ann Maest et al., of August 1, 2008, at 5:27 a.m. (STRATUS-NATIVE058697), submitted as Annex 10 to Chevron filing of Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Jennifer Peers et al., of Aug. 10, 2008, at 10:55 a m. (STRATUS-NATIVE056768), submitted as Annex

[CERT.GEOTEXT] 47

“questions for the Perito” were of the nature of “assigned to us.” 140 In other words, the plaintiffs asked questions and provided their own responses about their own work, increasing the case’s estimated damages to over US$ 10 billion. To further this charade, Stratus also published comments purporting to independently review and validate the Cabrera Report, and sought to persuade others in the field to lend their names to what they referred to as the work of the “Technical Special Master” acting in “the capacity of a neutral ‘expert’ to the Court.”141 But finding others willing to validate the Cabrera Report proved difficult; Mr. Beltman explained to Mr. Donziger that “some of the underlying work in the Cabrera report has weaknesses that an academic would probably have a hard time defending.”142 Plaintiffs have not provided, and cannot provide a valid explanation for why or how the supposedly independent court expert, Mr. Cabrera, submitted answers prepared by one of their own consultants to questions they themselves had posed.

This evidence of fraud simply cannot be skirted by the lower court Judge, whose judgment omits any statement on both the ethical basis and legal content arising from it. The lower court Judge was obligated to abide by Article 292 of the Penal Code, however he was especially tolerant of the procedural fraud by allowing violation of the basic right to due process, which produces the nullity of any proceeding, not to mention the judgment. This is further indicated by Article 76 (4) of the Constitution: “evidence obtained or presented in violation of the Constitution or the law shall be invalid and shall suffer from a lack of evidentiary value.” Subsection c), number 7 of this standard: “to be heard… with equal opportunity.” And in subsection k) under the same numbers and standards referenced: “to be judged by an independent, impartial and competent judge…”

The response by the lower court Judge in the decision was supposed to be in line with the Constitution, doctrine regarding procedural fraud, and Ecuadorian case law as it pertains to the same matter. The Supreme Court of Justice, in one of its most impactful rulings on procedural good faith, found:

“. . . just as this Court said in the decisions cited, ‘. . . absent good faith in the conduct by the parties in a creditor-debtor relationship, the panorama changes completely; in fact, if this vital element is eliminated as to the debtor, the State shall not only be obligated to force compliance with its legal duty, but it shall also

[initials]

10 to Chevron filing of October 29, 2010 at 5:20 p.m. See also, E-mail from Jennifer Peers to Pablo Fajardo et al., of Aug. 12, 2007 at 6:17 p m., attached as Annex 1 to Chevron filing of Dec. 20, 2010 at 4:30 p.m. (DONZ00026679).

140 E-mail from Douglas Beltman to Jennifer Peers and Ann Maest, of October 27, 2008 at 6:18 p m., submitted as Annex 10 to Chevron filing of October 29, 2010 at 5:20 p m. (STRATUS-NATIVE051388).

141 BELTMAN, Douglas, et al., Comments on the Report of the Court-Appointed Expert Ing. Richard Cabrera Vega in the Case of Maria Aguinda y Otros v. Chevron Corp., dated Dec. 1, 2008, at 1, attached as Annex 16 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p m.

142 Annex 2 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (STRATUS-NATIVE042610).

[CERT.GEOTEXT] 48

be liable for all damages suffered by the creditor and, in some cases where this unlawful conduct affects the interests of the society as a whole, causing alarm and inciting feelings of concern which impact the collective wellbeing, thereby violating social property, it shall further be classified as a criminal offense; likewise, however, if the creditor does not act in good faith and seeks to attain exorbitant benefits beyond those justified by the credit relationship, or tries to impose upon the debtor its abusive will, seeking to bypass the limitations indicated not only by the statement of will which produced the relationship of obligation (when this stems from a legal transaction) but also, the law, practice and very nature of obligations, the State cannot assist this creditor if it does not ask for protection in exercising its right but instead seeks to abuse it. The behavior by the parties, both the creditor and the debtor, must therefore be balanced, within the indicated limitations and characterized by good faith. This cornerstone and fundamental rule of law on obligations is, basically, a standard for behavior. It entails a duty to behave in an upright fashion in accordance with equity, and ultimately constitutes “an objective rule of honor of legal trade.”’(Von Thur, cited by Camacho Evangelista in “Good Faith in Fulfilling Obligations.” Granada 1962, pg. 32). As it has been indicated, modern French doctrine sustains that good faith rests with the moral duty that makes a legal obligation of loyalty between the parties….”143

The evidence further shows that the plaintiffs were aware of the illegality of their actions and took very specific measures to cover them up. In a first draft, which would later become Engineer Cabrera’s report, one notation comments that “we need to determine to whom Richard will attribute each of the annexes.”144 The consultants also understood the need to conceal the fact that Engineer Cabrera’s report had been written originally in English, and Mr. Beltman told a colleague that he should treat “our original English version as if it’s a translated version” of Engineer Cabrera’s work.145 One employee recommended that in his “responses,”

[initials]

143 Supreme Court of Justice, First Chamber of Civil and Trade Matters, proceeding number 385, Official

Register number 521, of February 25, 2002, pg. 10. 144 E-mail from Douglas Beltman to Steven Donziger, of March 11, 2008 at 2:22 p.m., submitted as Annex

10 to Chevron filing of October 29, 2010 at 5:20 p m. (STRATUS-NATIVE067410 and 067418). 145 E-mail from Douglas Beltman to Brian Lazar, of July 28, 2008 at 3:12 p.m., submitted as Annex 10 to

Chevron filing of October 29, 2010 at 5:20 p.m. (STRATUS-NATIVE044716).

[CERT.GEOTEXT] 49

which were secretly written to the questions about Engineer Cabrera’s report, the consultants would try to:

“to clean up the language so it sounds more like the Perito.”146

Along those same lines, Mr. Beltman reminded Mr. Donziger by e-mail that a report written by another of the plaintiffs’ consultants, William Powers, needed to “his name taken off” before it could be used. 147 Likewise, a third consultant of the plaintiffs, Richard Clapp, wrote a report that “was incorporated into the expert report as an annex pretty much as is,” and another that “will probably appear in the expert’s response to comments.” 148 Mr. Beltman warned Mr. Donziger not to show anybody these reports with Mr. Clapp’s name, “because [they] would be distributing proof” of th 149e fraud.

The plaintiffs’ reactions to the first versions of the film “Crude” provide further evidence of the efforts to conceal their fraudulent conduct. The plaintiffs were successful in getting Mr. Berlinger to remove the takes in which the plaintiffs are seen working, months prior to the Judge below appointing Engineer Cabrera as the supposed “independent” expert for conducting the global expert assessment, along with one of the members of Engineer Cabrera’s team, whose name was revealed in the expert report, Carlos Beristain. 150 A few months later, Attorney Fajardo wrote separately, saying that these scenes “are so serious that we can lose everything or a lot just because of those few, miniscule images,” and again insisted that “[they] be corrected or removed.” 151 In another email, Mr. Fajardo, asked the filmmakers to remove scenes showing Mr. Beristain and Mr. Maldonado: “Those two guys must not appear in the documentary at all!”152 Mr. Fajardo emphasizes that if the two remain in the film,

146 E-mail from Jennifer Peers a Ann Maest y Doug Beltman, of October 27, 2008 at 4:59 p m., attached as

Annex 10 to Chevron filing of October 29, 2010 at 5:20 p.m. (STRATUS-NATIVE051388 to 051389). 147 E-mail from Douglas Beltman a Steven Donziger, of March 23, 2008 at 4:02 a.m., submitted as Annex

10 to Chevron filing of October 29, 2010 at 5:20 p m. (STRATUS-NATIVE063676). 148 E-mail from Douglas Beltman to Steven Donziger, of November 6, 2008 at 9:20 a m., submitted as

Annex 10 to Chevron filing of October 29, 2010 at 5:20 p.m. (STRATUS-NATIVE065062). 149 E-mail from Douglas Beltman to Steven Donziger, November 6, 2008 at 9:20 a m., submitted as Annex

10 to Chevron filing of October 29, 2010 at 5:20 p m. (STRATUS-NATIVE065062). 150 E-mail from Mike Bonfiglio to Joseph Berlinger, of April 14, 2010 at 12:08 a.m., attached as Annex 6 to

Chevron filing of December 8, 2010 at 4:21 p m. (JB-NonWaiver00127806). 151 E-mail from Pablo Fajardo a Mike Bonfiglio et al., January 22, 2009 at 1:03 a.m., attached as Annex 6 to

Chevron filing of December 8, 2010 at 4:21 p m. (JB-NonWaiver00091321-22). 152 E-mail from Pablo Fajardo to Mike Bonfiglio, dated Dec. 25, 2008, at 10:19 p m., attached as Annex 4

to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00097061).


“the entire case will simply fall apart on us.”153

It is unfortunate and sad that this is not relevant at all for the Judge below, in spite of the fact that Mr. Fajardo himself thinks that their case would “fall” apart. That is, the plaintiffs discussed the risk of losing the trial and being prosecuted for fraud if the facts mentioned above were revealed, demonstrating the extent of the manipulation of justice in Ecuador. Thus it is nothing short of amazing that the lower court judge—in the face of evidence that the plaintiffs themselves had concocted, carried out and perfected the fraud outlined above—did not sanction them in any way in the judgment he issued. Rather, the judgment expresses a kind of forgive-and-forget approach that is inconsistent with the value system that should prevail in Ecuadorian justice. This approach is also inconsistent with the long tradition of intellectual honesty and courage which have inspired numerous Ecuadorian judges, such as Santiago Andrade, Galo Galarza and Ernesto Alban, the very authors of the ruling on procedural good faith transcribed in previous paragraphs. The lower court judge did praise these men when analyzing their decision in the Delfina Torres case. I shall return to this subject later to make evident how atrociously that other judgment by the Supreme Court was manipulated in the ruling issued by the lower court judge. The double standard of morality demonstrated by the lower court judge in the face of fraud as well as when facing Ecuadorian legal traditions prevented the worst fears of Mr. Fajardo from materializing in the lower court judgment. But these proceedings will continue and will arrive in the hands of judges who are willing to continue the long tradition of respecting the values of justice—and willing, consequently, to punish the perpetrators and accomplices of fraud and deceit.

This indisputable evidence of collusion shows a clear violation of the repeated instructions of the Judge below, in irreconcilable contradiction with the plaintiffs’ own statements as well as those made by Mr. Cabrera regarding his independence. The orders of the Judge below were that Mr. Cabrera must “answer for the entire report, the methodology used, the work of his assistants, etc.”154 Mr. Cabrera must “exercise his duties with impartiality and independence regarding the parties . . . and fulfill the requirements established by the Code of Civil Procedure for the appointment and performance of experts.”155 In June 2007, Mr. Cabrera promised to carry out his duties “with complete impartiality and independence from the parties.”156 The expert below asserted that “he [did] not have any relationship or agreement with the plaintiffs” and that it was “an insult to [him] that an attempt be made to link [him] with the attorneys for the plaintiffs.”157 How shameless!

153 E-mail from Pablo Fajardo to Mike Bonfiglio, dated Dec. 25, 2008, at 10:19 p m., attached as Annex 4

to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00097061).

154 Ruling of October 3, 2007 at 11:00 a.m., Record at 132846-132856 (132850v). 155 Ibid. at 132848v. 156 Record of Expert Appointment for expert Richard Cabrera, June 13, 2007 9:45 a.m., Record at 130169-

130169v (130169v). 157 Document by expert Richard Cabrera, submitted July 23, 2007 at 10:15 a m., Record at 131972.


The plaintiffs also said they did not maintain any kind of special or improper relationship with Mr. Cabrera. For example, Mr. Fajardo said the idea that Mr. Cabrera was working for the plaintiffs was “simply ridiculous.”158 Lies. And lies aimed at Ecuadorian Judges. Can the legal profession be exercised this way in our country? For the Judge below, it seems so.

Mr. Cabrera’s actions in these proceedings also violate several legal provisions relating to expert testimony. First, “[t]he expert . . . is not the representative of the parties in the lawsuit, and his job is not to do something on behalf of someone else, but rather to issue his own opinion on a technical question.”159 Moreover, the expert is an aid to Justice who must act with absolute impartiality and accuracy in delivering the technical information requested of him. 160 Besides violating these principles, Mr. Cabrera also violated the following additional provisions: Article 9 of the Organic Code of the Judiciary, and Articles 251, 257 and 120 of the Code of Civil Procedure. His report thus becomes illegal. The “expert” should be criminally prosecuted for his participation in the fraud.

Meanwhile, lawyers for the plaintiffs also have violated numerous legal provisions. Paragraph 9 of Article 335 of the Organic Code of the Judiciary prohibits lawyers from “exercising the right of action or contradiction in an abusive, malicious or reckless manner, violating the principle of good faith and loyalty, through practices such as distorted presentation of evidence, trickery and performing procedures in bad faith . . . .” The plaintiffs’ lawyers have not met their affirmative duty to act at all times “in accordance with the principles of loyalty, honesty, truthfulness, honesty and good faith.”161 In fact, the wrongful acts committed in this case could well be criminal in nature. The footage deliberately left unused from the film Crude, which shows the meeting between the representatives and consultants of the plaintiffs with Mr. Cabrera before his appointment as an expert, in order to ensure that the scope, content and wording of the report would support the plaintiffs’ case, clearly violates the principle of prohibition of collusion.

The only answer to all this from the Judge below was to deny any reliance on Cabrera’s report. But that is obviously insufficient, apart from being illegal because the judgment constitutes an act of concealment and even complicity in the events listed above.

[initials]

158 Plaintiffs’ submission filed on April 4, 2008 at 5:15 p.m., Record at 140165-140169 (140167). In related

litigation in the United States, the consultant for the plaintiffs, Mr. Mark A, Quarles, filed a statement indicating that Mr. Cabrera served as an independent expert for the lower court judge. See statement of Mark A. Quarles, September 1, 2010, pg. 121, filed as Annex 21 to the submission by Chevron on September 16, 2010 at 4:35 p.m. Mr. Quarles later admitted that had he known that “Mr. Cabrera was working directly with the plaintiffs,” he would not have signed such a statement. Ibid. on p. 122.

159 DE SANTO, Víctor. Expert Evidence. Editorial Universidad, Buenos Aires, 1997, p. 62. 160 Ibid. at 72. 161 Art. 330, paragraph 2 of the Organic Code of the Judiciary.

[CERT.GEOTEXT] 52

[initials]

.

The lower court judge fails to consider that fraud was necessary for the plaintiffs because they had no case at all. In addition, the same plaintiffs have recognized internally that the Cabrera Report was “the most important evidence we have in the case.”162 And they continued with their intricate machinations in order to produce it, knowing perfectly well that if their activities came to be known, it would “destroy the case” and they would all be sent “to j[a]il.”163. Well, the fact is that their activities came to be known, but nothing has happened. This is scandalous

The global assessment, which should have been carried out at all of the sites operated by TexPet was, without doubt, the focal point of the plaintiffs’ case and, without it, the plaintiffs’ case should have been dismissed. This is fully illustrated by the fact that the Judge below, in attempting to disregard the Cabrera report in his decision, actually based himself heavily on the reports of the experts, surreptitiously submitted by the plaintiffs as annexes to their “legal brief” on September 16, 2010, at 5:15 p.m., which were also based to a large extent on contaminated information, assumptions and conclusions from the fraudulent Cabrera Report, as described in more detail in the next section.

7. The expert reports attached by the plaintiffs to their “legal brief” projected the fraud in time while the lawsuit lasted in the court of the first instance. Illegal reform of the judicial process in Ecuador. Advance disclosure of opinion. Illegal replacement of evidence by the opinion of the plaintiff:

Since the irremediable nullity flaw that affected the report on the expert global assessment of all the fields operated by TexPet, due to the fraud committed by the plaintiffs, came to light, the Judge below granted the request of the plaintiffs to have an unprecedented opportunity to submit new “technical” files, which were surreptitiously introduced in the process through an incorrectly titled “legal brief” submitted on September 16, 2010 at 5:15 p.m.

The petition was accepted by the Judge of the first instance thereby, in and of itself, reforming the civil procedure of Ecuador, and he allowed an alleged and incorrectly titled “legal brief” of the plaintiffs to be the vehicle to submit expert reports hired by them, through which they tried to validate the information obtained through the expert reports derived from procedural fraud, in an effort too that said “legal brief” to prevail in the lawsuit instead of the evidence explicitly described in Article 121 of the Code of Civil Procedure. In doing so, the lower court Judge advanced an opinion prior to the decision,

162 Transcript of footage not used in the documentary Crude, presented as Annex 1 of the submission by

Chevron on September 16, 2010 at 4:35 p.m. (CRS 187-01-02); Email from Steven Donziger to Pablo Fajardo and others dated February 16, 2007 at 4:54 p.m., p. 2, attached as Annex 1 to the submission from Chevron presented on December 20, 2010 at 4:30 p m. (DONZ00024227) (in which the Cabrera report is described as “the most important thing in the case, the basis for [Chevron] to pay millions of dollars.”).

163 E-mail from Julio Prieto to Steven Donziger et al., of March 30, 2010 at 5:02 p.m., attached as Annex 2 to Chevron’s motion attempted filed Feb. 1, 2011 (DONZ00055225).

[CERT.GEOTEXT] 53

and the case was practically decided against Chevron since the Judge required that the parties submit an argument assessing damages, as if the damage had already been declared in a decision and that damage was the responsibility of Chevron.

This decision shows the Judge’s partiality. All of Chevron’s petitions, including its request for judicial action against the bare-face procedural fraud by the plaintiffs, were denied with the argument of formality and the strictness of the procedure of the summary verbal proceeding. However, when the plaintiffs find themselves without evidence and need to make up a form for “establishing” damage, the Judge has no problem with inventing a new phase in the summary oral proceeding. There is no other summary oral proceeding in Ecuador in which the Judge created this new phase.

There existed no legal grounds for this decision adopted by the Judge below, and the reports submitted by the plaintiffs on September 16, 2010 at 5:15 p.m. are of no value, as, inter alia, they are based on the invented and fraudulent evidence presented by the experts nominated by the plaintiffs during the judicial inspection proceedings and by Mr. Cabrera.

For example:

• Dr. Lawrence Barnthouse, who furnished a calculation of costs for alleged damages to natural resources, testified that he could not conduct a “completely independent” analysis of environmental deterioration and service losses because the majority of data necessary to complete the task “was only available in the Cabrera Report.” He acknowledged that he did not “independently perform the [necessary] calculations,” but instead based himself on “relied on available information, including the Cabrera Report and its annexes.”164

• Douglas Allen, who furnished a calculation of costs to remediate the soil and ground water, was expressly told by the Attorney and representatives of the plaintiffs to use the Cabrera Report as a “starting point” for his analysis. Therefore, without carrying out an independent analysis, he based himself entirely on the number of wells fabricated by FDA associate Lucía Gómez that required remediation in the former Concession area and for his ground water quality standards.165

Indeed, several of these authors themselves conceded that their reports should not have been relied upon because of severe limitations in their conclusions, citing the absence of expertise, questionable methodologies, and reliance upon unrealistic assumptions. Mr. Allen, for example, conceded that he has no experience assessing costs to remediate sites contaminated by crude oil and that he does not consider himself an expert in remediation of petroleum sites.166 And Dr. Lawrence

[initials]

164 Official transcript of Deposition of Dr. Lawrence Barnthouse, dated Dec. 10, 2010, 52:5-6, 10-11;

124:10-11; 123:16-17; 37:6, attached as Annex 1 to Chevron’s Motion filed December 21, 2010 at 11:00 a m. 165 Official transcript of Deposition of Douglas C. Allen, dated Dec. 16, 2010, 141:5; 198-206; 225; 341,

attached as Annex 2 to Chevron’s Motion filed December 22, 2010 at 5:40 p m.. 166 See Chevron’s Motion Regarding Plaintiffs’ Reports of September 16, 2010, filed Dec. 22, 2010 at 5:40

p.m.

[CERT.GEOTEXT] 54

Barnthouse stated that the methodology he adopted from the fraudulent Cabrera Report was an “an unreliable indicator,” “[s]uboptimal, [and] inadequate.”167 These reports were thus an extension of the plaintiffs’ fraud and provide further confirmation that there is no competent evidence supporting the appealed judgment. The dependence by the Judge below on these illegal criteria from experts paid by the plaintiff, which were not evidence and could not be taken into account in the judgment, is unacceptable.

At this juncture, there are two grounds for nullity of the proceeding: nullity arising from a violation of the constitutional rights to due process as well as nullity for a violation of process, in accordance with the provisions of Article 1014 of the Code of Civil Procedure. My client argues for nullity here on the grounds of a violation of process, but on a subsidiary basis to the instances of nullity derived from the omission of material formalities of the proceeding and also, on a subsidiary basis, the instances of nullity derived from the violation of constitutional rights to due process.

8. The judgment should also be vacated, or revoked, for violating due process, as the Judge used information not in the record as the basis for the decision:

One of the judgment’s gravest violations of due process is its consideration of evidence outside the record as the basis for the decision against my client. In accordance with the dispositive principle that governs this civil proceeding, the judge can only base his ruling on the record. Any consideration of proof outside of the record and which is not in the public domain constitutes a grave violation of that same principle and, therefore, of my client’s right to due process.

In fact, the judgment refers to several samples that are presumably contained in the record in order to arrive at its conclusion that the former Concession area is contaminated; however, the judgment’s use of specific types of sample names is irregular in that those names are not found in the record at all but are only found on spreadsheets created by the Plaintiffs containing information from the Plaintiffs’ database. Neither the spreadsheets nor the database have been admitted to the record.168 Nearly all of the samples taken by the Plaintiffs cited in the judgment contain the extensions “sv” and one by Texaco contains the extension “tx.” But the sample names on the record do not have these extensions. That is to say, these references are only found on the spreadsheets in the Selva Viva database. This can only mean that somehow the Judge below was given improper access to them.

[initials]

167 Official transcript of Deposition of Dr. Lawrence Barnthouse, dated December 10, 2010, 78:23-79:8,

203:22-204:4, 205:2-3, attached as Annex 1 to Chevron’s Motion filed December 21, 2010 at 11:00 a m. 168 The Selva Viva database is not part of the record and, what’s more, the only reason that Chevron

obtained access to the spreadsheet from the database is because the spreadsheet was produced by the Plaintiffs in the United States by Mr. Douglas Allen, the same Mr. Allen who wrote the report that makes up the basis of the soil remediation damages provided to the Plaintiffs.

[CERT.GEOTEXT] 55

And as if the use of the evidence not contained in the record were not atrocious enough, the Judge below further twists that evidence to arrive at his own unfounded conclusions because he places into the Judgment errors which appear in the Plaintiffs’ database and in the Plaintiffs’ spreadsheets.

There are various irregularities with the use in the judgment of the data contained in the database of Selva Viva, the plaintiffs’ company. For example, the judgment discusses samples where no contamination was found as if they did have contamination. Then, the Judge below says that “alarming levels of mercury have been found” when in reality mercury was not found in the samples cited by the decision. This error occurs because the Plaintiffs’ consultants, Stratus Consulting, removed from the results of the samples symbols that stated “undetected data.”169 The judgment also rules that the analytical results for certain samples are in milligrams per kilogram (mg/kg), when in reality they are micrograms per kilogram (μg/kg), in order to arrive at levels of contamination which are a thousand times higher than the samples actually showed. For example, the judgment says that the “soil and the groundwater [are] at risk of contamination” of up to 3142 mg/kg of PAH. But this and other results are actually in micrograms, although the Plaintiffs’ database says milligrams. The source of these errors is errors in the Plaintiffs’ database where the results are incorrectly marked. And further evidence that the Judge below used the Plaintiffs’ database or spreadsheets comes from his statement that John Connor inspected the Lago Agrio Central site, when in reality the inspector was Fernando Morales. This error can only come from the Selva Viva database or spreadsheets, which also erroneously state that Mr. Connor was the expert for that site.170

Further, at least two of the samples on which the judgment relies, SA13-SE1 (1.0-1.5m)_sv and SA13-SW3 (1.0-1.4m)_sv, also appear in Annex B of the Cabrera report, a report, incidentally, that the judgment purportedly struck. In the Cabrera report, those samples are used to show the TPH levels; however, the judgment uses those samples to provide results for Cr VI. It would seem impossible for the court to obtain the Cr VI figures for these samples when the only figures in the record for those samples are for TPH. But when one considers that these two sample names came from a table in Annex B of the Cabrera Report using the “sv” designation for twelve sample names, and that plaintiffs’ consultants were the authors of Annex B and more than likely used the Selva Viva database to author that Annex, the picture becomes clear. The Judge below could not have relied on these samples for a Cr VI analysis without obtaining those figures from the Selva Viva database and he could not have obtained those figures without Plaintiffs’ assistance.

[initials]

169 Cabrera Report, Annex E, p. 69; Official Deposition of Ann Maest. (Jan. 19, 2011), 173:19-174:11. 170 It should be noted that this is not the first time that contents of the Plaintiffs’ database have been used in

a court document which was supposedly written by others. Some time ago, Mr. Younger discovered that documents which Mr. Cabrera submitted to the court were the same as a version in the Plaintiffs’ database. See Cabrera Supplemental Omnibus, Ex. 11. The Plaintiffs said that it was only a “coincidence.” FDA Motion, dated Nov. 2010 at 5:17 p.m. We now know, of course, that the Plaintiffs were the authors of Mr. Cabrera’s materials.

[CERT.GEOTEXT] 56

The judgment’s use of the contents of the Selva Viva database constitutes possible fraud by the Plaintiffs and the Judge below and is a violation of my client’s due process rights; consequently, my client requests that the judgment and the entire proceeding be vacated on these grounds.

9. The lawsuit was further flawed by the improper conduct of Judge Juan Núñez. His conduct in the proceeding is in breach of the Constitution and causes the nullity of all of his actions. The fraud generated by the report of Engineer Cabrera, should not have been concluded:

Judge Juan Núñez, who heard the case for more than a year, was implicated in an attempt to request a bribe that completely destroyed the minimum legitimacy and credibility that the case should have had. 171 Chevron received and then delivered to the proper Ecuadorian authorities audiovisual recordings of four meetings at which the attempted request for a bribe was devised. By means of an expert analysis of the tapes, carried out by order of the Judiciary Council, the conclusion was reached that the recordings were actually authentic and had not been altered.172 The recordings were made, without the knowledge of Chevron, in May and June of 2009.

According to the audiovisual recordings, the alleged Government representatives tried to guarantee the expected future contractors that Judge Núñez would rule in this case against Chevron—even though the lawsuit was running its course and evidence was still being presented—and that the decision would obligate Chevron to pay billions of dollars to the government for environmental remediation. To demonstrate to these expected future contractors that the outcome of the lawsuit had already been pre-agreed, the alleged government representatives arranged two meetings between the aspiring contractors and Judge Núñez within the period that lapsed between the two meetings at the offices of the Alianza País headquarters.173 In the recordings from these meetings, Judge Núñez appears, confirming the following: that in the decision he will rule that Chevron is guilty;174 the claim is for USD 27 billion and he will decide whether Chevron will be ordered to pay more or less compensation;175

[initials]

171 Resolution of the Full Judiciary Council, of October 27, 2010 at 2:15 p m., Disciplinary File No. 008-2009-P-CPJS (resolution of the disciplinary case against Judge Juan Evangelista Núñez Sanabria), attached as Annex 14 to the Chevron brief of December 20, 2010 at 5:50 p m.

172 See the expert report of Hugo Rekalde D. issued to the executive director of the Judiciary Council, submitted as Annex 9 to the Chevron brief of July 13, 2010 at 8:48 a m.; also see the Chevron brief submitted on July 13, 2010 at 8:48 a.m., on pp. 5-6.

173 Letter from Dr. Thomas Cullen Jr. to the Prosecutor General, submitted as Annex to the Chevron brief filed on November 17, 2009 at 2:18 p.m., Record at 159290-159295 (159294) (regarding attempted bribery of Judge Juan Evangelista Núñez and related videos).

174 Transcript from meeting of June 5, 2009 between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez and Wayne Douglas Hansen, submitted as Annex 5-C to the Chevron brief of September 9, 2009 at 4:20 p m., Record at 158285-158322 (158319).

175 Transcript from meeting of June 5, 2009 between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez and Wayne Douglas Hansen, submitted as Annex 5-C to the

[CERT.GEOTEXT] 57

part of the compensation will be paid to the government;176 the Judge will enter the decision in October or November, 2009;177 and the appeals procedure will be a formality.178

The participation of Judge Núñez in these meetings and the apparent delegation of his judicial authority to government representatives in order for them to enter the decision have irredeemably flawed this case against Chevron to the point of nullity.

Even Mr. Donziger admitted internally that the “judge should not have been in the meetings period.”179 Likewise, Mr. Fajardo commented that “[t]he bad thing is that [Judge Núñez] prevaricates when stating things of the judgment . . . that might cost him a criminal proceeding. . . .” 180 And Even prior to involvement in this apparent bribery scheme, Judge Núñez made no secret of the fact that he was biased in favor of the plaintiffs. The Economist, for example, observed that “[t]he judge in Lago Agrio, Juan Núñez, . . . has made no secret of his sympathy for the plaintiffs.”181 The New York Times similarly has noted that Judge Núñez’s “sympathies . . . are not hard to discern,” and that “he appears likely to rule against Chevron this year.”182 These publications followed a public demand from the current President of the Republic for “expedited treatment of cases that are of interest to Ecuador” during a two-hour luncheon with the members of the National Court of Justice.183

[initials]

Chevron brief of September 9, 2009 at 4:20 p m., Record at 158285-158322 (158319). 176 Transcript from meeting of June 5, 2009 between Judge Juan Evangelista Núñez Sanabria, Juan Pablo

Novoa Velasco, Diego Fernando Borja Sánchez and Wayne Douglas Hansen, submitted as Annex 5-C to the Chevron brief of September 9, 2009 at 4:20 p m., Record at 158285-158322 (158293).



179 E-mail from Steven Donziger to Paul Paz y Mino, dated Sept. 30, 20098 at 12:04 p m., attached as Annex 1 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00019514).

180 E-mails between Pablo Fajardo, Steven Donziger, et al., dated Aug. 31, 2009 at 6:22 p.m. to Sept. 1, 2009 at 9:22 a m., attached as Annex 2 to Chevron’s motion attempted on Feb. 2, 2011 (DONZ00052150).

181 Justice or Extortion?: The Hounding of an American Oil Company, The Economist, May 23-29, 2009, at 42, attached as Annex 6 to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158365-69, 158366, 158368.

182 In Ecuador, Resentment of an Oil Company Oozes, N.Y. Times, May 15, 2009, attached as Annex 7 to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p m., Record at 158371-74, 158371.

183 CAMPANA M., Joffre, Interference in the Administration of Justice, El Universo (Mar. 5, 2009).

[CERT.GEOTEXT] 58

Under these circumstances, it was impossible for Chevron to have the “independent, impartial and competent” judge that the Constitution guarantees it; especially when, in the face of such hugely atrocious evidence set against it, the suit proceeds just as Judge Núñez said it would, meaning as if nothing had happened. Ecuador deserves to have some authority investigate this matter and for the judges in the case not to consider it a matter resolved by Núñez’s mere departure from the case. Everything heard by Judge Núñez in the proceeding is null and void since he was not, and could not, be the “independent, impartial and competent judge” that the Constitution required him to be.

Before being removed from the case, Judge Núñez made various rulings against Chevron. The most serious aspect of all is that this Judge refused to investigate the manifest irregularities in the report of the expert, Engineer Richard Cabrera.184 Chevron, based on Article 9 of the Civil Code, submitted a petition for the nullity of the proceedings conducted by Judge Núñez.185 However, the Judge below denied this petition and thereby tacitly gave validity to the corrupt decisions rendered by Judge Núñez.186 A lawsuit that includes these types of flawed decision is fraudulent and represents another reason for declaring the nullity of the entire lawsuit.

These decisions by Judge Núñez confirm that he was not, was not willing to be, an “independent, impartial and competent” judge. The Constitution has been circumvented and, with it, the rights to due process that must prevail in this lawsuit.

D. Concomitantly to what is stated in section C above, and alternatively to all of the above: nullity of the proceedings for violation of the right to due process derived from to the retroactive application of the Environmental Management Act.

Article 7 of the Civil Code expressly states that “[t]he law provides only for the future; it has no retroactive effect.” Since individuals base their conduct and manage their affairs according to the law in effect at a particular time, their expectations and vested rights under those laws would be violated if changes in legislation later were to create new obligations or extend the scope of possible liability for previous acts.

The non-retroactivity of the law is a fundamental legal principle, as recognized by Dr. Wray, former common representative for the plaintiffs: “legal order prohibits in the exercising of power any practice that leads to uncertainty, i.e. the inability to anticipate or predict the legal consequences of behavior.”187 This principle is so important that it has been enshrined in the

[initials]

184 See, for example, Ruling of May 28, 2009 at 11:00 a m., Record at 156691-156693v, in No. 9 (156691-

156691v). 185 Chevron brief submitted on Sept. 11, 2009 at 5:50 p.m., Record at 158430-158438 (158435-158,438)

(requesting the quashing of rulings issued by Judge Juan Evangelista Núñez). 186 See Ruling of Oct. 21, 2009 at 4:05 p.m., Nos. 13 and 17, Record at 158061-159063 (159062). 187 WRAY, Alberto. El debido proceso en la Constitución. Iuris Dictio Magazine, Volume 1, No. 1. Quito,

2000, p. 39, (quoted in Judgment of the Supreme Court of Justice, First Division, dated May 29, 2002, Proceeding 80-2002, published in RO 626, dated July 25, 2001).

[CERT.GEOTEXT] 59

Constitution.188 Article 82 of the Constitution reflects this general principle of law when it says that legal certainty “is based on respect for the Constitution and the existence of previous legal rules which are clear, public and implemented by the competent authorities.”

1. The non-retroactivity principle prohibits the imposition of damages in accordance with the Environmental Management Act because the operations of the Consortium ended years before the enactment of the Environmental Management Act—Nullity due to violation of the right to due process:

The Judge below, implicitly acknowledging that the principle of non-retroactivity also applies to the Environmental Management Act, stated that two of its provisions—“the verbal summary procedure and jurisdiction of the Chief Judge of the Provincial Court over the scene of events”—constitute an exception because they involve purely procedural changes in the legislation.189

However, these are not the only provisions that the judgment invokes as grounds for finding against Chevron. In this case, over 90% of the amount of the judgment is expressly based on the application of Chapter VI (2) of the complaint, which calls for Chevron to be ordered to pay “compensation for environmental damage, as provided by Article 43 of the Environmental Management Act.” 190 Therefore, the decision necessarily relies on Article 43 of the Environmental Management Act to grant a remedy that could never have been achieved under the law in effect at the time when TexPet might have committed the alleged acts or omissions. Ecuadorian law does not permit this retroactive application of [what is] a real substantive and not procedural change in the Environmental Management Act.

Section V of the complaint sets out the various legal and constitutional grounds that would support the remedies sought by the plaintiffs. These legal grounds are presented below in chronological order, to demonstrate that the Environmental Management Act did involve a substantive change in Ecuadorian law:

a) Actions existing before 1990:

Before TexPet ended its operations on June 30, 1990, the scenario for possible claims in Ecuador was as follows:

i. Individual claims for personal injury or property damage. Civil Code Article 2214 provides for the right to individually demand compensation from one “who has

188 See Art. 24, paragraph 1 of the Constitution of Ecuador, 1998 (“No one shall be tried for an act or

omission which at the time it was committed was not legally defined as criminal, administrative or other . . . . A person may only be tried before a judge or competent authority . . . .”); Art. 76, paragraph 3 of the Constitution of Ecuador, 2008 (materially identical to Art. 24, Paragraph 1 of the Constitution of Ecuador, 1998).

189 Decision at 27. 190 Decision at 180.


committed an intentional tort or an unintentional tort that causes damage to another.”191 The claimants in these cases must argue and prove192 the existence of damage to their person or their property, and a causal link between the damage in question and the action or omission attributable to the defendant.193 Since a claim cannot be made for alleged collective damages under Article 2214, any plaintiff that has not suffered individual and divisible harm has no right to initiate this action. In addition, it is superfluous to explain that under Ecuadorian law there is no accumulation of individual actions through “class action.”194

ii. Complaints from individuals to the State for the alleged violation of an environmental regulation or law. The State was the one who had the exclusive power and duty to demand remediation and take other appropriate measures (for example, imposing fines and penalties). Indeed, in accordance with the provisions of the Constitution of 1978, all inhabitants of Ecuador had the constitutional right to “live in a pollution free environment.”195 However, individuals did not have the right to invoke this directly; rather it was “the duty of the State to ensure that this right is not affected.”196 This provision confirms something that was essential to the Ecuadorian law then in force: the State owns all underground mineral and natural resources and virtually all land and water in the oil region of the Ecuadorian Amazon and it alone had the right to initiate an action for damages caused to this environment. Individuals only had the right to report environmental violations and ask the State to initiate a formal investigation.

iii. Claims from individuals demanding intervention by authorities to remove an imminent threat of damage to unspecified persons. Civil Code Article 2236 empowers individuals to report a

191 Civil Code Art. 2214 provides: “A person who has committed an intentional tort or an unintentional

tort that causes damage to another is obligated to make compensation; notwithstanding any penalties imposed on him by the laws for the intentional or unintentional tort”; see also Civil Code Article 2229 which provides: “As a general rule, any harm that may be attributed to another person’s intentional misconduct or negligence must be repaired by that person.”

192 Angel Isaac Gutierrez v. Molinos Champion S.A., Judgment of the Supreme Court of Justice, Civil and

Commercial Division, dated September 29, 1993, published in Judicial Gazette, year XCIV, Series XVI, No. 1, p.11: “‘A potential harm,’ hypothetical, based on assumptions or guesses, however founded they seem to be, whether present or future is not eligible for compensation.” (Separate vote by Miguel Macias Hurtado and Rene Bustamante Muñoz).

193 Miguel Macias Hurtado v. Inchalela Cía. Ltda. and Constructora Chalela Cia. Ltda. Judgment of the Court, dated November 12, 1990, published in Judicial Gazette, year XCI, Series XV, Number 10, pg. 3048: “ . . . The existence of negligence generates civil obligations whose source is liability, subject to the conditions of the existence of damage, a causal link between fault and damage, and the standing of the complaining party. As for the damage, we should note, from the conceptual point of view, it is ‘any impairment that an individual experiences in his person and property, loss of profit, of a material or moral nature, be it patrimonial or extra-patrimonial.’ (Ramón Meza Barros, Manual de Derecho Civil).”

194 Judgment of the Supreme Court, First Civil and Mercantile Division, dated October 29, 2002, Proceedings 31-2002, published in RO 43 dated March 19, 2003, Comité Delfina Torres vda. De Concha v. Petroecuador et al.: “[O]ur system of positive law does not yet include so-called ‘class actions’ . . . .”

195 Art. 19, paragraph 2 of the Constitution of Ecuador, 1978 (codified in 1993). 196 Idem.


situation posing a threat and demand, through a “popular action,” a relevant court order providing for the elimination of this threat.197 Undoubtedly, this article applies only to contingent damage, i.e. to damage that has not occurred yet but may occur. This action seeks to prevent such damage from actually occurring. In turn, Article 2237 of the same Code provides for the reimbursement of the plaintiffs for expenses incurred during their preemptive claim based on Article 2236,198 but does not allow for any compensation. There being no actual damage, this conclusion is simply logical. Several decisions by the former Constitutional Tribunal (now the Constitutional Court) confirmed this principle in a similar case related to the amparo remedy: “It is improper to request compensation via the amparo remedy . . . .”199

b) Rights and Actions established after 1990:

The plaintiffs cite various legal provisions that came after the end of TexPet operations in Ecuador:

i. In 1998, Ecuador adopted a new Constitution. Thus, Articles 23 and 86, named in the complaint, reiterate the right of every citizen to live in a clean environment and assign to the State the obligation to “protect” this right. These provisions are equivalent to what was laid out in the previous Constitution analyzed in the preceding section. The plaintiffs also argue that, under Chapter V, Section 2 of the 1998 Constitution, an individual could make a claim for violation of this right and could demand remediation. However, this section does not itself create a right authorizing individuals to file a legal claim demanding such remediation, rather the claimant had to file an administrative complaint before the highest authority of the agency of Public Administration concerned, in order that it establish liability for environmental damage. The highest authority on oil and gas activities was the Minister of Energy and Mines. Thus only he could establish, via a concrete administrative act, liability for environmental damage, following the

[initials]

197 Civil Code Art. 2236 provides: “As a general rule, a “public action” is granted in all cases of

contingent harm that threatens indeterminate persons because of imprudence or negligence. However, if the harm only threatens determinate persons, only one of them may file the action.”

198 Civil Code Art. 2237 provides: “If the public actions granted by the preceding articles seem well founded, the plaintiff shall be compensated for all the costs of the action, and he shall be paid for the value of the time and energy spent on them, without prejudice to the specific remuneration granted by the law in specific cases.”

199 Finding of the Constitutional Court, Third Division, dated March 18, 2003, Proceeding 0334-2003-RA, published in Official Register 195, dated October 22, 2003. In this regard it is worth citing an illustrative judgment that states that “. . . popular action lawsuits, though designed for the protection and relief of these concrete individual interests and collective rights, cannot be established nor exercised to pursue subjective or plural remediation of possible damage that may be caused to them by the action or omission of a public or individual authority . . . .” Finding of the Council of State, Administrative Disputes Division, Section Three, dated April 25, 2002, filing number: 05001-23-31-000-2001-2012-01 (AP-0388) (citing Judgment T-508, 1992).

[CERT.GEOTEXT] 62

administrative process provided for in Article 130 of the then Statutes of the Administrative Legal System for the Executive Branch and his decisions could only be challenged before the Court of Administrative Disputes: “Art. 91 - The State, its delegates and concessionaires shall be liable for environmental damage under the terms stated in Article 20 of the Constitution.”

This action also reflects the administrative nature of liability for environmental damage derived from concession activities, one of which was oil and gas activity. It also reflects the exclusive competence of the Administrative Branch over claims relating to environmental damage originating from concession activities, one of which is the production of oil and gas. There was no jurisdiction for such claims, other than through an appeal to the Court of Administrative Disputes challenging the resolutions adopted by the Minister of Energy and Mines.

The right to file a claim in the ordinary courts to determine liability for environmental damage had to be stipulated by a new law, and that did not occur until the approval of the Environmental Management Act in 1999.

In any case, it’s worth considering that even if the changes made by the 1998 Constitution created an environmental action that was available to individuals, this action was only intended to be an injunctive relief measure necessary to “protect” the environment: “Without prejudice to the rights of those directly affected, any natural or legal person, or group of people, may take the actions provided for in the law in order to protect the environment.” Moreover, even if the 1998 Constitution could serve as the basis for the alleged right of the plaintiffs, it cannot be applied retroactively to permit actions that did not previously exist, for alleged conduct that predated its enactment.

ii. In 1999, Ecuador adopted the “Indigenous and Tribal Peoples Convention, 1989.”200 Article 15 of the Convention establishes the right of indigenous peoples to take action against the government. Since the plaintiffs include many settlers who have no standing under the Convention and since the defendant in this case is Chevron, not the Government, the Convention does not constitute a legitimate legal basis to issue a ruling in favor of the plaintiffs. Also, as with the 1998 Constitution, these new rights under the Convention could never be applied retroactively.

iii. Finally, in 1999 Ecuador passed the Environmental Management Act. Article 43 of that Act expressly established the material right of individuals to claim damages based on diffuse damage to the environment as a whole, as opposed to a violation of individual rights. As explained below, the recognition of the right to bring such actions marked a fundamental

[initials]

200 Convention 169 on Indigenous and Tribal Peoples, 1989, Conference of the International Labour

Organization, published in R.O. 206, dated June 7, 1999.

[CERT.GEOTEXT] 63

change in the substantive legislation of Ecuador, as a consequence of the enactment of the new Constitution and the international obligations of Ecuador.

c) Key changes incorporated into Ecuadorian Law via the Environmental Management Act:

As there were no previous legal provisions conferring the right to bring a claim equivalent to the one at hand, Article 43 of the Environmental Management Act introduced a substantive change in Ecuadorian law. As demonstrated above, substantive provisions cannot be applied retroactively to behavior that occurred before the enactment of this new Act; it is prohibited by the current Constitution in Articles 76 and 82.

In fact, Article 43 of the Environmental Management Act created a new right: the right for those directly affected by a harmful act or omission to file a civil complaint, individually or collectively, seeking compensation for damages resulting from an act or omission harmful to the environment and/or health. It is clear therefore that the Environmental Management Act did not simply change the legal procedure for pursuing a pre-existing claim,201 rather it created a new cause of action by individuals who had never had it before and which allowed them to seek remediation that previously they were unable to seek.

Consequently, and given that it generates new responsibilities as well, the Environmental Management Act undoubtedly constitutes a substantive change in the law of Ecuador, which cannot be applied retroactively.

The assertion of the lower court Judge in his finding—that the Environmental Management Act is of a purely procedural nature—has no legal basis. The judge violated legal certainty and applied regulations to my client that did not exist before TexPet operations in Ecuador, but after.

There is no doubt that the remedy of compensation sought by the plaintiffs in Section VI of their complaint is baseless, given that no law in effect at the time that TexPet was operating in Ecuador establishes it. One of the former attorneys for the plaintiffs acknowledged years ago that several judges had already ruled that the Environmental Management Act “was not applicable to cases

[initials]

201 The EMA also contains procedural provisions that may be applied to a case that proceeds properly under a pre-

existing cause of action. For example, in the Calva case, No. 286-2001, the plaintiff based his argument on Civil Code Art. 2214 and—unlike the plaintiffs in this case—proved individual harm in the form of damage to livestock and crops. Because of the fact that the EMA provided procedures for the allegations of the plaintiff under pre-existing law, there were no problems of retroactivity. See Alfonso Calva Castillo v. Petroproducción, Judgment of the Supreme Court, Second Division on Civil and Mercantile Matters, dated March 12, 2008, Procedural Order No. 286-2001.

[CERT.GEOTEXT] 64

based on pollution that occurred before 1999.”202 In his own words, this implied that “this case is moving inexorably towards dismissal.”203

Finally, it is worth noting that Article 43 of the Environmental Management Act is not only a substantive rule, which creates a new right to sue that did not exist before, it has been applied illegally and retroactively with the intent of forcing damages claims based on diffuse interests to be tried in a summary oral proceeding, the rule is clearly [the product of] vague and inconsistent legislative drafting.

Basic rights to due process include the non-retroactive application of laws, and the legal certainty stipulated by Article 82 of the Constitution provides that persons have the right to be judged under previously established legal rules which are clear, public and implemented by appropriate authorities. However, this trial has been administered and a judgment reached in direct infringement of these constitutional provisions, leading to its nullity, which should be thus declared by the Court of Appeal.

V. I BASE MY SUBSIDIARY REQUEST FOR THE REVERSAL OF THE JUDGMENT UNDER APPEAL AND THE RULING WHICH SOUGHT TO CLARIFY AND ELABORATE ON IT FOR THE ISSUANCE OF ANOTHER FINAL ORDER IN ITS PLACE DISMISSING THE COMPLAINT, SUSTAINING ANY ONE OF THE DEFENSES RAISED BY MY CLIENT

Alternatively to the above and in the event, with which Chevron disagrees, that there is no nullity to declare, I hereby request the quashing of the decision on the grounds of it being illegal based on the following statements of fact and legal grounds.

A. The complaint is improper due to the effect of res judicata because it raises claims for diffuse interests which were already claimed and settled by the State and the corresponding Municipalities:

Throughout the course of this trial, my client has expressed that the plaintiffs lack any foundation to justify the claims of their lawsuit, as these legal claims were already exercised by the party with standing to do so, having also been the subject of settlement agreements over a decade ago.

The Judgment recognizes not just the existence of the settlement agreements, but also accepts that these settlement agreements are valid and in effect. In effect, the judgment also accepts that the settlement agreements executed by TexPet and the competent Ecuadorian authorities “were effective . . . for the Government of Ecuador to release Texpet and its parent company, Texaco Inc., from all responsibility for the environmental harm that may have originated in the Concession.”204 The judgment specifically confirms this assertion in another passage, indicating that “the record shows that the State has released Texaco, and consequently Chevron, from all

202 E-mail from Cristobal Bonifaz to Alejandro Ponce Villacis, et al., dated June 4, 2006 at 2:27 p m., pg. 2, attached as Appendix 1 of the Third Supplemental Petition of Chevron for Terminating Sanctions, filed on December 20, 2010 at 4:30 p.m. (DONZ00028557).

203 Id. 204 Decision at 30.


their responsibilities in relation to the environmental harm that is the subject of this complaint.”205 On the other hand, the judgment recognized that the complaint tries to assert collective and/or diffuse rights:

“the complaint has been signed by 42 citizens, the plaintiffs, who have not requested personal compensation for any harm, but rather have demanded the protection of a collective right in accordance with the formalities provided by the EMA, the redress of environmental harm, which as has been alleged in this lawsuit, affects more than 30000 people, these supposedly being undetermined. This Presidency has noted that the parties potentially affected by the activities of the Consortium are divided into several different human groups, that claim to be united by the fact of being affected by an environmental harm, without all belonging to a single nationality or neighborhood, but rather who are identifiable for sharing impacts coming from the environmental harm. There is no, as far as the record shows, census or list that identifies them, precisely because they are diverse human groups, but connected by one same impact and a common interest in resolving it.”206

Nevertheless, the judgment sustains the lawsuit, concluding that (i) the plaintiffs are third parties in relation to the settlement agreements; (ii) the State is not capable of restricting the fundamental rights of third parties; (iii) the agreements do not affect the rights of third parties, and (iv) the aforementioned agreements are not acts of government since the will of a private person, TexPet, has concurrently participated therein.207

These conclusions by the Judge below omit a suitable analysis regarding the true nature and scope of the settlements, as well as the effects of res judicata in the area of collective or diffuse rights, such as those which were the subject of the aforementioned contracts. In effect, as my client maintained accordingly throughout the course of the trial, upon entering into the settlement agreements and releasing TexPet and its associated companies from all environmental liability as it pertains to the Consortium operations, the Government and other local governmental entities acted, as per the applicable legislation and their obligations, in representation of all people of Ecuador and the alleged specific communities affected, including the plaintiffs themselves (due to which they are technically not “third parties” as it relates to said contracts), claiming the same rights that the lawsuit claims. In this sense, the Judge below has erroneously applied, among others, the legislation on extinction of obligations.

At the same time, the lower court Judge unnecessarily goes into an explanation about an aspect that was not even an issue in dispute.208 In this respect, at several points the judgment asserts that

[initials]

205 Decision at 29-30, 34, 91. 206 Decision at 33. 207 Decision at 34. 208 For further discussion, see Decision at 31-33.

[CERT.GEOTEXT] 66

the settlement agreements could never impact the right to action and claim that the plaintiffs held, because this is a “ fundamental, inalienable, substantive right.”209 The fact is that this right to action and claim can never be confused with the substantive right alleged by the plaintiff in filing a claim specifically exercising the right to action and claim. But the fact that the plaintiffs can exercise their right to bring a lawsuit does not indicate whatsoever that the lawsuit must necessarily be accepted by the judge who, at the time of rendering the judgment, evaluates the substantive right claimed by the plaintiff and the defenses by the defendant which bar the lawsuit from prevailing. In this case, that collective right is the right to live in a contamination-free environment out of which then comes the obligation to remediate the environmental damages. But that very right was the subject of the settlement agreements entered into at the time between TexPet and the competent Ecuadorian authorities, on behalf of all members of the people of Ecuador and the allegedly affected communities, as we will see below.

1. Background and scope of the settlement agreements.

Specifically, and in relation to the settlement agreements with the Municipalities and the Province of Sucumbíos (hereinafter, “the local Governments”), it is fitting to remember that in 1994, four municipalities within the former concession area—the municipalities of Joya de los Sachas, Orellana, Shushufindi, and Lago Agrio—brought separate suits against TexPet and Texaco seeking to address alleged “possible ecological damages” arising from the Consortium’s operations.210

These suits were intended to protect “the community at large”211 and the “the health of all citizens, animals, species, flora, fauna, rivers, water sources and

209 Decision at 33. 210 See Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed

between the Municipality of Joya de los Sachas and Texaco Petroleum Company dated May 2, 1996 (“La Joya de los Sachas Municipal Settlement”), filed May 4, 2004 at 10:08 a m., Record at 7384, 7425v, 7385; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Orellana and Texaco Petroleum Company dated May 2, 1996 (“Orellana Municipal Settlement”), filed May 4, 2004 at 10:09 a m., Record at 7426-68, 7427; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Lago Agrio and Texaco Petroleum Company dated May 2, 1996 (“Lago Agrio Municipal Settlement”), filed May 4, 2004 at 10:04 a m., Record at 7300-40v, 7301; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Shushufindi and Texaco Petroleum Company dated May 2, 1996 (“Shushufindi Municipal Settlement”), filed May 4, 2004 at 10:06 a.m., Record at 7341-83v, 7342.

211 Shushufindi Municipal Complaint at 2, attached as Annex 5 to Chevron’s Evidentiary Request No. 1.3.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m., (seeking to vindicate “the rights of the community at large” with respect to environmental pollution); see also Judgment Approving the Settlement, First Court of Civil Matters of Sucumbíos, Nueva Loja, Sept. 19, 1996, attached as Annex 9 to Chevron’s Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m., (characterizing the relief sought by the municipality as the “clean-up of the contaminated areas” and “the restoration of health of the affected population, animals and species” when approving the settlement of the action).


soil.” 212 Given their character as “local governments . . . in each of their respective jurisdictions,”213 these municipalities sought to fulfill their duties to protect the health and safety of their inhabitants214 and to assist the Ecuadorian Government in meeting its environmental obligations to all Ecuadorians.215

The purpose of the complaints can be ascertained from the Organic Municipal Regime Law cited therein from which the municipalities derive their governmental authority. Article 1 of that law states that municipalities have as their primary purpose the “local common weal and, within it and principally, taking care of the requirements of the city, the metropolitan area and the rural parishes.”216 Specifically mentioned in the law is their power, and duty, to “[c]ar[e] for the . . . health of the canton,” 217 and “[e]nsure faithful compliance with the legal rules on the environment and especially those rules related to noise, unpleasant odors, smoke, toxic gases, atmospheric dust, emissions and other factors that may affect the health and well-being of the population.”218 Each municipality also has “the capacity to perform the necessary legal acts to

[initials]

212 See La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron’s Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

213 See, e.g., Shushufindi Municipal Complaint, attached as Annex 6 to Chevron’s Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

214 See Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron’s Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (citing Articles 159, 160 and 164 of the Municipal System Law); La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron’s Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron’s Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.; Shushufindi Amended Municipal Complaint at 1, attached as Annex 6 to Chevron’s Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

215 See Art. 19 of the Organic Municipal Regime Law (discussed in La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron’s Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Amended Municipal Complaint at 1, attached as Annex 6 to Chevron’s Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.; Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron’s Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron’s Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m., (mentioning the law in general)).

216 Art. 1 of the Organic Municipal Regime Law. 217 Art. 164(a) of the Organic Municipal Regime Law. 218 See Art. 164(j) of the Organic Municipal Regime Law (discussed in La Joya de los Sachas Municipal

Complaint at 6, attached as Annex 3 to Chevron’s Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Amended Municipal Complaint

[CERT.GEOTEXT] 68

accomplish its purposes.”219 Provinces, too, have the authority to “cooperate with the State and the municipalities” in achieving these objectives.220

[initials]

nt in each of the

Each municipal suit was settled in 1996 on terms designed to “meet the interests of The Community and of its citizens as to any claims they may have against TEXPET.”221 In return for funding of “social interest works selected in accordance with community interest proposals,” the municipalities “exempt[ed], release[d], exonerate[d] and relieve[d] forever” TexPet and its affiliates “from any responsibility, claim, request, demand or complaint, be it past, present or future, for any and all reasons related to” the Consortium’s operations, “especially concerning damages possibly caused to the environment in said cantonal jurisdiction of the Municipality.”222 Each of the municipal settlement agreements was incorporated into a judgme

at 1, attached as Annex 6 to Chevron’s Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron’s Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron’s Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m., (mentioning the law in general)).

219 See Art. 2 of the Organic Municipal Regime Law. 220 Art. 1 of the Provincial Regime Law provides: “The Provincial Council is a public law institution

enjoying autonomy and representing the province. It has legal capacity and is able to perform the necessary acts to accomplish its purposes in the manner and according to the conditions specified in the Constitution and the law. It has legal capacity and its mission is principally to foster the social, cultural and material development of the province, giving special attention to rural areas, and to cooperate with the State and the municipalities in the respective district for a harmonious accomplishment of national expectations.”

221 See, e.g., Affidavit of Raúl Avilés Puente (Lago Agrio—Nueva Loja), May 2, 1996, filed May 25, 2004 at 2:20 p m., Record at 7708-08v. In addition to the representative of the Municipality of Lago Agrio, an official from each of the other local governments executed an identical affidavit in support of the settlements. See Affidavit of Adolfo Barcenas Mejía (La Joya de los Sachas), May 2, 1996, filed May 25, 2004 at 2:22 p m., Record at 7711-11v; Affidavit of Daniel David Pauker Gutiérrez (Orellana—Coca), May 2, 1996, filed May 25, 2004 at 2:21 p m., Record at 7710-10v; Affidavit of Eliceo Azuero (Sucumbíos Province), May 2, 1996, filed May 25, 2004 at 2:19 p.m., Record at 7709, 7709v; Affidavit of Jorge E. Cajas Garzón (Shushufindi), May 2, 1996, filed May 25, 2004, Record at 7712-12v.

222 See, e.g., La Joya de los Sachas Municipal Settlement & Release dated May 2, 1996, filed May 4, 2004 at 10:08 a.m., Record at 7384-7425v, 7386-87. Each municipality settlement contained identical terms. See also Lago Agrio Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:04 a m., Record at 7300-40v, 7302-03; Orellana Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:09 a m., Record at 7426-68, 7428-29; Shushufindi Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:06 a.m., Record at 7341-83v, 7343-44.

[CERT.GEOTEXT] 69

different trials223 and stated that, “pursuant to Article 2306 [currently Article 2362] of the Civil Code, this settlement shall have for the parties the effect of res judicata before the highest court.” 224 The Province of Sucumbíos executed a similar agreement releasing TexPet and Texaco from any liability concerning environmental remediation.225 That agreement also had the effect of res judicata226 and was approved by a popular assembly in which all citizens of the province (including many of the purported plaintiffs in this case) were invited to express their views.227

[initials]

An attempt was made to set aside the validity and effect of res judicata as to one of those agreements; however, it (or “the argument”) was quickly rejected by the competent court, and the validity and full effects of the settlement were ratified. This happened shortly after the agreement was signed with the Municipality of Lago Agrio, when the (new) mayor of that Municipality attempted to have that settlement agreement “rescinded.” The First Court in Civil Matters for the Province of Sucumbíos denied that request pursuant to former Article 2386 (formerly Article 2362) of the Civil Code because “the defendant ha[d] indicated its desire to perform under th[e] agreement” 228 and because the agreement “[was] legally signed by the

223 See Judgment Approving the Settlement, Second Court of Civil Matters of Sucumbíos, Shushufindi, May 8, 1996, at 4:55 p m., attached as Annex 7 to Chevron’s Evidentiary Request No. 1.3.3 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.; Judgment Approving the Settlement, Court of Civil Matters of Napo, Joya de los Sachas, June 12, 1996, at 3:20 p.m., attached as Annex 4 to Chevron’s Evidentiary Request No. 1.2.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Judgment Approving the Settlement, Court of Civil Matters of Orellana, June 25, 1996, at 9:35 a m., attached as Annex 2 to Chevron’s Evidentiary Request No. 1.1.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.; Judgment Approving the Settlement, First Court of Civil Matters of Sucumbíos, Nueva Loja at 5, Sept. 19, 1996, at 11:00 a m., attached as Annex 9 to Chevron’s Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

224 Judgment Approving the Settlement at 5, First Court of Civil Matters of Sucumbíos, Nueva Loja, Sept. 19, 1996, at 11:00 a.m., attached as Annex 9 to Chevron’s Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.; see also Article 2362 of Civil Code (“Settlement shall constitute res judicata determined by a court of last resort, but a declaration of nullity or rescission may be sought, in accordance with the preceding articles.”).

225 See, e.g., Sucumbíos Provincial Settlement & Release, dated May 2, 1996, filed May 4, 2004 at 10:12 a.m., Record at 7469-7510, 7471v, 7507-07v. In addition, a broad release of liability was also given to TexPet by a Consortium of Municipalities in the Province of Napo. See Final Release from Obligations, Liability and Claims from Consortium of Napo Municipalities, dated Apr. 27, 1996, filed Oct. 19, 2004 at 4:15 p m., Record at 10341.

226 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a m., Record at 7855-82v, 7863-64.

227 See Sucumbíos Provincial Settlement & Release, dated May 2, 1996, filed May 4, 2004 at 10:12 a m., Record at 7469-510, 7507-08v; Final Release from Obligations, Liability and Claims dated May 2, 1996, filed May 25, 2004 at 2:24 p m., Record at 7713-13v, 7713.

228 See Judgment of the First Court of Civil Matters of Sucumbíos, Nueva Loja, dated Oct. 10, 1996, at 9:35 a.m., attached as Annex 13 to Chevron’s Evidentiary Request No. 1.4.6 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m. Article 2362 (formerly Article 2386) of the

[CERT.GEOTEXT] 70

litigants” with “no issue in dispute in the case remain[ing] unresolved.”229 The mayor’s request for further review by the Supreme Court was denied.230 This constitutes additional evidence of the validity and res judicata effect of the settlements.

Likewise, and in reference to the settlement agreement with the Government of Ecuador and Petroecuador concluded in 1995,231 the following facts were established in the proceedings. In a 1994 Memorandum of Understanding, the Government of Ecuador agreed that TexPet would “not be responsible for the environmental impacts . . . and shall be released from any liability concerning such impact” arising from the Consortium’s operations.232 The resulting settlement agreement expressly covers “causes of action under Article 19(2) of the [1978] Political Constitution of the Republic of Ecuador,”233 which guaranteed all Ecuadorians the “right to live in an environment free of contamination” and placed the “duty [on] the State to assure this right and take responsibility for the protection of nature.”234 Consistent with this duty, the settlement specifically noted that the scope of work for which TexPet was responsible “t[ook] into consideration the inhabitants of the Oriente region.”235

In the settlement agreement with the Government of Ecuador, TexPet agreed to perform extensive “Environmental Remedial and Mitigation Work,” as well as to establish various programs and projects “to improve the overall quality of life.”236 The scope of the remediation work comprised the following broad categories: (i) closure of pits at the well locations; (ii) refurbishing equipment within production stations; (iii) abandoned installations; (iv) remediation

[initials]

Civil Code provides: “The settlement shall have the effect of res judicata without any further appeal, but a motion for nullity or rescission may be filed in accordance with the foregoing articles.”

229 Judgment of the First Court of Civil Matters of Sucumbíos, Nueva Loja, dated Oct. 23, 1996, at 8:20 a.m., attached as Annex 14 to Chevron’s Evidentiary Request No. 1.4.7 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

230 See Judgment of the Supreme Court of Justice, First Civil and Commercial Division, May 15, 1997, at 3:00 p m., attached as Annex 19 to Chevron’s Evidentiary Request No. 1.4.12 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

231 Scope of Work § VII.c, filed as Annex A to Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7868-82v, 7873-74.

232 Memorandum of Understanding § IV.a dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p.m., Record at 7705-07v, 7705v-06.

233 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a m., Record at 7855-82v, 7862. 234 Art. 19 of the Constitution of Ecuador. 235 See Memorandum of Understanding dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p m., Record at

7705-07v, 7706. 236 See Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v,

7868-79.

[CERT.GEOTEXT] 71

of soil contaminated with hydrocarbons; (v) re-planting; (vi) building containment dikes; (vii) socio-economic compensation; and (viii) negotiations with the municipalities of Lago Agrio (Nueva Loja), Shushufindi, Joya de los Sachas and Francisco de Orellana (Coca). 237 The categories of work performed by TexPet coincide with the claims contained in plaintiffs’ complaint.238

[initials]

2.

In exchange for TexPet’s promise to perform remedial work at the specified sites, the Government of the Republic of Ecuador and Petroecuador released TexPet and its affiliates from liability at any other sites in the former concession area.239 In 1998, the Government of Ecuador certified TexPet’s adequate performance of its remedial obligations and finally “release[d], absolve[d] and discharge[d] TexPet” and its parent companies from “any liability and claims.”240 Even one of plaintiffs’ own consultants acknowledged internally that he “did not find any clear instances where Texpet did not meet the conditions required in the cleanup.”241 The release left Petroecuador and the Government solely responsible for environmental conditions in the former concession area. This corresponded with their exclusive control over the area after the Consortium ended in 199

It is important to highlight that at the time when the settlement agreements were signed, the State was exclusively responsible for regulation of the environment and was tasked with redressing any “violation of the respective regulations and technical provisions” of the Law on Prevention and Control of Environmental Contamination.242

237 Scope of Work, filed as Annex A to Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a m., Record at 7855-82v, 7868-74. Specifically by virtue of the agreement with the Ecuadorian government in the final point of the text, TexPet carried out negotiations and timely execution of the settlement agreements with the local Governments.

238 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79-80. 239 See Final Release, dated Sept. 30, 1998, filed May 4, 2004 at 10:02 a m., Record at 7294-99v, 7298v;

Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7857. 240 Final Release dated Sept. 30, 1998, filed May 4, 2004 at 10:02 a m., Record at 7294-99v, 7298v. 241 E-mail from Douglas Beltman to Pablo Fajardo and Steven Donziger, dated August 1, 2008 at 4:27 p m.,

filed as Annex 10 to Chevron’s Motion filed October 29, 2010 at 5:20 p m. (STRATUS-NATIVE063668). 242 Art. 6 of the Hydrocarbons Law gives the Ministry for Industry responsibility for environmental issues

relating to the oil industry. This role was reaffirmed in Art. 5 of Executive Order 2982 of August 24, 1995, which provided that “[t]he Office of Undersecretary of the Environment (SMA) of the Ministry of Energy and Mines, through the National Environmental Office” will “monitor, evaluate

[CERT.GEOTEXT] 72

It is also important to highlight that the settlement agreements between TexPet and the municipal governments contained specific provisions expressly intended to benefit the populations of the former concession area.243 Thus, TexPet provided equipment (including an airplane) and money for medical clinics, education centers, and other social services.244 These services were to be administered through state entities (the Ministries of Education, Health, and Energy) with direct participation by representatives of the indigenous and colonist populations in the former Consortium areas.245

Other documents related to the settlement agreements also demonstrate that the local governments (municipalities and Provincial Council) were acting with the interests of their citizens in mind. For example, an official Ecuadorian Congressional report on the settlement agreement signed by the Government of Ecuador explained that its purpose was to “indemnify or alleviate the negative environmental [e]ffects caused . . . to the Ecuadorian population living in [the] Amazonian region.”246 In addition, various Ecuadorian officials have repeated, under oath, that the negotiations leading to these settlements were “open for all those who wanted to attend,” and members of many environmental organizations, including the Frente de Defensa de la Amazonía, did attend.247 These government officials saw themselves as the “facilitator[s]” of an

[initials]

and approve Environmental Studies throughout the Ecuadorian Territory” and will “verify compliance with these Regulations and, in the event of noncompliance, it will require the persons responsible to restore the affected areas and to provide the pertinent compensation to the affected population.”

243 See, e.g., Airplane Sales Contract Between TexPet and Indigenous Groups dated Dec. 9, 1996, filed June 28, 2004 at 4:35 p m., Record at 7759-62v, 7759v-61; Lago Agrio Municipal Settlement & Release dated May 2, 1996, filed May 4, 2004 at 10:04 a m., Record at 7300-40v.

244 See, e.g., Acta of Receipt of Equipment from TexPet, Mar. 30, 1998, Record at 7725-29, 7727-28; Release of TexPet upon Receipt of Payment dated June 24, 1998, filed May 25, 2004 at 2:30 p m., Record at 7734-38, 7734v; Remediation Agreement between Government of Ecuador and TexPet dated Nov. 13, 1997, filed May 25, 2004 at 2:27 p m., Record at 7720-24v, 7721-21v.

245 These representatives included FOISE (Federación de Organizaciones Indígenas de Sucumbíos), FCUNAE (Federación de Comunas Unión de Nativos de la Amazonía Ecuatoriana), OPIP (Organización de Pueblos Indígenas de Pastaza), and ONAHE (Organización de la Nacionalidad Huaorani del Ecuador).

246 Report of the Special Permanent Environmental Commission of the National Congress (Nov. 9, 1994), attached as Annex I to Chevron’s Objections to Expert Calmbacher’s Report on Sacha-94, filed May 26, 2005 at 10:00 a m., Record at 68452-651v, 68639, 68641 (explaining also that settlements were intended “to compensate, actually and rapidly, the inhabitants of the affected areas”).

247 Deposition of Giovanni Rosania Schiavone, dated Oct. 19, 2006 (“Rosania Dep.”) at 73:1-14; 94:1-94:12; 95:9-15; 103:1-10, attached as Annex 115 to Chevron’s Motion, filed May 21, 2010 at 4:35 p m. (“Cabrera Omnibus”); Deposition of Galo Abril Ojeda, dated Oct. 10, 2006 (“Abril Dep.”) at 70:6-22, attached as Annex 114 to Cabrera Omnibus.

[CERT.GEOTEXT] 73

open dialogue between the communities and Texaco,248 and followed orders from the “National Congress to take into account the problems that the Amazonian groups were having.”249 As a result of this dialogue, the environmental groups were “behind everything that was being done,”250 leading to a final instrument that fully considered and accounted for the interests of individuals and communities in the concession areas.251

The State’s role as a representative of its citizens was particularly clear with respect to the natural resources in the former concession area. Pursuant to the provisions of Article 605 of the Civil Code,252 the lands used for oil production in the former concession area, for purposes such as the construction of wells, stations, and encampments, were declared to be of public utility and appropriated for this purpose, thereby becoming property of the Ecuadorian State through Petroecuador.253 Likewise, under Article 604 of the Civil Code, the public streets and roads, which were constructed in the former concession area to carry out oil production activities, were deemed national assets whose use belongs to all of the inhabitants of the nation.254 Water, as a natural resource, has been declared by the current Constitution to be “inalienably and imprescriptibly owned by the State”255 and is also considered a national asset for public use

[initials]

248 Rosania Dep. at 78:4-79:3, attached as Annex 115 to Cabrera Omnibus. 249 Abril Dep. at 76:2-77:7, attached as Annex 114 to Cabrera Omnibus. 250 Abril Dep. at 94:13-95:3, attached as Annex 114 to Cabrera Omnibus. 251 Rosania Dep. at 86:6-87:5, 88:21-89:21, 112:5-113:10, attached as Annex 115 to Cabrera Omnibus. 252 Art. 604 of the Civil Code provides: “All land that is located within the boundaries of Ecuador and has

no other owner is State-owned property.” 253 See Judicial Inspection Acta for Sacha-18, filed Feb. 16, 2005 at 9:30 a m., Record at 51455-86, 51460. 254 Art. 604 of the Civil Code provides: “Assets that are owned by the Nation as a whole are called

‘national property.’ If such property can also be used by all the inhabitants of the Nation, such as streets, squares, bridges and roads, the adjacent sea and beaches, it is called “national property for public use….” Article 6 of the Organic Law on Land Transportation, Transit and Road Security provides: “The State is the owner of the public roadways, it shall administer and regulate the use thereof.”

255 Art. 318 of the 2008 Constitution of Ecuador. See also the last paragraph of Article 247 of the Constitution of 1998, which provides: “Waters are national assets for public use; their ownership shall be inalienable and not subject to time barring; their use and enjoyment shall belong to the State or to any persons who obtain these rights, in accordance with the law.” Art. 12 of the current Constitution relates access to water with human rights and describes it as “a strategic national asset for public use, inalienable, not subject to time barring, not subject to liens or encumbrances, and essential for life,” consistent with Art. 408 of that Constitution, which refers in general to “nonrenewable natural resources.” Constitution, Art. 318 provides: “Water is a strategic national patrimony for public use, inalienably and imprescriptibly owned by the State, and constitutes a vital element for nature and for the existence of human beings. All forms of privatization of water are prohibited.”

[CERT.GEOTEXT] 74

in accordance with Article 2 of the Water Act [Ley de Aguas].256 Indeed, during the negotiation of the settlement agreement, the Government of Ecuador confirmed these points to the court in New York by representing that it was the sole “legal owner of the rivers, streams and natural resources and all public lands where the oil producing operations involved in this litigation are located,” and thus the sole “legal protector of the quality of the air, water, atmosphere and environment within its frontiers.”257 Moreover, I should point out that at the time when the settlement and remediation contract of 1995 was entered into, only the Ecuadorian Government had sufficient plaintiff’s standing to represent the people as a whole before the courts of justice. The private parties did not have the right to assume representation of the people of Ecuador before the judges with an aim to protect the environment.258 Further, in the aforementioned letter from Ambassador Terán, there is specific affirmation that the plaintiffs’ lawyers in this trial “were attempting to usurp rights that belong to the government of the Republic of Ecuador under the Constitution and laws of Ecuador and under international law.”259 Individuals had only the right to report environmental violations and request an official investigation by the State. This was also expressly acknowledged by the plaintiffs’ counsel in the New York Aguinda case. Dr. Wray ( initially the plaintiffs’ attorney in the present case) explained in an affidavit that, under Ecuadorian law, “[t]he application of laws regarding the prevention and control of environmental contamination falls within the purview of the administrative agencies of the executive [branch],” such that “if a person feels harmed by environmental infractions, he must file a complaint in front of those officials and not in front of judges.”260Because the settlements addressed environmental impact on public resources, they were clearly entered into by the State on behalf of the people. According to the evidence presented, which has not been refuted in any way by the plaintiffs,

[initials]

256 Art. 2 of the Water Act provides: “The waters of rivers, lakes, lagoons [and] springs that originate and

end within the same property, natural waterfalls and other sources, and subterranean waters, whether or not they emerge, are national assets for the public use, are outside of commerce, and the ownership thereof is inalienable and imprescriptible; they are not susceptible to possession, accession or any other manner of appropriation. There are no rights of ownership thereof that exist or are recognized, and preexisting rights are only limited to the use thereof to the extent that they are efficient and in accordance with this Law.”

257 See Letter from Amb. E. Terán to Hon. J. Rakoff (June 10, 1996), attached as Annex 4 to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a m., Record at 132975-77, 132975.

258 Paragraph 10 of Art. 19 of the 1979 Constitution, reformed in 1984, established the right of any person “to direct complaints and requests to the authorities, but in no circumstance in the name of the people” (my emphasis). The categorical constitutional disposition blocked any type of interpretation contrary to the express text of that article.

259 See Letter from Amb. E. Terán to Hon. J. Rakoff (June 10, 1996), attached as Annex 4 to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a m., Record at 132975-77, 132975.

260 See Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-954, 132953; see also Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001), aff’d, 303 F.3d 470 (2d Cir. 2002), attached to Texaco Inc.’s Response to RFP, Record at 9521-66, 9535.

[CERT.GEOTEXT] 75

there is no doubt that by entering into the settlement agreements covering all the potential claims for environmental remediation which could arise from Consortium operations, the Government of Ecuador and the local governments acted in representation of their respective citizens, including the plaintiffs in this case, with respect to the same collective or diffuse rights set out in the complaint and wrongly vindicated in the judgment under appeal.

Finally, taking into account that the Government of Ecuador and the local governments were acting on behalf of the citizens in their respective jurisdictions, the only claims that survived the settlements and could be pursued separately were those for personal injury and individual property damage. This is reflected in the carve-out provision of the State’s settlement, which was understood to preserve the rights of third parties to bring claims for alleged individual injuries.261 As we well know, the plaintiffs in this case did not allege any individual injuries. As Mr. Donziger admitted (and as the judgment expressly recognized), the plaintiffs “did not sue for” “personal damages.”262 The complaint demands the removal of alleged contaminants that “threaten the environment and health of the inhabitants,” 263 seeks money for the repair of alleged “environmental damages,”264 and thus seeks to redress the same alleged harm covered by the settlement agreements entered into by the Government of Ecuador and local governments. As we have seen, such claims have been vindicated and released by the Government of Ecuador and the local governments acting on behalf of all Ecuadorian citizens.

2. The Settlement Agreements Signed with the Government of Ecuador and the Local Governments Are Res Judicata

The appealed judgment errs when it concludes that the release contained in the settlement agreements does not apply to the plaintiffs in this case “because the settlements are clear in stating who the active and passive parties are in the settlement, without such type of legal transaction being extendable to third parties.”265 The plaintiffs do not constitute “third parties” as it relates to the settlement agreements entered into by the competent Ecuadorian authorities given that they dealt with the collective or diffuse right of Ecuadorian citizens to live in a contamination-free environment. The effects of res judicata on those settlements extend to all and bar this lawsuit from prevailing because the plaintiffs are unquestionably part of the

[initials]

261 See Memorandum of Understanding dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p m., Record at

7705-07v, 7706v. 262 Diary of Steven Donziger, entry dated Oct. 27, 2006, at 30, attached as Annex 1 to Chevron’s Third

Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p m. (DONZ00027256). 263 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 79. 264 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 79v. 265 Decision at 32-33, 34.

[CERT.GEOTEXT] 76

community benefited by the settlement agreements. In this sense, the plaintiffs were also “parties” to these contracts and therefore the contracts’ effects are also applicable to the plaintiffs.

[initials]

or right.”

In effect, by operation of Article 2362 of the Civil Code,266 the settlement agreements have the effect of res judicata.267 Therefore, it is legally unviable for a later trial to prevail that has, as this trial does, (i) the same parties, (ii) the same legal and factual reasons (or “causa petendi”) and (iii) the same objective.268 The former Supreme Court of Justice of Ecuador (now the National Court) has been very clear on this point: “Pursuant to Art. 297 of the Code of Civil Procedure no new action may be instituted that shares subjective identity, constituted by the same parties participating, and objective identity, meaning that the same thing, sum or act is being claimed, based on the same cause, reason 269

This principle has constitutional magnitude, as Article 24(16) of the 1998 Constitution provides that “no person can be tried more than once for the same cause,” which has its parallel in letter i) of Art. 76(7) of the current Constitution: “No one may be tried more than once for the same cause and subject matter.” This principle is also universally accepted as a principle of legal certainty, something that the National Court itself has recognized:

We unanimously recognize the binding nature and firmness of a judgment with the effect of res judicata, qualities that uphold universal compliance with the ruling to guarantee the end of the proceeding and its subsequent indisputability, to prevent new adjudications and decisions between the same parties on the same matter—non bis in idem—thereby avoiding instability in legal situations that have been explicitly defined by the legal judgment.270

266 Art. 2362 of the Civil Code provides: “The settlement shall have the effect of res judicata without any further appeal, but a motion for nullity or rescission may be filed in accordance with the foregoing articles.”

267 Case Law, Mar. 26, 1990, Prontuario de Resoluciones of the Supreme Court of Justice No. 3, p. 116: “Under the legal scholarship and the case law, a settlement is a civil contract that replaces a judgment because it ends a lawsuit, with the effect of res judicata for the opposing parties. Settlement and arbitration, although different within the procedural area, have analogous objectives with respect to settling the claims of the litigants, without incurring the expense and delay that occurs with a lawsuit.”

268 See VODANOVIC, Antonio, Treatise on Civil Law, Vol. I, Editorial Jurídica de Chile. Santiago, 1996, p. 83.

269 Supreme Court Reporter, Year: CVII. Series XVIII, No. 2, p. 503. 270 Supreme Court Reporter, Year: XLVII. Series X. No. 4. p. 2266. See also, Judgment No. 008-09-SEP-

CC; Caso No. 0103-09-EP (Judge: Roberto Bhrunis Lemarie, J.) (2009), II (Consideraciones y Competencia) (Acción Extraordinaria de Protección) (“Decisions affirmed upon their final and definite appeal turn into res judicata; they thus become definite and immutable and come to embody a singular, concrete, and imperative mandate, not because they issue from the judge’s will, but because of the law’s command”) and Gaceta Judicial, Judgment dated Oct. 10, 1977, Year LXXVIII,

[CERT.GEOTEXT] 77

In this case, the Judge below dodges the subject of res judicata in the judgment from the proper perspective, which would be keeping in mind that the substantive law claimed in this trial is a collective and/or diffuse right held by all Ecuadorians—not only the plaintiffs. The Judge below instead performs a superficial analysis of the aforementioned contracts and concludes, with no valid legal foundation, that the plaintiffs are characterized as “third parties” as it relates to the settlements because they did not sign the agreements. As to the rest, the Judge below includes an additional extensive argument that, in accordance with the above explanations, is irrelevant in all senses since it is founded on the right to action and petition which my client has not placed at issue.

This analysis is simply wrong. Whether the parties are identical turns on the real parties in interest, not the nominal persons involved in the complaint.271 It is unquestionable that the environment belongs to the Ecuadorian nation as a whole272 such that all citizens share an indivisible right to a clean environment and public health. From this standpoint, the fact is that nobody can be considered strictly a “third party” because all individuals belong to a community as a whole.

As shown above, the Government of Ecuador had (and still has) the specific and constitutional duty to represent the interests of the community in environmental matters. 273 The local governments, too, were (and still are) obliged to “strive for [the] collective material well-being” of their citizens,274 “look after the sanitation and health” of the local communities, 275 and “contribute to the achievement of the State’s goals” 276 —”whose main purpose is the local common weal.”277 Thus, the “People” were the real parties in interest in these prior settlement agreements whose effects of res judicata extend to all. As shown above, and as the appealed

[initials]

Series XIII, No. 1, p. 128; Judgment No. 005-09-SEP-CC; Case No. 0112-09-EP (Judge: Edgar Zárate Zárate, J.) (2009), 3ra Consideración. See also, Judgment No. 835-2003-RA; Case No. 00118-98-TC (2003) (Dissent: Milton Burbano Bohórquez and Simón Zavala Guzmán, JJ.).

271 DEVIS, Hernando, Compendium of Procedural Rights, General Theory of Procedure, 10th edition, 1985. Editorial ABC. Bogotá. Vol. I, pp. 325, 504 and 505.

272 Art. 604 of the Civil Code provides: “National assets are those that belong to the Nation as a whole. If their use also belongs to all the inhabitants of the Nation, such as the streets, plazas, bridges and roadways, the neighboring sea and beaches, they are called public use national assets or public assets . . . .”

273 Art. 19(2), of the 1993 Constitution of the Republic of Ecuador, Law No. 25, published in Official Gazette 183, May 5, 1993, reads: “the State guarantees [to each citizen] 2. The right to live in an environment free of contamination. It is the duty of the State to ensure that this right is not violated and take charge of the preservation of the environment . . . .”

274 Art. 12 of the Organic Municipal Regime Law. 275 Art. 164 of the Organic Municipal Regime Law. 276 Art. 19 of the Organic Municipal Regime Law; see also Provincial Regime Law, Art. 1 (the Province’s

“mission is to . . . work with the State and the municipalities of the respective area toward the harmonious furtherance of the national interest”).

277 Art. 1 of the Provincial Regime Law.

[CERT.GEOTEXT] 78

judgment itself confirms, the alleged representatives of the plaintiffs have admitted on several occasions that they seek to vindicate only “collective rights”278 to live in a clean environment that are “shared by the community.” 279 Like the Government of Ecuador and the local governments, the plaintiffs here seek to represent the “People,” which means that the parties are legally identical.

The causa petendi280—or the factual background and legal basis for the claims—is likewise identical between the settlement agreements and this action. A comparison of the settlement agreements and the Lago Agrio complaint shows that they both have the same factual basis and legal grounds: the alleged impacts of the Consortium’s operations on the citizenry’s right to live in a clean environment. The plaintiffs here argue that “environmental damages” were caused by the “methods and procedures introduced, established and applied by TEXACO” during the Consortium.281 The settlement agreements also aimed “[t]o establish the mechanism whereby Texpet will be released from any claim . . . for environmental impact as a consequence of the operations of the former PETROECUADOR—TEXACO Consortium.”282 Plaintiffs’ legal claim purports to be based on the “collective right” to live in a “healthy, ecologically balanced environment that is free of contamination.”283 The settlement agreements expressly purported to release collective claims based on the citizenry’s right to a healthy and clean environment,

[initials]

278 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 78v-79; see also Art. 12 of the

Provincial Regime Law. 279 Environmental Management Act, Glossary of Definitions (definition of “Collective Environmental

Rights”) and Article 41. 280 DEVIS ECHANDÍA, Hernando. General Notions of Civil Procedure. 1966. Editorial Selecciones

Graficas. Madrid, Spain. pp. 218-219 and DEVIS ECHANDÍA, Hernando. Compendium of Procedural Rights, General Theory of Procedure. 10th edition, 1985. Editorial ABC . Bogotá. Vol. I, p. 502.

281 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 74. 282 Memorandum of Understanding ¶ I(d) dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p m., Record at

7705-07v, 7705. 283 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v. In like manner, the

complaints filed by the relevant municipalities against TexPet had, as their factual basis, the alleged “ecological catastrophe which degraded the environment and its forest biodiversity, contaminated its water sources, in streams and rivers which the population use . . . .” Orellana Municipal Complaint at 2, attached as Annex 1 to Chevron’s Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; see also La Joya de los Sachas Complaint at 2, attached as Annex 3 to Chevron’s Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Complaint at 1, attached as Annex 8 to Chevron’s Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Complaint at 1, attached as Annex 5 to Chevron’s Evidentiary Request No. 1.3.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p m.

[CERT.GEOTEXT] 79

“including but not limited to any causes of action under Article 19-2 [] of the Political Constitution of the Republic of Ecuador.”284

Finally, the Government of Ecuador and the local governments (municipalities in the area of the former Concession and the Provincial Council) sought the same objective in settling their claims with TexPet that the plaintiffs seek here; in the words of the former Ecuadorian Supreme Court (now the National Court), they each had the same “final result . . . in mind when filing their claims” or settling them.285 In the complaint in the present case, the plaintiffs demand the remediation of environmental impact, specifically claiming (i) “[t]he elimination or removal of contaminating elements that still threaten the environment and the health of residents,”286 and (ii) “[t]he remediation of the environmental damage caused.”287 The judgment itself recognized that “the State has released Texaco, and consequently Chevron, from all their responsibilities in relation to the environmental harm that is the subject of this complaint.” This was precisely the same objective that the Government of Ecuador and the local governments pursued and achieved in the settlements, when securing specific environmental remediation for alleged environmental harm arising out of the Consortium operations and funds for socioeconomic programs. In turn, the Government of Ecuador and the local governments released TexPet and its parent companies, subsidiaries and affiliates, among others, from responsibility for any “environmental impact,” broadly defined as “[a]ny solid, liquid or gaseous substance present or released into the environment in such concentration or condition, the presence or release of which causes, or has the potential to cause harm to human health or the environment.”288

[initials]

3.

284 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7862.

The text of Article 19-2 of the Political Constitution of the Republic of Ecuador, as it was written in 1995, demonstrates that the State had the authority—and indeed, the “duty”—to protect and vindicate the citizenry’s right to a healthy and clean environment. See Article 19-2 of the 1978 Constitution of Ecuador (as codified in 1993) (establishing the citizenry’s “right to live in an environment free from contamination,” but placing the “duty [on] the State to ensure that this right is not abridged.”) The vindication of that constitutional “right” was accomplished through the execution of the settlement contract, which the State was constitutionally authorized, and obligated, to pursue. Any assertion that the State could not settle this constitutional right on behalf of its citizenry runs squarely against the clear text of the then-extant Constitution.

285 Rosa Elena Rey Orozco vs. Arcesio Volívar Morocho Erráez, Judgment of the Supreme Court of Justice, Second Labor and Social Division, June 7, 2004, Case 98-2004, published in Official Gazette 506, Jan. 18, 2005. Similarly, according to Hugo Alsina: “The object of a lawsuit . . . is the thing requested; . . . not in a physical sense but rather the sense of the usefulness or advantage sought.” ALSINA, Hugo, Tratado Teórico Práctico de Derecho Procesal Civil y Comercial, 2d ed., Volume IV, Editorial Ediar, Buenos Aires, 1961, p. 147.

286 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 79. 287 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v, 79v. 288 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a m., Record at 7855-82v, 7857.

[CERT.GEOTEXT] 80

Conclusion: The plaintiffs’ claims are barred from prevailing due to the effect of res judicata.

It is contrary to the principle of legal certainty to sustain the possibility that the same collective or diffuse right may be repeatedly and indefinitely claimed by different members of the same group, alleging the same factual history and seeking the same compensation that was already the subject of a settlement prior to this process. But it is specifically to this illogical outcome that the appealed judgment leads in disregarding the effect of res judicata on the settlement agreements entered into between TexPet and the competent Ecuadorian authorities. The fact that the plaintiffs did not sign the settlement agreements is absolutely irrelevant, because the Ecuadorian authorities acted on behalf of all Ecuadorian people, which necessarily includes the plaintiffs, despite alleging their capacity as “third parties” to said contracts.

Furthermore, the result of the appealed judgment would give rise to other groups that have also sued Chevron for the same alleged environmental damages—among whom would be the members of the “affected communities” supposedly represented by the plaintiffs in this trial—getting judgments in their favor. 289 If the settlement agreements entered into with the Government of Ecuador and the local governments do not bar this litigation, then there is no principled reason why a judgment in favor of the plaintiffs here would have the effect of res judicata with respect to these other groups who say that they are not represented by the plaintiffs in this proceeding. Disregarding the effect of res judicata in the release that was granted to my client could mean that these types of trials would go on indefinitely. All of the aforementioned is a clear and permanent violation of due process.290

In conclusion, because TexPet and its affiliates and principals have been absolutely released in the settlement agreements that give rise to the effect of res judicata to all, the lower court judge seriously errs in sustaining the claims put forth by the plaintiffs. As a result, the appealed judgment must be revoked, rejecting the lawsuit filed and specifically imposing costs on the plaintiff.

289 The record includes a written declaration from leaders of the Huaorani and Kichwa indigenous groups

protesting their inclusion in this lawsuit and stating that neither the plaintiffs nor the Frente has been authorized to represent them. Chevron’s Motion regarding Plaintiffs’ Representation of Kichwa and Huaorani Communities, filed Jan. 17, 2007 at 3:00 p m., Record at 125652-54, 125653.

290 On this matter, I refer to Chevron’s Motion filed Dec. 15, 2010 at 5:50 p.m.


B. The judgment made by the court of the first instance ratifies and aggravates the systematic violation of Chevron’s due process that occurred throughout the lawsuit. The proceeding is null and void on these grounds:

“Due process,” as a fundamental right, has constantly evolved through the constitutional history of Ecuador.291 It has been defined as:

“a set of inherent rights of persons and prior to the State, of a substantive and procedural nature, acknowledged by the Constitution, which seek to safeguard liberty and ensure that persons submitted to litigation enjoy guarantees to exercise their right to a defense and obtain a just, prompt and transparent process from judicial and administrative bodies. The guarantees that constitute due process are set forth in Article 24 of the [Constitution] which, based on the principle of legal hierarchy, prevails over all other secondary laws, procedural practice or order of authority.”292

The right to due process and the various guarantees that this entails are aimed at ensuring, among other things: (i) the right to a fair defense (meaning to ensure that both parties have equal access to the court, equal access to witnesses, experts and equal opportunities to present their arguments, objections and pertinent evidence in order to prove their arguments and answer those of the opposing party); (ii) the right to be judged by a “natural judge” (meaning judges that act independently, impartially and competently) and (iii) openness of trials (meaning to ensure that all fact-finding proceedings are conducted in a transparent manner; that, among others, the experts furnish all data upon which they base themselves and that they answer all questions posed to them). These rights have been incorporated into the 1978, 1998 and 2008 Constitutions which, according to Professor Santiago Andrade Ubidia, give “a new role to the judge as guarantor of . . . the rights and guarantees established in the Constitution.”293 In this lawsuit, each and every one of these basic guarantees were violated or ignored.

The Judge below violated these fundamental rights with a systematic series of illegitimate, inappropriate and unjust decisions that should have been rendered null and void at the time and that now mandate that the decision to be quashed.

The judge of the first instance refused to consider evidence crucial to Chevron’s defense; he based his decision on evidence that is illegal and hardly reliable; and during the lawsuit, he adopted a constant pattern of decision biased against Chevron. Those decisions lack the necessary basis and have deprived Chevron of its basic right to defend itself before independent and impartial judges.

[initials]

291 See, for example, Art. 76 of the 2008 Constitution, Art. 24 of the 1998 Constitution and Article 19 No.

16 of the 1978 Constitution. 292 CORRAL, Fabián, Due Process. In the newspaper El Comercio. November 9, 2006. p. A3 (discussing

the 1998 Constitution). 293 ANDRADE UBIDIA, Santiago, The Judicial Branch in the current Ecuadorian Constitution, published

in The New Constitution of Ecuador: State, rights and institutions. Editorial Corporación Editora Nacional, Quito, 2009, p. 240.

[CERT.GEOTEXT] 82

1. The Judge refused to consider critical evidence submitted by Chevron.- Illegal renunciation of various inspections and analogous application of evidence.- Failure to comply with rules of evidence.- Failure to comply with rules regarding essential error.- Legal and technical speculation of the judge of the first instance.- Violation of process and denial of Justice:

During the lawsuit, the Judge below repeatedly refused to consider evidence critical to Chevron’s defense, which is the same as denying the neutral administration of justice. In its answer to the complaint, Chevron presented a series of fundamental legal defenses—including the lack of jurisdiction and non-existence of a viable action—that should have resulted in the immediate dismissal of the entire case by the lower court Judge.

However, instead of resolving these prior legal questions on the grounds of them being procedural presumptions for the existence of the lawsuit, the lower court Judge ordered that the case be opened for evidence, thereby misusing the limitations of summary oral proceedings. Because in summary oral proceedings, it is not possible to resolve petitions except in a decision; this in no way means that the Judge in the case can seize jurisdiction or competence to fanatically initiate the judicial process that the plaintiff filing the complaint proposes to him.

The Judge in summary oral proceedings, like any other Ecuadorian judge, must first ensure that he has competence to begin handling the case or else declare the immediate nullity of the case in the event that his lack of jurisdiction or competence is evident.

In this lawsuit, the judge of the first instance seized jurisdiction and competence that he lacked and, in abuse of the summary oral proceeding, seriously restricted the procedural rights of Chevron, subjected as it was to the dictatorship of unjust judicial activity. In the process, the appointment of experts was ordered in order for them to act in the stipulated judicial inspections of 122 sites operated by the former Petroecuador-TexPet Consortium. It was agreed between the parties that any dispute would be resolved by “settling” experts appointed independently by the Judge in the case.

In order to guarantee that the judicial inspections would be conducted in a transparent and reliable manner, and consistent with the requirement of Article 252 that the Judge appoint experts unanimously agreed by the parties, the parties spent several months negotiating a “procedural agreement” that, once finalized, was presented to the Judge below. 294 This agreement included three documents: (i) the Terms of Reference for the Participation of the Experts During the Judicial Inspections; (ii) a Sample Collection Plan for the environmental evaluation of the sites subject to judicial inspection; and (iii) an Analysis Plan outlining the

[initials]

294 Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004 at 8:02 a m.,

Record at 8470-74, 8550-51, approved by Order of Aug. 26, 2004, filed at 9:00 a.m., Record at 9051-53, 9052.

[CERT.GEOTEXT] 83

analytical protocols for analyzing samples taken during the judicial inspections sought by the parties and ordered by the Judge, within the evidentiary period.295 The Judge approved this “procedural agreement” in an order issued on August 26, 2004, at 9:00 a.m., thereby making the agreement’s contents binding rules for the case.296

Within this framework, the Judge below ordered that two experts participate in each of the judicial inspections, one nominated by each party. 297 The Court also ordered that if the respective party-appointed experts issued “divergent” reports, then such divergence would be “settled” by experts appointed by the Judge below.298 In addition, per the plaintiffs’ request, the lower court Judge further ordered that among the experts nominated by the parties and designated by the Judge below for the judicial inspections, they would also participate in the global expert assessment of all of the fields operated by the former Consortium, selecting from among those that participated in different judicial inspections requested by the parties.299

In accordance with the procedural agreement approved by the lower court Judge and the provision of Article 252 of the Civil Procedural Code, each of the parties nominated their experts to act in the judicial inspections, while the Judge below, in turn, appointed the corresponding settling experts.300 Nevertheless, in two cases, the expert nominated by the plaintiffs, Dr. Charles Calmbacher, did not submit the expert report (Sacha-6 and Sacha-21). (It was subsequently revealed that Dr. Calmbacher had been dismissed by the plaintiffs since his conclusions did not confirm their allegations and that the two reports submitted on his behalf (Sacha-94 and Shushufindi-48) had been modified by the plaintiffs).301

[initials]

295 Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004 at 8:02 a m.,

Record at 8470-551, 8470-72, 8475-8518, 8519-49. 296 Order of Aug. 26, 2004, filed at 9:00 a.m., Record at 9051-53, 9052. 297 See Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004 at 8:02

a.m., Record at 8470-8551, 8470-71; See also Order of Aug. 26, 2004, filed at 9:00 a m., Record at 9051-52v, 9052. 298 See Order of Sept. 16, 2004, filed at 9:30 a.m., Record at 79736-36v, 79736. 299 Plaintiffs’ Motion Requesting Judicial Inspections and Global Assessment, filed Oct. 29, 2003 at 5:45

p.m., Record at 4677-78, 4677v-78; Order of Oct. 29, 2003 at 5:55 p m., Record at 4681-84v, 4683v-84. 300 Chevron’s motion filed Nov. 23, 2005 at 3:10 p.m., Record at 84794-84798 (84794-84795) (regarding

the Requirements, Conduct and Responsibilities of the Experts); see also Chevron’s motion filed Sept. 20, 2005 at 5:00 p.m., Record at 79738-79742 (79379-79741); Order dated Sept. 16, 2005 at 9:30 a m., Record at 79736-79736v (79736).

301 See Chevron’s Alegato, filed Jan. 6, 2011 at 5:55 p.m., at § 2.1.

[CERT.GEOTEXT] 84

However, the lower court Judge refused to follow this procedure agreed to by the parties and ordered by Law, and he did not appoint settling experts to make a decision on the dissimilar conclusions presented in all of the cases by the experts appointed as proposed by each party. Since the lower court Judges never allowed the completion of the process, the few, incomplete and divergent reports it cited have no evidentiary value, and cannot properly be the basis of any judgment.

The justification of the Judge below for his failure to appoint settling experts—that the lower court Judge himself was capable of evaluating the raw technical data in the expert reports—is plainly inadequate. First, although the Judge below attempts to justify the failure to appoint these settling experts by stating that such a failure is justified if “the judge believes that a third expert will not help him better form his opinion,”302 the Judge below in this case had previously recognized in the procedural agreement that due to the technical nature of the case, settling experts were necessary to form the Judge’s opinions. Second, the Judge below had already appointed settling experts for every site where party-nominated experts completed reports, but the Judge below failed to order the settling experts to consider the divergences and settle them in the respective report. Therefore, the statement by the lower court Judge that settling experts were not appointed because they were not necessary is factually incorrect. And third, the Court simply ignores that the appointment of settling experts was necessary to ensure that consistent and comparable data was available for all inspections. The existing reports employ divergent criteria and therefore cannot simply be pieced together to form global conclusions.

Indeed, the record also proves that the lower court Judge was incapable of weighing the evidence on his own without settling experts. The judgment found Chevron liable under the guise that “even [the reports’] apparent contradictions—and the resulting debates they have triggered—have served to better illustrate the reality in the eyes of the judge.”303 However, the one settling expert report in this case, the report on Sacha-53, indicates that the view of reality of the Judge below was simply incorrect. The Sacha-53 report found, contrary to the conclusion of the plaintiffs-nominated expert, that TexPet’s remediation complied with all the requirements of the respective agreement. Therefore, despite the confidence of the lower court Judge in his abilities to weigh the technical and scientific evidence, it is plain that he was not competent to do so and that settling experts were required.

The Judge clearly acted with no consultation regarding this point since the settling experts would have allowed the clarification of the technical aspects of the proceeding that the lower court judge considered could be satisfied through his sole assessment, despite lacking sufficient technical knowledge to construct the conclusions that, in the long run, he ended up making in the decision. The superficiality of the technical arguments of the lower court judge are particularly serious if one takes into consideration the fact that, in the decision, the lower court judge uses expressions of doubt regarding the liability of TexPet and regarding the true causes of the damage.

[initials]


[CERT.GEOTEXT] 85

It appears to be that the lower court judge deliberately attempted to conceal the technical and scientific evidence and based himself on suppositions, on speculations and on isolated ideas in order to reach the two basic conclusions of the decision regarding the existence of (i) the damage and (ii) the liability of TexPet. Thus, on page 161 of the decision, there appears the phrase “they have apparently been ignored by Texpet”; on page 170, the lower court judge says that “there is a probability of at least 50% that the conduct of Texpet is the cause of the impacts on health”; on that same page, paragraphs later, it appears that the contamination of soil and water “finds its cause primarily in the activities of Texpet”; and that “the impacts suffered by the indigenous people in their cultures have been partially produced by the activity of the defendant.” (Emphasis added).

All of these phrases reflect ambiguities, the judge’s lack of certainty, the lack of conclusive proof in the case and legal relativisms of the same Judge who issued the decision which, in the hands of a Judge with knowledge, would have ruled that the merits themselves of the plaintiffs’ accusation be rejected on the grounds of a lack of conclusive evidence, as should be presented in a lawsuit of civil liability for supposed environmental damage. In short, the Judge below has used for his decision a host of subjective reasoning, which from his individual point of view is the most fair and legal, while in reality, in fact, the law should have prevailed over his subjective fairness, as the Judge below is not a conciliator or Justice of the peace, rather he is a Trier of Law, who was required to use only legitimate and scientifically proven evidence. In addition, the pressure that was put on him is clear, i.e., both the illegal local political interference and the immeasurable pressure from the media, both locally and internationally.

In its legal-technical part, the text of the decision acknowledges the lack of sufficient expert reports in processing the case, thereby leaving space for the speculation that characterizes the decision.

In addition, the illegitimate renunciation of the judicial inspections by the plaintiffs prevented the Judge in the case from making an analogous application of the conclusions that he said he had taken from the judicial inspections that had indeed been carried out. Beyond the fact that it is not true that the lower court Judge had been present at the judicial inspections conducted during the lawsuit, it is alarming to see how the Judge in the decision candidly agrees that he can evaluate the environmental damage to a vast territorial area belonging to the former Concession based on judicial inspections that were carried out elsewhere in a minimal section of this territory of the Concession, and without the judge having, as it was admitted, technical knowledge.

The Judge’s assessments in this respect are likewise speculative and lacking procedural significance since the evidence refers to facts and not assumptions, as indicated in Article 116 of the Code of Civil Procedure: evidence must limit itself to the matter in dispute and to the facts submitted to litigation.” (Emphasis added).

If the Judge did not carry out judicial inspections of the former concession sites since the plaintiffs decided to illegitimately withdraw from them, then those uninspected


areas are not part of these proceedings and there is no legal rule that allows the Judge to imagine, deliberate, suppose or have the hope that there is environmental damage in those areas and that Texpet is liable for it. Even plaintiffs have acknowledged that “the assertions in the complaint are to be proven only and exclusively by the Plaintiffs.”304 Despite this, the Judge unlawfully speculated as follows, involving in the action what should not be involved therein since the judicial inspections had not been carried out: “. . . Thus,—states the Judge in the judgment, page 106- considering the existence of hydrocarbon impacts mentioned before, we have to analyze the scope or extension of such contamination in soils within the concession area, with the warning that it cannot be understood that all of the soil in the area is polluted but rather that the samples are representative of the sites from which they have been taken, but even so it is considered that based on the quantity and consistency of the data gathered in the 54 judicial inspections conducted at sites operated by Texpet, it is be appropriate to consider the possibility of extrapolating these data to other installations operated by Texpet, though they were not inspected during these proceedings, that is, we shall not proceed from the premise that the results of the samples from sites analyzed in the judicial inspections are direct evidence from uninspected sites, but rather that the quantity of inspected sites can lead to regarding them as a representative sample of the universe of sites operated by Texpet, so that results from the inspected sites can be extrapolated, an idea which is strengthened to a great extent, by the similarity of the results in the inspections that were carried out . . . .” (Emphasis added).

The Judge cannot extrapolate conclusions. He should record the facts that are part of the litigation and, if he does not do so, because the plaintiffs themselves did not want this, then they are no longer facts in the proceedings and they cannot be the subject of the judgment.

The Judge does not have the power to extrapolate any conclusion concerning facts that do not exist in the proceedings. The facts of the action must be proven, not imagined, speculated or extrapolated. That is not reasoned judgment but arbitrariness and abuse. I will return to these issues at a later stage. In addition to the fact that, for all pertinent legal purposes, the Judge has the obligation of expressing in his decision, the weighing of all evidence produced. Moreover, if the Judge himself has said that he has not taken into account the expert report of Mr. Richard Cabrera, then 100% of the sites evaluated by this expert are not and cannot be weighed by the Judge as validly produced “evidence.”

Another serious infringement by the lower court Judge of the rules of evidential practice was his failure to admit the arguments as to essential error put forward by my client, which aimed at ensuring the technical suitability of the expert reports. The Judge had the possibility of dismissing the essential errors argued by Chevron but only once he had heard the evidence produced in each case, in accordance with Article 258 Code of Civil Procedure: “if the expert opinion contains an essential error, proved in the summary proceedings, the judge must, at the request of a party or of his/her own motion, order that it be corrected by another or other experts, without prejudice to any liability incurred by the former experts because of fraud or bad faith.” (Emphasis added).

[initials]

304 Plaintiffs’ response, filed on Feb. 15, 2006 at 5:45 p m., Record at 93628-93630 (93628).

[CERT.GEOTEXT] 87

The lower court Judge did not comply with the aforesaid rule and violated the procedure for hearing evidence, with the consequent effect on my client’s lawful right to challenge the malicious techniques and arbitrary conclusions of several of the appointed experts, who did not use the sampling and analysis plans ordered by the Judge below but, instead of this, employed unreliable methods and instruments to collect the samples, used unaccredited laboratories to analyze them and made use of incomplete or falsified documentation to conceal these defects.305 The Judge changed the procedure and only referred to the essential errors argued by Chevron in the judgment, stating on page 40 thereof his particular interpretation of the facts: “. . . since it is up to the judge to conduct the proceeding, and given that article 258 CPC states that essential errors shall be “summarily proven,” in connection with art. 844 of the Code of Civil Procedure, it impedes the initiating of incidents that could slow down the proceedings, we have no doubt about the impossibility of initiating a new evidentiary phase as sought by the defendant within an oral summary proceeding so as to prove the existence of an alleged essential error that the law sets forth that shall be proven in summary proceedings rather than expeditiously. Therefore, it has been ordered that the evidence be limited to documents so that they may be incorporated into the proceedings without unnecessary delays, but that permit the claimant to state its arguments as it has done, although they have not been sufficient to convince the judge of the existence of such errors . . . .” (Emphasis added).

This is a change to the proceedings for hearing and proving an essential error, since it is not the opinion of the Judge that must prevail over the evidence to show the essential error but the right of the party alleging the essential error to use the evidence that it considers appropriate. Although the rule states that the evidence should be dealt with summarily, this does not mean that the evidence is limited to documentary evidence. The agreement of the lower court Judge that it was appropriate to limit the procedural rights of Chevron, requiring it to produce only documentary evidence, is evidence of his failure to comply with the Law and the impact thereof on the defendants right to due process.

The court’s conclusions are incorrect for other reasons as well.

First, the Court’s attempt to ignore the improper legal standards employed in many expert reports does not remedy those essential errors. The judge ignores that in many cases, the technical results depended on legal standards, and if an expert employed an incorrect legal standard, the technical results are flawed.

Second, while the Court purports to resolve the other issues by disregarding the “data interpretation” and focusing only on the raw data of the reports, it simply ignores Chevron’s petitions regarding essential errors that show a myriad of additional flaws in the data and reports.

Third, the Judge below cannot refuse to process an essential error petition or deny the party alleging it the right to prove it, much less can he deny the existence of essential errors based on

[initials]

305 Chevron motion to Dismiss Judicial Inspection Experts’ Report, filed on 6 August 2010 at 2:30 p m.,

Record at 192723-192877v (192741-192750).

[CERT.GEOTEXT] 88

decisions regarding other essential error petitions by the same party, and/or deny such essential error petitions based on said party having made use of other concomitant procedures, such as the observation and challenge of the same expert reports. The refusal of the Judge below to open summary proceedings to address Chevron’s essential error petitions prevented Chevron from defending itself against the evidence brought against it. In his judgment, even the lower court Judge stated that “the defendant has used these essential error proceedings as a mechanism to challenge the plaintiffs’ evidence.”306 The failure by the Judge below to follow the required procedure with regard to these petitions is an indication of the failure of the Ecuadorian judicial system to provide justice, especially because we know, from the U.S. discovery, that plaintiffs’ evidence is fraudulent.

The lower court Judge here committed a further error of judicial evaluation which led him to reach absurd conclusions, such as the conclusion stated on page 42 of the judgment “ such that it is virtually impossible that an essential error would escape the eyes of the judge.” I believe, on the other hand, that several essential errors in the experts’ reports did not escape the Judge: many escaped him, as we shall show below.

My client has been prejudiced by this abusive method by the lower court Judge of conducting the proceedings, which method does not accord with the law or with the case-law of Ecuador. For example, the National Court of Justice, Fiscal Division, in proceedings 301-2009, stated as follows:

“. . . FOUR: There are several questions that are raised against the judgment but the issue of nullity of the proceedings must be examined first because, if it is well-grounded, it invalidates them from the time that this fact arose and invalidates any subsequent procedure, including the judgment. This Division must verify whether this has happened and, to this end, it puts forward the following considerations: a) It is apparent from a review of the proceedings that the Court, in use of its power to act sua sponte recognized to it by Article 262 Tax Code, ordered the performance of formalities that it must have regarded as necessary to enable it to have available sufficient evidence to issue its decision, which is entirely relevant conduct, since it can do this at any stage of the case, until it gives its judgment; b) Performance of these formalities must comply with the requirements of any procedural action, the hearing of the parties, so as to safeguard the due process, the right to a defense and the impartiality of the judge; c) An expert report must of course be brought to the knowledge of the parties, so that, in exercise of their right to a defense, they can accept or reject the content

[initials]

306 Decision at 44.

[CERT.GEOTEXT] 89

thereof or, if not, make comments. An expert report, per se, without acceptance or rejection, whether express or implied, by the parties cannot be evidence to convince the judge and this is why it needs to be brought to his knowledge; d) Pages 195 to 197 contain the expert report filed by Dudley Arellano Mejía, which has not been brought to the knowledge of the parties since, on pages 98 et seq., the judgment appears and this is an offence to the due process and the right to a defense guaranteed by the Constitution; e) Apart from this file, there are also outstanding petitions that have not been dealt with by the Court, such as the expiry of the appointment of the appointed expert. Since the procedure had not been fully carried out, it was hardly possible for the decision to be given. Therefore, the second ground of Article 3 Cassation Act argued by the appellant applies . . . .” (Emphasis added).

In fact, the lower court Judge created an incomplete procedure with inconsistent reports, from which, in the appealed judgment, he quoted and got what was in his best interest to support the plaintiffs, which demonstrates that the process was not completed in these proceedings and so the judgment therein could not have been made. 307

The proceedings are invalided by reason of the considerations stated above, and the appealed decision should be reversed and the case thrown out in its entirety.

2. In an arbitrary manner, the lower court Judge omitted legally accepted means of evidence and relied on the filing of September 16, 2010, at 5:15 p.m. from plaintiffs’ “specialist consultant[s]” in his judgment. The Judge acted against an express legal rule—possible breach of public duty:

The fact that the Judge below relied on the reports from the “specialist consultant[s]” paid by the claimants inexorably requires revocation of his judgment and dismissal of the plaintiffs’ claims. Even though the decision by the Judge below appears to recognize that these “specialist consultant[s]” are not “experts or assistants,”308 the proceedings ordered by the Judge of the lower court and also the apparent acceptance by the Judge of this document contravene Ecuadorian Law. In spite of the improper conduct by the plaintiffs and in spite of the fact that the production of evidence ordered within the evidentiary period had not ended, in particular, the hearing of the expert evidence, the lower court Judge gave the plaintiffs an opportunity to present a flawed “legal report,” which was used as a vehicle to open a second and illegal ad hoc evidentiary period, in favor of the plaintiffs, which allowed them to again and in a concealed fashion introduce their evidence.

[initials]

307 See Chevron’s motion filed on Jan. 6, 2011 at 5:55 p m., at § 3.3.1. 308 Decision at 57-58, 181.

[CERT.GEOTEXT] 90

The formulation of supplementary technical-economic claims concealed under the form of an alleged “legal report,” such as that filed by the plaintiffs on 16 September 2010, at 5:15 p.m., did not remedy the defects affecting the reports filed by Mr. Cabrera and the reports filed by the experts nominated by the plaintiffs (which we know were, in case after case, defined and/or prepared and/or supervised by the claimants themselves). The actions of the Judge in accepting the “legal reports” of the parties represented the opening of a second period for submitting evidence in favor of the plaintiffs so that they could try to “cure” the report of expert Cabrera, written by third parties aligned with them.

Plaintiffs’ so-called “legal report” and the technical reports that were attached thereto are alien to the judicial proceedings in Ecuador, which could not be taken into account by the lower court Judge when rendering his decision because it would have been in breach of Article 115 Code of Civil Procedure. Pursuant to Article 117 of the same Code, Article 115 only allows the Judge to apply his reasoned judgment to evidence properly introduced in the case; he is prohibited from basing his final ruling on the unsubstantiated comments of the parties to the proceedings and, even more so, from replacing the evidence submitted in the proceedings, however defective it may be, with the mere opinion of an interested party and its consultants.

The absence of evidence or defects in the evidence cannot be cured by replacing it with the written opinion of the plaintiffs in the action or of their consultants, since this would involve use of the powers of the Judge in the case to favor one of the parties and, possibly, breach of duty.

The conduct of the lower court Judge does not have comparison in Ecuadorian Law: there is no place for the parties’ consultants in our procedural system but, despite this, the Judge has taken into account in his judgment the opinion of consultants of the plaintiffs in the action. Nor is it possible to replace the evidence at the discretion of the Judge in the case, and yet the Judge has tried to make up for the expert reports which were defective in terms of their content, technical quality and grounds with the written opinion of the plaintiff and their consultants. Nor is it possible to replace the evidence relative to the waived judicial inspections with the expert evidence: the evidence requested by the party is the evidence that must be processed and, if the Judge in the case wishes to use his powers to sua sponte request further evidence, then he should do so in accordance with Article 118 of the Code of Civil Procedure.

[initials]

the

But even setting aside the fact that there was no basis in law for the Judge below to decide as he did,309 the fact remains that the grounds on which the “legal report” of the plaintiffs relies are the data contained in the expert reports of the experts nominated by the plaintiffs for the judicial-inspection process, along with the forged and fraudulent report of expert Cabrera.310 Those estimates, therefore, are deficient for all the reasons discussed above.311 This is confirmed by

309 Ibid. 310 See Chevron’s Alegato §§ 7.3-7.4. 311 See Chevron’s Alegato §§ 3.3–3.4.

[CERT.GEOTEXT] 91

testimony of the authors of the reports themselves.312 Douglas Allen, for example, agreed that he has no experience assessing costs to remediate sites contaminated by crude oil and that he does not consider himself an expert in remediation of oil fields.313 In addition, in many cases, they simply assumed the accuracy of the Cabrera Report, without having considered its fraudulent preparation or Chevron’s observations on it, which questioned not only its legitimacy, but the entire lack of technical and scientific validity, as well as its lack of logical consistency and lack of connection to the real history of the facts examined. Dr. Lawrence Barnthouse stated that he was under the impression that Mr. Cabrera “would be neutral” as an expert designated by the Judge below, adding that, had he known the extent to which plaintiffs prepared the Cabrera’s Report, he “might not have wanted to get involved” in the case. 314 The authors also acknowledged severe limitations in their conclusions, citing the absence of expertise, questionable methodologies, and reliance upon unrealistic assumptions. Among other things, Jonathan Shefftz admitted that he “was not engaging in any exercise to verify [Mr. Cabrera’s] data series or his cost figures.”315

Additionally, the reports of the “specialists,” including the plaintiffs in their submission of September 16, 2010 at 5:15 p.m., are clearly insufficient to substitute the plaintiffs’ burden of proof on any issue. Article 43 of the Environmental Management Act, unlawfully invoked both as grounds for the complaint and grounds for the decision, provides that the Judge must rule “in accordance with the experts’ reports that were ordered.” As plaintiffs themselves acknowledged, this provision “contains an imperative for the judge, not a mere recommendation, thus showing that the determination of the amount required for remediation of the damage MUST be made by the judge, in accordance with the expert reports ordered.”316 As even the Judge himself recognized, the reports of the plaintiffs’ “specialists” are simply not expert proof, as defined by Articles 250 to 263 of the Code of Civil Procedure. For example, contrary to the requirement of Article 252 that a judge appoint as an expert “a person of his own choosing,” these individuals are the plaintiffs’ paid consultants, chosen by the plaintiffs alone. Additionally, contrary to the requirement of Article 256 that an expert “swear” to perform his duties “faithfully and lawfully,” these individuals have given no such oath to this Court. Their arguments and comments lack any procedural value whatsoever; they are a song in the wind; they serve no purpose in the proceedings, more so if their conclusions are based on a spurious “global” expert assessment, such as Richard Cabrera’s, which according to the statement by the Judge below, has not been taken into account in issuing his decision in this case.

The Judge is not a mere dictator in the case, he cannot apply Ecuadorian Law at his discretion, and he cannot work to benefit the interests of the parties. The content of the preceding paragraph

[initials]

312 This testimony is discussed in further detail in my client’s filings of December 21, 2010 at 11:00 a.m.

and Dec. 22, 2010 at 5:40 p m. 313 See Chevron’s Motion Regarding Plaintiffs’ Reports of September 16, 2010, filed Dec. 22, 2010 at 5:40 p m. 314 See Chevron’s Motion Regarding Report of Lawrence Barnthouse, filed December 21, 2010 at 11:00 a m. 315 See Chevron’s Motion Regarding Plaintiffs’ Reports of September 16, 2010, filed Dec. 22, 2010 at 5:40 p m. 316 Plaintiffs’ motion filed Sept. 16, 2008 at 11:30 a.m., No. 5.2, at 9, Record at 150878-150995 (150866).

[CERT.GEOTEXT] 92

describes arbitrary conduct by the lower court Judge with regard to the rules relating to means of evidence, the assessment of the evidence and the limits of the judgment. In none of these three limitations on legal proceedings has the Judge below followed the Law, and having refused to carry out his activities within the described limits, he has had the naivety to accept this and defend it in his judgment, for example, when he mentions that he is in a position to apply reasoned judgment “concerning conjecture” and not concerning evidence.

I will return to these points at a later stage but, with regard to the conclusion due to the issues discussed in this sub-heading, I argue that the judgment has no legal basis and that the proceedings on which it is based reveal manifest unlawfulness as regards the application of the rules of evidence, the use of reasoned judgment and the limits in general on the activity of a Judge.

3. The use of summary oral proceedings was arbitrary, and the Court prevented a suitable defense of Chevron’s rights - Chevron was unable to make a counterclaim against the plaintiffs:

In addition to all the procedural irregularities addressed above, this trial was contaminated by a great many biased decisions throughout the entire process, which on many occasions denied Chevron its right to due process. Each one of these decisions taken individually would require overturning the decision.

Among other things, the Judge below manipulated the oral summary proceedings to (i) deny a speedy decision on legal defenses set forth; (ii) proceed to subsequent stages of the trial in spite of not having met the necessary procedural prerequisites; (iii) make it impossible to file an immediate appeal to correct orders that were harmful to my client; and (iv) prevent filing of counterclaims and the inclusion of indispensable and/or necessary third parties.

These problems were only aggravated by the lack of effective impartial and expedited judicial relief on the part of the Judge below in the face of convincing and irrefutable evidence filed by my client regarding the fraud of the Mr. Cabrera and the plaintiffs. Even after it was clear that the evidence of the plaintiffs was completely manipulated through fraud, collusion and deceit, and that Mr. Cabrera’s report was actually secretly written by the plaintiffs’ consultants and later translated into Spanish to be filed under the signature of Mr. Cabrera, the lower court Judge amazingly kept on pressuring my client to close the production of evidence. The Judge refused to admit Chevron’s petitions to investigate the plaintiffs’ acts of corruption, defects that had invalidated the trial from the very time when the complaint was filed. Instead, the Judge below carried on as if nothing had happened, ordering the parties to submit supposed “legal reports,” with financial criteria for valuing the supposed damage. This was aggravated by the decision of the Judge below to impose new ridiculously short periods on my client, if it wished to submit important briefs or respond to the statements of the plaintiffs and the experts. 317 In fact, the Judge below went so

[initials]

317 See Decisions dated October 27, 2010, at 10:10 a.m. (at § 15 and 21); Nov. 9, 2010, at 5:32 p.m. (No.

3); Dec. 1, 2010, at 5:50 p m. (No. 5); Dec. 3, 2010, at 4:50 p.m.

[CERT.GEOTEXT] 93

far as to sanction two of the Chevron attorneys, for petitioning for redress of the fraudulent conduct of the plaintiffs.318

Finally, the lower court Judge announced that the case was closed and that the decision was being considered and went on to issue a very speedy decision, even though the production of key evidence was still in process. This diminished the evidence, just when more specific evidence of the plaintiffs’ fraudulent activities was just coming to light. The Judge’s failure to order any investigation after being presented with this evidence violated Chevron’s due process rights, denying it the opportunity to discover evidence in Ecuador to further prove plaintiffs’ fraud. Surprisingly, on February 2, 2011, when we tried to submit a motion specifying the additional evidence of fraud, obtained in discovery in the United States, the Judge below illegally instructed the Clerk of Court not to receive it on at least three occasions.319 This shows that what was intended was at all costs to avoid the continued production of evidence and irrefutable proof of collusion and fraud committed against Chevron. It would seem that the Judge below confused this evidence with the “proof” of the case brought before him and which was requested by both parties in October 2003, as if Chevron were trying to surprise him with evidence, which in his opinion was not relevant to the case per se, which had not be considered in the corresponding evidentiary period, ignoring that the evidence that Chevron produced was to provide a basis for and report the fraud and deceit that the plaintiffs’ attorneys, together with sole expert Cabrera and Steven Donziger, had secretly conceived. The Judge’s obligation was to send the record to the Office of the Prosecutor General, in accordance with numeral 10 of Art. 129 of the Organic Code of the Judicial Branch. Instead he tried to take a shortcut to issue a judgment, ignoring his due diligence and care in the handling of this case. No impartial judge could reject such evidence in a manner compatible with due process. However, this is only one example in a long list of biased and indefensible decisions by this Judge, and each one of these decisions taken individually would require overturning the decision issued by Judge Zambrano.

The denial of Chevron’s due process by the Judge below carried all the way through to the last page of the appealed judgment. In the decision, the lower court Judge ordered Chevron to issue a “public apology” in “recognition of the harm caused” and declared that if Chevron failed to print such an apology in multiple newspapers on three different days, the court would double the damages against the company.320 This award plainly violates any notion of due process. First, by doubling the damages if

[initials]

318 See Decision dated October 27, 2010, at 10:10 a m. (§ 1, 2, 5 and 7). 319 The Judge below, in fact, had a hostile attitude towards the evidence that showed the plaintiffs’ fraud.

When Chevron tried to submit evidence of the Plaintiffs’ fraud recently discovered on February 1, 2011, the Judge Zambrano came out of his private office, read the first two pages, and immediately ordered the Secretary to ignore the submitted documentation. See Chevron’s Motion filed Feb. 3, 2011 at 4:24 p.m., at 2; Purely formally, the judge a quo accepted the submission in the decision itself. Decision at 1.

320 Decision at 186.

[CERT.GEOTEXT] 94

Chevron refuses to admit fault, the court has charged Chevron over US$ 8 billion to appeal this case. Second, there is no basis in Ecuadorian law for imposing such conditional punitive damages. And third, in violation of Chevron’s due process and free speech rights, the court has attempted to compel Chevron to speak against its will and falsely proclaim its liability.

The objections stated in the paragraphs above make it evident that the use of summary oral proceedings was a fraudulent measure that was deliberately used by the plaintiffs in this lawsuit in spite of the fact that it could have been tried in ordinary proceedings before a Civil Court Judge since it was a matter that entailed joinder; this is a matter addressed above in this appeal.

The use of summary oral proceedings came to be—in large part owing to steps taken to limit Chevron’s rights—a procedural trick played on my client. Not only did summary oral proceedings prevent my client from filing a counterclaim against the plaintiffs, which is and has been its wish, but the fraudulent use of summary oral proceedings also allowed the Judge to refrain from answering hundreds of briefs filed by Chevron under the formulism that they would be addressed “in due course” given that incidental proceedings are not in keeping with summary oral proceedings. So then, the “due course” for addressing these petitions and responding to them appropriately never arrived, and the Judge’s decision, with the same naivety as always, reached the conclusion that it would not be necessary to address them, since a writ of execution was issued for each of the decisions in which the Judge denied timely attention to those briefs.

Chevron was subjected to a rigid proceeding, shaped like a funnel, in which the immense number of possible defenses and procedural alternatives for the best use of those defenses were gradually squashed. Article 844 of the Code of Civil Procedure was used abusively by the lower court Judge. This was the pretext for refusing to allow hundreds of Chevron petitions.

The failure to use ordinary proceedings, which should have been used in this trial, turned out to be one of the most effective tools in the procedural fraud, since it encroached on most of the Chevron defense.

Far from suitably addressing the serious defects with which this trial was rife, the Judge carried out matters with notable lightness, obvious partiality, alarming neglect and complete lack of judicial support. In this regard, the Judge failed to issue any decision on a series of petitions filed by my client in due course, as soon as the cases of procedural fraud were discovered through legal proceedings filed in the United States of America.

As mentioned above, not only is the use of summary oral proceedings in this particular case contrary to due process, but the fact that Article 43 of the Environmental Management Act has opted for this avenue to process lawsuits for damage to the environment is inconsistent with the complex nature of the subject matter. The rules for summary oral proceedings themselves clearly indicate that this is a process conceived of to handle simple matters that require little evidentiary activity, such as; “calculation of interest, proceeds, and damages ordered in a final judgment; disputes involving urban property between a lessor and lessee or sublessee, or between a lessee


and sublessee, and commercial matters that do not have a special procedure.”

As has been seen, in the Ecuadorian legal system, the natural avenue to handle a case involving damages has always been the plenary-suit process, which provides the necessary mechanisms to exercise a proper defense in relation to the disputed subject matter. The mere fact that Chevron had to litigate environmental damage in an avenue that is not fitting in-and-of itself represents a violation of due process. In addition to the selection of a procedural avenue that is clearly unsuitable, we should add the fact that Article 43 of the Environmental Management Act not only creates a new right, but also one that, contrary to individual rights, is collective and/or diffuse in nature, with characteristics of its own which are completely distinct from those of individual rights.

In order to ensure due process in the implementation of a new right, whose nature is different than what previously existed, structural changes in the legal system should have been required to ensure that the specific particularities of that new right were sufficiently considered by the legislature. This has been the case in the other countries of the region that introduced the possibility into their legal systems of bringing lawsuits based on exercising diffuse interests. It is strange that the judge below, who made such an extensive review of foreign law and case law, did not take the time to better understand what diffuse interests are about. Based on the above, Article 43 of the Environmental Management Act and summary oral proceedings in-and-of themselves are clearly insufficient to properly process cases for environmental damage based on the exercise of diffuse interests.

This decision must be revoked as the result of the improper use of summary oral proceedings on the part of the plaintiffs and the Judge. This is without prejudice to the invalidation advocated above related to improper joinder.

4. Invalidation due to lack of sufficient power to waive judicial inspections, since the Judge did not have the authorization of each one of the plaintiffs to do so:

The Judge made a serious error in this decision, in ordering nothing more than “all filings by the parties related to the waiver of judicial inspections are deemed to have been addressed,”321 since it was the specific obligation of the Judge to issue an opinion on this ground for invalidation and not “consider addressed” certain filings that should have been processed.

The fact is that these proceedings were also invalidated by defects related to violation of the important procedural step set forth in Article 346, No. 3, of the Code of Civil Procedure, that is, the lack of legal standing due to lack of sufficient power to waive, on behalf of the plaintiffs, the performance of 64 of the judicial inspections requested by them and ordered by the Judge within the respective evidentiary period. The fact that the attorney, Fajardo, without any written authority whatsoever from the plaintiffs designating him common representative, and without any legal provision whatsoever that authorizes this, supposedly waived 64 of these judicial

[initials]

321 Decision at 48.

[CERT.GEOTEXT] 96

inspections “on behalf” of the 48 plaintiffs. Moreover, following said waiver and prior to accepting it, the Judge ordered this waiver to be approved by each and every one of the plaintiffs; furthermore, said waiver was not approved by eight of the 48 plaintiffs. All this shows that the attorney Pablo Fajardo lacked the legal capacity to file said waiver. Although it is true that the supposed common representative of the plaintiffs did succeed in obtaining the illegal approval of the trial Judge for a waiver of 64 of the judicial inspections requested by the plaintiffs,322 later, in response to opposition briefs filed by Chevron,323 the Judge below ordered each one of the defendants to personally approve the waiver.324 So then, eight plaintiffs never approved that waiver.325 (emphasis added)

Beyond the improper procedure, since there was no legal provision whatsoever that authorized this waiver, the inability of the common representative to obtain the approval of these eight plaintiffs makes this waiver ineffective, leaves the evidence diminished and the proceedings incomplete.

First, contrary to the findings of the Judge below, these facts show that the procedural agreement was far from simply a guidepost for the Judge below. It was agreed by the parties and enshrined in a court order. Article 252 mandates that any agreement between the parties to appoint experts “shall be binding on the judge.” This provision does not allow a judge to simply abandon such an agreement, which he previously ordered, simply because it resulted in the discovery of inconvenient truths for one party (here, with the Sacha-53 inspection). If parties are allowed to abandon such agreements after they have been ordered, then any party in any case will simply abandon their agreement if it produces results harmful to their case.

Second, evidence shows that the abandonment of the judicial inspections was prompted not by the neutral consideration of the Judge below of the Code of Civil Procedure, but by the plaintiffs’ desires. After the report of the settling experts was submitted for the Sacha-53 well-site, the plaintiffs’ lawyers—who were also running low on funds to cover the costs associated with

322 See Plaintiffs’ motion filed on July 21, 2006, at 9:10 a.m., Record at 116431-116435 (116434); decision

on Jan. 22, 2007, at 9:00 a.m., Record at 125656-125659 (125657). 323 See, for example, Chevron’s brief filed on Feb. 7, 2006, at 5:30 p.m., Record at 93007-93011 (93010);

Chevron’s motion filed on Feb. 22, 2006, at 9:38 a.m., Record at 95411-95421 (95421); Chevron’s motion filed on Aug. 16, 2006, at 5:40 p m., Record at 117234-117244 (117243); Chevron’s motion filed on Aug. 25, 2006, at 5:00 p.m., Record at 118518-118,526 (118526); Chevron’s motion filed on Sept. 13, 2006. at 4:00 p m., Record at 120012-120016 (120014-120016).

324 Decision on Oct. 2, 2006, at 3:30 p.m., Record at 120552-120554v (120552v). 325 Chevron’s brief filed on Feb. 27, 2007 at 5:42 p m., Record at 126252-126253 (126253); see Plaintiffs’

motion and attachments filed on Dec. 15, 2006, at 3:00 p m., Record at 124894-124908; see also the plaintiffs’ complaint filed on May 7, 2003 at 11:30, Record at 73-80v (73-73v).


continuing the judicial inspection work that they themselves requested—opposed any further work by the settling experts. 326

Third, the acceptance by the lower court Judge of the waiver was improper since it harmed Chevron and denied its right to present a defense. The “waiver” of the judicial inspections has the same meaning and effect as the “desist,” which was previously sought by the plaintiffs but not accepted by the Judge below (“since whoever desists, waives”).327 All waivers must meet two requirements: (i) that only the particular interest of the one waiving is involved, and (ii) that waiver does not harm the rights of other persons.328 Additionally, waiver cannot be granted to “[p]ersons attempting to use the withdrawal to avoid the benefit that prosecuting the lawsuit or proceeding with appeal could provide to the opposing party or to a third party.”329 Here, Chevron was unquestionably harmed by the substitution of the fraudulent Cabrera process for the agreed evidentiary phase of the case.

Fourth, the waiver of the judicial inspections by the plaintiffs violated the legal concept of “unity of the act.”330 This principle makes clear that the judicial inspections requested by the plaintiffs were not ninety-seven individual procedures but rather a single evidentiary unit.

Once an order has been issued to gather evidence, it must be gathered for the benefit of all the parties and the proceedings. Pursuant to Article 44 of the Code of Civil Procedure, for the waiver of inspections proposed by attorney Fajardo, as supposed common representative of the plaintiffs, to be proper, there must not only be a legal provision that authorizes him to file it, but in addition, in the unlikely hypothetical case that this was proper—which is not the case here—in order to file such a waiver, he would either have had to had the prior express approval of each and every one of his clients, or otherwise, a power of attorney authorizing him to do this, or else, once he had filed the waiver, he would have had to obtain the approval of each and every one of the 48 clients he supposedly represents.331

In this case, the person who claims to be common representative of the plaintiffs, attorney Pablo Fajardo, neither had any legal provision whatsoever that authorized him to waive the judicial inspections nor was he authorized by the plaintiffs to do so. Moreover, once he had filed this

[initials]

326 Plaintiffs’ motion filed Mar. 2, 2006 at 5:45 p m., Record at 97394-97400 (97399) (objection to the

naming of the settling experts). 327 Banco del Pacífico vs. Sostenes Onias Cedeño Loor, Judgment of the Supreme Court of Justice, First

Civil and Commercial Division, Case 228-2001, published in Official Gazette No. 378, July 27, 2001. From a legal standpoint, the authority to waive is conditioned on application solely to the interest of the person waiving such and that his waiver is not prohibited. See also Order of Jun. 19, 2006 at 3:00 p.m., Record at 112208-09v, 112208v.

328 See Art. 11 of the Civil Code. 329 Art. 375 of the Code of Civil Procedure 330 This concept is defined as the “commission of an act with legal consequences without interruption, from

the commencement to the conclusion thereof.” SANCHEZ ZURATY, Manuel, Basic Legal Dictionary, Editorial Jurídica del Ecuador, 2d ed., vol. 2, 1993, p. 783.

331 See Art. 44 of the Code of Civil Procedure.

[CERT.GEOTEXT] 98

waiver, he failed to obtain the approval of the plaintiffs. His clients never issued any special authorization, and to date, there are eight plaintiffs that have not approved that waiver of the performance of those judicial inspections. As a result, this waiver is invalid, and the acceptance thereof by the Judge (“by majority approval”) was an irreparable burden for my client, because it influenced the final result of the case; therefore, that waiver is invalid, along with the judgment handed down on February 14, 2011, at 8:37 a.m. against Chevron.

It is completely unacceptable that the Judge ignores this serious irregularity without even giving a suitable explanation in this decision, which, therefore, lacks proper justification as expressly stated in Article 76 No. 7 of the Constitution.

This allegation that the decision is invalid is also based on the inadmissibility of allowing the files to be diminished due to the acceptance of the illegal waiver of judicial inspections. The failure to gather evidence requested by the plaintiff and ordered by the Judge prevented the Judge from handing down a decision with proper justification and reasoning pursuant to the provisions of Article 76, No. 7, subsection (l) of the current Constitution. This trial lacks the elements required of a trial of the facts that, having been the subject of the litigation, must therefore be the subject of the decision in the case. As a result of the improper acceptance of the waiver to perform almost two-thirds of the judicial inspections ordered, the plaintiffs were unfairly and improperly released from the burden of proof that pertained to them, and the case file was incomplete.

The only way to cure this procedural defect is to declare the nullity of the entirety of the proceedings, at least from the time when the decision was issued accepting the illegal, unapproved waiver of the judicial inspections and to order that each and every inspection be carried out, in conformity with the provisions of the respective evidentiary period. Any other decision that fails to invalidate the Court’s decision, and is issued on the substance of the lawsuit, will not only be based on a incomplete proceeding, in which the pertinent part of the incomplete evidence—that is, the judicial inspections waived, which must be the subject of discussion, counterclaims and settlement, within the lawsuit, so that they have probative value—would be replaced by suppositions based on inferences and extrapolations, which is what in fact took place in the decision of February 14, 2011, at 8:37 a.m., flagrantly violating what is stipulated in the second paragraph of Art. 115 of the Code of Civil Procedure, in which it the judge is ordered to express the weighing of “all the evidence produced” in his judgment (decision).

Finally, proceedings are null for these other reasons.

5. Any action taken by Judge Ordóñez in the proceedings after August 26, 2010, at 2:45 p.m., is null and may have no legal effect whatsoever:

This decision fails to take a position on an additional ground for nullity of the proceedings as shown in the file. In fact, Article 164 of the Organic Code of the Judicial Branch provides that the jurisdiction of a judge be suspended from the time when a complaint challenging that judge is filed; this suspension is in effect with no need for a summons to be issued with the respective


complaint. Thus, all the decisions issued by Judge Leonardo Ordóñez Piña from August 26, 2010, at 2:45 p.m.—the date the challenge entered by Chevron against that judge was filed in the Office of the Court Clerk of the Chief Justice of the Sucumbíos Provincial Court—are null and void, since the Judge lacked the jurisdiction to issue them. Any interpretation and appeal against the provision pointed out above is contrary to an express legal provision and introduces fraud into the Justice System, since it would mean allowing conduct expressly prohibited by the law.

All the decisions issued by Judge Ordóñez in this case after that date are null and void, since the Judge lacked the jurisdiction to issue them. As was acknowledged by one of the representatives of the plaintiffs, these decisions were issued in spite of the fact that Dr. Ordóñez “was fully aware that he could not issue any more decisions.”332 And they would be null anyway, even if Judge Ordóñez was not aware of the complaint with the challenge because the Law, as we will see, makes no distinction in this respect. Procedural correctness is what it does recognize.

After a litigant files a complaint challenging a judge, the Code of Civil Procedure clearly establishes that “[the] judges] judges who are to take the place of the recused judges shall continue to hear it until the recusal is decided upon.”333 Article 164 of the Organic Code of the Judicial Branch clearly establishes that the jurisdiction of judge who is challenged is suspended “from the time of the request until a ruling is handed down denying the challenge.” The Code also expressly prohibits the judge challenged from acting in the proceeding until there is ruling on the challenge: “Justices, judges and other court employees who were recused shall not participate in the principal case until the recusal is ruled upon in a separate proceeding.”334 Therefore, starting from the time when Chevron filed its complaint challenging Judge Ordóñez on August 26, 2010, at 2:45 p.m., the Judge lacked jurisdiction to hear this case. As stated in Article 864 of the Code of Civil Procedure, any act performed by the Judge after the challenge was filed, “shall be null and void.”

Contradicting these express provisions of the Code of Civil Procedure, Judge Ordóñez issued three decisions without the jurisdiction to do so, the first on August 31, 2010 at 4:00 p.m., the second on September 17, 2010 at 8:05 a.m., which requested the case file so the Judge could rule, and the third on September 23, 2010 at 9:10 a.m.

The fact that all these decisions are null and void is consistent with the provisions of Article 346 of the Code of Civil Procedure, which clearly states that the “jurisdiction of a Judge or court” is a “essential procedural matter,” and Article 344 in the same Code, that states that “a proceeding shall be null . . . only when any of the essential procedural formalities set forth in this code has been omitted.” Although

[initials]

332 Interview of Luís Yanza, Radio Amazonas, on September 25, 2010. By stating that “the next judge to

assume the case must request the file so he may rule,” Mr. Yanza admitted that the decision of Dr. Ordóñez through which he requested the file so he could rule was not valid. Id.

333 Art. 865 of the Code of Civil Procedure. 334 Art. 864 of the Code of Civil Procedure.

[CERT.GEOTEXT] 100

Judge Ordóñez’s order of autos para sentencia was later revoked, this is of no legal consequence under Ecuadorian Law. As long as this Court fails to recognize the nullity of all decisions issued by Judge Ordóñez after August 26, 2010, at 2:45 p.m., this proceeding has a defect of nullity with respect to the decisions that affect the rights of my client.

C. There is no legal basis for the judgment by virtue of the Civil Code or any other law that may have existed at the time of Consortium operations.

1. There is no legal basis for the Judgment by virtue of Articles 2214 or 2229 of the Civil Code

According to Section VI (2) of the complaint, the plaintiffs seek compensation and the only pre-1990 law cited by the plaintiffs which they believed establishes the possibility of obtaining compensation, is Article 2214 of the Civil Code.335

Upon acknowledging the principle of non-retroactivity, the judgment states that “the substantive right to seek redress for harm is guaranteed by the Civil Code, as stated in the petitions of the complaint, in its articles 2241 and 2256 [2214 and 2229 of the current codification].”336

2. Articles 2214 and 2229 of the Civil Code are not applicable, because no individual damages were claimed, demonstrated or adjudicated:

Article 2214 establishes a general right of action for personal injuries or damages derived from civil offenses or quasi-offenses. Article 2229 complements Article 2214 insofar as specific cases of injury or damages to persons or their property, but does not establish an action that is separate from that provided by Article 2214. Articles 2214 and 2229, taken together, reference compensation to third parties for real and proven injuries suffered to their person or property.

On the contrary, the claim cites harm to the “Communities” which the plaintiffs allege to represent, and these communities are only vaguely defined. Further, there is no evidence that the plaintiffs have been duly authorized by the “Communities” to represent them with regard to claiming any separable harm.337 Nonetheless, although Section III of the

[initials]

335 Given that the Environmental Management Act cannot be applied retroactively to the facts that

allegedly occurred years prior to its enactment, the plaintiffs have claimed that their rights to file a suit are based on the Civil Code and not on the Environmental Management Act. See, for example, the Sworn Testimony of Dr. Alejandro Ponce-Villacis of Dec. 18, 2006, attached as Annex 5 to Chevron filing of Oct. 8, 2007 at 8:10 a m., Record at 132897-132996 (132978, 132985) (speaking as “one of the attorneys for the plaintiffs [of Lago Agrio],” and communicating that “the Lago Agrio proceeding is based primarily on substantive concepts which already exist under Civil Law, which include the extracontractual obligation of reparation” of Article 2214).

336 Decision at 28. 337 Decision at 28. Based on the argument and evidence, it is unclear who the alleged 30,000 persons are

who the plaintiffs seek to represent. Their identities and addresses are unknown, due to which it is impossible to know whether they belong to the communities that the plaintiffs state to represent, whether they are located inside or outside the former concession area, or whether they were affected by oil operations.

[CERT.GEOTEXT] 101

complaint338 includes generic and unspecific allegations about the environmental effects, among the remedies sought (see Section VI of the complaint) the plaintiffs do not request compensation for specific damages or injuries.339

In fact, on numerous occasions the plaintiffs have acknowledged that they do not seek compensation for alleged individual or personal damages for any of the 48 identified plaintiffs. Pablo Fajardo, attorney for the plaintiffs, acknowledged in a recent radio interview that “we never asked for compensation for anybody in particular; our claim is for reparation of the environment, social and cultural damages derived from the environmental contamination that Chevron would have left behind.”340 Likewise, the head of the plaintiffs’ U.S. legal team, Steven Donziger, acknowledged in sworn testimony that the “collective action” brought by the plaintiffs “does not include claims of personal injury or damages.” Given the fact that the plaintiffs have repeatedly acknowledged that this case has nothing to do with any claim for individual damages, any invocation of Articles 2214 and 2229 of the Civil Code is obviously flawed.

Furthermore, this case cannot be considered an accrual of individual lawsuits based on Article 2214 because Ecuador does not recognize so-called “class actions.” This fact was expressly acknowledged by the plaintiffs’ Ecuadorian attorneys in the New York case: Dr. Wray, who later became the representative in common for the plaintiffs and author of the lawsuit subject of these proceedings, explained in a sworn statement that, under Ecuadorian law:

“nothing exists that can be compared to the United States’ ‘class action.’”341

Even more recently, Mr. Donziger testified that:

338 Plaintiffs’ complaint, filed May 7, 2003 at 11:30 a m., Record at 73–80v (76-77). 339 See Plaintiffs’ complaint, filed May 7, 2003 at 11:30 a.m., Record at 73–80v (76-77). Therefore, this

case contrasts with that of Delfina Torres, Comité Delfina Torres Vda. de Concha vs. Petroecuador et al., Ruling by the Supreme Court of Justice, First Civil and Merchant Court, of October 29, 2002, File 229, published in R.O. 43, of March 19, 2003, where the named defendant—admitted under Civil Code (Article 2214) as an ordinary proceeding—appeared in the “capacity of legal representative of a legal entity under private law” to repair direct damages suffered by said entity which were alleged and proven in a particular and specific manner. (Nos. 5, 15 and 27). In fact, the Supreme Court specifically stated that “[i]f the action had been brought as a legal representative of the “public interest” or of society in general, doubtless this would have been procedurally barred, or there would be no standing to sue according to the terminology adopted by our Code of Civil Procedure.” (No. 5).

340 Interview of Pablo Fajardo, Radio Ecuador Inmediato, The Power of the Word, of Dec. 20, 2010, at 7:00 p.m.

341 Sworn Statement of Dr. Alberto Wray of March 8, 1994, attached as Annex 1-A to Chevron filing of October 8, 2007 at 8:10 a.m., Record at 132897-132996 (132948).


“there was no . . . class action mechanism under Ecuadorian law to pursue personal injury claims.”

This same principle was clearly stated in the court decision cited in the Judgment: “our system of positive law has yet to adopt so-called “class actions,” which would have prevented this suit from being brought [if it had been brought in the name and on behalf of the public]…”342

The inapplicability of Articles 2214 and 2229 was also directly confirmed by the judgment. The Judge below stated that “individualized reparation of the health of the affected persons, who are undetermined, cannot be ordered . . . .”343 Likewise, the Judge below set forth: “ we must note that the reparation of particular cases of cancer has not been demanded, nor are such cases identified, thus they are not remediable . . . .”344 And the Judge below himself determined that “ neither the presence of harm nor the need for cleanup of private lands, crops, streets or buildings has been shown in the record . . . .”345 All in all, the plaintiffs “have not requested personal compensation for any harm, but rather have demanded the protection of a collective right . . . .”346

Given that Articles 2214 and 2229 set forth claims for only individual damages, and not for the presumed collective damages, they do not apply in this case. Thus, the claim for compensation of damages cannot be founded on the relevant provisions of the Civil Code as stated in the appealed judgment, but are instead necessarily based on the Environmental Management Act of 1999.

3. All claims by virtue of Articles 2214 and 2229 of the Civil Code would also be subject to the principle of prescription

The lack of support in the Civil Code for the compensation claim brought by the plaintiffs is confirmed by the fact that any action of that nature which would have been based on the Civil Code was outside the prescriptive period at the time the complaint was filed.347 Extinctive prescription has been legally defined as the “manner in which a right becomes extinguished due to its not being exercised within the time established

342 Comité Delfina Torres vda. De Concha vs. Petroecuador et al., Ruling by the Supreme Court of Justice,

First Civil and Merchant Court, Clause Five, First Civil and Merchant Court, October 29, 2002, Res. 31-2002, published in R.O. 43, of March 19, 2003.

343 Decision at 183. 344 Ibid. at 184. 345 Ibid. at 180. 346 Ibid. at 33. 347 This allegation was expressly made by my client when it answered the claims under Article 2259 (now

2235) of the Civil Code. See answer to complaint submitted in the Mediation Hearing which took place on Oct. 21, 2003 at 9:10 a m., appearing in the case file at pages 243 - 267, Section IV.3.4 (p. 265). The statement by the defense cannot be interpreted as an acknowledgement of the fact that the plaintiffs have any type of cause of action. The law of prescription would exclude the causes of action, if there were any, which there are not.


by law.”348 Article 1583 (11) of the Civil Code states generally that prescription is one manner in which obligations may become extinguished, whereas Article 2392 of the Civil Code indicates that prescription is a way for “actions” to become extinguished. As it was stated by the former Supreme Court (today, National Court) of Ecuador:

“The demurrer of prescription of the action is a way to extinguish the action in its substantive aspects and its being declared bars the Judge from ruling on the claims of the lawsuit.”349

Consequently, although at some point the plaintiffs could have brought actions against Chevron (which in this case, they had none), said actions would have become extinguished due to the passage of time, as explained above. The complaint in this case is based on alleged acts or omissions by TexPet as Consortium operator. In Section I.1-2 of the complaint, the plaintiffs acknowledge that TexPet acted as an operator from January 1, 1965 until June 30, 1990 (and its participation in the Consortium ended in June of 1992).350 The lawsuit, however, was only recently filed in 2003.

The judgment, therefore, is for acts or omissions that allegedly occurred between 13 and 38 years prior to the complaint being filed. The complaint is simply not timely.

Any claim founded on Article 2214 of the Civil Code is subject to the prescriptive period of four years, pursuant to the provisions of Article 2235 of this Code, for actions brought for damages from negligence or willful misconduct. According to Article 2235,351 the prescriptive period

[initials]

348 Dictionary of the Spanish Language [Diccionario de la Lengua Española] 22d Edition. Published by

Real Academia Española. Madrid. 2001. 349 Edgar Antonio Mite Salas v. Miguel Arostegui, Ruling by the Supreme Court of Justice, First Civil and

Merchant Court, March 27, 2006, Matter 110-06, published in R.O. 379 of October 18, 2006. The Supreme Court explained: “Case law also considers that the exception of prescription of the action extinguishes the action and the right of others and when it is alleged, the judge must set forth its admissibility and, if it is [admissible], order the matter to be concluded, without analyzing any outstanding issues in the matter. According to doctrine, the end of the prescription is the extinguishing of a right due to its not being exercised in a timely fashion due to the fact that the authority of the holder is not and cannot be undefined in time and it was necessary to specifically indicate a period and cause it to be legally valid. This exception is absolutely a means which tends to wipe out the action in its substantive aspects. Therefore, its declaration involves an issue of the merits which must be handled at the time of judgment. (GJ XIV-No. 2 p. 324).”

350 Plaintiffs’ complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v (73v-74). 351 Art. 2235 prevails over the laws of general prescription which are applied in cases where no specific

prescriptive period for a specific cause of action is provided. Art. 2235 provides: “Actions granted by this Title for damages or fraud have a prescriptive period of four years, counted from the time when the act was committed.” Ecuadorian courts therefore apply the prescriptive period of four years stipulated by Article 2235 for claims of intentional and unintentional illicit acts: “The plaintiff bases its claim on the provisions of Book Four, Title XXIII, regarding offenses and quasi-offenses, under its Articles 2241, 2242 (2214, 2215) et seq. of the Civil Code in force, and with this substantiation the complaint is admissible at both jurisdictional levels. By this virtue, even under the theory of the plaintiffs’ seeking restitution for damages suffered due to an offense or quasi-offense, Article 2439 (2415) of the Civil Code would not be applicable, but instead Article 2259 (2235) . . . .” Medardo Alfredo Luna Narváez v. Compañía Aérea Servicios Aéreos Ecuatorianos C.A., First Chamber, Matter 20-2004, published in R.O. 411 of Sept. 1, 2004.

[CERT.GEOTEXT] 104

of four years would start to run commencing on the date when TexPet allegedly carried out the unlawful acts.352 As previously indicated, the alleged acts and omissions by TexPet as an operator occurred prior to July of 1990. Therefore, any claim relating to operations in the Consortium area occurring from that time forward, including the alleged acts or omissions regarding the area conditions, should be filed against Petroecuador, its only owner and operator for the last 20-plus years.

As a condition for dismissal of the Aguinda action in New York, Texaco agreed to toll the prescriptive period between the time of filing the lawsuit with the New York court (which occurred in November of 1993) and any new filing of the same claim being carried out in Ecuador within one year after the conclusion of the Aguinda case in New York (meaning, until late 2003).353 This agreement cannot be applied because in this case, the lawsuit has been filed against Chevron, and not against Texaco, and different actions are invoked than those in the New York case. And, even if the tolling were to be applied, this would not allow reactivation of the actions which had become extinguished prior to the commencement of the New York case in November of 1993. Thus, by virtue of the prescriptive period of four years, the only claims that had not become extinguished in November of 1993 were those based on alleged acts or omissions occurring beginning in November of 1989 (less than eight months before TexPet ceased to act as Consortium operator).

As previously shown, the decision by the Judge below that, because of the merger, Texaco’s obligation in the Aguinda case is binding upon Chevron is flawed. Further, the Judge below did not take into account the fact that the Aguinda case claims are different from those brought by the plaintiffs in this matter.354

In this lawsuit, the plaintiffs do not seek payment of compensation for individual injuries to persons or damages to plaintiffs’ private property, but instead seek to protect the collective and diffuse right to a clean, contamination-free environment.355 Under Ecuadorian law, “diffuse interests” are defined as “interests which are homogeneous and of an inseparable nature held by indeterminate groups of

[initials]

352 A celebrated Chilean scholar who is widely respected throughout Latin America has explained the rule

contained within Art. 2235 of the Ecuadorian Civil Code, which is identical to Art. 2332 of the Chilean Civil Code: “432. Prescription: The action to obtain restitution for damages caused by an offense or quasi-offense is extinguished after a prescriptive period of four years counting from the time when the act was committed, that is, commencing the day on which the act of willful misconduct or negligence was committed (5) and not from the time when the damage was produced, should this date and the act not be contemporaneous (Art. 2332).” Alessandri Rodríguez, Arturo Extracontractual Liability under Chilean Civil Law [De la responsabilidad extra-contractual en el Derecho Civil Chileno]. Published by Ediar. Santiago. 1983. No. 432. Pg. 522.

353 Ruling by the Second Circuit Court, August 16, 2002, 303 F.3d 470, Record at 9567-9584 (9581) (part of Texaco Inc.’s answer to the request for production of documents).

354 Chevron filing of Dec. 22 at 5:55 p m., at § 1.4. 355 See Plaintiffs’ complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v (79-80). Plaintiffs’ team

leader in the United States, Mr. Steven Donziger, essentially admits this in outtakes from the documentary Crude. “[E]ven if we win the case,” he says, “the people are never going to receive as part of our claim, compensation… from Texaco for all their personal damages; their diseases, their illnesses, their economic losses, poverty, the emotional damages felt by the people . . . for the loss of family members . . . . [A]ccording to Ecuadorian law, we cannot sue for that. We are only suing for cleanup.” Transcription of outtake from the documentary Crude, filed as Annex 8 to the Chevron filing of December 22, 2010 at 5:45 p m. (CRS 010-10-03).

[CERT.GEOTEXT] 105

individuals connected by common circumstances.”356 Thus, a judgment rendered in accordance with Article 2214 of the Civil Code would be barred by the prescriptive period as well as by the even more significant issue that no claims were brought for individual damages.

D. The Constitution does not provide for the lawsuit filed by the plaintiffs for alleged environmental contamination

Prior to 1990, the only conduit through which Ecuadorian law would allow a private party to bring a claim for violation of laws relating to prevention and monitoring of environmental contamination was Administrative Law, through commencement of an action before the administrative authorities of the Executive Branch.357 These authorities were the only ones that could provide any sort of relief when an individual or group of individuals “felt harmed by environmental offenses”; this was a remedy independent of the actual claims that a private party could initiate as a result of damages to his person or private property.358 This is because the protection of and compliance with the constitutional right to a clean and contamination-free environment was entrusted to the Ecuadorian State by Article 19 (2) of the Constitution, which required it to: “ensure that this right is not violated.”359

In 1998, a new Constitution was enacted and this duty of the State was transferred to Article 86, which established with even greater clarity that:

“The State shall protect the peoples’ right to live in a healthy and ecologically balanced environment . . . . It [the State] shall see that this right is not affected and shall guarantee the preservation of nature. The following is declared to be of public interest to be regulated in accordance with the law: 1. Preservation of the environment, conservation of the ecosystems, the biodiversity and the integrity of the country’s genetic heritage; [and] 2. Prevention of environmental pollution,

[initials]

356 Environmental Management Act – Glossary of definitions. The Ecuadorian definition coincides with the

definition used in other jurisdictions and in works by legal scholars. For example, subparagraph I of Article 81 of the Code of Consumer Protection of Brazil defines “diffuse rights” as “transindividual [rights] which are inseparable by nature and held by indeterminate persons linked by a set of circumstances.”

357 See the Sworn Statement of Dr. Alberto Wray, of March 8, 1994, attached as Annex 1-A to Chevron filing of Oct. 8, 2007 at 8:10 a.m., Record at 132946-132954 (132953).

358 See the Sworn Statement of Dr. Alberto Wray, of March 8, 1994, attached as Annex 1-A to Chevron filing of Oct. 8, 2007 at 8:10 a.m., Record at 132946-132954 (132953).

359 Art. 19, numeral 2, of the 1978 Constitution of Ecuador (1993 codification).

[CERT.GEOTEXT] 106

reclamation of degraded natural areas, sustainable management of natural resources, and requirements to be met by public and private activities for that purpose . . . .” 360

The plaintiffs have not filed an action with the Executive Branch, nor against the Executive Branch, to denounce any actual environmental offense which violates their constitutional right to a clean environment.

E. There is no legal basis for the judgment rendered by virtue of Article 2236 of the Civil Code:

Article 2236 of the Civil Code, which is so often cited in both the complaint and the judgment, is entirely inapplicable in this case.361 This article allows for a “popular action . . . in all cases of contingent damages that threaten unspecified persons because of the negligence or imprudence of another. But if the damage only threatens specified persons, only they will be able to initiate proceedings.”

Taken literally, this article applies only with respect to “contingent” damages—damages which have not yet occurred but could occur—and in which the only possible defendant is the party who can end this threat or contingency and does not do so because of negligence. In this case, that can only be Petroecuador. Moreover, it is a precautionary rule which does not admit damages.

[initials]

ment Act).

The plaintiffs’ complaint acknowledges that, in fact, there are no “contingent” damages which can be alleged in this case. Presumably, in a forced attempt to utilize Article 2236 of the Civil Code, they request “[t]he elimination or removal of the contaminating materials that still threaten the environment and the health of residents.” 362 However, the alleged existence of “contaminating elements” acknowledges the existence of real and present harm, not of potential future harm. In the filing of September 16, 2010 at 5:15 p.m., the plaintiffs allege “the immediate presence of contaminating substances at certain points in the ecosystem.”363 But the claim of actual damages is not the subject addressed by Article 2236, which may only be reached through a personal action for individual damages to person or property (for example, under Article 2214) 364 or through a specific environmental lawsuit (for example, Article 43 of the Environmental Manage 365

Moreover, the judgment goes far beyond anything that could be said to eliminate a threat to people. The judgment states that soil remediation to a level of 100 ppm of TPH should be

360 Art. 86 of the 1998 Constitution of Ecuador. 361 Decision at 1, 33-34, 174. 362 Plaintiffs’ complaint, filed May 7, 2003 at 11:30 a m., Record at 73–80v (79). 363 Plaintiffs’ filing of September 16, 2010 at 5:15 p m., at pg. 5. 364 Art. 2214 of the Civil Code. 365 Art. 43 of the Environmental Management Act.

[CERT.GEOTEXT] 107

required “to leave things in the state they had prior to the consortium’s operations.”366 Given that the governmental remediation level is 25 times higher, the 100 ppm obviously is not necessary to eliminate a threat to people. Even more clearly, almost all categories of damages awarded by the Court below—such as “program for recovery of flora and fauna and aquatic life,”367 “potable water systems,”368 “health system,”369 “community reconstruction and ethnic reaffirmation program,”370 and “treatment for the persons who suffer from cancer”371—do not even involve the supposed removal of “contaminating elements in the environment,”372 much less removal of elements that pose a threat to people.

Nonetheless, Petroecuador is the only one against which it would be possible to request an injunction regarding contingent damages. An action to prevent future damages must necessarily be initiated against the current owner or possessor of the property or asset on which, at the time of the lawsuit, the activity causing the threat or contingent damage is being carried out, since these are the only persons who have the power to end the threatening activity. In citing the Civil Code, the plaintiffs and the Judge below do nothing more than give an extemporaneous acknowledgement that they cannot rely on the Environmental Management Act, and try in vain to illegally modify their complaint, which clearly establishes in its petitions “reparation of environmental damages, according to Article 43 of the Environmental Management Act.”373

Because the plaintiffs rely on the Environmental Management Act as a substantive foundation for formulating the remediation they seek to obtain, they acknowledge that their petitions could not be brought under the provisions of the Civil Code. Therefore, the principle of non-retroactivity, which bars restitution under the Environmental Management Act, as has been analyzed above, removes all viable causes of action from the judgment rendered. To admit otherwise would be illegal.

F. The lower court judgment must be reversed given that the Judge ignored the limits of the principle of congruence.

Although it appeared to comply with the principle of congruence and the prohibition against hearing claims which are extra petita, the lower court Judge in fact violated that principle on multiple occasions by indirectly granting several petitions which had not been included in the plaintiffs’ complaint and openly granting others. Thus, the judgment rendered by the Judge below is illegal and must be reversed, in accordance with the provision of Article 273 of the Code of Civil Procedure.

[initials]

366 Decision at 181. 367 Id. 368 Ibid. at 182. 369 Ibid. at 183. 370 Id. 371 Ibid. at 184. 372 Ibid. at 34. 373 Ibid. at 180.

[CERT.GEOTEXT] 108

1. The Judge did not have the authority to consider, much less find in favor of the plaintiffs on, several aspects not included in the lawsuit.

As previously explained by my client during these proceedings, the principle of congruence under Ecuadorian Law limits the judge’s jurisdiction, allowing him only to decide “the issues regarding which the case was filed and answered and any collateral issues arising during the trial that may have been saved for decision in the judgment, without causing any harm to the parties.” As the Judge below claimed, the Supreme Court of Justice ruled that “it is only in the complaint and in the answer to the complaint that the terms of the debate and the scope of the judgment are definitively established.”374 Thus, the principle “delimits the contents of the judgment, since the judgment must be rendered in accordance with the meaning and scope of the claims or challenges and the defenses duly asserted in order for what was requested and what is resolved to be legally identical.”375 There is a lack of concordance in the form of ultra petita “[w]hen what is granted is more than what was requested,” and extra petita, “[w]hen something other than what was requested is granted.”376

Neither the plaintiffs, nor the “expert,” Engineer Richard Cabrera, nor any of their other “experts,” nor the Judge below, may modify the complaint once it has been filed. The plaintiffs’ own Ecuadorian attorneys have acknowledged that by virtue of the doctrine of “extra petita” they cannot request “anything more than what has been petitioned in the lawsuit.”377

Chapter VI of the complaint contains the plaintiffs’ petitions. As the plaintiffs’ attorneys themselves interpreted them, these requests only ask for “only for . . . money to do a proper cleanup”;378 “no [requests for] damages other than cleanup.”379 As a result, during internal discussions the plaintiffs acknowledged that they could not later request “damages to the affected individuals” or money for the alleged “immoral profits.”380

[initials]

374 Mentor Eliecer Chico Villacrés y otra vs. Alba Hime Chamba Quevedo, ruling by the Supreme Court of

Justice, First Civil and Merchant Court, Decision No. 509-99 of Oct. 11, 1999, Matter 38-98, published in R.O. 334 of Dec. 8, 1999.

375 Alberto Vásconez Gavilanez vs. Manuel Tobar Mayrga, ruling by the Supreme Court of Justice, First Civil and Merchant Court, Decision 246-2000, Matter 150-97, published in R.O. 133 of August 2, 2000.

376 Id. 377 Transcript of unused footage from the documentary Crude, Annex 1 to the Chevron filing of Sept. 16,

2010 at 4:35 p m. (CRS 159-00-10). 378 Transcript of unused footage from the documentary Crude, filed as Annex 2 to the Chevron filing of

Aug. 6, 2010 at 2:50 p m. (CRS 269-00-01). 379 Transcript of unused footage from the documentary Crude, filed as Annex 8 to the Chevron filing of

Dec. 22, 2010 at 5:45 p m. (CRS 076-05-1A). 380 Transcript of unused footage from the documentary Crude, filed as Annex 1 to the Chevron filing of

Sept. 16, 2010 at 4:35 p m. (CRS-159-00-09); transcript of unused footage from the documentary Crude, filed as Annex 5 to the Chevron filing of Sept. 14, 2010 at 11:10 a.m. (CRS-159-00-06). As Mr. Donziger admits, the plaintiffs “[a]re only asking for… cleanup”; two of the plaintiffs’ attorneys candidly affirm that “there is no room for compensation here.” Transcript of unused footage from the documentary Crude, filed as Annex 1 to the Chevron filing Sept. 16, 2010 at 4:35 p m. (CRS-159-00-09). However, Mr. Luís Yanza wanted the judgment for compensation of damages “to be large,” because “that causes an extremely major impact.” Id.

[CERT.GEOTEXT] 109

In any case, in another contradiction between what they admit privately (while they are filming each other) and what they state publicly, the plaintiffs and their attorneys and sponsors have systematically disregarded the complaint and have requested a series of damages of a much greater scope than those of their original claim. These other claims originate from the fraudulent Cabrera Report and were expanded in the “reports” by their “experts” of September 16, 2010 at 5:15 p.m., and included the following: (1) compensation for alleged excessive cases of cancer deaths; (2) potable water supply; (3) recovery of the land and culture of indigenous communities; (4) compensation for loss of the ecosystem; and (5) recovery from “unlawful profit” and “punitive damages.”381 The complaint kept unlawfully reinventing itself over the course of the proceedings.

2. The lower court judge did not apply the principle of congruence. The Judge below illegally disregarded it via his generalized redefining of “environmental damage,” and violated the Law by sentencing my client to pay punitive damages.

In being faced with the new, brazen requests for restitution which constituted an illegal modification of the complaint, the lower court Judge pretended to abide by the law, in particular when citing Section VI of the complaint,382 as well as when specifically stating that he was restricting himself to the claims set forth in the complaint.383 However, at the high court, and notwithstanding these statements and his feigned rejection of the fraudulent Cabrera “report,” from which these extra petita claims originated,384 the lower court Judge granted many claims which were not considered part of the petitions in the plaintiffs’ complaint, and the judgment is therefore flawed by the extra petita defect, specifically: the compensation for alleged excessive cases of cancer deaths (cited again as relevant to the claim regarding public health); potable water supply (cited again as if it were somehow “supplementary” to the damages in fact adduced); recovery of the culture of the indigenous communities (a very slight nexus with the alleged damage to game hunting and fishing due to the damage to the environment); and punitive damages and unlawful enrichment.

The lower court Judge granted these illegal claims of the plaintiffs, save the last of them, via the mechanism of unduly incorporating these claims into the unfounded and limitless definition of the concept of “environmental damages.”385 As for the final category—punitive damages and undue enrichment—the Judge below did not even try to pretend to comply with the principle of congruence.386

[initials]

381 See Chevron Argument, filed Jan. 6, 2011 at 5:55 p m., ¶ 6.3. 382 Decision at 2, 178. 383 Decision at 90. 384 See Decision at 51 (“[T]he Court accepts the petition that said report not be taken into account to issue

this verdict.”). 385 See Decision at 87 (noting the plaintiffs’ position “that the environmental harm is not simply those

impacts that are suffered by the ecosystem, but that also part of that same harm encompasses all of the consequences that the harm may produce.”).

386 See Decision at 184-186.

[CERT.GEOTEXT] 110

As for the alleged environmental damages, the lower court Judge first stated that “the environment is not only the flora and fauna and the setting in which they develop, but that the environment is also formed by institutions, economic, political and social relationships, and culture, among other values between individuals and the human community.” He later used the term “holistic” assigned to “environment” to define “environmental harm” as “any loss, decrease, detriment, reduction or harm caused to or inflicted on the environment or any of its natural or cultural components.” 387 As that Judge had already defined “environment” in an absolutely broad way, which covered anything, he could have also defined “environmental harm” as any impact that occurred in the trial area. But just in case, the Judge below specifically included “impacts suffered by the human beings” as a result of the environmental damages.388 He readily acknowledged that his definition of “environmental damage” was “holistic.”389

The definition of the lower court Judge lacks any foundation whatsoever under Ecuadorian law. Moreover, it violates both the law and the plaintiffs’ own claim. It constituted a desperate but illegal attempt to grant the new requests by the plaintiffs, knowing that they were not included in their complaint. Therefore, the judgment is illegal and must be reversed, and the judgment is equivalent to an amended complaint, automatically carried out by the Judge below to help the plaintiffs.

The Judge cannot modify the specific claims of a lawsuit because in doing so, he would become a party to the proceedings instead of a neutral judge. A Judge’s impartiality is the essence of the jurisdictional system and the basis of society’s respect for the authority of the law. Undoubtedly, the existence of that impartiality places upon the administrator of justice the moral authority necessary to settle the disputes brought by the parties.

In addition to the clear failure to apply the principle of congruence, the lower court Judge, by having introduced and granted claims that were not set forth in the complaint, has awarded compensation amounts that are not based on diffuse rights, but that, at the very least, stem from what is referred to in legal doctrine as autonomous plurilateral commitments [prestaciones plurilaterales autónomas]. As stated previously, it makes no sense from a legal standpoint, nor is it consistent with the general principles of law or the most basic common sense, for a judge to rule that a private entity that is not a party to the proceeding and thus has not evidenced any type of representation of a person or group of people, is the sole beneficiary and administrator of all sorts of compensation. There is no legal basis whatsoever under the laws of Ecuador whereby the Amazon Defense Front could be named beneficiary of the compensation amounts illegally ordered in the judgment.

G. The Judge a quo concluded incorrectly and without foundation that the plaintiffs had proven the elements of extracontractual civil liability:

Even if the plaintiffs had a viable action and it were possible, which it is not in this case, for the Judge to render a judgment which was consistent with the constitutional right to due process and with

387 Decision at 94. 388 Id. at 125; see Id. at 138. 389 Id. at 171.


regard to the principles established under extracontractual civil liability, the plaintiffs would still have the burden to prove three elements in order to sustain their claims: damage, fault and causation.390 This reality was recognized not only by the plaintiffs but also by the Court: “classic extracontractual liability entails three assumptions which must be found: (1) some moral or material damage, (2) the culpable act by the party that causes the damage, and (3) a causal link between the act at fault and the damage caused.”391 Contrary to the conclusion found in the appealed judgment, and as my client repeatedly demonstrated in the proceedings below, the plaintiffs did not prove any of the three basic elements provided by the Civil Code for extracontractual civil liability.392 Specifically, the plaintiffs did not establish that TexPet acted negligently, an omission confirmed by their belated and faulty attempt to impose a standard of strict or objective liability (see “plaintiffs’ first allegation”). They did not demonstrate the existence of any recognized damage or threat to unspecified persons. The plaintiffs further failed to establish any connection between the alleged damage and TexPet, much less in relation to my client.

In short, what the lower court Judge argued in order to find Chevron liable was unlawful and lacked foundation. The Judge utilized a standard of objective liability the likes of which have never been seen before: he described this standard as a presumption of negligence and then used this presumption to justify bypassing the need to establish causation. Not having analyzed negligence or causation in accordance with Ecuadorian Law on extracontractual liability and instead treating both as if they had been shown, he awarded the plaintiffs billions of dollars in compensation for damages after a cursory review of the facts. However, he never tried to relate the categories or the amounts set by the judgment with any evidence of actual damage caused by TexPet operations. In short, the Judge held Chevron liable for billions of dollars for the simple fact that TexPet engaged in exploration and extraction of oil as a minority partner of Petroecuador. For each of these reasons, the judgment rendered by the Judge must be reversed.393

1. Contrary to what is indicated in the judgment, TexPet’s practices did not violate its duty to be diligent as Consortium Operator.

Since the commencement of this case, the plaintiffs argued that TexPet acted negligently in its Consortium operations. In fact, in their complaint they alleged that the defendant was liable for the alleged damage “as the acts and omissions described above are directly imputable to its manifest

[initials]

390 See Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m., § 7.1, p. 217. 391 See Plaintiffs’ Alegato filed Dec. 23, 2010 at 10:12 a m., § 3.2, p. 4; Decision at 75. 392 See, e.g., Chevron’s Alegato filed Jan. 6, 2011 at 5:55, Ch. VII; Chevron’s Motion filed Sept. 16, 2010,

at 4:35 p.m.; Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 393 See Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p.m., Ch. VII.

[CERT.GEOTEXT] 112

intention or negligence…”394 In seeking to explain the legal basis for the allegations in their complaint, the plaintiffs also stated that “the obligation of reparation of damages resulting from fraud or negligence has existed in Ecuadorian law since the Republic’s very beginnings.”395 The plaintiffs also indicated time and again that they have the burden of proof to establish this claim. For example, when seeking to terminate the judicial inspections, the plaintiffs argued that the Code of Civil Procedure “impose[s] the burden of proof on the plaintiff,” and therefore “it is for the plaintiff to determine which are the taking of evidence necessary to prove the case.”396

Yet, after the plaintiffs’ fraud was exposed and they were left, after 7 years of litigation, without any competent evidence upon which the Judge could render judgment in their favor, the lower Court decided to apply a new criteria of “objective liability”397 under which it could “reverse the burden of proof”398 with regard to the negligence. This was a clear, illegal and brazen attempt to allow the plaintiffs to skirt the consequences of their misconduct by shifting the burden of proof onto, ironically, the victim of their fraud: Chevron. As explained above, my client provided the lower court judge with concrete and irrefutable evidence of repeated illicit acts by the plaintiffs, including the falsification and fabrication of evidence at every stage of these proceedings. This evidence stripped the plaintiffs’ case of any support, but the Court responded with an unfounded and bad faith attempt to allow them to circumvent the burden of proof, which they manifestly could not satisfy. Shifting the burden of proof after the conclusion of the evidentiary stage, in which my client crafted and presented a defense based on the common understanding that the plaintiffs had the burden of proof, caused irreparable prejudice and violated the guarantees of due process. Process was violated under the direction of the lower court Judge.

But the reality is that the plaintiffs never proved the elements of the extracontractual civil liability of which they accused TexPet.

a) Application of objective liability to TexPet is illegal:

The belated decision by the Judge to shift the burden of proof by applying the criteria of objective liability lacked any legal merit whatsoever. According to Article 1715 of the Civil Code, “burden of proving that an obligation . . . is on the party who alleges it.” So, in order to hold my client liable for redressing any alleged harm or elimination of any alleged threat, Ecuadorian Law required the plaintiffs to show that the harm or threat were caused by the

[initials]

394 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v (78v). 395 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a m., Record at 73-80v (78v). 396 See Plaintiffs’ Motion filed June 21, 2006 at 2:30 p m., Record at 112221-112223; see also Plaintiffs’

Motion filed Feb. 15, 2010, at 5:45 p m., Record at 93628-93630 (“The truth is, your Honor, that the affirmations of the claim must be proved exclusively by the plaintiff; their form, exhibits and admissibility fall exclusively upon whoever affirms facts in the claim. Therefore, if the plaintiff considers it necessary to conduct certain evidentiary procedures and considers others unnecessary, this is the will that should govern.”).

397 Decision at 84. 398 Id. at 83.

[CERT.GEOTEXT] 113

intentional or negligent actions of my client. According to the first two paragraphs of Article 113 of the Code of Civil Procedure: “It is plaintiff’s obligation to prove the facts he has affirmatively alleged in the lawsuit, and the defendant has denied. The defendant is not required to produce evidence if his answer to the complaint was an unconditional or absolute denial.”

In its requests for relief in its response to the complaint, my client categorically and wholly denied any negligence.399 By shifting the burden of proof at this point in time, the Court denied my client the right to a defense, given that the evidentiary stage was conducted under the established principle that the plaintiffs bore the burden of proving their case against my client.400

The primary alleged support for the Court’s new burden-shifting, strict liability theory is the judicial decision called Delfina-Torres.401

While the lower court Judge notes that the plaintiffs’ invoked current article 2229 in their complaint, as discussed above, that section only allows claims for individualized damages resulting from the intentional or negligent acts of another. Ultimately, for multiple reasons, Delfina-Torres does not apply to this case:

First, the decision has no binding precedential value and is not the law. Under Ecuadorian law, to change the liability standard for torts the National Assembly must abrogate the current legal provision and enact a new law replacing it, or the National Court of Justice must change the law in a decision subsequently cited three times in decisions of that court.402 But neither of those things has happened. Therefore, Delfina-Torres does not alter the “classical” theory of civil liability that requires any plaintiff to prove that the defendant acted negligently, which is still in

[initials]

399 Answer to Complaint, submitted in the Mediation Hearing of Oct. 21, 2003 at 9:10 a.m., Record at 243-

267 (265-265v)

(“IV.5.1.- I deny that my client has caused any damage to the plaintiffs - IV.5.2- I deny that my client must respond for the actions of third parties - IV.5.3- I deny that my client has any obligation to remedy any damages whatsoever - IV.5.4- I deny that CHEVRONTEXACO CORPORATION can have applied to it any of the legal standards that the plaintiffs hold as the basis of their claim - IV.5.5.- I deny that my client has executed any of those facts described in the claim- IV.5.6-I deny that my client has caused any damages- IV.5.7- I ultimately deny all of the factual foundations of the claim.- IV.5.8- I deny that CHEVRONTEXACO CORPORATION has committed any civil offense or quasi-offense causing any damages to the plaintiffs.- IV.5.9- I deny that CHEVRONTEXACO CORPORATION may be imputed with any malice or negligence which may have caused the damages to the plaintiffs either currently or in the past.”).

400 See Chevron Alegato filed Jan. 6, 2011 at 5:55, at § 7.7. 401 Comité Delfina Torres vda. de Concha vs. Petroecuador y otros, Judgment of the Supreme Court of

Justice, at the Twenty-first Clause, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

402 See Civil Code, Arts. 3, 19(2) of the Cassation Law.

[CERT.GEOTEXT] 114

effect in Ecuador. As acknowledged in the complaint, which post-dated the Delfina-Torres decision, plaintiffs must prove that my client acted negligently.

Second, the case tried in Delfina-Torres was brought pursuant to a different cause of action, which has no application here. In Delfina-Torres, the plaintiff proceeded under Article 2214, but plaintiffs here have neither pled nor proven individual claims for damages. This also renders plaintiffs’ reliance upon Article 2229 inapposite, because that Article is ancillary to Article 2214. Plaintiffs conceded this in their first alegato when they stated that “Article 2229 of the CC (formerly 2256) presents two elements. Paragraph one ratifies and completes the provision contained in Article 2214 . . . . The second section of the Article . . . develops a particular instance of the obligation to remedy that is applicable to hazardous activities . . . .”403

Third, Delfina-Torres did not revamp Ecuadorian civil liability standards, but confirmed the existing standard under which plaintiffs must prove negligence. The decision expressly states that “[i]n our legal system, tort liability is in essence subjective, that is [it] necessarily requires a finding of negligence for liability to be found.”404 But this was not at issue in Delfina-Torres because the defendants’ answer to the complaint averred that the harm had been caused by a force majeure event.405 It was thus incumbent upon the defendants to prove this defense, since, as the Court explained, “each of the parties is responsible for proving the truthfulness of the facts that it has claimed as grounds for its arguments or defenses.”406 Properly understood, Delfina-Torres only confirms that, consistent with Article 113 of the Code of Civil Procedure, any defense of force majeure must be proven by the defendant. It is natural that a defendant might elect to plead, and thus assume the burden of proving, a defense of force majeure (or third-party negligence or contributory negligence) in situations where there clearly is harm causally linked to the defendant’s activity. In this case, by contrast, there was no proof of harm caused by the Consortium’s operations. As a consequence, plaintiffs tried in their complaint to identify

[initials]

403 Plaintiffs’ Alegato of Dec. 23 2010, at 10:12 a m., at 6. 404 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of

Justice, at Whereas Clause Twentieth, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

405 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twenty-Fourth, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003 (“TWENTY FOUR: The defendants PETROECUADOR and PETROCOMERCIAL state in their exceptions that the damages suffered by the “Delfina Torres viuda de Concha, Propicia Nº 1” neighborhood and its inhabitants were due to force majeure or an Act of God.”).

406 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twenty-First, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003. Under Article 1563 of the Civil Code, the “proof of an act of God [is incumbent] upon the one who asserts it,” and under Article 1690, “the obligor must prove the act of God asserted.”

[CERT.GEOTEXT] 115

specific acts that they claimed (and thus assumed the burden of proving) were negligent, and Chevron responded with an absolute defense rather than a defense such as force majeure. The burden thus remained on plaintiffs to prove the negligence that they alleged, as well as causation and harm.

Fourth, if Delfina-Torres did purport to impose a new strict liability standard, that would surely mark a substantive change in the law and thus could not be applied retroactively to pre-2002 conduct—let alone conduct dating back decades.407

Finally, even if Delfina-Torres could permissibly be interpreted as putting in place a strict liability standard applicable here, the only consequence would be as to one of the three elements of tort liability, i.e., negligence.408 Plaintiffs would continue to bear the burden to prove (i) the alleged harm and (ii) that the alleged harm was caused by my client’s alleged actions (causality). On these points, Delfina-Torres is unequivocal: “1) The plaintiff had to prove: a) the damages it had suffered; b) the amount or extent thereof, and, c) the facts that gave rise to such damages . . . .”409 According to the decision, a plaintiff in all events must “prove the harm and the accompanying causal nexus for a compensatory action to succeed.”410 Likewise, the decision stated that any presumption operated only upon claims “derived from damages caused by hazardous activities or undertakings.”411 In other words, plaintiffs must prove “damages” that were “caused by” my client’s alleged “hazardous activities” before the rule of strict liability is even invoked. In Delfina-Torres itself, neither the existence of the harm nor its link to the defendant’s operations was at issue. Neither had been denied by the defendant, which, as noted, relied on legal defenses, including the claim that force majeure immunized it from civil liability.412 In contrast, my client strongly denied (i) the existence of the alleged harm and (ii) that any alleged harm could be traced to its own operations rather than those of Petroecuador or

[initials]

407 See Chevron’s Alegato filed Jan. 6, 2011 at 5:55, § 5.3.1. 408 Delfina-Torres recognizes that the standard for torts is one in which plaintiffs need to prove harm and

causation as well as negligence, and that “[t]he theory of strict liability is not widely accepted by the legislatures of a majority of countries nor is it accepted in the jurisprudence of foreign courts.” Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twentieth, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

409 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twenty-First, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

410 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twentieth, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

411 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clause Twenty-First, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

412 Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, at Whereas Clauses Sixteenth and Twenty-First, First Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in Official Register 43, Mar. 19, 2003.

[CERT.GEOTEXT] 116

other causes. As shown below, the plaintiffs failed to meet their burden on those elements, and the judgment must be reversed, even if negligence could be inferred.

In fact, the very cases relied upon by the Judge below demonstrate that because TexPet complied with all relevant laws and regulations, my client cannot be held strictly liable for TexPet’s conduct. The Judge cites Decision 168-2007, of April 11, 2007, Case Number 62-2005, Andrade v. CONELEC et al., Decision No. 414-2007 of October 2, 2007, Case Number 19-2005, Hermida Moreira et al. v. Municipality of Cuenca, and Decision No. 457-2007 of November 16, 2007, Case Number 71-2005, López Yánez v. President of the Republic for the proposition that my client may be held liable without proof of negligence.413 However, those same decisions explain that, in the case of hazardous activities, the defendant cannot be held liable where it has “observed regulations and techniques established for the exercise of the public activity involved.”414 In the case at hand, even assuming oil exploration is an inherently dangerous activity, which it is not, TexPet complied with all applicable Ecuadorian laws and regulations, as well as with all recognized industry standards, throughout its operations in Ecuador. Thus, my client cannot be held strictly liable for the lawful and proper conduct of TexPet.

Moreover, the decision by the Judge below to shift the burden of proof upon rendering his judgment (and when the evidentiary stage was already completed) violated the fundamental principle of the “unity” of the evidence. This principle prohibits any court from considering part of the evidence based on one standard and considering another part of the evidence based on another, contrary standard. By allowing the shifting of the burden of proof at the end of the proceedings, what occurred in this case is precisely that: the Judge considered the first part of the evidence based on Article 114 of the Code of Civil Procedure, which establishes that each of the parties must prove the facts it is alleging, and considered the second part of the evidence based on the standard of objective liability. That is contrary to Ecuadorian Law and violates Chevron’s right to due process.

These standards are in force in order to prevent the deprivation of acquired rights and to protect the right to legal certainty, which, as it is recognized by Article 82 itself of the current Constitution, is founded on respect for previous legal provisions. Once this proceeding commenced, my client presented its evidence to the lower court Judge pursuant to the standards in force on that date as to the burden of proof, the standard of liability and prescription.

Changing the rules after the evidentiary stage of the proceedings had been completed caused the case to be governed by two different procedural principles and left my client with no opportunity

[initials]

413 Decision at 175. 414 Andrade v. CONELEC et al., Decision No. 414-2007 of October 2, 2007, Case No. 19-2005 at 24;

Hermida Moreira et al. v. Municipality of Cuenca, and Decision No. 457-2007 of November 16, 2007, Case No. 71-2005, at 37; López Yanez v. President of the Republic, at 22.

[CERT.GEOTEXT] 117

to properly defend itself. This was not only an attack on the principle of non-retroactivity of laws, but it also violated the guarantee of due process by depriving Chevron of its fundamental right to defend itself against the claims of the Plaintiffs.

b) TexPet’s activities were not negligent nor did they constitute deliberate, much less fraudulent, violations:

All of the claims contained in the complaint are founded on the alleged negligence of TexPet in its operational methods. Notwithstanding the decision by the Judge below to accept such arguments, these allegations lack any foundation whatsoever.

As my client pointed out, TexPet complied with the Ecuadorian laws in force during the time of its operations in the Consortium, and its extraction practices were appropriate practices which were used in other countries at the same time that TexPet conducted its activities in Ecuador. Likewise, TexPet’s operations as a member of the Consortium were directed, supervised, and approved by the Government of Ecuador. The plaintiffs implicitly admitted that fact by requesting—after the evidentiary period was closed—that TexPet’s fault be presumed and that the burden of proof be shifted to my client. If during the evidentiary stage the plaintiffs had been able to show that TexPet acted negligently or with intentional misconduct, they would not have had the need to request the illegal imposition of objective liability.

At the same time that it applies objective liability, the Court below also concluded that TexPet’s operations were deficient in multiple ways.415 The reality, however, is that TexPet’s activities were legal and consistent with standard practices for the Oil Industry at that time, as my client demonstrated on numerous occasions. Under either an objective or subjective theory of liability, TexPet operations were not negligent nor did they consist of intentional misconduct.

The plaintiffs’ argument, adopted in the lower court judgment, that TexPet was out of compliance with Ecuadorian laws disregards the fact that at all times, the Ecuadorian State oversaw and regulated TexPet’s operation in the Consortium and, therefore, it was in compliance with Ecuadorian laws. In fact, at that time, the State held exclusive responsibility for regulating and monitoring compliance with environmental laws; and the only recourse that private parties had was to file an administrative complaint with the Government for environmental issues. Further, the legislation cited by the plaintiffs established vague standards and gave public institutions the power to interpret and enforce these standards. According to those laws, the Government closely regulated TexPet during the Consortium period, and also demonstrated its satisfaction with TexPet’s compliance with Ecuadorian laws in force. 416 Likewise, after the comprehensive environmental remediation carried out by TexPet after the end of the exploration

[initials]

415 Decision at 175. 416 Therefore, the plaintiffs’ argument that Ecuadorian standards mandate “zero contamination tolerance”

for environmental impacts is false.

[CERT.GEOTEXT] 118

and production agreement, the Ecuadorian State released TexPet and its affiliates from all liability for environmental impacts. It is too late in the day for the plaintiffs to allege violations of Ecuadorian Law when the entity which was exclusively in charge of defending those laws—the Government itself—publicly released TexPet from liability. In doing so now, the plaintiffs disregard the standards applied by the proper government authorities of the time in order to retroactively apply a standard of zero tolerance. This is a standard crafted by the Judge below in the appealed judgment that exists nowhere else in the world and is impossible to apply.

Although the Judge below repeatedly asserts that Government oversight cannot extinguish third party claims, this assertion alone does not retroactively create an action for the plaintiffs. Again, the plaintiffs did not file a complaint for individual damages, but are instead seeking to vindicate diffuse rights.417 Those were the same rights protected by the Government in its oversight of Consortium operations, and the same rights which were settled and released by the Government in the settlement agreements.418 If the plaintiffs’ felt that the Government did not enforce the laws during the Consortium period, they had, under these very same laws, the right to ask the Government to respond to their claims. The plaintiffs cannot use the same laws enforced by the Government to attempt a new claim that has already been settled, nor can those Laws confer a retroactive right of action to file those claims against Chevron.

The plaintiffs lack any retroactive legal standing whatsoever to make these claims against Chevron. In fact, the P\plaintiffs’ claim, were it to have sufficient cause, should be filed against the State and Petroecuador: its argument is based on the assumption that the State failed to fulfill its obligations to regulate and guarantee compliance with its regulations. However, this issue was not presented to the lower court judge, since he had no competence to declare the illegitimacy of actions by the State. That issue is subject to the Settlement Agreement of 1995.

However, the Judge below disregarded all of that and awarded the plaintiffs compensation for unproven damages on the basis of laws which assign him no authority whatsoever and on the basis of a supposed action that the plaintiffs did not have the right to file at that time. In doing this, the Judge below twisted these legal provisions. As it was stated previously, the provisions belong to Laws that apply in unique circumstances and that create no right of action for private parties. These Laws delegate the oversight, regulation and enforcement of their provisions to specific public institutions under the Executive Branch and which only by exception may be handled by Administrative Law Judges. Any allegations of non-compliance must be presented in different proceedings and before different authorities and Judges.

However, these administrative Authorities, the authority of which is based on the laws referenced by the Judge in his judgment, supervised TexPet and then released it of all liability. The Judge cannot simply select which parts of these Laws and regulations he will cite in his judgment and circumvent the administrative activity toward TexPet which exempted it from all

[initials]

417 Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m., § 1.4; Ch. 5. 418 Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m., Ch. 5.

[CERT.GEOTEXT] 119

civil liability. The Judge should have considered the limitations inherent to his judicial authority and abstained from going into an analysis of TexPet’s non-compliance with laws and regulations whose oversight and regulation can only be exercised by the competent authorities and entities. If these authorities and entities did not establish TexPet’s liability, the Judge could not declare in their place the non-compliance with the Health Code, the Water Act and the Hydrocarbons Law, such as he did illegally in his judgment.

In fact, simply reading these Laws in context, clarifies both the inapplicability of their provisions to these proceedings and the Judge’s absolute lack of authority to evaluate alleged violations of the cited legislation:

• Law on Hydrocarbon Reservoirs or Deposits of 1921: In accordance with the expressed terms, this Law shall not apply to hydrocarbon operations in the Oriente. Further, as the Judge acknowledged, the Law was never in force during the Consortium operations. Therefore, the suggestion that, even so, “it is fitting to take its content into account” is simply ridiculous.419

• Hydrocarbons Law of 1971, its amendments and regulations: This Law and its regulations specifically state that the Ministry of Natural and Energy Resources is in charge of determining compliance with the Law. 420 And none of them creates a private right of action.421

[initials]

419 Decision at 61. 420 Art. 68 [now 74]: “The respective ministry [Ministry of Natural Resources and Tourism] can terminate

the contract if the contractor: “7. Obstructs of makes difficult the oversight and audit that must be performed by the authorized officials of the State, or would not provide the data and the rest of information regarding any other matter of the oil activity . . . . 13. Commits repeated violations of the law and its regulations.” Art. 71[now Art. 77, very similar to the original] “The breach of contracts entered into by the Ecuadorian State for the exploration and/or production of hydrocarbons which does not give rise to termination thereof, or violation of the Law or its regulations, shall be penalized with a fine…which shall be imposed by the National Hydrocarbons Director, stating the reasons therefore and applying objective valuation criteria[.] Article 81 [now 90] of the same Hydrocarbons Law of 1971 states that “Compensation must be paid for damages to territories, crops, structures or other goods due to the exploration or development of oil production or any other phase in the hydrocarbon industry, shall be set by experts appointed by the parties. In case of a disagreement, the appropriate Ministry [Ministry of Natural Resources and Tourism] will appoint a deciding expert, whose decision will not be open to appeal.”

421 This can be confirmed by reviewing the following amendments and standards in the Hydrocarbons Law. Law Amending the Hydrocarbons Law, 1982; the Regulation for Exploration and Extraction of Ministry Resolution 1311, 1987; Regulation for hydrocarbon Operations (stating, in its Article 71: “Sanctions for non compliance or violation of this Regulation. In case of non compliance or violation of this Regulation, without prejudice to civil and criminal actions, the National Hydrocarbons Director shall impose the sanctions established in article 77 of the Hydrocarbons Law. Companies affected by these sanctions may appeal, should they consider them unjust or extraneous, before the Ministry of Energy and Mines . . . .”); and Ministry Resolution num. 1743: Standards for Prevention, Oversight and Remediation of the Environment from Hydrocarbon activities of exploration and extraction in the National Parks or equivalent (Art. 23 establishes that “[t]he General Managers of the Environment and National [Managers] of Hydrocarbons of the Ministry of Energy and Mines and the National Forest Director from the Ministry of Agriculture and Livestock, shall ensure compliance with the standards set forth in this agreement,” and Article 24 of the same Ministry Resolution establishes that:”[t]he non-compliance with the provisions of this Resolution and those of Prevention Control and Environmental Remediation in the area of hydrocarbons shall be punished pursuant to the provisions of Art. 77 of the Hydrocarbons Law”).

[CERT.GEOTEXT] 120

• Maritime Police Code: It specifically states that “Port Authorities and Oil Terminal

Superintendents shall be the authorities charged with imposing sanctions under this Section. The Administration of the Merchant Marines and Coastal Authorities [Dirección de la Marina Mercante and del Litoral] may modify the sanction, if it deems necessary, and any modification would stand as final” has “coactive jurisdiction for charging the fines and monetary obligations arising from applying the sanctions under this Section.” According to the Code, citizens only have the power to “report” violations thereof to the proper authorities.422

• Law for the Prevention and Control of Environmental Contamination: The law confers authority upon the Government to “regulate, monitor and prohibit, in all national territory, damages directly or indirectly stemming from contamination of the environment and degradation of ecological systems.” 423 The Law does not create a private cause of action, but rather just the possibility “to make a report to the proper authorities.”

• Health Code: The Code specifically states that “the Minister of Public Health; the Director General of Health… hold jurisdiction to hear, adjudicate and impose the sanctions provided for in this Law.”424

• The Water Law and its Regulations: The law states that: “The authority to adjudicate administrative violations and impose the administrative sanctions provided for in this Law, is held by the Chief of the Agency or District in whose jurisdiction they were committed.”425

Each Law that the Judge invoked in his judgment specifically declares that a governmental agency, and not a Court under the Judicial Branch, has the authority to ensure compliance with these laws and to sanction those responsible for violating them. None of the laws cited mention a

[initials]

422 Art. 115(L) of the Code of Maritime Police. 423 Art. 3 of the Law for Prevention and Control of Environmental Contamination, in its Article 10 “[t]he

application of this law and the execution of actions aimed at the preservation of air, water and soil resources is the purview of the following authorities: a) Ministry of Health . . . ; b) Ministry of Agriculture and Livestock . . . ; c) Ministry of National Defense . . . d) Ministry of Natural and Energy Resources . . . ; e) Ministry of Industries, Trade and Integration . . . ;” among other institutions.

424 Art. 208 of the Health Code asserts that: “Article 208 of the Health Code establishes that: “The following are health authorities: the Minister, the National Director, the National Vice-Director, the Regional Directors, the Provincial Chiefs, and the Health Commissioners. The Minister, National Director and National Vice-Director of Health exercise their jurisdiction throughout the territory of the State.” And according to Article 212 of the same code “[T]he health authority is the competent judge to hear, establish and impose sanctions, pursuant to the provisions of this Code.”

425 Art. 97 of the Water Law and its Regulations.

[CERT.GEOTEXT] 121

private right of action. Therefore, the provisions are not applicable to this action and, in any case, the Judge below did not have the jurisdiction to consider them.426 Moreover, not even under the pretext of correcting the plaintiffs’ errors of law may the lower court Judge complete or reorient the complaint in order to issue a judgment.

Further, the allegations contained in the complaint contain an improper joinder of civil and environmental actions. The fact that the judgment is based on these Laws and regulations, which are of a different legal nature and which protect different legal interests, require that Sole Division of this Court, as occurred in the Red Amazónica case, reverse the lower court judgment and dismiss the lawsuit.427

Contrary to the conclusion of the Judge, TexPet’s concession contracts do not offer any foundation for TexPet’s liability (much less that of Chevron) toward the plaintiffs. These contracts were executed between the Ecuadorian State and TexPet, and the plaintiffs do not have any right to bring actions deriving therefrom. The only parties who could claim a breach by TexPet— namely, the Ecuadorian State and Petroecuador—have not done so and, further, have released TexPet from all liability. The assertion by the Judge that TexPet did not comply with its contractual obligations is false. The Judge, on repeated occasions, points to a supposed lack of compliance with the provisions of the concession contract of 1964428 and decides to disregard the fact that this contract (including the provisions cited by the Judge) was replaced in August of 1973. In fact, the Concession Contract of 1973 established that “the contracts executed on March 5, 1964 and June 27, 1969, are completely substituted by the present contract…. Consequently the parties shall hereafter be governed only by the stipulations set forth in this public instrument.” Therefore, the inference by the lower court Judge that during the entire period of its operations, the Consortium was governed by the provisions of the 1964 contract is erroneous in fact and in law. It is simply inaccurate and shows the Judge’s bias against my client.

Even if we assume that the 1964 contract had not been replaced, the citations by the Judge are improper. For example, the Judge insinuated that clause 32(g) of this Contract, which refers to the use of “machines that are appropriate and efficient,” was a sort of environmental regulation.

[initials]

426 The last-minute citing of these laws by the plaintiffs, and the reliance by the Judge below on them, is

also an illegal, but approved, attempt by the plaintiffs to modify their complaint. The fact that in the judgment he has considered these belated allegations violates, therefore, the principle of congruence, and therefore invalidates the judgment rendered by the Judge a quo. However, even if the plaintiffs had pled violations of these laws, His Honor lacks jurisdiction in this matter to invoke them. As previously examined, the plaintiffs’ claim improperly links civil and environmental actions, and joining claims that TexPet violated other Ecuadorian legislation only multiplies the error.

427 Red Amazónica versus Oleoducto de Crudos Pesados S.A., Judgment rendered by the Supreme Court of Justice of Nueva Loja, July 29, 2009, Case 218-2008. The plaintiffs, in the case known as Red Amazónica, sought environmental damages in a summary oral proceeding under the Environmental Management Act and also requested civil compensation as owners of certain properties which were supposedly affected by the hydrocarbon operations. The court panel that heard the case, of which Dr. Zambrano was a member, sustained that this constituted an inappropriate acceptance of civil and environmental actions. The decision was recently ratified by the National Court of Justice. Red Amazónica versus Oleoducto de Crudos Pesados S.A., Judgment by the National Court of Justice, January 17, 2011, Proceeding No. 999 -2009-SR.

428 See, for example, Decision at 61-62, 64.

[CERT.GEOTEXT] 122

He did the same thing when citing the provision in this contract declaring that TexPet “sufficient technical and financial means to conduct effective hydrocarbons exploration.” However, a simple reading of the Contract shows that these provisions were designed to ensure that the parties would comply with the purpose of the Contract: which was “to exploit the concession.”429 Clause 40.1 of the 1973 Contract illustrates the same point. Said provision establishes the following: “The contractors shall use modern and efficient machinery, and they shall utilize the most adequate technology and methods in their work so as to obtain the greatest productivity in the exploitation of deposits, observing in every case the reserve conservation policy formulated by the Government.”430 When they are read in this context, these provisions do not suggest, as the Judge asserts, that what was required of TexPet was “the best technological resources available” to avoid environmental damage.431

The judgment concludes that TexPet failed to meet industry standards for discharge of produced water based on a 1962 industry API publication alleged to be the “only historical document” on this topic in the case file.432 The 1962 API “Primer,” however, states in the introduction that it was not written to establish a standard for acceptable practices for management of produced water or any other aspect of oilfield operations: “Because of the wide variations in specific methods and techniques used in the many different fields throughout the country problems have been dealt with in a [very] general manner. The examples used, the explanations given, and the pictures and drawings shown are merely illustrative and in no sense are to be considered as API recommendations, or as being the only way in which the objective could be accomplished.”433

In addition to misstating the import of the 1962 Primer, the judgment also wholly ignores the numerous historical publications and factual data in the court records demonstrating that discharge of produced water to surface water was, in fact, a common and accepted practice in the era of Texpet’s operations in Ecuador. Documents cited to the Judge that were published subsequent to the 1962 API Primer, written by USEPA, and other authoritative sources, demonstrate that in 1963 (the year following the publication of the 1962 API Primer cited in the judgment), approximately 1.4 million barrels of produced water were discharged into surface water in the U.S.,434 a volume that remained fairly consistent

[initials]

429 1964 Concession Contract, Clause 32 (g). 430 1973 Concession Contract, Clause 40.1. 431 Decision at 165. 432 Decision at 161. 433 API, 1962, Primer of Oil and Gas Production, Book 1 of the Vocational Training Series, American

Petroleum Institute, Dallas, TX (Foreword) 434 Interstate Oil Compact Commission (IOCC), 1965. Water Problems Associated with Oil Production in

the United States. Interstate Oil Compact Commission, Oklahoma City, OK

[CERT.GEOTEXT] 123

through 1985.435 Indeed, more than 930 million barrels per year of produced water are still discharged to the surface in onshore oilfield operations worldwide.436 Documents cited to the court from 1960, 1976, 1993, and 1998 also confirm that U.S. and international oil field regulators identified the discharge of produced water into surface water as an accepted practice.437

The judgment also fails to consider or even acknowledge that produced water discharge was a legal and accepted practice in Ecuador during the period of Texpet operations. Ministry Resolution 621, issued in 1992, two years after termination of Texpet operations, established the first numerical limits that were specific to the discharge of produced water to surface water.438 Additionally, the judgment ignores that more produced water was discharged to surface water by Petroecuador over the 1990 to 2007 period (861 million barrels produced, of which 394 million barrels were discharged) than had been discharged in the prior 18-year period of Texpet operations from 1972 to 1990 (377 million barrels produced and discharged).439

The judgment also asserts, echoing the claims of the plaintiff’s attorneys, that the existence of a patent owned by Texaco for waste reinjection technology in the 1970s demonstrates that produced waters should have been injected rather than discharged to surface water.440 In the first place, patenting a technology obviously does not mean, or even suggest, that use of that technology is legally required or consistent with international standards. Moreover, the cited patent is wholly unrelated to produced water, which is never even mentioned in the patent. Rather, the patent addresses methods for pre-treatment of wastewater from industrial facilities,

[initials]

435 WAKIM, P.G., 1987. API 1985 Production Waste Survey, Statistical Analysis and Survey Results, Final

Report, American Petroleum Institute, Washington, DC, October 1987, see Figure 1A below. 436 International Association of Oil and Gas Producers (OGP), 2009. Environmental Performance in the

E&P Industry, 2008 Data. International Association of Oil and Gas Producers, London, UK. Report No. 429, see Figure 1B.

437 Interstate Oil Compact Commission (IOCC), 1960. Production and Disposal of Oilfield Brines in the United States and Canada. Interstate Oil Compact Commission, Oklahoma City, OK.; USEPA, 1976. Development Document for Interim Final Effluent Limitations Guidelines and Proposed New Source Performance Standards for the Oil & Gas Extraction Point Source Category, EPA 440/1-76/055a, Group II. U.S. Environmental Protection Agency, Washington, DC; E&P Forum, 1993, Exploration and Production (E&P) Waste Management Guidelines, Report No. 2.58/196, The Oil Industry International Exploration and Production Forum, London, UK.; World Bank, 1998. Oil and Gas Development (Onshore), Pollution Prevention and Abatement Handbook, July 1998.

438 Republic of Ecuador, Ministry Resolution No. 621 of February 21,1992. Environmental Regulations for Hydrocarbon Activities in Ecuador, Official Register No. 888, March 6, 1992.

439 Ecuadorian Ministry of Energy and Mines, Production of Formation Water, 1972-1990 (Superior Court of Nueva Loja, Document 129713); Woodward Clyde International, Production of Formation Water in the Fields of Former CEPE-Texaco, date omitted; and Official Letter No. 0963 PPR-SDA-LGL-2008, sent by the General Superintendent of Petroproducción to the Superior Court of Nueva Loja, April 28, 2008, submitted in Chevron’s Rebuttal to Mr. Barros, 2010, Attachment D, Temporary Analysis of Handling of Produced Water in the Area of the Former Concession, PETROECUADOR-Texpet, Jan. 14, 2010.

440 Decision at 162-165.

[CERT.GEOTEXT] 124

such as refineries.441 The judgment’s citation and quotation of this material is yet another example of the misrepresentation of the evidence in the record. Affirming, as the Judge below does, that the mere existence of a patent or the availability of technology necessarily calls for its mandatory use, would be the same as saying that manufacturers of electric or hybrid motor vehicles could no longer produce vehicles that only have internal combustion motors, since under the reasoning of the Judge below, this mere fact would make those manufacturers negligent with respect to the environment.

Likewise, the judgment faults Chevron for TexPet’s use of unlined earthen pits during the period in which TexPet served as operator of the Consortium.442 At that time, however, the use of such pits was a legal and standard industry practice in the United States, Ecuador, and around the world.443 The evidence in the record demonstrates that during the period that TexPet served as the operator of the Consortium, unlined earthen pits were commonly used in oilfields in the U.S. In 1984, the U.S. EPA reported approximately 125,000 earthen pits in U.S. oilfields, of which 97.5% were unlined.444 This same study identified the construction of reserve pits, for storage of drilling mud and cuttings, as a standard practice in well sites.445 Even today, in fact, unlined earthen pits remain in common use in the U.S. for management of certain types of oilfield

[initials]

441 See Certification from U.S. Department of Commerce, United States Patent and Trademark Office,

dated Mar. 6, 2008, Record at 153722-31(responding specifically with documentation for patent no. 3,817,859 and patent no. 3,680,389). In fact, this patent addresses methods for pre-treatment of alkaline wastewater streams from industrial facilities, such as refineries, prior to disposal by deepwell injection. Id. Produced water associated with oilfield operations is not an alkaline wastewater, does not fit the description of any of the waste streams described in the patent, and is not contemplated or covered by this patent.

442 Decision at 158. 443 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p m., § II.B.4.b.ii.2, at 132-134; (Connor, 2010; Connor

and Gie, 2007). 444 USEPA, 1987a, “Report to Congress: Management of Wastes from the Exploration, Development, and

Production of Crude Oil, Natural Gas, and Geothermal Energy, Volume 1 of 3, Oil and Gas, y USEPA, 1987b, “Report to Congress: Management of Wastes from the Exploration, Development, and Production of Crude Oil, Natural Gas, and Geothermal Energy, Volume 3 of 3, Appendices, cited in SOUTHGATE, CONNOR & MACNAIR, Response to the Allegations of Mr. Cabrera Regarding the Supposed Unjust Enrichment of TexPet (Sept. 8, 2008) at 10-11, (146,342-70) (citing U.S. EPA, 1987a, 1987b).

445 USEPA, 1987a, “Report to Congress: Management of Wastes from the Exploration, Development, and Production of Crude Oil, Natural Gas, and Geothermal Energy, Volume 1 of 3, Oil and Gas, y USEPA, 1987b, “Report to Congress: Management of Wastes from the Exploration, Development, and Production of Crude Oil, Natural Gas, and Geothermal Energy, Volume 3 of 3, Appendices, cited in SOUTHGATE, CONNOR & MACNAIR, Response to the Allegations of Mr. Cabrera Regarding the Supposed Unjust Enrichment of TexPet (Sept. 8, 2008) at 10-11, (146,342-70) (citing U.S. EPA, 1987a, 1987b).

[CERT.GEOTEXT] 125

wastes. For example, in Texas, data from 2009 show that of the 12,059 permitted pits on record, 7,056 (63%) do not have synthetic liners.446

The judgment also ignores that regulations addressing the design and construction of oilfield pits were not issued in Ecuador until 1992, two years after TexPet ceased its operations.447 It was not until 1995 that Ecuador established general procedures for closure of oilfield pits, and numerical criteria for remediation of soils in oilfield pits were not established until February 2001.448 Notably, and ignored in the judgment, none of these regulations require the use of synthetic liners in oilfield pits. 449 In fact, Petroecuador continues to construct and use unlined earthen pits in the former concession today.450 Since 1990, Petroecuador has more than doubled the number of wells in the region, drilling more than 414 new oil and gas wells, each of which entails use of earthen pits for management of drilling muds, cuttings, and wastes.451 In the past three years alone, Petroecuador has constructed more than 277 unlined earthen pits

[initials]

446 Railroad Commission of Texas, Oil and Gas Division, Technical Permitting, Environmental Permits and

Support. Personal Communication, February, 2009, cited in CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 19, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p.m.

447 Republic of Ecuador, Ministry Resolution No. 621 dated Feb. 21, 1992. Environmental Regulation of Hydrocarbon Activities in Ecuador, Official Register No. 888, Mar. 6, 2992 cited in CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 20, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p m.

448 Republic of Ecuador, Executive Decree 2982, Environmental Regulation of Hydrocarbon Activities in Ecuador, Official Register No. 766, Aug. 24, 1995 cited in CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 20, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p.m.

449 Ministry Resolution No. 621, Art. 13, dated Feb. 21, 1992. Environmental Regulation of Hydrocarbon Activities in Ecuador, Official Register No. 888, Mar. 6, 1992; Republic of Ecuador, Executive Decree 2982, Environmental Regulation of Hydrocarbon Activities in Ecuador, Official Register No. 766, Aug. 24, 1995; Republic of Ecuador, Executive Decree 1215, Substituting Regulation to the Environmental Regulation of Hydrocarbon Operations in Ecuador, Official Register No. 265, Feb. 13, 2001, cited in CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 20, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p m .

450 CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 20, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p.m..

451 IHS International Exploration and Production (E&P) Database, 2009 and Petroecuador. Statistical Managerial Report, Aug. 2009 cited in CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 21, attached as Annex 4A – 4C to Chevron filing of Sept. 16, 2010 at 4:35 p.m.

[CERT.GEOTEXT] 126

associated with the drilling of sixty-three new wells in the Guanta, Shushufindi, and Sacha oilfields discussed in this case.452

As for the citation by the lower court Judge of Article 46.1 of the 1973 Contract, that provision required that contractors “adopt all convenient measures” for protecting natural resources and to “avoid contamination” of water and lands under State control. 453 As previously analyzed, TexPet’s practices were in line with generally accepted practices of the time, and TexPet complied with these obligations. The Ecuadorian state recognized that and released it from all liability. Further, the judge was obliged to acknowledge that this provision indicates that “the State had the power to audit and monitor” the Consortium operations. 454 By way of this oversight and approval of TexPet operations, the Government clearly found that the measures adopted by the Consortium were appropriate and satisfied its interest in maximum productivity and its obligation to implement the environmental laws in force.

The abovementioned points have also been proven by the fact that the Ministry of Mines and Petroleum never declared the expiration of the concession contract, nor was the 1973 concession contract performance bond ever cashed.

Lastly, the cursory reference by the lower court Judge to a clause in the Contract to assert that TexPet would be liable jointly and severally with Petroecuador455 disregards the settlement and release agreement executed between the two parties and the State, through which all hypothetical joint liability was waived and terminated between TexPet and Petroecuador.456 Even setting aside this point, this position on the part of the Judge below lacks validity with regard to actions taken exclusively by Petroecuador. It is outrageous, moreover, to suggest that the State-owned oil company is not responsible for its own actions. The veiled inference of the Court is a feeble attempt at justifying the plaintiffs’ decision not to sue Petroecuador. Given that the operations of

[initials]

452 CONNOR, John. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E., Regarding Remediation

Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador (Sept. 3, 2010), at 21, attached as Annex 4A – 4C to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p m. (citing Chevron filing of Jan. 14, 2010). My client has shown in several prior filings that its practices with regard to natural gas management were also legal and in accordance with standard industry practice. See Chevron filing of January 6, 2011 at 5:55 p m., § 7.4.6; Chevron filing, September 16, 2010, at 4:35 p m., pages 106-07.

453 Decision at 65. 454 Id. 455 Ibid. at 61. 456 This agreement, in which the State —in representation of the same people as the so-called plaintiffs seek

to represent in this case and that, therefore, cause this agreement to be applicable to all of them— released TexPet and accepted its remediation as the equivalent or “in consideration” for its part in the Consortium, extinguished all joint liability which might have existed under Article 1532 of the Civil Code. See also ALESSANDRI, Arturo, The Theory of Obligations [Teoría de las Obligaciones] Published by Editorial Jurídica Ediar-Conosur Ltda, 1988, pgs. 288-291 and ABELIUK Rene, Obligations [Las Obligaciones], Volume I, Published by Editorial Temis S.A., 3rd edition, 1993, pgs. 350-351.

[CERT.GEOTEXT] 127

the state-owned company represent the most likely cause of any alleged impact, the plaintiffs’ decision makes little sense if their true intention is to achieve environmental remediation and not just a colossal sum of money to spend as they wish.

Therefore, the conclusion by the Judge that TexPet violated its duty to be diligent in its Consortium operations is not based on real facts. The decision by the lower court Judge must be reversed.

2. The evidence on which the lower court Judge based his ruling was improperly produced in the case and the weighing of the evidence in the judgment violates the provisions of the Code of Civil Procedure. The judgment is illegal.

According to Devis Echandía, “from the evaluation or assessment of legal evidence we understand the mental operation aimed at determining the merit or value of conviction that may be deduced from its content.”457 It is the Judge who weighs the evidence: “this is an exclusive procedural activity of the judge.”458

Additionally, Article 115 of the Code of Civil Procedure indicates that “sound judgment” is the method that the Judge in the case must follow to weigh the evidence.

Citing Coutore, sound judgment is defined as “The rules of correct human understanding; it is a system for freely evaluating evidence as the judge is not constrained by strict rules which say what value must be given to a given thing, nor does he only decide based on the rulings of his internal jurisdiction.”459

Among the guarantees of due process are those pertaining to the production and weighing of evidence. While sound judgment is not regulated through norms, as was indicated, Procedural Law does refer to it as a method for weighing evidence. However, there are two intrinsic elements of this non-regulated form of weighing evidence, which are: the first, referring to reason, which demands a “rational” and non-contradictory assessment of the facts, with actual reality. This process must be completed according to the Judge’s experience, which, furthermore, must be adjusted in each case to the specific characteristics of each lawsuit. And, the second element, which is logic, is a necessary reference to certain fixed parameters, which are specific to a strictness which—it would be supposed—would be intrinsic in a legal case.

Sound judgment becomes a requirement for a reasoned evaluation of the evidence, which excludes irrationality and arbitrariness, and whose objective is the rational, logical and critical reconstruction of the facts in dispute based on the evidence furnished by the parties. According to treatise writer Eduardo J. Couture, “The Judge who must make a decision in accordance with sound judgment is not free to reason at his whim, discretionarily, arbitrarily. This way of acting would not be sound judgment but free conviction.”

[initials]

457 DEVIS HECHANDIA, Hernando. General Theory of Judicial Evidence .Volume I. Fifth Edition. Victor

P. de Zavalía – Editor. Buenos Aires, 1981. Page 287. 458 Id. 459 COUTURE, Eduardo J. Foundations of Civil Procedural Law. Editorial B de F, Montevideo, 2005.219 pp.

[CERT.GEOTEXT] 128

The guarantees of due process are provided for in, inter alia, Number 4 of Article 76 of the Constitution: “The evidence obtained or produced in violation of the Constitution or the law shall be completely invalid and shall lack probative value,” pursuant to Article 117 of the Code of Civil Procedure: “Only evidence that has been properly taken, i.e., that has been requested, presented and produced in accordance with the law, shall be valid in court.”

According to treatise writer Hernando Devis Echandía,460 whose criterion has been repeatedly cited in the judgments of the National Court and the former Supreme Court of Justice, there are several doctrinally accepted principles that the Judge must take into account when weighing evidence: a) the necessity of the evidence and the prohibition for the Judge to apply his private knowledge about the facts; b) the judicial and legal effectiveness of the evidence; c) the unity of the evidence; d) the “community” of the evidence, or of its acquisition; e) the public interest in the function of the evidence; f) the loyalty and probity or veracity of the evidence; g) the contradictory nature of the evidence; h) the equality of opportunities for the evidence; i) the disclosure of the evidence j) the formality and legitimacy of the evidence; k) the legitimacy of the evidence; l) the preclusion of the evidence; m) the immediacy and administration of the Judge in the production of the evidence; n) the Judge’s impartiality in the administration and evaluation of the evidence; ñ) the originality of the evidence; o) the concentration of the evidence; p) the freedom of the evidence; q) the pertinence, suitability and utility of the evidence; r) the naturalness or spontaneity and lawfulness of the evidence and respect for human rights; s) the coercive procurement of the material evidence; t) the impeccability of the evidence; u) the evaluation or assessment of the evidence; v) the burden of proof and the personal responsibility of the parties for their failure to act; w) the orality in the production of evidence; x) the principle of inquisition for obtaining evidence; y) the unavailability and non-renounceable nature of the evidence; z) the gratuitous nature of the evidence.

[initials]

.”

Although not all of the aforementioned evidentiary principles are included in the legal norms, be it the Constitution (Article 76461) or in the procedural legislation, these principles form part of the guarantees of due process and, in conformity with the terms of Number 3 of Article 11462 of the Constitution, are understood to be “directly and immediately applicable

“Due process is a constitutional right. Therefore, it is superior in ranking and pervades a country’s entire legal system; consequently no one and nothing can avoid it. All acts and procedures of officials from the bodies of the public power must abide by it . . .” (Dr. Luis Cueva Carrión – Due Process – Quito 2006).

460 DEVIS HECHANDIA, Hernando. General Theory of Judicial Evidence .Volume I. Fifth Edition. Victor

E. de Zavalía – Editor. Buenos Aires, 1981. Vol. I, Pp 114 – 141. 461 In accordance with the penultimate subparagraph of Art. 4, Art. 169, inter alia, of the Constitution. 462 “The rights and guarantees established in the Constitution and in international human rights

instruments shall be directly and immediately applicable to and before any public, administrative or judicial officer, ex oficio or at the request of a party.”

[CERT.GEOTEXT] 129

In addition to reviewing compliance with the above-cited principles, the Judge that weighs the evidence must verify, inter alia, the following: (i) that whoever requested evidence is a party to the proceedings (standing); (ii) that the evidence was requested and ordered within the respective evidentiary period; and (iii) that it was produced within the period that the judge in the case set for that purpose. Additionally, the Judge must analyze the formal and material validity of the evidence, in other words, if it complies with the norms applicable to each item of evidence, with special emphasis on those requirements relating to their completeness and probative validity.

It is inherent to exercising the right to evidence, and therefore also constitutes a necessary element for evaluating evidence, that the requesting and production of said evidence be subject to the principle of procedural “good faith and loyalty,” which not only means being subject to the limits of the Law and Morals, but also suffering the consequences for conduct that demonstrates recklessness and bad faith. This fact becomes especially relevant in this case, in which all procedural activity, from filing the complaint itself, to the ruling that is now under appeal, has been flawed due to the misconduct of the plaintiff, which is characterized, inter alia, by the production of fabricated evidence and a distorted presentation of the facts, with the unequivocal and already admitted intention of misleading the Courts and thus damaging my client, pursuant to the evidence which is already in the record.

The weighing of evidence is part of the procedure for formulating a judgment; it is subject to the rules of reasoning and entails a series of steps:

“Evaluating the evidence heard during a proceeding is certainly a complex operation, especially when interpreting norms, but that in no way authorizes affirming that the judge or court called upon to perform both of these tasks has in doing so authentic discretion, that is, an ability to choose that the legal system does not, of course, grant him.”463

Pursuant to the rules on reasoning of the judgment, the construction of the first premise of the syllogism constituted by the decision necessarily requires the logical and rational reconstruction of the factual background of the dispute. The first step in this process is the recapitulation, on the part of the Judge, of the points that caused the litis to be brought, which is none other than contrasting the claims made by the plaintiffs in their complaint with the objections made by the defendant in its answer.

Completely and specifically defining the terms that led to the dispute allows the Judge to define in his judgment the facts that must be proven by both the plaintiff and the defendant, which is nothing more than identifying the burden of proof. This identification allows the Judge to

[initials]

463 FERNANDEZ, Tomás – Ramón. On Discretion and Judicial Arbitrariness. Iustel, Portal Derecho S.A.,

Madrid 2005, 1st Edition . P. 92.

[CERT.GEOTEXT] 130

contrast it with the evidence available in the proceeding; that is, with the evidence requested by the parties and ordered by the Judge during the respective evidentiary period, which was in fact produced and is available in the proceedings.

Only when the Judge has exhausted the construction of the analysis which constitutes the premise for the factual background of the dispute can he then perform the subsequent analysis which relates to subsuming these factual elements in the legal hypothesis invoked by the parties, both in the complaint and in the answer to it, in order to determine whether or not it is pertinent and to interpret this right. He must first of all determine the pertinence of the proposed action, and then, if applicable, decide and rule on the merits thereof.

Article 114 of the Code of Civil Procedure determines each party’s obligation to “prove the facts [it] alleges,” that is, in conformity with Article 113 of the same Code, “facts that [it] has affirmatively alleged in the lawsuit, and that the defendant has denied.” In contrast to the above, it is in turn the obligation of the defendant “must prove his denial, if it contains an express or implied allegation regarding the fact, the right or the quality of the thing in dispute.” The second part of Article 114 of the aforementioned Code of Civil Procedure in turn determines that “[e]ither of the litigants can produce evidence about the facts alleged by the opposing party.” Furthermore, the second paragraph of Article 115 of the Code of Civil Procedure mandates that “In his ruling the judge must state his evaluation of all the evidence produced.” (Emphasis added.) Thus, according to the very statement made by the Judge below in the judgment handed down on February 14 at 8:37 a.m., he noted that he did NOT consider the report of Engineer Richard Cabrera (or the report of Dr. Calmbacher) in arriving at his decision, and therefore, for the pertinent legal purposes, by no means could the Judge below have considered, as he in fact did, the bogus ancillary expert opinions that were submitted based on the Cabrera report by ad hoc professionals on September 16, 2010, as a result of the rash, sui generis and unlawful order by Judge Leonardo Ordóñez for the parties to submit their briefs and arguments with respect to the monetary value of the “damage” allegedly sustained. In view of this fact, any extrapolation or tacit or implied acknowledgment of the Cabrera report or of the ancillary reports is entirely void of all legal and evidentiary value.

In conformity with the provisions of Articles 117464 and 119465 of the Code of Civil Procedure, the Judge must analyze the evidence in terms of its production; that is: if it has been requested, presented and examined in accordance with the Law. He must verify that the evidence is legally admissible, not only with respect to the procedural requirements relating to due process, such as that production of evidence requires notice to the opposing party (final part of the first subparagraph of Article 119 of the Code of Civil Procedure) or complying with the requirement to disclose the evidence (Article 120 of the Code of Civil Procedure466), but also with

[initials]

464 Art. 117: “Only evidence that has been properly taken, i.e., that has been requested, presented and

produced in accordance with the law, shall be valid in court.” 465 Art. 119: “Within a certain period of time, the judge shall order that all evidence presented or requested

within that time period be produced after notifying the opposing party.” 466 Art. 120: “All evidence is public, and the parties are entitled to attend the taking of evidence.”

[CERT.GEOTEXT] 131

respect to the merits and actual content of the evidence, must decide on the pertinence and suitability467 of the evidence for demonstrating the facts that are the subject of the dispute (Article 116 of the Code of Civil Procedure468).

“. . . Art. 120 (116) of the Code of Civil Procedure establishes: ‘Pertinence of the evidence.- The evidence must be limited to the matter being litigated and to the facts comprising the lawsuit.’ This means there would be an error in interpreting this legal norm, whenever the judge accepts as evidence and gives probative value to a fact that is not germane to the case or dispute.”469

Another verification of legal admissibility with respect to the production of evidence which the Judge must perform at the time of ruling, as part of the evaluation of said evidence, is to determine if such production was completed and/or if the proof is complete. The above is pursuant to the specific requirements prescribed by the Law with respect to each of the items of evidence set forth in Article 121 of the Code of Civil Procedure. In this case, we should note for the purposes of this lawsuit, the relevance of the provisions relating to performance of judicial inspections and expert examinations.

a) The Weighing of Certain Specific Evidentiary Items.

i. Documentary Evidence.

Documentary evidence, unlike other evidence, is assigned weight by law: that is, its value is regulated by substantive and procedural norms, which determine the requirements and formalities that both public and private documents must fulfill in order to be intrinsically valid, and to have probative validity.

The requirements for a document to be intrinsically valid, which are “the legal concepts of nullity or falseness of a public or private instrument” cannot be confused with “the probative force of the content of a valid and authentic instrument.”470

The weighing of documentary evidence, which occurs when the Judge renders his decision, will necessarily refer to the procedural norms contained in the Code of Civil Procedure, relating to public and private instruments, which are said to principally relate to the probative validity thereof, and must also refer to the substantive norms that determine the requirements and formalities relating to the validity of the acts that are implemented through said documents.

[initials]

467 DEVIS HECHANDIA, Hernando. General Theory of Procedure. Medellín, 1994, Biblioteca Jurídica

Dike, 13th Edition, Vol. 1. P. 57 (“evidentiary activity, objections or mere defenses and allegations are logically oriented around the claims, allegations, objections and defenses made in the proceedings.”).

468 “The evidence must be limited to the matter being litigated and to the facts submitted for the court’s decision.”

469 Decision No. 228-2004, Second Division, Official Register 548, 03-21-2005. 470 Jan. 28, 2000. Resolution 19, Official Register 27, 02-29-2000: “SECOND.- the appellant is confusing

the legal concepts of nullity or falsity of a public instrument with the probative force of the content of a valid and authentic instrument.”

[CERT.GEOTEXT] 132

The merger and documentary evidence: The Judge, when rendering his decision, failed to examine and weigh a large part of the documentary and testimonial evidence, especially the evidence proposed by my client, which constituted a violation of the mandate contained in Article 115 of the Code of Civil Procedure, relating to it being necessary to assess the evidence “as a whole”; a provision that must be interpreted in accordance with the terms of the final subparagraph of this same article, which furthermore obliges him to “[i]n his ruling the judge must state his evaluation of all the evidence produced.”

Without prejudice to the aforementioned omission, and the analysis I make in the following point regarding the reasoning for the decision, it is necessary to note that the judgment mistakenly invokes certain items of evidence, which the Judge used as the basis for deciding against Chevron.

The lower court judge invokes three types of evidence in his decision: documentary evidence, principally referring to the discussion of the supposed merger between Chevron Corporation and Texaco Inc.; the sui generis testimonial evidence, if this was the proper way to refer to the interviews with individuals who have a direct interest in the outcome of this case that were conducted at the request of the plaintiff during the judicial inspections; and, the judicial inspections and expert examinations.

Without attempting to go into a statement of the documentary evidence that was presented by my client, which the lower Court failed to examine and weigh, and which will be the subject of other separate considerations—it dismisses it as evidence without stating any reason to justify such dismissal, which in and of itself constitutes a valid and sufficient ground on which to base an appeal seeking to revoke the decision issued—I must refer to the Judge’s interpretation of the content of that part of the aforementioned documentary evidence that relates to the supposed merger between Chevron Corporation and Texaco Inc. This allegation was the subject of the correlated objection made in the answer to the complaint, which gave rise to the litigation with respect to this point. This objection has a necessary link to the principal objection established in the answer to the complaint, relating to the Ecuadorian judges and courts’ lack of jurisdiction over Chevron Corporation, as it is not domiciled nor has it operated in Ecuador, nor does it have any relation whatsoever to the facts that are the subject of the complaint.

The Judge below recognizes in clause THREE of the judgment that “. . . as they prove with the certificate on pages 230 and 231 (translation on page 225), the merger in reality occurred between Texaco Inc. and Keepep Inc.” (page 6 of the judgment). Additionally, after five more pages of analysis with the clear intention of distorting the aforementioned documentary evidence, the Judge, on page 11 of the judgment, after discussing the points which, in his opinion, would give rise to confusion with respect to the previous supposed merger between Chevron and Texaco, declares that “. . . any citizen, whether Ecuadorian or North American…would have inevitably arrived at the conviction that there was a merger between the two . . . . This announcement did not cause the confusion and in any case, it is presumed to be true…” Later on page 12 of the decision it is further stated that “. . . in addition to being a public and well-known fact . . . no further evidence of the merger is required . . . since its notoriety has been demonstrated . . .” (Emphasis added).

The notoriety that is provided for as proof in Article 27 of the Organic Code of the Judiciary, as the Judge below himself affirmed, requires evidence; that is, proof of the notoriety of the fact


alleged (“its notoriety has been demonstrated,”) it having been the Judge who, in addition to the evidence presented and the allegations made by the plaintiff, argued for and completed a series of operations to assess the evidence, including lifting the corporate veil, in order to conclude against express evidence that there is a merger which “does not result in confusion,” and that the same is the result of a clear fraudulent intention to damage the plaintiff (Emphasis added).

In the specific case of the judgment appealed from, the Judge failed to consider the certain fact, which is proven in the record, that Texaco eliminated the possibility of any doubt when it notified the plaintiffs and their attorneys in 2002, after the completion of the corporate act whereby Texaco merged with Keepep Inc., before this case commenced, that it had designated a proxy in Ecuador with sufficient power to be notified and answer complaints. Yet the plaintiffs, and their Ecuadorian and North American attorneys, having sufficient and ample knowledge of the facts, as the aforementioned merger was extensively discussed in the related suit brought by the plaintiffs before the New York Courts, which is invoked as background for the complaint itself, by their own decision and not due to any confusion, chose not to sue neither Texpet nor Texaco Inc., or the Petroecuador-Texaco Consortium, but only and exclusively Chevron Corporation, not due to any confusion, I repeat, but due to a procedural strategy which had no purpose other than to cause damage to my client, pursuant to the evidence in the record.

ii. Testimonial Evidence

In order to clearly analyze the “testimonial” evidence invoked by the Judge in his judgment, this point requires an initial analysis to legally differentiate between the evidence from witnesses that is provided for and regulated in Paragraph 4, Section 7 of Title One, Book Two of the Code of Civil Procedure (Articles 207 to 214), from the interviews conducted as part of the judicial inspections which, having the quality of testimonial evidence, must comply with the requirements provided for in the aforementioned norms, as stipulated in Article 244 of the same Code.

It should be noted that, in accordance with our legal system, testimony, as a general rule, is the only evidence that must necessarily be completed within the evidentiary period. Nevertheless, paragraph two of the aforementioned Article 244 of the Code of Civil Procedure considers as an exception to the rule the possibility that testimonies may be taken within the judicial inspection processes. This witnesses statement should necessarily be related to the matter which is sought to be proven through the judicial inspection, wherefore the Judge inspects during its completion. Trying to use the judicial inspection to take testimonies that are not related to the subject of said judicial proceeding would be distorting its very purpose and abusing process. Likewise, there are two possible ways to request such testimonies. The first, when they are requested and provided for within the “evidentiary period, after giving notice to the opposing party,” and which furthermore must be considered as independent evidence, must be drafted “separately,” that is, it will not come to form part of the certificate of judicial inspection, and “will be added to the record.” The second way is for the testimonies be requested and ordered as part of the actual


completion of the judicial inspection. These testimonies lack the aforementioned formalities and, according to practice, have been generally characterized as mere “interviews.”

We must note some of the requirements for the testimony to be fully valid: the probity and impartiality of whoever is giving it (Article 208 of the Code of Civil Procedure), on the one hand; and, on the other, the testimony being taken under oath, notifying the witness of the penalties for perjury (Article 230 of the Code of Civil Procedure.) It is clear that the “testimonies/interviews” mentioned in the judgment do not comply with the aforementioned requirements, as the Judge recognizes, whereby they are not items of valid evidence that the Judge below could have taken under consideration, which he nevertheless did, particularly as grounds to establish the contamination and impact on the health of residents which, according to Dr. Zambrano, exist in the former concession area.

The judgment, on pages 136 and 137, establishes that the document entitled “The Legacy of Texaco Wells and Stations,” prepared by Manuel Pallares and Pablo Yépez, has lost probative value due to the fact that its admissibility is unclear. However, it objects to the value of the testimony given by Pablo Yépez, since it adduces that it does not constitute a witness’ statement. In a manner that is also illogical, it leaves open the possibility of considering said document, which was challenged by the defendant and objected to by the Judge himself, as a source of statistical information, in order to then have the possibility of using it as most convenient for him, and in this way harming my client.

In reference to the document entitled “Study to determine the scope of the effects of contamination in the wells and stations drilled prior to 1990 in the fields of Lago Agrio, Dureno, Atacapi, Guanta, Shushufind, Sacha, Yuca, Auca and Cononaco,” the judgment while it does establish that this study was prepared under a contract with the Amazon Defense Front, which surely had some inter-institutional agreement with Petroecuador, since the document was printed on sheets with the logo of said public corporation, apparently accepts the defendant’s objection, since this fact makes it lose objectiveness; yet in the next line, as in the case of the previous document, the Judge literally states the following: “this Court does not accept this Report as effective proof of the facts [it] contains, but rather that [it] constitutes evidence to be considered with all of the rest.”

The Judge, on his own initiative and accord, subsequently decided to take into account these two documents for the purposes of determining the existence of damages, thereby contradicting his own statement that these documents are flawed by a lack of impartiality and objectivity, which makes them inept documents that cannot be used, whether as a pretext for statistical information, or as evidence of any kind. This conduct by the Judge below violates the principle of evaluation of evidence, since in these specific cases, he already evaluated the evidence and established that it was not pertinent to take it into account. The Judge states that it is not evidence, yet still proceeded to assess it as if it were evidence: he breaks the rule that only lawfully produced evidence may be evaluated by the Judge: “Only evidence that has been properly taken, i.e., that has been requested, presented and produced in accordance with the law, shall be valid in court.”471

Also illegal is the lower court judge’s practice with respect to the statements received during the judicial inspections: “This Court recognizes that all these testimonies mentioned before are not

[initials]

471 Art. 117 of the Code of Civil Procedure.

[CERT.GEOTEXT] 135

decisive and irrefutable evidence that there is a health problem among these citizens …,” yet despite this, going against all procedural norms with respect to the evaluation of the evidence, he concludes: “. . . however, they can’t be totally dismissed since we can observe the impressive coincidence between the facts described in all these statements, without a single statement or declaration to the contrary”; affirming in the next line that the “…Court will consider such statements, in accordance with sound judgment, and jointly with the rest of the scientific evidence that has been submitted by the parties. However, this Court is inclined to think that the coincidences in the testimonies corroborate what has been said . . .” (page 144). This is not sound judgment, but judicial arbitrariness.

Therefore, not only is the Judge making a contradiction, but there is also an assessment of a supposed fact based on a mere subjective appreciation, that is, in the words of the judge himself, of a supposition (“makes us think”) (the Judge below, and who else?) based on “coincidences.” It is a speculative analysis of the facts, on which the Judge has based his supposed convictions on items of evidence which do not exist in our legislation, apparently using the method of sound judgment, when in fact it is an analysis that has no logical basis and is even contradictory in and of itself.

The Judge below has invented his own methods of interpreting the disputed facts for the process of assessing documents and testimonies. He has committed possible malfeasance, because in using this absurd evaluation of the disputed facts, he has ruled against Chevron, under a supposed liability, which was likewise decided on in a speculative, false and abusive manner.

iii. Expert evidence.

Pursuant to Article 250 of the Code of Civil Procedure, expert evidence “is an auxiliary mechanism of the judge available for when he does not possess certain specialized technical knowledge.”472 As far as its probative value is concerned, we should point out that the expert does not create the evidence, but rather based on the facts presented, he clarifies the evidence presented to him so that the Judge may render his final interpretation,473 i.e., his conclusions are more relevant than the facts he receives, obtains, or presents.

The Judge, in what can be characterized as an aberration, has disregarded the expert reports, particularly those that relate to the judicial inspections, by affirming that:

“. . . [w]e cannot (who?) rely on what has been said by separate experts who have served as witnesses for the Court as called by the parties, since apart from

[initials]

472 OTEGA, Carolina Martell. LA PRUEBA PERICIAL.- CONCEPTO Y NATURALEZA JURÍDICA

[EXPERT EVIDENCE – CONCEPT AND LEGAL NATURE]. http://www.aeds.org/Congreso12/PONENCIASCOMUNCIACIONES%20LIBRES/Ponencias/Cominicaciones%20Libres/CarolinaMartelll htm

473 Expert Evidence [Prueba Percial]. http://derecho.laguia2000.com/derecho-procesal/prueba-pericial

[CERT.GEOTEXT] 136

contradicting one another, each expert demonstrates a different perspective with regard to the same moment in time” (pg. 81 of the judgment).

However, instead of requesting new expert opinions as provided for under Article 259 of the Code of Civil Procedure in the event of conflicting expert reports, or in the event of a lack of clarity of these reports due to contradiction between them, the Judge below decides to take on the role of a settling expert and/or make his own technical assessments, to conclude that Chevron is guilty of the accusations, stating:

“Under this framework we begin to examine the existence of alleged conflicting expert reports . . . since even their apparent contradictions—and the resulting discussions that have arisen—have served to better illustrate reality from the judge’s standpoint, thus it was not considered necessary to name a third expert, in that this could bring new disputes, rather than more clarity, to the process.” (pg. 38). (Emphasis added).

“9.2.- . . . EXISTENCE OF ENVIRONMENTAL DAMAGE.- having reviewed the separate expert opinions that were presented to the Court by different experts called by the parties and named by the Court, and also those that have acted, in their capacity as having been named by the Court without having been called by a party, it has been demonstrated that environmental damage, which has originated from petroleum exploration activities carried out over the life of the Concession, does exist, as explained below in evaluating the laboratory results of samples taken by the expert (sic). Prior to that we should clarify that this Court has not considered the conclusions presented by the experts in their reports because of conflict between them, even though they are based on the same reality; consequently each expert’s assessments and personal opinions have been disregarded while the technical content of the reports has been relied on, especially with regard to the previously cited results, in such a way that the judge has been able to form his own opinion, in accordance with the rules of fair criticism.” Pg. 94 (emphasis added).

It is true that Article 262 of the Code of Civil Procedure indicates that the “judge is not required to adhere to the experts’ opinion against his own convictions.” This principle, however, the origin of which has been studied and qualified in the ruling handed down by the Third Civil and


Commercial Division of the Supreme Court of Justice,474 which the Judge does well to cite only when it benefits him to abuse its rulings:

“It is worth demonstrating as well, that within the scope of this type of evidence, the Judge may even depart from the expert’s opinion.”

However, by not relying on the report, the Judge must set out his reasoning for not doing so: “the judge cannot arbitrarily depart from this (the report) which means that he must cite a sufficient basis for doing so.” 475

b) Characteristics of the alleged assessment of the evidence in the appealed judgment.- Absence of adequate justification:

In his judgment, the Judge proceeded to adjust his alleged justification to an outcome that was predetermined, decided, and announced by the plaintiffs even before it was released. Chevron’s guilt and the ruling against it had already been announced and were anticipated by each one of the acting Judges on multiple occasions, the most explicit of these being that formulated by Judge Ordóñez and taken up by Judge Zambrano, who rendered the decision by relying on and agreeing with the illegal argument by the plaintiffs set forth in the submission of March 24, 2010, at 4:38 p.m.476 Thus, in the ruling dated August 2, 2010, at 9:00 a.m., he ordered the parties to submit to the Clerk “a legal brief” which “sets out and formulates their positions as to the applicable economic criteria for remediation of environmental damages,” which amounted to, not just an anticipated ruling,477 but also an act of malfeasance with regard to Chevron’s responsibility. This ruling was merely a link in a chain478 of previous and subsequent

[initials]

474 NULLITY OF WILL. File 395, Official Register, Supplement 31, March 17, 2008. No. 395-06 Ordinary Proceeding No. 200-2004, brought by Elba María Regalado Pacheco, et. al., v. Silvia Cepeda de Santiana based on nullity and falsity of an open will. Supreme Court of Justice: Third Civil and Commercial Division.

475 ADRIAN DIAZ, Claudio. Authority of the Judge to Depart from Expert Opinion: Problems of Reasoning and Authority [La facultad del juez de apartarse del dictamen pericial: problemática argumentativa y del poder]. http://www.e-derecho.org.ar/congresoprocesal/La%20Facultad%20del%20Juez_CLAUDIO%20DiAZ.pdf

476 Subparts A, B, and C of the Petition, says, inter alia, “. . . a one-time period, which is not subject to extension, may be ordered so that the defendant may present the evidence which summarily proves the existence of alleged factual errors. . . . Upon expiration of the given period, consider the evidence and decide all petitions regarding factual error in a judgment . . . given my request that no further delays be permitted, Your Honor, and that you in turn commence this evidentiary period of three days . . . .” (emphasis added).

477 Numbers 1 and 5 of Art. 128 of the Organic Code of the Judicial Branch: “Art. 128.- Prohibition.- Judges are barred from: 1. Stating their anticipated opinion in any action they may be judging or are meant to judge,” . . . 5 “To unjustifiably put off or delay disposition of the proceedings under his jurisdiction.” In accordance with Art. 129, Number 3 of the same Code, “To decide any issue before him in strict observance of the terms established by law and subject to the principles and guarantees that guide the activities of the Judicial Branch.”

478 (i) decision dated March 12, 2010, at 2:20pm (“. . . the submissions which have been presented by the parties…shall be promptly addressed, . . . provided that they do not have an express interest in delaying the proceeding”); (ii) ruling dated July 27, 2010, at 10:00am (“Principally, it is established that on the day following notification, a 3-day period shall be commenced, during which the petitioner may summarily prove its arguments, given that it is incumbent upon the petitioning party to present its evidentiary basis, by documenting proof for each pending petition concerning factual error.”); (iii) decision dated July 29, 2010, at 5:00pm, (“. . . having established what is set out in decision dated July 27, 2010 at 10:00am…by clarifying that evidence shall be solely

[CERT.GEOTEXT] 138

decisions which were issued in violation of express legal provisions and which reflected the history of a decision that had already been announced.

In the justification of the judgment, the Judge has disregarded a substantial part of the evidence, choosing at his convenience only those that aid him in what could be termed “the factual premise” for the reasoning behind his ruling, when what he should have done was analyze all of the evidence produced (just the evidence, nothing more).

In establishing the grounds for his justification, i.e., “set[ting] out the legal principles upon which it is based and its…relationship to the factual background,” 479 the Judge chose to defend a priori the regulations cited by the plaintiffs as grounds for the complaint, and even others outside of the scope of the litigation, to later render an interpretation of these regulations that is consistent with said false conviction of guilt of my client. 480

The Judge, violating the principle of the integrity of evidence as set forth in article 115 of the Code of Civil Procedure, which as a first obligation with respect to weighing the evidence makes it incumbent upon him to “consider it in its entirety,” as well as the obligation of “expressing in

[initials]

and exclusively in the form of documents”); (iv) decision dated July 30, 2010, at 5:59pm, “that documents which merit inclusion pursuant to the order contained in decision dated July 27, 2010 at 10:00am shall be reproduced”; (v) decision of August 2, 2010 at 9:00am, (“within a 45-day period” “a legal brief” is to be presented to the Clerk of the Court which “sets out and formulates their positions as to the applicable economic criteria for remediation of environmental damages” “. . . without this being in any way construed as a confession . . . ”, “. . . this Judge, in relying on the interpretations in the executive decisions as alleged, and, in interpreting in this case as a legal brief . . . ”, “the judge is not required to adhere to, against his own judgment, the opinion of experts” Additional briefs which may be submitted by the parties and which are not related to the substance of this decision, shall not be relied upon because of their lack of value under procedural law, but rather, they will only be added to the record, since the judge is required to safeguard ethics in his decisions and to adhere to the provisions of Art. 169 of the constitutional framework.”; (vi) decision of August 3, 2010, at 3:00pm, apart from ordering that the briefs be added to the proceeding, and without ruling on the content and requests contained in the respective briefs, he ordered “. . . that the parties abide by the order contained in the relevant part of decision dated August 2, 2010 at 9:00am.”

Decision dated August 4, 2010, at 4:30pm, in which it was generally ordered that each of my client’s three (3) briefs, as cited therein, be incorporated into the proceeding, “. . . ordering that the parties abide by the order contained in the relevant part of decision dated August 2, 2010 at 9:00am.”

479 Subpart l) of Art. 76 of the Constitution. 480 FERNANDEZ, Tomás – Ramón. On Discretion and Legal Arbitrariness. Iustel, Portal Derecho S.A.,

Madrid 2005, 1st edition- Pgs. 97-98. “I find it important to emphasize that what I have already stated at the outset and that whatever the limits that assessment of the evidence, which is, obviously, not a mathematical equation, can offer the individual who undertakes that assessment, has nothing to do with discretion in the strict sense, which is foremost the freedom to choose one solution among several as the applicable law would first allow, a freedom which does not exist as such when formulating the factual premise behind the final argument, nor when specifying the legal premise, first through the selection, and then through the interpretation of the applicable law.” (emphasis added).

[CERT.GEOTEXT] 139

[the judgment] the weighing all evidence produced,”481 not only failed to invoke and ignored a substantial part of the evidence presented in the proceeding, but also, and which is more serious, he also failed to weigh such evidence.

As set forth hereinafter, the Judge below, instead of basing the judgment on the evidence presented in the proceeding and on the applicable law, manipulated these two premises from the syllogism inherent in a judgment and, invoking “reasoned judgment,” replaced these two elements with his own and very personal criteria, which he ultimately used to serve as the grounds for an arbitrary, illegal and illegitimate conviction decision, the result of which had already been announced before the sitting Judge had even requested the case file in order to issue a ruling only a few days prior to actually doing so, and completed the most impressive task of “reading” almost 210,000 pages of the case file in very few days. Surprising is the “ability” of the Judge below.

I should clarify that, in accordance with article 115 of the Code of Civil Procedure, contrary to the conduct adopted by Dr. Zambrano, “sound reasoning” is a method for weighing the evidence and not, as he has sought to do, a method in which “…cherry-picking among the facts…” which have been the subject of the evidence those “… which are more appropriate or best adapt to the decision which he has resolved to make, excluding the rest of the list of such facts which the Law requires him to weigh, without giving the least explanation of the consequent elimination…” This, in doctrine, is called “extreme arbitrariness.”482

It should be remembered that the Judge, even when invoking principles such as that of “reasoned judgment,” is prohibited from basing his decision on his “personal convictions,” (or based on the archaic personal conviction known as “intimate conviction,” whereby judges did not answer to anyone or explain to anyone the ground(s) for their decisions—which in theory could have even been based on the motives or intuition of the Judge or on his sympathy or aversion for one the parties, which could be true in this case), but rather he should do so based on the analysis of the terms under which the action is brought, and on the facts deriving therefrom, and which comprise the “thema probandum”; using such means of evidence which effectively demonstrate the facts alleged, that is, those facts which are duly established in the proceeding. The Judge should further base his judgment on the applicable Law, which must be selected and applied in accordance with the specific circumstances of each case, as the following doctrinal criteria tells us, which is based on a Spanish judgment of appeal:

“each judge or Court is responsible for verifying, in accordance with the allegations of the parties and the results of the evidence presented, the reality of the injurious fact and the conduct of, and attribution to the causal agent of the damage, determining the extent thereof with respect to the damage caused; and

[initials]

481 Art. 115 of the Code of Civil Procedure “Evidence must be evaluated as a whole, in accordance with the

rules of good judgment [sana crítica], without prejudice to the solemnities for certain acts to exist or be valid, as established by the substantive law.

In his ruling the judge must state his evaluation of all the evidence produced.” 482 FERNANDEZ, Tomás – Ramón. On Discretion and Legal Arbitrariness. Iustel, Portal Derecho S.A.,

Madrid 2005, 1st Edition, Pg. 95.

[CERT.GEOTEXT] 140

further to incorporate the facts in the regulations, selecting and interpreting the law applicable to the case, which implies, . . . to issue timely opinions, resolving the controversy existing between the parties in accordance with the law.” 483

In this regard, Couture states that “the Judge shall make his decision in accordance with reasoned judgment, and is not free to reason at will, at his discretion or arbitrarily. This form of action would not be reasoned judgment but rather free conviction.”484

In the judgment which is the subject of my appeal, the Judge omitted the first and fundamental step of weighing the evidence, that is “the conscientious examination of each of the items of evidence”; the only possible procedure which would have legitimately permitted him to “dismiss the improperly presented or non-pertinent evidence, and verify or compare the admissible evidence in order to draw the conclusions in the case.” 485

The judgment is not the product of the analysis and weighing of the evidence, nor of the application of the governing Law, but rather, to the contrary, the result of the case having been preconceived, in order to construct the discussion of the grounds which the Constitution and the Law require of him, the Judge not only selected the evidence which could be most useful to him for this purpose, but also substituted the application of the criteria of sound judgment which must be applied to the evidence, and used it as pseudo grounds to justify his own and personal criteria which in turn substituted for the evidence presented which is required to be weighed by him.

The Judge below not only dispensed with the evidence but in addition, he manipulated it. He eluded and failed to weigh each and every item of evidence in its entirety. Furthermore, in the particular case of the judicial inspections and the expert examinations, by omitting such weighing of the evidence he avoided declaring the nullity thereof since, with the exception of three specific cases (expert reports for sites Sacha 6 and Sacha 21, which were single reports that were not challenged for essential error, and Sacha 53 which was effectively resolved, the processing of said expert examinations having been exhausted), the performance of such examinations was not exhausted and for this reason they are lacking in evidentiary value, both because the pertinent expert reports are divergent and because, in multiple cases, the allegations of essential error were not addressed in the proceeding.

In accordance with article 117 of the Code of Civil Procedure, the reports of the judicial inspections and/or the expert examinations are lacking in evidentiary value, given that the completion of the procedural steps pertaining to their production and rebuttal was not permitted.

The Judge, instead of weighing the evidence and declaring the nullity of the expert reports, the production of which was not completed, took out of context the provisions set forth in

[initials]

483 FERNANDEZ, Tomás – Ramón. On Discretion and Legal Arbitrariness. Iustel, Portal Derecho S.A.,

Madrid 2005, 1st Edition, Pg. 99. 484 COUTURE, Eduardo J. Basics of Civil Procedural Law. Second Edition. Editorial Depalma. Buenos

Aires. 1951. pg. 174, 175 and 176. 485 3-X-2003 (Decision No. 261-2003, First Division, R.O. 262, 29-I-2004). Principles Relative to

Weighing the Evidence: Sound Judgment

[CERT.GEOTEXT] 141

the final paragraph of article 262 of the Code of Civil Procedure, 486 which refers to the requirement of “clarity” which is required in expert reports, and furthermore, without having ordered the legal remedy set forth in that regulation, not only did he fail to order the drafting of new reports, but also he qualified them in a general manner, without making any distinction whatsoever between the cases, as “biased.”

3. The Judge incorrectly concluded that the plaintiffs had legally proven the existence of damages in the operating area of the former Petroecuador-Texpet Consortium. Abuse of scientific and technical reason on the part of the lower court Judge

Despite what the Judge says in the judgment, the plaintiffs failed to provide legal proof of the existence of legally cognizable harm in the Concession area. The errors in the analysis by the Judge below when asserting the contrary are serious and numerous.

In the first place, the Judge below inexplicably based his findings on the fraudulent, biased and unreliable evidence presented by the experts nominated by the plaintiffs during the judicial inspections process, which the plaintiffs themselves have recognized was essentially defective. In fact, this evidence was the product of a fraud: undue pressure, procedural tricks and extreme distortion of the scientific method. As indicated below, neither this evidence nor any other evidence identified by the Judge below provides a basis for the conclusion that damages exist in accordance with the law.

Secondly, the attempt by the Judge below to identify the alleged contamination is a mockery of what should be a true legal and scientific analysis. In fact, after omitting the evidence that is valid and relevant to the dispute, the Judge below proceeded to scour the record for samples which allegedly support the plaintiffs’ version of the case. In this process, the Judge below misused samples which did not show the presence of contaminants to conclude that there was contamination, inflating from ten to one thousand times the results of the sampling, and inexplicably he failed (and in fact did not even attempt) to distinguish between the impacts caused by Petroecuador’s operations and the alleged impacts supposedly related to the activities of the former Consortium. The Judge below compounded his error by extrapolating the results of isolated samples from the sites of the former concession to the entire area, without considering that such extrapolation is not only legally unviable as a substitute for the effective verification of the harm, but also leaves out, as he did in the judgment, any possibility for determining causation, and consequently, an adequate legal determination of liability, since one cannot disregard the proven and relevant fact that Petroecuador has operated the concession area for the last 20 years.

To which sites and what data did the judge below extrapolate? The clear defect of this arbitrary approximation was made even more evident in the judge’s clarification of March 4, 2011, in which, addressing whether he had considered the documents submitted by Expert Barros, stated “and to Petroecuador’s participation at Well Shushufindi 89, mindful that the remediation of the new pits at that well is not covered by this judgment.” Then which pits did he consider in his

486 “If the judge does not find the expert report sufficiently clear, he may, on his own motion, appoint

another expert or experts to perform a new review. He may also ask the prior experts to turn over any data that he deems necessary . . . .”


calculation of 880 pits? Was this also left to the Amazon Defense Front to determine? The Judge did all of this without a scientific or statistical analysis that would allow him to conclude that such samples were representative. What was not inspected was not a part of the case, and any extrapolation of results, as analyzed previously, is legally improper. The judge may not invent evidence or reasons that are not scientific or technical.

Finally, even if the Judge below had valid results to identify the alleged contamination (which was not the case), the appealed judgment also fails with respect to the legal analysis performed, since the action brought by the plaintiffs required the Judge below not only to look for damage but further to establish that such damage represents a threat to persons. In fact, in accordance with article 2236 of the Civil Code, there must be evidence of “some threat to non-specific persons,” Neither the Judge below nor the plaintiffs established that the alleged contamination represented a threat to human beings, as stipulated in article 2236. In fact, the Judge below asserted that the TPH measurements did not provide any information with respect to toxicity. 487

In fact, the evidence in the case record conclusively demonstrates that there is no threat to human beings in connection with the environmental conditions in the area of the former Concession. This conclusion was the result of an exhaustive evaluation of the risk to human health, which used the almost 1,300 soil, sediment and water samples collected and analyzed during the judicial inspections. This evaluation shows that 97% of the samples did not contain hydrocarbons or metals at concentrations exceeding conservative health-based standards. The subsequent evaluation of the remaining 3% indicated that no person could reasonably be exposed to the chemicals in a manner which would result in a real health risk. Significantly, no confirmed excesses were recorded of the drinking water standards for any petroleum chemical agent which would demonstrate that the drinking water supplies had been impacted by petroleum operations.488 As a consequence, the evidence recorded demonstrates that no conditions exist which would expose the local residents to harmful concentrations of hydrocarbons or metals within the Concession area. For this reason, the judgment which asserts the opposite without basis must be revoked.

a) The plaintiffs have admitted that their evidence is inadequate

Because it is based largely on the reports from the experts proposed by the plaintiffs, the decision overlooks that the plaintiffs themselves acknowledged that their evidence was inadequate.

487 Decision at 101. 488 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area, attached as appendix to the Chevron’s rebuttal to the expert report by Richard Cabrera filed Sept. 15, 2008 at 2:14 p m., Record at 146424-146464.


On several occasions, Mr. Donziger described the “scientific” work of the plaintiffs as “spotty,”489 “screwy,”490 and greatly inferior to “the really tight science needed to win these cases.”491 In short, since the plaintiffs relied on annexes “from interested organizations, such as Oil Watch,” their [pieces of] evidence “are not seen as serious or trustable.”492

In the initial stages of the proceeding, the plaintiffs were also afraid that if the evidence submitted by the experts they had proposed was analyzed completely, “[a]ny analysis, even [if] signed by a scientist, has the potential of revealing more vulnerabilities than strengths.”493

The plaintiffs not only admitted that they lacked “tight science,” but also the most basic proof for establishing civil liability. For scientific and legal reasons, none of the reports submitted by the experts proposed by the plaintiffs are worthy of credence or prove any fact: they contain procedural and substantive errors and are also greatly affected by fraud. 494 Given this background, it was not surprising that, with respect to the Sacha 53 site, with respect to which conclusions were issued, the settling experts in large part agreed with the conclusions of the experts proposed by Chevron, and not with the experts proposed by the plaintiffs.495 In short, no value should have been given to the reports on the judicial inspections by the experts proposed by the plaintiffs, because of their countless flaws and defects.496 Nevertheless, the Judge below used them as the basis for his judgment. Likewise, the Court’s insinuation that Chevron’s nominated experts employed improper methods is unfounded and I reject it.497

[initials]

489 E-mail from Joe Berlinger to Mike Bonfiglio and Alyse Spiegel, dated January 28, 2008 at 2:08 p m.,

attached as Annex 6 to Chevron’s pleading filed on December 8, 2010 at 4:21 p.m. (JB-NonWaiver00092079 to 00092083).

490 Diary of Steven Donziger dated March 7, 2006, page 5, attached as Annex 1 to Chevron’s pleading filed on December 20, 2010 at 4:30 p m. (DONZ0027256).

491 Diary of Steven Donziger dated June 3, 2006, page 2, attached as Annex 1 to Chevron’s pleading from December 20, 2010 at 4:30 p.m. (DONZ0023089).

492 E-mails between Alejandro Ponce Villacís and Steven Donziger, dated March 14, 2006 and March 15, 2006 at 12:42 a m., attached as Annex 2 to Chevron’s pleading with intended filing on February 2, 2011 (DONZ00086332).

493 E-mail from Aaron Marr Page to Alejandro Ponce Villacís et al., dated October 1, 2006 at 7:31 a m., attached as Annex 2 to Chevron’s pleading with intended filing on February 2, 2011 (DONZ00041645).

494 See Chevron Motion to Strike Judicial Inspection Reports, filed Aug. 6, 2010 at 2:30 p m., at 1-2, 5; Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p.m. §§ 2–3.

495 See Chevron’s Alegato filed on Jan. 6, 2011 at 5:55 p.m. in § 3.3.1. 496 See Chevron Motion to Strike Judicial Inspection Reports, filed Aug. 6, 2010 at 2:30 p m at 1-2, 5..;

Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p m. §§ 2–3. 497 MACKEY, Pedro Alvarez, HINCHEE, Robert. Evaluation of Chevron’s Sampling and Analysis

Methods [Evaluación de los Métodos de Muestreo y Análisis de Chevron], attached as Annex 6 to Chevron’s filing of Oct. 23, 2006 at 8:25 a.m., Record at 121776-121793..

[CERT.GEOTEXT] 144

b) The Judge below is mistaken in stating that contamination exists in the former Concession area

The sweeping conclusions of the Judge below regarding the alleged contamination in the former Concession area are not based on actual information or evidence. Considered appropriately, the evidence shows conclusively that there is no health risk associated with the environmental conditions in the former Concession area. A detailed evaluation of the health risk, in which almost 1300 soil, sediment and water samples taken and analyzed during the judicial inspections were used,498 has shown that:

• Approximately 97% of the samples analyzed (1257 of 1297) did not show concentrations of hydrocarbons or metals above the health-based conservative screening criteria, which indicates that there is no risk to local residents, regardless of the possibility of exposure in those places. This included 970 of the 996 soil and sediment samples, and 287 of the 301 water samples.

• Only 3% of the samples (40 samples from 18 sites) had to be further evaluated in order to determine possible exposure pathways, beyond the initial screening of metals and hydrocarbons. This more detailed evaluation indicated that it is not possible for anyone to be reasonably exposed to the chemical substances at those sites in a manner that could pose a health risk. Chronic exposure of residents at those specific sampling points is unlikely given that access to the site is controlled by Petroecuador, the location of the contaminants is remote, or due to other similar factors.

• Of that 3% of the samples (40) that had to be further evaluated, it was determined that the source of contamination in at least 85% (34) corresponds to Petroecuador’s facilities. The source of contamination from Petroecuador included recent leaks and spills, as well as open pits used by Petroecuador, particularly at the production stations. The other 15% (6) of the samples were not related to oil discharges but were due to metal concentrations of natural origin or sources unrelated to oil (given that no hydrocarbons were detected in the samples).

• None of the 149 samples taken from sources of drinking water (including water wells, municipal water supplies and surface water used as water for consumption) reported that the drinking water quality guidelines had been exceeded for any petroleum

[initials]

498 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area, attached as an appendix to Chevron’s rebuttal to the expert report of Mr. Richard Cabrera, filed Sept. 15, 2008, at 2:14 p.m., Record at 146424-146464 (146426).

[CERT.GEOTEXT] 145

chemical, which indicates that the oil operations did not affect the supplies of drinking water.499

This comprehensive evaluation of the judicial inspection data clearly shows that there are no conditions in the Concession area that could cause the local residents to be exposed to harmful concentrations of hydrocarbons or metals.

However, the Judge below disregards this evaluation and, instead, he prefers to favor the plaintiffs’ baseless hyperbolic claims. In fact, when the Ecuadorian standards in force [during the Consortium] were applied to the evidence collected and analyzed by the experts nominated by Chevron, using reliable scientific methods, the evidence in the record shows that the conclusions of the Judge below regarding contamination attributable to TexPet are erroneous and unfounded.500

c) Analysis of the conclusions of the Judge below regarding the chemicals

The judgment claims to base its conclusions on health and the environment on an evaluation of the presence of contaminants in the soil of the former concession area.501 In doing so, the judgment makes significant errors in describing and evaluating the evidence relating to specific contaminants allegedly found in the soil of the former concession area, which the judgment attempts to link to alleged health impacts, calling these compounds “dangerous elements that must be monitored and, eventually eliminated.”502

Among the numerous examples of errors in the judgment are the following. Mercury: In perhaps its most egregious error, the judgment claimed to find “alarming levels of mercury,” 503 in samples where the laboratories reported that no mercury was found.504 In fact, although the plaintiffs’ nominated experts analyzed a total of 40 soil and 19 water samples for mercury;

499 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area, attached as an appendix to Chevron’s bebuttal to the expert report of Mr. Richard Cabrera, filed Sept. 15, 2008, at 2:14 p.m., Record at 146424-146464 (146426-146427).

500 See also e.g., Chevron’s Alegato filed Jan. 6, 2011 at 5:55 p.m., § 7; Chevron’s Motion filed Sept. 16, 2010, at 4:35 p m.; Chevron’s Motion filed Oct. 29, 2010 at 5:20 p m.

501 Decision at 101. 502 Decision at 107. 503 Decision at 109. 504 GRANDES, Xavier. Expert Report from the Judicial Inspection Performed at the Lago Agrio North

Production Station. August 22, 2005. See Annex 5: Report of Analytical Results, [PAGE 168]; ROBALINO , José. Expert Report from the Judicial Inspection at the Sacha Central Station. November 18, 2005. See Annex D: Laboratory Results; GRANDES, Xavier. Expert Report from the Judicial Inspection Performed at the Shushufindi 08 Well. August 25, 2005. See Annex 8: Report of Analytical Results, at 131.


mercury was never detected in any of their samples.505 Benzene: Contrary to the statement in the judgment,506 the plaintiffs’ nominated experts never detected benzene in any sample (soil or water).507 Moreover, although the judgment claimed that concentrations of benzene found by experts nominated by Chevron were “alarming,”508 it ignored the evidence that the few samples it described were taken from the site of a recent Petroecuador spill,509 and from a pit constructed by Petroecuador in 1995, well after the Consortium and its operations ended.510 Barium: The judgment incorrectly speculates about the possibility that barium “can cause effects harmful to health and even could cause cancer,”511 even though it “lack[ed] studies” evaluating the health effects of barium.512 However, there are numerous scientific studies in the record demonstrating that barium sulfate (barite), the form of barium used by the petroleum industry as a drilling mud additive, is not toxic.513 Contrary to the Court’s unsupported speculation about the risks of barium, the evidence in the record shows that the U.S. EPA has concluded that “barium sulfate is essentially non-toxic to humans and other species of mammals . . . . [It] cannot reasonably be anticipated to cause acute or chronic toxicity in humans or adverse effects in the environment.” 514 Toluene: The judgment also claimed to identify ten samples of toluene “show[ing] the dangerous presence of this polluting agent and the urgent need to remove it from the Concession area.”515 But the Judge below erred in stating that two samples collected by the plaintiffs’ nominated experts showed concentrations of 1 mg/kg, and 5 mg/kg of toluene,516 when in fact the laboratory reports state that the laboratory could not detect any toluene

505 GRANDES, Xavier. Expert Report from the Judicial Inspection Performed at the Lago Agrio North

Production Station. August 22, 2005. See Annex 5: Report of Analytical Results, at 168; ROBALINO, José. Expert Report from the Judicial Inspection at the Sacha Central Station. November 18, 2005. See Annex D: Laboratory Results; Xavier Grandes. Expert Report from the Judicial Inspection Performed at the Shushufindi 08 Well. August 25, 2005. See Annex 8: Report of Analytical Results, at 131; GRANDES , Xavier. Expert Report from the Judicial Inspection Performed at the Shushufindi 67 Well. July 15, 2005. See Annex 8: Report of Analytical Results, at 164.

506 Decision at 108. 507 CAMINO, Edison. Expert Report from the Judicial Inspection at the Sacha 51 Well. April 27, 2005. See

Laboratory Reports Annex; and DAVILA, Oscar. Judicial Inspection of the Shushufindi Southwest Station. Feb. 28, 2005. See Annex C: Laboratory Results.

508 Decision at 108. 509 BIANCHI MOSQUERA, Gino. Report from the Judicial Inspection of the Sacha 13 Well. August 23,

2005. 510 BJORKMAN, Bjorn. Report from Expert Bjorn Bjorkman, M.S. Judicial Inspection of the Sacha North

2 Station. May 3, 2006. 511 Decision at 111. 512 Id. 513 Technical appendixes submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert

Report: Appendix A.12 Bioavailability and Ecotoxicology of Barite in Terrestrial Ecosystems. 514 Publication entitled: “Barium Sulfate; Toxic Chemical Release Reporting Community Right-to-Know,”

40 CFR Part 372, Federal Register, (June 10, 1993) 58, No. 111, 32622-32628. 515 Decision at 108. 516 Id.


in these samples.517 The judgment also failed to address the evidence that, setting aside one sample taken from a Petroecuador spill,518 the next highest concentration of toluene measured by either party in the former concession area was more than 2,300 times less than the health-based soil screening guidance for toluene, based on U.S. EPA guidance documents.519 Chromium VI: The Judge below claims that the plaintiffs’ nominated experts identified dangerous levels of Chromium VI in soil,520 but as was clearly shown in the evidence, more than 98% of the test results submitted to the Judge below by the plaintiffs’ experts and cited in the judgment were for total chromium—a naturally-occurring element in all soils which poses no significant health risk. Furthermore, when the plaintiffs did test for Chromium VI using the proper analytical methods, they either did not detect any Cr VI, or found it in only miniscule quantities. And, when citing the few valid Cr VI data points collected by plaintiffs, the judgment reports values that are 1000 times higher than what the laboratory actually found.521 Lead: The judgment stated that an analysis of the judicial inspection results demonstrated that “lead poisoning is a real risk.”522 The evidence submitted to the Judge below, however, indicated that only one soil sample exceeded current Ecuadorian standards for lead in agricultural soils of 100 mg/kg, and no hydrocarbons were present in this sample, indicating that the source of lead was not petroleum operations. 523 Cadmium: The judgment states that with respect to cadmium, “the 151 results between 1.003 and 315.79 mg/Kg are indeed dangerous.”524 But the Judge below ignores the evidence that Oriente crude oils and produced water contain only trace amounts of cadmium, meaning that any high concentrations of cadmium found cannot be attributable to oil

517 Dávila, Oscar. Report from Expert Dávila, Geologist, Judicial Inspection of the Shushufindi Southwest

Station. Feb. 28, 2005. See Annex C: Laboratory Results, Record at 52057-52058; and Camino, Edison. Expert Report from the Judicial Inspection at the Sacha 51 Well. April 27, 2005. See Laboratory Reports Annex.

518 Bianchi Mosquera, Gino. Report from the Judicial Inspection of the Sacha 13 Well. August 23, 2005. 519 McHugh, Thomas. Water and Soil Quality Criteria for Evaluation of Environmental Data from the

Judicial Inspections. Technical Appendix (A.4) submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert Report. September 15, 2008. The sample in reference had a toluene concentration of 0.28 mg/kg in pit 4 of the Shushufindi 48 Well. The U.S. EPA level is 650 mg/kg.

520 Decision at 110-111. 521 PROCTOR, Deborah. Refutation of Mr. Cabrera’s Statement Regarding the Presence of Total and

Hexavalent Chromium at Oil Exploration and Production Sites in Ecuador. Statement Related to the Lawsuit of Maria Aguinda et al. against Chevron Corporation. September 15, 2008.

522 Decision at 109-110. 523 MCHUGH, Thomas. Water and Soil Quality Criteria for Evaluation of Environmental Data from the

Judicial Inspections. Technical Appendix (A.4) submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert Report. September 15, 2008.



production.525 The judgment also failed to address the evidence that virtually all (99.4%) of the cadmium concentrations in soil and sediment samples collected by all parties were lower than naturally-occurring background levels in soils in the Oriente (0.02-3.3 mg/kg cadmium). 526 PAHs: The judgment incorrectly states that Chevron’s nominated experts never tested for PAHs.527 Chevron’s nominated experts analyzed more than 900 soil samples and more than 300 water samples for individual PAHs and reported all of these analytical results to the Judge below, which is on record in the case file.528 These experts’ samples confirmed that PAHs are not present in water above any U.S. EPA or WHO drinking water standard, and that aside from a few areas contaminated by Petroecuador’s existing operations, PAHs present no health risk in soil.529 The judgment ignores all of these results.

The Judge below also stated that 54 samples from experts nominated by the plaintiffs showed concentrations of PAHs between 1.1 and 3142 mg/kg, 530 but, as my client has repeatedly explained, the plaintiffs reported PAH data that their laboratory could not actually have measured using their equipment or analytical methods, and yet the judgment ignored this evidence.531 Finally, the judgment claimed that plaintiffs’ experts found soil samples containing 876 to 3142 mg/kg PAH at the Auca 1 and Cononaco 6 wells,532 but the laboratory reports

525 DOUGLAS, Gregory. BTEX, Polycyclic Aromatic Hydrocarbons, Content of Trace Metals and

Properties of Crude Oil from Ecuador. Technical Appendix (D.1) submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert Report. September 15, 2008; NEFF, Jerry M. Formation Water, Characterization and Toxicity. Technical Appendix (D.9) submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert Report. September 15, 2008.

526 MCHUGH, Thomas. Background Values of Heavy Metals in Soil. Technical Appendix (F.1) submitted to the Court with Chevron’s refutation of Richard Cabrera’s Expert Report. September 15, 2008.

527 Decision at 109. 528 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area. September 15, 2008, at 54. 529 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area. September 15, 2008, at 59-61, 70-80. 530 Decision at 108-09. 531 DOUGLAS, Gregory S. Assessment of the Validity of the Analytical Data of the Experts Nominated by

the Plaintiffs during the Judicial Inspections. Sept. 15, 2008, at 18-20. 532 Decision at 109.


actually indicate that these samples contained 0.876 to 3.142 mg/kg PAH,533 1000 times less PAH than erroneously reported in the judgment.

Total petroleum hydrocarbons (TPH) have been the centerpiece of the plaintiffs’ claims throughout the proceedings. However, the judgment concedes that TPH is not an indicator of health risks, and concedes that almost 80% of all the soil samples collected during the Judicial Inspections show concentrations below 1000 mg/kg TPH and more than 90% are below 5000 mg/kg TPH.534

The judgment engages in minimal discussion of surface water and groundwater evidence, but nonetheless concludes that “[t]he surface water for human consumption has suffered a considerable impact because of the dumping of at least 16 billion gallons of formation waters during the operations of Texpet” (once again adopting an unproven claim by the plaintiffs) and that “[t]here exist risks of leaks from the pits that could affect the groundwater.”535 There is no evidence in the record, however, that supports this statement. In fact, the evidence that the Judge below claims to rely on to establish contamination of surface water, the Bermeo expert report,536 actually detected no hydrocarbons (TPH or PAHs) in any surface water samples.537 Expert Bermeo also found no metals in concentrations above any U.S. EPA or WHO drinking water standards.538 The judgment ignores these facts. The judgment also ignores the record evidence which proves that my client sampled surface waters (rivers, streams, springs) as part of the judicial inspection process, and 98% (173 of 175) of those sampling locations met the standards for hydrocarbons in drinking water established by the WHO and U.S. EPA.539 The only two sampling locations where surface water impacts were observed (i.e., streams with elevated

[initials]

533 VILLACRECES, Luis. Expert Report for Site Inspection of Auca-01, Mar. 23, 2007. See Annex C:

Laboratory Report; Expert Report for Site Inspection of Conoaco-06, Mar. 26, 2007. See Annex C: Laboratory Report,).

534 Decision at 102-103. 535 Decision at 125. 536 Decision 112. 537 BERMEO Sarmiento, Jorge. The Art and Methods of Fishing Used in the Eastern Oil Region of the

Ecuadorian Amazon. Use of dynamite and muellin as fishing methods. November 17, 2009, at 43. 538 BERMEO Sarmiento, Jorge. The Art and Methods of Fishing Used in the Eastern Oil Region of the

Ecuadorian Amazon. Use of dynamite and muellin as fishing methods. November 17, 2009, at 38-42, and Chevron’s motion filed Nov. 26, 2009 at 5:39 p.m., at 4-6,.

539 CONNOR, John A. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E. Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador. Sept. 16, 2010, at 28-29.

[CERT.GEOTEXT] 150

salinity or petroleum hydrocarbon concentrations) were associated with on-going Petroecuador spills or leaks.540 The judgment considers none of this evidence.

The judgment also provides no basis for any claim that groundwater is contaminated, other than speculation that TPH sample results “gives us a good indication that the pits are a potential source of hydrocarbon contamination of groundwater.”541 The judgment ignores the extensive evidence in the record. All of the sampling of the drinking water wells in the area of the former Consortium operations show, contrary to the Court’s speculation about the “risk of leaks from pits,” 542 that there has been no impact on groundwater from oil production. 543 Moreover, published studies about the risks posed by weathered crude in Ecuadorian soils concluded, again contrary to the Court’s speculation, that “Ecuadorian crude oil impacted soil is unlikely to result in dissolved concentrations [of petroleum in groundwater] that exceed health-based goals.”544

Finally, the judgment ignores the evidence, submitted by my client, demonstrating via a comprehensive public health risk assessment that there are no public health risks related to drinking water from petroleum exploration and production activities in the former concession area, based on the results of over 7,000 analyses from 253 drinking water sampling events conducted by Chevron and others in the Northern Oriente region of Ecuador.545

d) The judge improperly gave weight to the samples collected by the plaintiffs’ experts, while ignoring evidence in the record that these samples were improperly analyzed by an unaccredited laboratory.

Moreover, though the Court ordered all experts to use only duly accredited laboratories to analyze their samples, the laboratories selected by the plaintiffs’ experts lacked the requisite accreditation to perform the

[initials]

540 CONNOR, John A. Expert Opinion of John A. Connor, P.E., P.G., B.C.E.E. Regarding Remediation

Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador. Sept. 16, 2010, at 28.

541 Decision at 117. 542 Decision at 125. 543 MCHUGH, Thomas. Answer to Mr. Cabrera’s Allegations in Relation to Risks to Public Health tied to

Hydrocarbons and Metals in the Area of the Petroecuador-Texaco Concession, Sept. 15, 2008. 544 O’REILLY, K. and THORSEN, W. Impact of Crude Oil Weathering on the Calculated Effective

Solubility of Aromatic Compounds: Evaluation of Soils from Ecuadorian Oil Fields, Soil and Sediment Contamination, 19:391-404. 2010.

545 BELLAMY, William D. Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, Sept. 29, 2007.

[CERT.GEOTEXT] 151

requested analyses. 546 For example, the plaintiffs’ primary laboratory, HAVOC, analyzed seventy-six percent of all the plaintiffs’ samples, and it was the only laboratory that participated in the sample analysis at thirty-one of the forty-one sites where the plaintiffs’ experts collected samples and reported data.547 Yet HAVOC had no accreditation for the types of analyses it conducted on samples for any of the thirty-one sites.548 In fact, the plaintiffs themselves were seen conceding in the Crude outtakes that HAVOC lacked the necessary credentials,549 which likely explains why they blocked—using admittedly “dirty” 550 tactics—all efforts by the Twentieth Civil Court of Pichincha and Chevron to inspect that laboratory.551

Furthermore, the TPH method that HAVOC and plaintiffs’ other laboratories used to analyze samples provided an inaccurate measure of TPH from petroleum, and is prone to false positive results indicating the presence of petroleum where there is none, especially in water samples. HAVOC’s data also failed a double-blind study and “chemical reasonableness” testing for metals and PAH, which means that its data showed random patterns of results where specific linear relationships should have existed. These failures mean that HAVOC’s data was either entirely fabricated or represented analytical or reporting errors, rather than valid analytical results. One of the plaintiffs’ experts admitted that HAVOC did not have the equipment necessary to analyze PAHs, but knowing this, submitted the improper data anyway.

In its decision, the Court makes a failed attempt to resolve this issue by comparing HAVOC to the Severn Trent Laboratories in the United States used by Chevron.552 Noting that the plaintiffs argued that Severn Trent lacked Ecuadorian accreditation, the Court concludes that “justice cannot be served if the samples are found to be invalid based on these formal objections.”553 The Court’s conclusion, however, is incorrect. First, HAVOC not only did not have Ecuadorian

[initials]

546 Chevron Motion to Strike Judicial Inspection Reports at 22-25, filed Aug. 6, 2010 at 2:30 p m.. 547 Chevron Motion to Strike Judicial Inspection Reports at 25, filed Aug. 6, 2010 at 2:30 p.m.. 548 Chevron Motion to Strike Judicial Inspection Reports at 25, filed Aug. 6, 2010 at 2:30 p.m.. 549 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of

his Sampling and Analysis Programs attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148210; see also Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p m. (CRS 068-00-02).

550 See Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 052-00-5).

551 Chevron’s Oct. 19, 2006 Press Release, For the 6th Time the Judge is Impeded from Carrying out the Judicial Inspection, attached as Annex 2 to Chevron’s filing of Mar. 13, 2007 at 5:15 p.m., Record at 126743-127041, 126968-70.


[CERT.GEOTEXT] 152

accreditation; it had no accreditation. In this respect, HAVOC was fundamentally different than Severn Trent, which was accredited in the United States. Moreover, as discussed, the issues raised by Chevron went well beyond the mere lack of accreditation and centered on the specific technical failures of the HAVOC lab. The Court does nothing to address these issues because, apparently, they cannot be justified.

e) The Judge below inappropriately ignored matters concerning the culpability of third parties.

The judgment fails to take into account Petroecuador’s activities in the former Concession area, beginning from the time TexPet exited the Consortium and continuing through today. Instead, the Judge below dismissed any evidence showing that any existing contamination is recent and that the culpable party is Petroecuador, the government’s oil exploration company, basing this dismissal on the flawed procedural argument that this evidence cannot be reviewed because there is no claim against Petroecuador and it is not party to these proceedings.554 From the procedural point of view, that meant, as my client submitted, that the joint defendant was not properly constituted and, therefore, the trial could not continue. But even in the case that the trial could continue against my client alone, which is not accepted, when analyzing the causal relationship, the chain of causality, the Judge below was simply not entitled to disregard, ignore, overlook the true fact that the oil operation in the area of the former Consortium has been in the hands of Petroecuador for the last twenty years.

It is neither reasonable nor admissible to ignore the most obvious source of any damage, and this shows the arbitrariness of the Judge’s appraisal of the causal link. The court completely ignored evidence that shows that the pits, wells and production stations situated within the area of the former concession have been under the sole control and responsibility of Petroecuador since 1992, when the activities of the Consortium came to an end.555 The Judge below also ignored various expert reports which found that Petroecuador was responsible for the contamination and spills in the region.556 Furthermore, it completely ignored evidence that in the nearly twenty years since TexPet ceased to be involved in oil activities in the former concession, Petroecuador has aggressively pursued its oil exploration activities in the area. It is on record in these

[initials]

554 Decision at 19. 555 Certificate of Delivery and Acceptance of the Petroecuador-Texaco Consortium Operations of Nov. 25,

1992, filed April, 27, 2004 at 2:38 p.m., Record at 7227-7256v (7234). 556 See, for example, Expert Report of Adriana Enríquez on the Palanda production station, filed June 24,

2007 at 8:15 a m., Record at 130605-130639 (130616, 130627); Expert Report of Adriana Enríquez on the refinery at Shushufindi, filed Sept. 24, 2007 at 5:00 p m., Record at 132684-132791 (132717); Expert Report of Luís Alberto Villacreces Carvajal on the Judicial Inspection of Lago Agrio Central, filed Sept. 6, 2006 at 4:40 p m., Record at 119320-119503 (119327).

[CERT.GEOTEXT] 153

proceedings that Petroecuador has more than doubled the number of oil wells of the former concession, drilling more than 41 wells since 1990 at a cost of over US$ 1.2 billion.557

In support of its extensive drilling activity, Petroecuador has constructed over 277 pits within the area of the former concession,558 almost ninety percent of which have been built on the platforms of the wells operated by the former Consortium, and not on the platforms of the recently-drilled wells.559 Petroecuador used these pits to bury large volumes of drilling muds and other waste produced by its oil field activities, mainly in the Guanta, Shushufindi and Sacha fields, which also implies that with these activities Petroecuador, voluntarily or involuntarily, has created an uncertainty in the process as regards the causality theory, since the specified actions, as they had been carried out in the sites where the former Consortium operated, could be erroneously attributed to TexPet.560 In addition to constructing new wells and installations, Petroecuador has actively operated the fields and installations existing within the area of the former concession. As recently as 2009, Petroecuador repaired or reconditioned 250 wells.561

Despite its investment in new infrastructure, Petroecuador has invested little in improving its environmental practices or in the basic maintenance of oil field equipment, which has led to frequent spills of crude oil from old, poorly-maintained and corroded pipes.562 Some of the company’s senior managers have confirmed that after 1992, when the concession became the sole property of Petroecuador, the Government took over the budget and no longer allocated sufficient funds for the maintenance of the existing infrastructure.563 In fact, between 1993

[initials]

557 Annex B of the Report Environmental Impacts Related to Petroecuador’s Defective Operating

Practices, attached as Appendix A to Chevron’s Rebuttal to the first Barros Report filed Jan 14, 2010 at 5:55 p m., Record at 164471-164473 (164473) [hereinafter “Petroecuador Impacts Report”].

558 Petroecuador Impacts Report, Attachment I, filed as part of Appendix A to Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p m., Record at 164528-164533 (164532-164533).

559 Petroecuador Impacts Report, Attachment I, filed as part of Appendix A to Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p m., Record at 164528-164533 (164529); see also id., Attachment G, Record at 164502-164519 (164510) (photos of Petroecuador discharging drilling waste in unlined pits at former Consortium sites).

560 See Petroecuador Impacts Report, Attachment I, filed as part of Appendix A to Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164528-164533 (164532-164533).

561 Id. at 3. 562 See Petroecuador Impacts Report, Attachment H, filed as part of Appendix A to Chevron’s Rebuttal to

the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164521-26, 164526 (register of spills in the former Concession area from 1992 to 2009).

563 Petroecuador is Going Through a Second Crisis, Diario Hoy, dated Feb. 6, 2006, filed as Annex 7 to Attachment I of Appendix A to Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p m., Record at 164795-164796 (164796) (reporting statements by the former Vice Presidents of Petroecuador and Petroproduction); see also the Deposition of Ricadro Reis Veiga on Dec. 23, 1998, at ¶ 10, filed as Annex A to Chevron’s Rebuttal to the first Barros Report, filed Jan. 14, 2010 at 5:55 p.m., Record at 164828-164832 (164831).

[CERT.GEOTEXT] 154

and 2003, Petroecuador spent less than one per cent (1%) of its budget on environment, health and safety.564 This figure from the early years has persisted in more recent budgets.565

Between 1992 and 2009, independent news media in Ecuador reported spills attributable to Petroecuador of approximately 4.6 million gallons of crude oil,566 which has impacted rivers and watercourses throughout the region. These facts have been properly entered into evidence in this trial. Indeed, on March 15, 2010, Petroecuador published an advertisement in several leading national newspapers that showed that between 2005 and 2008 the company was responsible for 175 spills. Its own records show that of the 1,415 significant oil spills which Petroecuador recorded between 2000 and 2008 alone, 565 (forty percent) were due to corrosion, 128 (nine percent) to operator error and another 240 (seventeen percent) to equipment failure, which means that sixty-six percent of these spills could have been avoided with better equipment, maintenance and staff training.567 But despite all this evidence, the court ignores Petroecuador’s liability in order to place the blame for the area’s environmental conditions solely on Chevron.

4. The analysis of causality in the appealed ruling misapplied the Law and ignored the absence of proof of causality.

The Supreme Court (now the National Court) of Justice has held that, for there to be civil liability in a matter of tort liability, there must be, and it must be proven at trial, direct and necessary causality between the alleged damage and the alleged causal action.568 That did not happen in this case. The plaintiffs could not establish causality because, as described above, they did not prove any damage, wherefore the determination of causality becomes impossible and

[initials]

564 Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010 at 5:55 p m., Record at 164426-

164459 (164446) (citing the Petroecuador Report (2007) and the Office of the Comptroller General of Ecuador Report (2005)).

565 Id. 566 See Petroecuador Impacts Report, Attachment H, filed as part of Appendix A to Chevron’s Rebuttal to

the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164521-26, 164526 (register of spills in the former Concession area from 1992 to 2009).

567 See Petroecuador evaluates environmental damages caused by crude, El Universo, Feb. 28, 2009, filed as Annex 8 to Attachment I of Appendix A; Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164797-98 (164798).

568 See Ruling of the Supreme Court of Justice, First Civil and Commercial Division, August 29, 2001, published in the Gaceta Judicial [Judicial Gazette], series XVII, number 7, p. 1853 (“There should be a relationship of causality between such culpable actions and the damage.”).

[CERT.GEOTEXT] 155

unnecessary. However, in any event, the judgment erred in two ways when it held that the plaintiffs had satisfied the element of causality. First, it misinterpreted and capriciously applied erroneous criteria in evaluating the relationship of causality. Second, in accordance with the law, the plaintiffs’ claims failed and should not have succeeded because they did not introduce evidence to support the relationship of causality. For both reasons, the lower court’s decision should be revoked.

a) The ruling misinterpreted and erroneously applied the Law with respect to causality.

Doctrine and case law in civil matters are consistent in establishing that causality requires the existence of a necessary and direct relationship between the action and the damage.569 These two characteristics emphasize two basic elements of causality: the empirical relationship between a damage and an action, and the normative aspect according to which there should be sufficient proximity – that is to say, a significant and not just accidental relationship between the damage and the actions of the accused in order to attribute liability to it. This need for proximity is also consistent with article 1574 of the Civil Code, which establishes the obligation to answer only for damage that is an “immediate or direct” consequence of failure to comply with an obligation. 570 Therefore, “the purpose of the relationship of causality is to specify that the harmful result is nothing more than a direct and necessary consequence of a circumstance (action or omission) attributable to a specific person. . . . If the harmful result is not a consequence of its author’s reprehensible action, he cannot be required to repair the damage.”571

To validly and legally order my client to repair damage, it was absolutely necessary to prove the relationship of causality; this is the cause-effect relationship between the actions attributed to my client and the alleged damage to the environment.

To Bustamante Alsina, “the causal nexus is the element that links the damage directly to the action and indirectly to the factor of subjective imputability or objective attribution of the damage. It is an objective element because it refers to an external link between the damage and the action of the person or the thing.”572 Jaime Fernández Madero adds that “it is a

[initials]

569 ALESSANDRI RODRIGUEZ, Arturo. Tort Liability in Chilean Civil Law. First Edition, Editorial

Jurídica de Chile, Santiago, 2005, p. 241. 570 Article 1574 of the Civil Code. 571RODRIQUEZ GREZ, Pablo. Tort Liability. Second Edition, updated June 2010, Editorial Jurídica de

Chile, Santiago, 2010, p. 369. See also id. at 394-95 (The correct application of the theory of adequate causality, [sic] the physical causality must be established first and, based on that, the various conducts involved must be analyzed on the basis of the material action that caused the damage. Therefore, the judge, before anything else, must examine the situation within the framework of the material (or physical) causality and, once this aspect has been resolved, separately analyze each compromised conduct until he or she finds the one that is ideal for producing the result. . . . If the physical causality does not give an answer, in other words, if it is impossible to specify the material cause of the damage (a common question), the judge should analyze each action causally linked to the result and rule on the adequate causality on the same basis.)

572 BUSTAMANTE ALSINA, Jorge. “A New Explicative Theory of the Causal Relationship. Théorie du cheminement ou de l’empreinte continue du mal,” (La Ley) LL 1991-E-1378.

[CERT.GEOTEXT] 156

question of the factual and legal link that must be present between the agent’s conduct and the harm, so that it allows for imposition on that individual of the obligation of the duty to repair.”573 Arturo Alessandri maintains, along these same lines, that “there is a relationship of causality when the fraudulent or culpable action or omission is the direct and necessary cause of the damage, when without it the damage would not have occurred.”574 The Supreme Court has established, with full clarity, that in order for there to be a relationship of causality, the damage must come, directly and necessarily, from the illicit action attributed to the defendant.

But the matter in the ruling is much more serious than the mere speculation by the lower court Judge regarding the alleged relationship of causality. As we will see later on, the Judge below did not even perform a theoretical exercise on the chain of causality to establish to whom the alleged damage should be attributed.

The plaintiffs tried to establish the connection between the Consortium’s activities and the alleged damage on the basis of the judicial inspections, the Cabrera report, and the reports of “experts” filed by the plaintiffs on September 16, 2011 at 5:15 p.m. However, they could not establish the alleged damage and, less still, the relationship of causality. The lower court Judge discarded the reports submitted by the experts designated for the judicial inspections because he deemed that their conclusions were “contradictory,” even with respect to the very existence of the damage, and he said that he based himself solely on their “technical content.” 575 Consequently, in evaluating causality, he did not even refer to those experts’ report[s]. Similarly, the Judge below totally discarded the Cabrera report, which tried to address causality, but fraudulently.576 The only information that was left for the Judge to use to try to establish a causal relationship was the judgment of the “experts” who submitted opinions “on their own initiative” on September 16, 2010, in an audacious procedural maneuver alien to procedural law to try to surreptitiously revive and recycle the Cabrera report. Certainly those opinions “on their own initiative” have no procedural value; they were based on Cabrera’s fraudulent report, which the lower court Judge himself had discarded; and, most importantly, none of them established a causal relationship between my client’s actions and the alleged damage. In fact, some of those “experts” expressly stated that they could not establish [a] causal relationship. Thus, after

[initials]

573 FERNANDEZ MADERO, Jaime. Damages Law: New Doctrinal and Jurisprudentiel Aspects, La Ley,

Argentina, 2002, p. 145. 574 ALESSANDRI RODRIGUEZ, Arturo. Tort Liability in Chilean Civil Law, p. 176. 575 Decision of the Provincial Court of Justice of Sucumbios, dated Feb. 14, 2011 at 8:37 a.m., María

Aguinda et. al. v. Chevron Corp., No 002-2003 at 94. However, the Court did not mention the conclusions of the settling experts for Sacha 53, who participated in order to deal with these precise conflicts among the judicial inspection experts. The settling experts concluded that TexPet had successfully completed the remediation of the wells at the site; that there was a low level of risk to human health and the water supplies; and that there was insufficient evidence “to be able to affirm or reject the vegetation and the livestock in the area of the well [sic]; no analyses of the contaminating elements that would potentially be present in the vegetable and animal tissues were submitted.” Report of the settling experts, filed on Feb. 1, 2006 at 5:00 p m., Record at 92,492 -92,685 (92,576).

576 Decision of the Provincial Court of Justice of Sucumbios, dated Feb. 14, 2011 at 8:37 a m., María Aguinda et. al. v. Chevron Corp., No 002-2003, at 51.

[CERT.GEOTEXT] 157

discarding the conclusions of the judicial inspection experts and the Cabrera Report, the Judge below had no evidence whatsoever upon which to base a finding of causation.

There is nothing in the case file that would enable the Judge to conclude as he did in the appealed judgment that the alleged environmental damage is a direct and necessary consequence of actions attributed to my client. As we will see later on, despite the lower court Judge’s speculations, pirouettes, and digressions, he simply could not establish, in a well-founded and reasonable manner, that causal relationship. See the Judge’s statement on page 170: “[E]ven though none of these factors can be attributed with either direct causation or exclusive responsibility….” In spite of which he arbitrarily concludes that there is “sufficient” causal nexus to find my client guilty.

Initially, the lower court Judge claimed to adopt the theory of “adequate cause.” However, he defined this “theory” not as a theory, but as justification for the Judge to proceed as seemed best to him: “which means that any general rule can be ignored and trust is placed in the discretionary powers of the judge.”577 The theory of adequate causality establishes more reliable and objective parameters: “[That] damage which a reasonable person would have considered to be a natural or probable consequence of imprudence or negligence must be repaired.”578 Thus, it was the task of the Judge below to evaluate the causality, not in a discretionary manner, or subjectively, but in the light of the objective parameter of the “reasonable person,” which required him to leave behind his subjectivity and carry out an analysis with at least a “criterion of reasonableness”579 that would be considered as such by anyone who analyzed his reasoning. The absolute discretion to which the Judge below refers is no such thing, but exactly the opposite.

Thus, the lower court Judge misinterpreted and misapplied the pertinent law. The Judge below, having not performed any analysis of causality, and citing only the ruling in the Delfina-Torres case, omitted basic steps regarding how to perform an analysis of causality (that ruling does not even discuss them). Some of those theories, such as what is known as the theory of equivalence of conditions (or sine qua non condition), establish the necessary empirical relationship between the alleged negligent action of the accused and the alleged damage suffered by the plaintiff. Some of the other theories, such as that of adequate causality, used incorrectly by the Judge below, would have had the purpose of normatively attributing liability. Thus, it is not that the lower court judge chooses one and disregards the others at his discretion (especially because, as doctrine has established, the use of just one theory without considering the others can lead to absurd results); but that, in performing a serious and exhaustive analysis of causality, the judge must consider (reason by means of) several of these theories because he wants to arrive at the real source of the damage. That is the opposite of what this Judge did in the appealed judgment, wherefore it must be revoked.

Thus, if the lower court Judge—after the plaintiffs had theoretically proven the existence of specific, concrete damage, which they never did—had wanted to carry out “the correct

[initials]

577 Decision at 88. 578 RODRIGUEZ GREZ, Pablo. Tort Liability. Second Edition, updated June 2010, Editorial Jurídica de

Chile, Santiago, 2010. 579 Decision at 172.

[CERT.GEOTEXT] 158

application of the theory of adequate causality, the physical causality should [have been] established first and, based on that, the diverse conduct involved should have been analyzed on the basis of the material action that causes the damage. Therefore, the judge, before anything else, must examine the situation within the framework of the material (or physical) causality and, once this aspect has been resolved, separately analyze each compromised conduct until he or she finds the one that is ideal for producing the result. . . . If the physical causality does not give an answer, in other words, if it is impossible to specify the material cause of the damage (a common question), the judge should analyze each action causally linked to the result and rule on the adequate causality on the same basis.”580 Consequently, the plaintiffs should have first proven the specific damage and the various actions that could have directly caused that specific damage. Then, among all those causes, the Judge below should have performed an empirical analysis to clearly establish which of the specific actions had really caused the specific damage, [and] then performed an objective, reasoned legal analysis in order to attribute legal liability to one of those alleged actions that most likely would have caused the alleged damage. A simple reading of the ruling shows that the Judge below did none of these things. He firmly believes, as he literally stated, that he could use “discretionary powers”581 to simply assign liability to Chevron without employing any analysis of causality.

Furthermore, in support of his mistaken and absurdly extensive interpretation of this theory, the lower court Judge only cited one legal source – the judicial decision in the Delfina Torres582 case. Yet this decision (even supposing it had precedential value, which it does not) does not support that Judge’s affirmation that he has unrestricted discretion to evaluate the causal relationship. Instead, this judgment affirms that: “1) The plaintiff had to prove: a) the damage she suffered; b) the value or scope of the damage, and c) the facts that caused this damage. . . .”583 And furthermore, it then indicates that a plaintiff in any case must “prove the damage and the corresponding causal nexus for an action for indemnification to prosper.”584 In other words, the plaintiffs were required to prove “damages” that were “caused” by the supposed “dangerous activities” of my client, even if an objective liability is erroneously invoked. In the actual Delfina Torres case, neither the existence of damage nor its link to the defendant’s operations was the subject of dispute in the litigation. The defendant (Petroecuador), in answering the complaint, had not denied any of them and, as indicated, its defense was based

[initials]

580 RODRIGUEZ GREZ, Pablo. Tort Liability. Second Edition, updated June 2010, Editorial Jurídica de

Chile, Santiago, 2010, p. 394-395. 581 Decision at 88. 582 Comité Delfina Torres vda. De[widow of] Concha vs. Petroecuador et al., Ruling of the Supreme Court

of Justice, Clause Twenty-one, First Civil and Commercial Division, October 29, 2002, Res. 31-2002, published in Official Register 43, March 19, 2003. Decision at 74, 86-88.

583 Comité Delfina Torres vda. De Concha vs. Petroecuador et al., Ruling of the Supreme Court of Justice, Clause Twenty-one, First Civil and Commercial Division, October 29, 2002, Res. 31-2002, published in Official Register 43, March 19, 2003.

584 Comité Delfina Torres vda. De Concha vs. Petroecuador et al., Ruling of the Supreme Court of Justice, Clause Twenty, First Civil and Commercial Division, October 29, 2002, Res. 31-2002, published in Official Register 43, March 19, 2003.

[CERT.GEOTEXT] 159

on objections of law, including claiming the occurrence of an Act of God, an allegation that upon having been proven and accepted, gave the defendant the necessary immunity against all liability.585 However, in comparison thereto, my client in this litigation overwhelmingly refuted (i) the existence of the alleged damage, as was indicated above, and (ii) that a nexus could be established between the alleged damage and the operations of TexPet, instead of establishing it with the operations of Petroecuador or other causes. Therefore, Delfina Torres, in addition to not being a precedent, does not give the Judge below any basis for the distorted and biased formulation and use that this judge gives to the theory of adequate causality, and much less so authorization to not order the plaintiffs to comply with their burden of proving the existence of a direct and necessary link between the damage they are alleging and what they have chosen to claim. The fact that the plaintiffs have not complied with this is sufficient reason to revoke the judgment and dismiss the complaint.

Furthermore, instead of following Ecuadorian law and asking himself if the supposed damage to the environment (supposing it existed) was a natural or probable consequence of TexPet’s conduct, the lower court Judge in his ruling gave absolute discretion (without clearly mentioning it) to supposed foreign theories that even allowed him to arbitrarily eliminate the requirement of causality (even though its existence was admitted by the plaintiffs) so long as the Judge below could conclude that the defendant acted negligently. The Judge below admitted this when he said that, under this theory of causality, “the causal link is assumed to exist”; damage is simply “understood to be a causal result of this risk”; “the mere existence of damage would be sufficient to accredit a causal nexus”586; and “the causal link is confirmed” based simply on the erroneous or unreasonable creation of a risk or danger. 587 And as the judgment creates a supposed (although legally non-existent) assumption of negligence on the part of TexPet which would not admit proof to the contrary, it would also allow it to further release the plaintiffs from their duty to prove causality, which, in the eyes of any attorney, is clearly a huge and unacceptable violation of the most elementary norms of extra-contractual civil liability. And this is even worse still if we add to this the fact that the Judge below believes that he can also discount the existence of the alleged damage since the activities carried out by the consortium would have been dangerous activities. In other words, the Judge below tries to make us believe that, simply because it participated in an oil extraction activity, TexPet must be punished—even without any evidence or any legal basis for doing so—since it presumes the damage, as well as the negligence and causality. This demonstrates, once again, that my client has been denied the right to an adequate defense and the right to due process, and due to all of this, the judgment must be revoked and the complaint dismissed in its entirety.

585 Comité Delfina Torres vda. De Concha vs. Petroecuador et al., Ruling of the Supreme Court of Justice,

in Clauses Sixteen and Twenty-one, First Civil and Commercial Division, October 29, 2002, Res. 31-2002, published in Official Register 43, March 19, 2003.

586 Decision issued by the Acting President of the Provincial Court of Justice of Sucumbios, dated Feb. 14, 2011 at 8:37 a.m., María Aguinda et. al. v. Chevron Corp., No 002-2003, at 88-89.

587 Decision issued by the Acting President of the Provincial Court of Justice of Sucumbios, dated Feb. 14, 2011 at 8:37 a.m., María Aguinda et. al. v. Chevron Corp., No 002-2003, at 154-55.


b) In Addition To Ignoring Valid Evidence of Causation, The Judgment Makes No Causal Link Between TexPet And The Alleged Damage.

The judgment creates a causal link out of thin air, offering no evidence to link the alleged (but unproven) damage to TexPet’s operations. Indeed, the judgment actually admits that there is no proof in the record of individualized harm to human health,588 thereby making causation in that area impossible to prove. The judgment also rejects the interpretations of the information and conclusions in the judicial inspection reports and dispenses with the Cabrera report in its entirety. Accordingly, the purported causal link to the damage alleged is not based on anything at all and, thus, any casual link is simply a manipulation of the “evidence” in the record to force a causal link where none exists.

Alleged Harm to Human Health. The judgment acknowledges that no plaintiff has claimed or proven any actual health problem due to the Consortium’s operations, but then simply notes that there is “a probability of at least 50% that Texpet’s conduct was the cause of the [unproven] health impacts.”589 In “finding” a false causal link between TexPet’s operations and harm to human health, the judgment completely ignores evidence of several alternative causes for the alleged harm that is reflected in the record, such as the documented presence of fecal matter in the water, malnutrition, limited health care, and Petroecuador’s exclusive operations in the former concession area since 1990, as well as the certain and real exposure to the pesticides that the region’s inhabitants have misused on their cultivated fields, among others.590

Moreover, the lower court Judge fails to consider the real fact that the plaintiffs simply assumed that living in one of the towns located within or near the former concession area establishes—a priori and without need of proof—some type of harm or poses a risk to health, while disregarding the “Chain of Risk,” that is, human presence, the existence of suspicious material, and exposure to such material in terms of time and its concentration. But there is no proof that the Consortium even operated in five of the communities where the forty-eight named plaintiffs

588 Decision at 138. 589 Decision at 169-71 (§ 10.2). 590 See KELSH, Michael A., MCHUGH, Thomas E., and TOMASI, Theodore D., Rebuttal to Mr.

Cabrera’s Excess Cancer Death and Other Health Effects Claims, and His Proposal for a New Health Infrastructure, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146371-146649, 146410-13, 146529-46; CONNOR, John and LANDAZURI, Roberto, Response to Statements by Mr. Cabrera Regarding Alleged Impacts to Water Resources in the Petroecuador-Texaco Concession Area, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148352-478, 148365, 148364-65, 148428-37; SANTACRUZ, Silvia, The other L.A., Forbes (Nov. 20, 2009) (Between 2000 and 2008, Petroecuador caused 1415 oil spills—which equates to an accident every two days).


live: Ávila, Unión Milagreña, Tarapoa, San Roque, and Aguas Negras. Four of the allegedly “affected communities”—El Dorado de Cascales, Palma Roja, Villa Secoya and San Pablo—are clearly outside the boundary of the former concession. The plaintiffs also assumed, without foundation, that the alleged health effects were caused by exposure to potentially toxic components of petroleum in such a dosage and with such frequency that this exposure is capable of affecting health while disregarding the “Chain of Risk” as stated above.591

The only drinking water samples in the record (almost all collected by Chevron’s nominated experts) did not show any adverse impacts associated with petroleum operations. Of the 2,759 analytical results for the 13 petroleum‐related constituents having assigned MCLs 592 (i.e., chemical concentrations at levels that pose a possible public health threat as defined by the US EPA), only one sample concentration exceeded the applicable lead criterion of 0.010 mg/L. A single case of exceeding [the criterion] does not indicate a public health risk from petroleum operations, especially when tests on both produced water and crude oil samples show results below the MCL for lead.593 Thus, it is unlikely that the lead is the result of petroleum exploration and production activities. The only demonstrated need for water treatment is due to fecal contamination and the inferred risk from human and/or animal pathogenic agents, which is not the result of petroleum activities in the area.594 In fact, eighty-nine percent of the drinking water samples from the area were positive for E. coli.595 In his December 2010 deposition, Mr. Beltman of Stratus Consulting admitted that while “the quality of the water available to the people in the region for drinking and bathing is very poor . . . much of the problem is caused by poor sanitation.”596 Nearly admitting their utter failure to prove causation, Plaintiffs’ in their 3rd Alegato baldly claimed that

[initials]

591 See, e.g., Plaintiffs’ Motion, filed Aug. 31, 2005, at 5:20 p m., Record at 79274-366, 79274. 592 “MCL” stands for “Maximum Contaminant Level” 593 BELLAMY, William D., Evaluation of Drinking Water Quality Related to Petroleum Exploration and

Production Activities in the Oriente Region of Ecuador, attached as Annex 9 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p m., at section entitled “Public Health Implications of the Analytical Results.”

594 Laboratory analyses were carried out to detect the presence of E. coli in the water, and not only fecal contamination, an important distinction since fecal contamination can be high in tropical environments but not E. coli, which is a better indicator of human pathogenic agents.

595 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 4, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

596 Official transcript of deposition of Douglas John Beltman, dated Sept. 16, 2010, at 130:12-13; 142:5-13, attached as Annex 7 to Chevron’s Motion, filed Dec. 22, 2010 at 5:45 p m.

[CERT.GEOTEXT] 162

“Texaco bears the burden and responsibility to pay the cost of providing the Concession region with safe and clean water, even if that includes financing water disinfection processes that are not wholly related to pollution by oil.” 597 Though the lower court Judge acknowledges the existence of fecal contamination, he makes no serious attempt to distinguish between damage caused by these “proven harms,” 598 and his speculation about harm allegedly caused by petroleum operations.

The judgment states that two reports authored by Miguel San Sebastian599 support its conclusion that there is a “risk” of cancer associated with living in oil-producing areas, “suggesting a causality.”600 The judgment ignores the evidence submitted by my client that the FDA [Amazon Defense Front] initiated and collaborated in San Sebastian’s work, and ignores that FDA and San Sebastian sought to conceal the FDA’s role in order to present his studies as independent,601 while in fact, and as has already been proven, the Amazon Defense Front began these studies to find evidence for this case, and thus, nearly all of the studies were prepared to support the claim of the plaintiffs. The judgment also ignores the numerous expert reports in the record and the important affidavits submitted by Chevron (Laura Green – Record at 7891-7906; and Dr. José Rafael Varea Terán – Record at 4850-4852) that explain that the San Sebastian reports do not constitute valid scientific evidence to establish any relationship between oil production activity and cancer, as well as reports in the record that explicitly criticize San Sebastian’s studies, such as those of Dr. Kelsh602 and the editor of the journal that published San Sebastian’s study, Jack Siemiatycki, who noted that the “limitations of the study design and the lack of clear, strong results” made reaching any conclusions based on that study unsupportable. 603 Further, the judgment ignores Dr. San Sebastian’s own statement in the record that the report cited by the lower court Judge cannot be used to demonstrate that living near oil production caused cancer.604 That Judge inappropriately seized on San Sebastian’s conclusion that his work “suggest[s] an association” between cancer and oil production and converts that into causation, saying that the

[initials]

597 Plaintiffs’ Third Alegato filed February 1, 2011 at 2:55 p m., at 53-54. 598 Decision at 115. 599 Decision at 131-35. 600 Decision at 135. 601 CHRISTOPHER, John P., Evaluation of the doctoral thesis of the Plaintiffs’ Expert Dr. Miguel San

Sebastián. October 29, 2010, at 5. 602 KELSH, Michael. Expert Report of Michael A. Kelsh: Cancer Risk and Oil Production in the Amazon

Region of Ecuador - A Review of the Epidemiologic Evidence. Sept. 26, 2010 at 4. 603 SIEMIATYCKI, J. Commentary: Epidemiology on the side of the angels. Int. J. Epidemiology 31:1027-

1029, 2002. Available from: http://ije.oxfordjournals.org/content/31/5/1027 full. 604 HURTIG, A.K. and SAN SEBASTIAN, M., 2004, Cancer in the Ecuadorian Amazon (1985-1998).

Instituto de Epidemiologia y Salud Comunitaria Manuel Amunarriz. Quito, Ecuador: Abya Yala, 50, at 35.

[CERT.GEOTEXT] 163

study “draw[s] a cause-effect factor”605 where it does not. Thus, the judgment’s reliance on the two studies, as if they were independent and scientifically valid evidence, is clear error that must be rectified by a reversal of the appealed judgment.

The judgment also relies on various statements by residents of the areas who were interviewed during the judicial inspections to find a causal link between environmental impacts and health.606 The value that these statements were given during the judicial inspections, without considering that the people interviewed are potential beneficiaries of the judgment and are therefore interested, and evidently biased parties, contrasts with the fact that the Judge had ignored the sworn depositions given by various people during the proceedings, under oath and in accordance with all legal formalities, which, in the case of the witnesses presented by Chevron, were scientists and ex officials of the Ecuadorian State who testified with respect to fundamental issues of the case.

While the lower court Judge admits that the interviews of the potential beneficiaries of the judgment “are not decisive and irrefutable evidence” of health problems suffered by these individuals, he nonetheless gives weight and full probative value to these statements simply because they are similar, which could instead suggest that “the interviewees were coached beforehand.”607 The judgment states that “the statements received during the judicial inspections have demonstrated satisfactorily that there are scientific bases for reasonably linking the claims concerning health made by inhabitants of the region with the oil contamination that derives from the Texpet’s activities as the Consortium operator.”608 But this statement ignores contradictory and biased testimony in the record from these very same witnesses. For example, the Judge below relies on the testimony that Ms. Aura Fanny Melo Melo gave during the judicial inspection of Shushufindi 13, which the judgment quotes as stating that the water in the area is contaminated by “crude oil.”609 But Ms. Melo admitted her bias at that inspection, noting that she is a member of the plaintiff organization, Amazon Defense Front, and therefore has a direct interest in the outcome of the case.610 Moreover, actual sampling of Ms. Melo’s well during the judicial inspection shows that no such crude oil contamination exists (see CVX Judicial Inspection Report for SSF-13, Record at 89743, 89753). Here, it is proven that the truth was found in the science and not the coached testimony.

Finally, the judgment refers to “the human health risk assessment” as evidence proving that oil production operations cause health impacts. But the judgment fails to cite

[initials]

605 Decision at 135. 606 Decision at 139-44. 607 Decision at 144. 608 Decision at 171. 609 Decision at 142 610 See Judicial Inspection Certificate for the Shushufindi 13 Well, Record at 74987.

[CERT.GEOTEXT] 164

any risk assessment,611 and ignores the only human health risk assessment in the record—the report of Dr. Thomas McHugh—submitted by Chevron, which proves that there is no causal link between oil production activities in the former concession and any health claims.612

Alleged Harm to the Environment. The judgment fails to offer any evidence at all for its misconceived hypothesis that a causal link exists between TexPet’s operations and the harm to flora, fauna, aquatic life and drinking water in the former concession area. Instead, the judgment merely states that a causal link exists, without providing any basis for this conclusion, and without offering any evidence to support this causal connection. With regard to groundwater and soil, the judgment simply deemed causation to exist based on the lower court Judge’s view that the Consortium was negligent. The Judge simply “finds” causation by discussing the fact that drilling produces formation water, and that the Consortium (lawfully and appropriately) used unlined settling pits to treat that water before (lawfully and appropriately) discharging it.613 The only purported evidence of causation to which the Judge points does not in fact support the existence thereof. In purporting to determine “whether the potential harm has really occurred,” the Court quoted a snippet of a letter dated in 2007 from Rodrigo Pérez Pallares, who is not a party to the proceeding or witness or expert in the case, in which Mr. Pérez states that “in Ecuador, 15.8 billion gallons were spilled between 1972 and 1990 during the whole operation period of the Texaco Consortium.”614 But this language says nothing about causing any damage to soil or groundwater. As even the Court implicitly conceded, Mr. Pérez was talking about the lawful, appropriate practices just noted—discharging produced water after treatment, that is, in the Court’s words, “after decantation and passing through the goosenecks.”615 Indeed, Mr. Pérez made this very point in a portion of the letter that the Court omitted. His first clarification, on the same page as the quoted text, explains that oil wells produce water, and that that water is returned to the earth through two universal techniques used in the oil industry: pouring produced water into the natural currents capable of diluting the mineral salinity or reinjecting the water into the ground; the suitability of each method will depend on the conditions of the place. Moreover, the Judge below also failed to note that Mr. Pérez showed just how widespread and accepted the treated discharges are, by adding (immediately after the text the Court quoted) that Petroecuador had discharged a greater amount of water in a shorter and more recent period (16.380 billion gallons from 1990 to 2006), and that a much greater amount of treated water was discharged in the United States.

611 Decision at 170-171. 612 MCHUGH, Thomas. Response to Mr. Cabrera’s Report on Public Health Risks Related to

Hydrocarbons and Metals in the Petroecuador-Texaco Concession Area. Submitted as part of Mr. Kelsh’s report in response to Mr. Cabrera. September 15, 2008, at 49-87.

613 Decision at 154-66. (§ 10.1). 614 Decision, issued by the Acting President of the Provincial Court of Justice of Sucumbios, dated Feb. 14,

2011 at 8:37 a.m., María Aguinda et. al. v. Chevron Corp., No 002-2003, at166. 615 Id.


It is public knowledge that the pits, wells, and production stations located in the former concession area have been under the sole control and responsibility of Petroecuador since 1992, when the Consortium ended.616 And several court-appointed experts found that Petroecuador was responsible for the contamination and spills in the region.617 618 Even one of the plaintiffs’ Ecuadorian attorneys recognized, in a conversation captured on video, that it is:

“inconceivable to me that we can blame Texaco for everything that Petroecuador has been doing to this date.”

Another of plaintiffs’ attorneys responds: “Oh, I agree.”619

From 1992 to 2009, independent media outlets from around the country reported approximately 4.6 million gallons of crude oil spills attributable to Petroecuador,620 which have impacted rivers and streams throughout the region. Indeed, on March 15, 2010, Petroecuador took out an ad in several mainstream newspapers showing that between 2005–2008, the company was responsible for 175 spills. Its own records show that of the 1,415 significant oil spills Petroecuador recorded from 2000 to 2008 alone, 565 (forty percent) were caused by corrosion, 128 (nine percent) by operator error, and an additional 240 (seventeen percent) by equipment failure, meaning that approximately sixty-six percent of these spills could have been prevented with better equipment, maintenance and personnel training.621 Similarly, between 1990–2007, over 394 million barrels of formation water generated as a result of the exclusive operations of Petroecuador were discharged into rivers and streams, including discharge of over 300 million barrels after those

616 Certificate of Delivery and Acceptance of the Petroecuador-Texaco Consortium Operations, Nov. 25,

1992, filed Apr. 27, 2004 at 2:38 p m., Record at 7227-56v, 7234. 617 See, e.g., Expert Report of Adriana Enriquez on Palanda Production Station, filed June 24, 2007, at

8:15 a m., Record at 130605-39, 130616, 130627; Expert Report of Adriana Enriquez on Shushufindi Refinery, filed Sept. 24, 2007, at 5:00 p.m., Record at 132684-791, 132717.

618 Chevron’s Rebuttal to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141164; see Expert Cabrera’s Global Report at 27, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134256.

619 Transcript of Crude Outtakes, attached as Exhibit 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 040-27-04).

620 See Petroecuador Impacts Report, Attachment H, filed as part of Appendix A to Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164521-26, 164526 (register of spills in the former Concession area from 1992 to 2009).

621 See Petroecuador evaluates environmental damages caused by crude, El Universo, Feb. 28, 2009, submitted as Annex 8 of Attachment I of Appendix A; Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164797-98, 164798.


discharges were first regulated under Ecuadorian law in 1992.622 Nearly eighty-four million barrels of formation water were discharged into the environment from June 2000 to June 2004 alone, due to inadequate construction and maintenance of re-injection facilities.623

The lower court Judge did not address any of these topics. In fact, he conceded that my client had “managed to prove with documentation the existence of environmental damages that are the responsibility of third parties.”624 The Judge even went so far as to admit that evidence in the record shows not only “the existence of polluting practices and effects in the operations conducted by Petroecuador,” 625 but also contamination due to, among other things, fecal coliforms, fertilizers and agricultural pesticides. Despite claiming that it would “exclude” these damages from his judgment, the Judge below never attempted to make a distinction between the harm he admits was caused by third parties and harm that allegedly could have been caused by the Consortium’s operations.

Alleged Harm to Indigenous Culture. The only evidence on which the lower court Judge relies to establish a causal connection between the alleged harm to indigenous culture and Texpet’s operations are the interviews that were conducted with inhabitants of the area during the judicial inspections, to which the Judge below ascribes validity based on the identical nature of the statements.626 But the judgment ignores the fact that these statements are biased and therefore cannot be used to form the basis of any damages claim. The judgment also ignored evidence of the true cause of loss to indigenous culture: the state-sponsored migration and colonization.627

H. Even assuming the existence of liability regarding the plaintiffs’ claims, something that my client does not accept, the judgment in terms of compensation is not legally justified.

After having redefined the “environmental damages” in order to avoid the limitations of the principles of congruence and having admitted the majority of the plaintiffs’ untimely additional claims, the appealed judgment ordered payments for several billions of dollars. Half of these payments are related to the alleged “real” damages and the other half are for “punitive damages.”

622 See Petroecuador Impacts Report Attachment D, filed as part of Appendix A to Chevron’s Rebuttal to

the first Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164479-94, 164480-81 (Temporal Analysis of Production Water Management in the Former Petroecuador-TexPet Concession).

623 Chevron’s Rebuttal to the first Barros Report, filed on Jan. 14, 2010, at 5:55 p m., Record at 164426-59, 164446-47 (citing 2005 report by the Comptroller General’s Office).

624 Decision at 119. 625 Decision at 122. 626 Decision at 139, 144. 627 Decision at 171-72.


In addition, the lower court Judge ordered a compensation of 10% of the “actual” damages to be made to the Amazon Defense Front, which is not a party to this case but has played a significant role in the perpetration and cover-up of the reported acts of fraud.

These compensation amounts awarded in the judgment have no basis in the law.

1. The awarding of compensation for damages in the lower court judgment for several categories of alleged “environmental damages” is speculative and is not supported by any valid evidence:

The lower court Judge awarded monetary compensation for seven types of “actual” damages, dividing them into three different categories: First, “principal measures” for up to 5.396 billion dollars for soil remediation and 600 million dollars for groundwater remediation. These amounts supposedly had the objective of restoring the environment to its natural state, despite the fact that the lower court Judge admitted that there is no evidence of what the natural state was.628 Then, as if 6 billion dollars were not sufficient, the lower court Judge added supplementary payments for “at least” 200 million dollars to restore flora, fauna and aquatic life and 150 million dollars to build a drinking water system. Finally, the lower court Judge added mitigation measures of “at least” 1.4 billion dollars for public health care and another 800 million dollars for public health care associated with the merely theoretical possibility of future cancer cases attributable to the conduct of TexPet, and 100 million dollars for the restoration of the indigenous culture. These three categories are supposedly “aimed at decreasing and mitigating the effect of harm impossible to redress.”629

In addition, the judge in his ruling completely failed to identify the specific damages that he believes Texpet had caused. Instead, he delegated that judicial function to the plaintiffs’ Amazon Defense Front, which will administer the multi-billion-dollar compensation in conformity with the provisions of Section 15 of the judgment. For example, nowhere did the lower court Judge indicate “which pits opened by TEXACO” and which parts of the large “surrounding environment” actually require soil remediation, and yet he awarded more than US$ 5 billion for that purpose. 630 Although the judgment does not specify which bodies of water, allegedly containing hazardous substances, will require treatment and which elements must be removed, the Judge awarded US$ 600 million to the Front for that very purpose.631 Nowhere did the lower court Judge identify or order identification of, those people who “suffer from cancer that can be attributed to Texpet’s operation in the Concession,” and even so, he awarded US$ 800 million to

[initials]

628 Decision at 177. 629 Decision at 177. 630 Decision at 179-80 631 Decision at 179.

[CERT.GEOTEXT] 168

the Front to fairly treat those people.632 These omissions on the part of the lower court Judge confirm even more that the awarded compensation has no legal foundation.

None of these compensation awards are supported by any evidence, and the lower court Judge hardly purports it to be otherwise. Even if there were grounds for any kind of to award compensation in each category, the figures that the lower court Judge assigned are speculative; they are not based on expert assessments as stipulated by law and are therefore punitive. They have no basis in the law or the merits of the case.

Moreover, a general error that is discussed below with respect to each category, is the absence of any viable expert report to support the amount of damages ordered. Article 43 of the Environmental Management Act stipulates that the Judge must establish compensation amounts “in accordance with ordered experts’ reports.” As the plaintiffs themselves have acknowledged, this provision “implies an obligation for the judge, not a mere recommendation; therefore this shows that the determination of the amount required for the repair of a damage MUST be established by the judge in accordance with ordered experts’ reports.”633 The plaintiffs have even acknowledged that “the lack of an assessment might very well be a reason for the nullity of a trial.”634 The lower court Judge himself knows that, as he repeatedly pointed that out in the judgment when discussing Article 43 of the Environmental Management Act cited in the complaint.635 Likewise, Article 2236 of the Civil Code (also assuming that the plaintiffs had a cause for action pursuant to that article) only requires the issuance of an injunction to prevent future damages, not a monetary compensation. In fact, this provision exists precisely to prevent the type of speculative determinations that the lower court judge has made in the judgment.

However, on the other hand, the judgment rejected all of the expert conclusions, 636 and attempted to disregard the Cabrera Report in its entirety; and with reason, given that it is nothing more than a fraud, and the product of the plaintiffs themselves. 637 Moreover, the process of carrying out the judicial inspections, apart from being affected by the plaintiffs’ fraud, was never completed. As Chevron also argued in its submission dated August 5, 2010, at 4:30 p.m., the new brief submitted by the plaintiffs on September 16, 2010 at 5:15 p.m. could not serve to fill the void that these flaws in the expert reports created in the record. The reports by the plaintiffs’ “specialists” are simply not expert evidence, as defined in Articles 250 to 263 of the Code of Civil Procedure. For instance, contrary to the requirement of Article 252, which establishes that

[initials]

632 Decision at 184 633 Plaintiffs’ brief filed Sept. 16, 2008 at 11:30 a m., paragraph 5.2, at 9, Record at 150878-150995

(150886). 634 Id. 635 See Decision at 2, 90, 94 (objecting to the Court’s review of “the various expert reports”), 176

(attempting to consider “the various expert reports according to the rules of sound judgment”), 179. 636 Decision at 94. 637 Decision at 51.

[CERT.GEOTEXT] 169

the Judge must designate an expert “in the person of his choosing,” these individuals who prepared the plaintiffs’ brief of September 16, 2010 at 5:15 p.m. are consultants that are paid by the plaintiffs and chosen exclusively by the plaintiffs. Additionally, contrary to the requirement of Article 256 that the expert must “swear” that he will perform his duty “faithfully and legally,” these individuals have not taken this oath before the Court.

In sum, in terms of the “actual” damages, despite the recognition on the part of both the plaintiffs and the lower court Judge that the amount to be allocated for any damages depends on the amounts set forth in the reports of experts designated by the lower court Judge, reports do not exist in this case. Instead, the Judge below in the judgment attempted to undertake this duty as his own, an action for which he has no legal authority or institutional competency. For this reason alone, the amounts ordered are illegal and the judgment must be reversed.

a) “Principal measures” concerning soil remediation (US$ 5.396 billion).

The judgment’s distortion of the scientific evidence and the factual record are clear from its award of damages for soil remediation of US$ 5,396,160,000. This amount is not based on any evidence or expert testimony in the record, is much higher than any of the inflated estimates for soil remediation presented by plaintiffs’ experts, and is more than 171 times higher than the US$ 31.45 million budget established in 2007 for the PEPDA remediation program in the former concession area, which has been approved by DINAPA,638 and which the State and Petroecuador have said is sufficient to fully remediate all of the pits in the area of the former concession.639 The judgment’s apparent decision to fabricate the elements used to calculate its award without specifically citing a single document in the record led to significant and fatal errors.

First, the judgment asserts that there are 880 pits requiring remediation, and claims to base that number on the interpretation of IGM aerial photos, official documents of Petroecuador and the report of Expert Barros.640 This assertion is simply false. Official Petroecuador reports state that there are 370 pits to be remediated in the former concession area, not 880 as claimed in the judgment.641 Nowhere in the report of Expert Barros is the conclusion that 880 pits require

[initials]

638 Letter from the Undersecretary of Environmental Protection (DINAPA) of the Ministry of Energy and

Mines to Eng. Galo Balda S., Vice President of Petroproduction, Quito Ecuador, Oct. 28, 2002. Final Report, Elimination of Pit SA-14-1, PEPDA, 2006. Final Report, Elimination of Pit SA-15-1, PEPDA, 2006. Final Report, Elimination of Pit SA-32-1, PEPDA, 2006. Final Report, Elimination of Pit SA-32-2, PEPDA, 2006. Final Report, Elimination of Pit SA-78, PEPDA, 2006.

639 Annual Report on the Timetable for the Elimination of Environmental Liabilities, PEPDA, Dec. 2007. 640 Decision at 125. 641 Annual Report on the Timetable for the Elimination of Environmental Liabilities, PEPDA, Dec. 2007.

[CERT.GEOTEXT] 170

remediation.642 And while the judgment does not provide any citation to evidence that the aerial photographs show the presence of 880 pits requiring remediation, my client has submitted expert evidence demonstrating that the pit count prepared by the Amazon Defense Front (FDA) and submitted as Cabrera’s work, which was based solely on aerial photography is entirely incorrect and incomplete since Cabrera did not submit aerial photos for each site with his report.643 The lower court Judge, possibly due to “his” speedy reading and analysis of the case file, overlooked the fact that it contains aerial photos of a very small number of oil exploration and production sites.

Second, the judgment claims, purportedly based on the same photographs and reports, that the average size of the pits to be remediated is 2400 square meters, to which it adds an additional 1100 square meters per pit to account for “the possibility of leaks and spills,” and the possibility that soil might have to be remediated to a depth of 2.40 meters.644 Using these numbers, the judgment asserts that 7,392,000 cubic meters of soil would require remediation.645 These claims about pit size and depth and soil volume that would require remediation are entirely inaccurate, and ignore the extensive evidence in the record. For example, at the request of the Court, PEPDA submitted details about surface area, depth, and volume of soils for 66 pits remediated in the former concession area.646 PEPDA indicated that the pit sizes were significantly smaller than assumed by the judgment, the average depth of remediation was 1.32 meters (approximately half the depth in the judgment), and the average volume of soil remediated was 1810 cubic meters (less than 4.5 times the volume indicated in the judgment).647 There is extensive evidence in the record that clearly shows that these exaggerated pit sizes claimed in the judgment are incorrect.648

[initials]

642 BARROS, Gerado. Expert Report dated Dec. 21, 2009; Responses to Defendant’s Questions regarding

the Expert Report, Jan. 27, 2010; Ruling on the Defendant’s Request Regarding Documents Cited in Ch. IV of the motion filed Jan. 29, 2010, Feb. 11, 2010; Additional Expert Report filed April 29, 2010; Ruling on Defendant’s motion filed May 21, 2010, and Ruling on Plaintiffs’ motion filed May 21, 2010, and June 6, 2010.

643 DI PAOLO and HALL, 2008. Refutation of the Methodology used by Mr. Cabrera to Determine the Number and the Area of the Pits in the Petroecuador-Texaco Concession, submitted as part of the Response to the Expert Examination Summary Report. Filed with the Superior Court of Nueva Loja in September 2008, Record at 148296-148351.

644 Decision at 125. 645 Decision at 125. 646 Letter from Engineer Jorge Vivanco A., PEPDA Project Coordinator, to the Director of Environmental

Protection, Amazon District, Nov. 26, 2007, Record at 134,148. 647 Id. 648 HBT Agra, Ltd., October 1993, Environmental Assessment and Audit of the Petroecuador-Texaco

Consortium Oilfields to June 30, 1990, Woodward Clyde Corporation, 2000; Remediation Action Program, Oriente Region, Ecuador, Final Report - Volume I and II, Environmental Audit Report, Final Report – document prepared for Texaco Petroleum Company, Woodward-Clyde International, Inc., May 2000; Final Report, Petroecuador Report, Ministry of Energy and Mines, Republic of Ecuador, Culebra – Yulebra Area, Environmental Liabilities, 2004; Petroecuador Report, Ministry of Energy and Mines, Republic of Ecuador, Lago Agrio Area, Environmental Liabilities, 2004; Petroecuador Report, Ministry of Energy and Mines, Republic of Ecuador, Shushufindi Area, Environmental Liabilities, 2004; Petroecuador Report, Ministry of Energy and Mines Republic of Ecuador, Aguarico Area, Environmental Liabilities, 2004.

[CERT.GEOTEXT] 171

Third, although the judgment cites Mr. Barros as the source for soil remediation costs ranging from US$ 183 per cubic meter to US$ 547 per cubic meter, with an average cost of US$ 365 per cubic meter, no such costs exist in Mr. Barros’ reports.649 In fact, these unit costs do not appear to exist anywhere in the court record, and the judgment does not cite any technical basis whatsoever for such inflated unit costs for soil and pit remediation.650 Official Petroecuador documents indicate that the PEPDA program performed remediation of the same pits in the former concession area for US$ 15.71 per cubic meter, 23 times less than the unit cost claimed in the judgment.651 In fact, the judgment purports to require my client to re-remediate areas that were already remediated by Petroecuador through the PEPDA program.

Finally, the judgment shockingly doubles its already inflated cost estimate, based solely on the fact that plaintiffs’ expert Douglas Allen’s soil remediation cost estimate to remediate to 100 ppm TPH was roughly double the cost estimate to remediate to 1000 ppm TPH.652 This arbitrary and unscientific multiplication increases the judgment’s cost estimate to US$ 730 per cubic meter, more than 46 times higher than the amount PEPDA is currently paying to remediate the exact same soil, in accordance with applicable legal parameters. The judgment does not explain why its already exaggerated cost estimates would only result in remediation to 1000 ppm TPH, or why unit costs would double if a 100 ppm TPH target is selected, or why a 100 ppm concentration is an appropriate cleanup target. Further, Mr. Allen’s higher cost estimate, US$ 949 million, was calculated based on a 100 ppm TPH limit, which Mr. Allen himself concedes is only a “conceptual-level valuation . . . not a detailed study,” and which he concedes does not represent the actual cost to remediate soil or groundwater in the former concession area,653 does not support in

[initials]

649 BARROS, Gerado. Expert Report dated Dec. 21, 2009; Responses to Defendant’s Questions regarding

the Expert Report, Jan. 27, 2010; Ruling on the Defendant’s Request Regarding Documents Cited in Ch. IV of the motion filed Jan. 29, 2010, Feb. 11, 2010; Additional Expert Report filed April 29, 2010; Ruling on Defendant’s motion filed May 21, 2010, and Ruling on Plaintiffs’ motion filed May 21, 2010, and June 6, 2010.

650 One of plaintiffs own experts, Mr. Villacreces, conceded that Ecuadorian contractors perform remediation at unit costs of $29 to $72 per cubic meter. See, e.g., Annex S for the judicial inspection report written by Mr. Villacreces for Shushufindi-24.

651 HINCHEE, Robert. Refutation of the Procedure used by Mr. Cabrera to Determine the Alleged Need for Remediation and its Costs, attached to Chevron’s Rebuttal to the expert report of R. Cabrera, filed Sept. 15, 2008 at 2:14 p.m., Record at 148129-148179.

652 Decision at 181. 653 See Official Transcription of Deposition of Douglas C. Allen, dated Dec. 16, 2010, attached as Annex 2

to Chevron’s Motion filed Dec. 22, 2010 at 5:40 p m., at 336:16-18; 374:7-18; 374:22-24.

[CERT.GEOTEXT] 172

any way the proposition in the judgment that unit costs double based on the targeted cleanup level.

There simply is no evidence in the record supporting any of the “calculations” leading to the judgment’s award for soil remediation. The judgment calculated the remediation costs using “the official Petroecuador documents submitted by the parties and especially by expert Gerardo Barros,” 654 but the court’s ruling on Chevron’s requests for amendment and clarification indicates that Mr. Barros’s report does not appear in the calculations, because it cites other evidence to reach the pit size that was used to arrive at the aforementioned remediation costs.655

But in any event, the judgment is not based on the evidence, not even if one accepts that the Court’s order clarifying and expanding upon the judgment, of March 4, 2011 at 3:10 p.m., correctly explains the Court’s remediation calculations. In the order, the court explains that it used three types of evidence to derive the pit sizes, but none of this evidence is appropriate for calculating pit size as the judgment has done. First, the Judge stated in the judgment that he looked at aerial photographs of 880 pits, 656 which is impossible because the case file only contains a total of approximately 100 aerial photographs of wells and stations. Second, in his order, the lower court Judge cites a Texpet letter from 1980 that gives an estimate for building new pits, which seems to note that the pits measure 30 meters by 30 meters, although a drawing contained in those notes says 60 meters by 30 meters.657 These measurements were nothing more than estimates that were never implemented and are not a valid basis for calculating the size of current pits. Third, the lower court Judge also cites in his clarifying and expanded order a document that did not appear in expert Barros’s report either. The document is included in the judicial report from the expert suggested by the plaintiffs, Luis Villacreces, on Guanta-06. This document mentions the plans proposed by Texpet in 1977 for mud pits, which are supposed to measure 43 meters by 33 meters by 2.5 meters deep.658 But the judge errs in his calculations, using the figure 22.5 meters as the depth instead of 2.5 meters as the document says—a serious error. None of the documents cited in the clarifying and expanded order prove the actual size of any pit built in the former concession, and in any event, none of the documents support the size of 60 meters by 40 meters used in the judgment. Therefore, with no basis whatsoever to support the judgment’s conclusions on the size of the pits, the figures cited in the judgment for soil remediation have no basis in the evidence or the law.

[initials]

654 Decision at 125. 655 Order of March 4, 2011, at 15-16. 656 Decision at 125. 657 Order of March 4, 2011, at 15-16. 658 Id.

[CERT.GEOTEXT] 173

For all of these and other reasons, the judgment distorts the evidence in the record, ignores the scientific evidence, and disregards basic facts requested by and reported to the court about pits in the former concession area.

b) “Principal measures” concerning groundwater (US$ 600 million).

The judgment’s award of US$ 600,000,000 in damages for groundwater remediation is not based on any of the evidence in the record. The judgment’s analysis of groundwater contamination is entirely speculative, describing “the possibility that there exist seepages” from pits creating a risk that “groundwater could become contaminated.”659 The judgment does not identify a single sample of groundwater showing contamination. Indeed, the judgment ignores the substantial evidence in the record showing that groundwater has not been contaminated by petroleum operations in the former concession area.660 The judgment also ignores the evidence, submitted to the court by my client, that demonstrates scientifically, the data in the court record “show no signs of impacts to groundwater” and that there is “no evidence that oil residuals attributable to Texpet operations can lead to groundwater contamination.”661 Even the plaintiffs’ experts have admitted on numerous occasions that there is no evidence of groundwater contamination in the former concession area.662

Further, the judgment just guesses at a compensation amount, stating that US$ 600,000,000 is “a figure that is lower than average according to the economic criterion that estimated by Douglas C. Allen . . . which is not in any way obligatory or binding for this Court, but rather a simple reference that is not accepted.”663 The judgment does not offer any explanation as to why the Allen report is used as a benchmark to justify this amount, why the court ignored the significant criticisms of the fact that there is no groundwater requiring remediation, or the logical and legal basis for the conclusion that US$ 600,000,000 was the appropriate award for groundwater damages that were not proven by the evidence.

[initials]

659 Decision at 117. 660 NEWELL, Charles. Groundwater Conditions in the Former Petroecuador-Texaco Concession Area,

dated Sept. 9, 2010, attached as Annex 13 to Chevron’s Technical Alegato filed September 16, 2010 at 4:35 p.m. 661 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E. Expert Report on Remediation

Costs: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, attached as Annex 2 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

662 Transcript of Crude outtakes, attached as Exhibit 2 to Chevron’s Motion filed Aug. 6, 2010, at 2:50 p.m. (CRS 195-05-01); also see Chevron’s Motion filed Aug. 6, 2010, at 2:50 p m. on p. 21; E-mail from Ann Maest to Douglas Beltman, December 4, 2007 (STRATUS-NATIVE050355).


[CERT.GEOTEXT] 174

c) “Supplementary measures” for restoring flora, fauna, and aquatic life (“at least” US$ 200 million).

The award of “at least” US$ 200 million for a restoration plan for flora, fauna, and aquatic life “for at least 20 years” is based on nothing more than naked assertions that it “is obvious” that “the native flora and fauna will not be restored on their own.”664 But the judgment fails to cite any evidence demonstrating any impact of Consortium operations on flora and fauna in the first place, much less any evidence of which supplementary measures are required to address any impact. The judgment simply speculates about the existence of damage and the cost of measures required to address that damage.

The only document the judgment cites, the report of plaintiffs’ expert, Dr. Barnthouse, does not provide any independent estimate regarding damages, it merely regurgitates the damages claims from the fraudulent Cabrera report.665 As my client has explained to the court, there are four fundamental errors in the Cabrera report: (1) more than 99% of the alleged damages were for the lawful construction of roads and wells that are still in use by Petroecuador (2) the remaining <1% of damages relied on a flawed aerial photo interpretation prepared by FDA, (3) the damages assessment does not follow any internationally-accepted principles for assessing damage, and (4) even if the correct assumptions had been used, flawed and unsustainable calculations resulted in a vast overestimation of costs. 666 For example, Dr. Barnthouse’s report adopts the Cabrera report’s proposed cost per hectare for rainforest restoration, US$ 29,180.00 per hectare, without considering that this is thirteen and a half times higher than the range that the Ecuadorian Forestry Law provides. 667 These errors are significant. As demonstrated by my client, if adjustments are made to the numbers from the Cabrera Report (used by Dr. Barnthouse) to correct the errors and overestimates, the “restoration cost” valuation method referred to by the judgment results in an error rate of 600,000 percent.668 The judgment, however, ignores this evidence, and nonetheless appears to use Dr. Barnthouse’s report to establish a range of damages.669 It then announces that it is removing from the numbers in Dr. Barnthouse’s report “compensation for past services lost,” without any indication of how it was doing so, and arrives

[initials]

664 Decision at 182. 665 See generally, BARNTHOUSE, Lawrence, Evaluation of Natural Resource Service Losses Related to

Oil Field Development in the Concession, attached as Annex E to Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m.

666 TOMASI, Theodore, Rebuttal to the Calculation of Supposed Economic Damages Due to Ecosystem Losses by Mr. Cabrera, attached as Appendix 12 to Chevron’s Objections to Richard Cabrera’s Expert Report, filed Sept. 15, 2008, at 2:14 p m., p. ES-9, Record at 146650-146728, 146664-146665.

667 Id. at 13. 668 TOMASI, Theodore, Rebuttal to the Calculation of Supposed Economic Damages Due to Ecosystem

Losses by Mr. Cabrera, attached as Appendix 12 to Chevron’s Objections to Richard Cabrera’s Expert Report, filed Sept. 15, 2008, at 2:14 p m., Record at 146650-146728, 146664-146665.


[CERT.GEOTEXT] 175

at an independent determination of the amount of damages “which shall be sufficient to invest in programs for the recovery of the native species.”670 The judgment reaches this determination without reference to any evidence whatsoever and without explaining the rationale for the amount of the award. The Judgment also ignores the only report in the record that addresses the issue of biodiversity of flora and fauna, which shows that petroleum operations had not significantly affected the indices of biodiversity in the area:

These comparative diversity indices do not detect significant differences between areas with, and areas without, petroleum development. Those differences that were observed can be attributed primarily to the natural variability inherent to biological evaluations. It can be concluded that a history of petroleum development alone does not affect abundance and diversity of biological resources in the area.671

d) “Supplementary measures” concerning potable water systems (US$ 150 million).

To cover up the failure of plaintiffs to include in their complaint any request regarding potable water, the judgment presents this award of US$ 150,000,000 in extra petita damages for the construction of “a potable water system or systems” for the “benefit the persons who inhabit the area that was operated by the defendant” as if it were somehow supplementary to the environmental clean-up of soil and groundwater.672 In fact, in addition to the false assertion that “the defendant” operated in the area at a previous point in time, the judgment fails to provide any real rationale for requiring that a permanent potable water system be installed in the region, and ignores the vast amount of evidence in the record showing that the water in the area is contaminated by fecal coliform (E. coli), but is not contaminated by compounds associated with petroleum production.673 Moreover, the Ecuadorian Public Health Ministry reports that 50% of hospitalizations are the result of inadequate sanitation, with diarrhea being responsible for thousands of child deaths each year, the majority less than two years of age.674

Even if there were any factual or scientific basis for an award of damages related to petroleum impacts to potable water, which there is not, the sum awarded by the judgment has no basis whatsoever in valid evidence. The judgment bases its award on the conclusion that a regional aqueduct system is needed for 35% of the population in the area that is not already served by

[initials]

670 Id.. 671 BJORKMAN, B. and SANCHEZ, C. Response to Mr. Cabrera’s Statements Regarding Alleged

Ecosystem Harms, Record at 158568. 672 Decision at 182. 673 BARROS P., Gerardo. Ruling on the Defendant’s Request Regarding the Documents. February 11,

2010. Cited in Ch. IV of the Motion dated Jan. 29, 2010, Annex 5. 674 Ecuadorian Ministry of Urban Development and Housing (MIDUVI), Deputy Secretariat of

Environmental Sanitation, “National Plan for Development of the Potable Water Sector and Basic Sanitation” prepared for MIDUVI by Yépez, G., Gómez, B., Ecuador 2002.

[CERT.GEOTEXT] 176

public water supplies,675 that the full price of the aqueduct system is US$ 430 million, and thus the appropriate potable water damages award is US$ 150,000,000.676 Although the judgment purportedly relies on the Barros Report and “the different sources contained in his annexes and other documents that reflect the costs of programs by the European Reference Centre for First Aid Education, UNICEF, and USAID,”677 that is misleading.678 The US$ 430 million figure in the judgment is taken directly from the fraudulent Cabrera Report, the same report that the judgment stated would “not be taken into account to issue this verdict.”679 While the judgment states that Expert Barros concluded that US$ 430 million was “enormously exaggerated,” the judgment fails to mention that the court relies on these costs (US$ 430 million x 35% of the population without access to better quality potable water) which are known to be 9 to 17 times higher than actual costs in the region. 680 Therefore, the US$ 430 million advanced by the plaintiffs’ lawyers in the Cabrera Report and soundly rejected by Expert Barros is the sole, fraudulent basis for establishing damages for potable water in the judgment, which therefore must be reversed.

e) “Mitigation measures” concerning public health in general (“at least” US $ 1.4 billion).

The judgment ignores and twists the scientific and factual evidence to reach the conclusion that Chevron should pay US$ 1,400,000,000 to “cover the health needs created by the public health problem occasioned by the acts of the defendant.”681 First, the judgment states, contrary to all of the scientific and factual evidence in the record, that “ a serious impact on public health has been demonstrated, provoked by the presence in the environment of contaminants coming from the hydrocarbon operational practices as they were implemented by Texpet.”682 Yet the Judge admits that it is “undetermined” whether even one person has suffered this supposedly “serious” and un-remediable damage683 and that there is a “the lack of proof of the harm or injuries to the health of specific persons.”684 As demonstrated above, all of the scientific evidence, including the only risk assessment conducted in the case, demonstrates that there is no risk to public health

[initials]

675 BARROS P., Gerardo. Ruling on the Defendant’s Request Regarding the Documents. February 11,

2010. Cited in Ch. IV of the Motion dated Jan. 29, 2010, Annex 5. 676 Decision at 182-183. 677 Decision at 182. 678 The plaintiffs’ experts have admitted that problems with water are related to hygiene. 679 Decision at 51. 680 CONNOR, John and LANDAZURI, Robert, Answer to Mr. Cabrera’s Assertions in Relation to Alleged

Impacts on the Water Resources in the Area of the Petroecuador-Texaco Concession, at 15, Aug. 29, 2008. 681 Decision at 183. 682 Id. 683 Id. 684 Ibid. at 138.

[CERT.GEOTEXT] 177

posed by former Consortium operations.685 This category of damages (and certainly its amount) has no relation to any conduct of the Consortium. Instead, it is an effort to expropriate my client’s assets to accomplish what the plaintiffs consider a desirable public good—”a health improvement plan” and “health system” to assist all “inhabitants of the population centers” in the area “in general.”686 That this is true is shown by the judgment’s failure to cite any evidence at all to support either its broad mandate concerning public health care or the amount of its award.

While the judgment does not specifically state that the court relied on the public health care costs report of plaintiffs’ expert Picone, the dollar amount in the judgment matches that put forth by Picone. However, Picone himself disputes the judgment’s conclusion that the health care needs of residents in the Oriente were caused by the acts of my client. Dr. Picone testified that he does not “reach the conclusion that the health care needs of the population in the Oriente can be tied to any particular environmental damage.”687 Indeed, Dr. Picone specifically testified, contrary to the conclusions in the judgment, that he had no reason to believe that the health care needs of the population living near the former concession area are any different than the rest of the Oriente as a result of oil exploration and production operations.688 The judgment’s order for Chevron to pay for a “health care program” lacks any basis in law or the evidence and must therefore be reversed.

f) Additional public-health “mitigation measures” to address cases of cancer (US$ 800 million)

The judgment also awards an absolutely arbitrary US$ 800,000,000 to increase the already arbitrary health care program award, purportedly to “include treatment for the persons who suffer from cancer that can be attributed to Texpet’s operation in the Concession.”689 In doing so, the judgment claims that “there…exists sufficient indications to demonstrate the existence of an excessive number of deaths from cancer in the area of the Concession,”690 but does not cite to that evidence. Yet the Judge admits that “the reparation of particular cases of cancer has not been demanded, nor are such cases identified.”691 In fact, as noted above, the only documents in the judgment cited in connection with the possibility of an increased incidence of cancer are the San Sebastian studies, studies that were commissioned and sponsored by the FDA, which the judgment admits—as it must—do not prove a cause-and-effect relationship between residence in

685 McHUGH, Thomas. Quality Criteria of Water and Soil for the Evaluation of Environmental Data of the

Judicial Inspections, Technical Annex A4 submitted to the Court with Chevron’s motion refuting the Expert Report of Richard Cabrera. Sept. 15, 2008.

686 Decision at 183. 687 Transcript of the Deposition of Carlos Picone (Dec. 16, 2010) at 159:7-17. 688 Transcript of the Deposition of Carlos Picone (Dec. 16, 2010) at 220:20-221:3. 689 Decision at 184. 690 Id. 691 Id. at 183.


a canton near oil-producing facilities and increased risks of cancer.692 The judgment also ignores all of the other evidence submitted by my client and published in respected international medical journals disproving any link between cancer and residence in the proximity of oil production in the Oriente.693 Accordingly, the judgment’s statement that “an association [based on these San Sebastian studies]. . . will determine the existence of this causal nexus appreciating the evidence as a whole,”694 is plainly false and is not supported by the record.

The judgment also cites no evidence in the record—nor can it—supporting the speculative conclusion that US$ 800,000,000 is an appropriate award for the treatment of cancer. The judgment does not explain why the unjustified US$ 1,400,000,000 health care program it also awarded is insufficient to provide cancer treatment, the judgment fails to indicate how the award was calculated or even how many people in the former Concession area “suffer from cancer that can be attributed to Texpet’s operation,” and the judgment fails to indicate why that unknown number of people would require almost one billion dollars of health care to treat illnesses that are not identified anywhere in the record. 695 The judgment’s award for treatment of “excess [incidences of] cancer” is contrary to the evidence and entirely speculative.

g) “Mitigation measures” for “a community rebuilding and ethnic reaffirmation program” (US$ 100 million).

Finally, the judgment awards plaintiffs extra petita damages of US$ 100,000,000 for establishing a “community reconstruction and ethnic reaffirmation program.” 696 The judgment states, without reference to any evidence or acknowledging the expert reports in the record to the contrary, that “impacts on the indigenous peoples [are] a consequence of the conduct of the defendant.”697 There is no basis for this statement, and it simply misstates the historical record,

[initials]

692 Id. at 136. 693 See e.g., KELSH, Michael. Expert Report of Michael A. Kelsh: Cancer Risk and Oil Production in the

Amazon Region of Ecuador - A Review of the Epidemiologic Evidence, Sept. 26, 2010; ARANA, A. and F. Arellano, Cancer incidence near oilfields in the Amazon basin of Ecuador revisited, Occup. Environ Med. 64: 490-491, 2007, attached as Appendix H.1B, Sept. 15, 2008, at 1916-1920.

694 Decision at 136. 695 Decision at 184. 696 Decision at 183. 697 Id.

[CERT.GEOTEXT] 179

as my client has explained to the court. 698 Inconsistent with this conclusion, the judgment elsewhere states that the claimed indigenous impacts have only “been partially caused” by the activities of the Consortium.699 Certainly there is no basis in fact or law for granting an award against my client to remediate the impacts caused by “migration and/or colonization” that the judgment admits “in many cases” resulted in the “acculturization process experienced by the indigenous people.”700

There also is no basis for the sum awarded by the judgment. The judgment claims that the award is calculated using the figures from the CAIMAN project, which cost US$ 9.5 million over four years.701 The judgment then states that extending the CAIMAN project to 20 years “which proportionately increases the costs.”702 There is no way, however, to arrive at the US$ 100 million award in the judgment using this methodology. The award granted in the judgment, which does not match any expert statement or evidence in the record, is simply unexplained, and the plaintiffs never submitted any expert report regarding the indigenous population.

2. The lower court Judge clearly acted in violation of the law by imposing a possible payment against the defendant for punitive damages.

Whereas clause number FOURTEEN of the appealed judgment, addresses punitive damages to the tune of over US$ 8.646 billion, the stated purpose of which would be: “having at once exemplary and dissuasive purpose [against undesirable conduct].” 703 This entire matter is illegal, for several reasons.

First, as previously discussed, such “compensation” on its own amounts to “extra petita.” In contrast to all other categories of “extra petita” damages ordered in the judgment (such as cancer treatment), in this case, the Judge did not even attempt to relate the punitive damages to any other element of the plaintiffs’ claim. This on its own is fatal for the determination of a punitive damages, and, in fact, for the judgment overall.

Second, such compensation (even had it been requested) is in conflict with the laws of Ecuador. Pursuant to the provisions of the Civil Code, the actions giving rise to extra-contractual responsibility only allow reclamation of compensatory damages in order to fully compensate the plaintiff. Article 1572 of the Civil Code specifically limits compensation for illicit acts to consequential damages and plaintiffs’ lost profits:

[initials]

698 WASSERSTROM, Robert. Roads, Oil and Native Peoples: A Controlled Comparison on the

Ecuadorian Frontier, attached as Annex 17 to Chevron’s filing of September 16, 2010 at 4:35 p.m. 699 Decision at 172. 700 Ibid (Section 10.3). 701 Id. at 184. 702 Id. 703 Id. at 185.

[CERT.GEOTEXT] 180

“Art. 1572.- [Compensation for damages].– Damages include consequential damages and lost profit, regardless of whether they result from failure to comply with the obligation, or improper performance of the obligation or delay in the performance.”

The Supreme Court (today’s National Court) recently confirmed that Ecuadorian legislation does not authorize the imposition of punitive damages:

“It shall be recalled that our legal system has accepted a system of remediation with regard to compensation or indemnity—understood to be sufficient to rectify the damage and to enable the victim to return to its previous state prior to when the damage was suffered—and not punitive, which is typical of legal systems such as common law, in which, as applicable, courts adhere not only to the compensatory pretense, but also and very frequently sentence those who have caused damages to remediation in the form of a punishment or sentence in order to prevent similar conduct or failure to act from occurring in the future.”704

Even Mr. Donziger, a member of the plaintiffs’ legal team, admitted privately that

“[p]unitive [damages] [have] no basis in Ecuadorian law, but we could push for them and try nonetheless.”705 And they certainly did.

Additionally, Ecuadorian civil courts are barred from applying sanctions. In general, sanctions may only be applied in criminal proceedings which respect the constitutional guarantee of nullum crimen, nulla poena sine lege, and the presumption of innocence, among others. Pursuant to the provisions of Article 132, Number 2 of the 2008 Constitution, a punishment can only be established by law, and must precisely define, or categorize, the acts leading to punishment. Consequently, the imposition of punitive damages by a civil judge, in the absence of any current law directly authorizing him to do so, would violate the Ecuadorian Constitution.706

704 Asociación de Negros del Ecuador (ASONE) y otros vs. Petroecuador y sus filiales [Association of

Blacks in Ecuador (ASONE), et. al., vs. Petroecuador and its affiliates], Judgment of the Supreme Court of Justice, First Civil and Commercial Division, dated March 30, 2006. Proceeding 120-06, published in Official Register 381 of October 20, 2006.

705 E-mail from Steven Donziger to Josh Lipton, dated April 22, 2007, at pg. 2, attached as Annex 1 to the brief submitted by Chevron on December 20, 2010 at 4:30pm. (DONZ00038322).

706 ÁLVAREZ, Agustín. Repensando la incorporación de los daños punitivos [Rethinking the Assignment of Punitive Damages]. http://www.acaderc.org.ar/doctrina/articulos/repensando-la-incorporacion-de-los-danos-punitivos. pg. 2 (citing PICASSO, Sebastián. Nuevas categorías de daños en la Ley de Defensa del Consumidor [New Categories of Damages in the Law of Consumer Defense] Sp. Sup. Amendment to the Law of Consumer Defense. Ed. La Ley, Buenos Aires, 2008 and also in Sobre los denominados daños punitivos [So-Called Punitive Damages], LL 2007-F-1154).


This non-acceptance of punitive damages in Ecuadorian law is shared by other countries which are governed by a civil law tradition. In Mexico, “the U.S. precedent of evolutionary jurisprudence for moral damages, or punitive damages, does not even exist.” 707 The civil codes of Peru708 and Chile709 clearly stipulate that plaintiffs only have the right to compensation for consequential damages and lost profits. 710 For these and other civil law countries, punitive damages contravene the long-held principle that a plaintiff may be compensated, but may not be unjustly enriched. This reflects the opinion that it is unjust to grant an indemnity that is greater than the damage itself. 711 As the Colombian Constitutional Court explains, “restitution for the damage should be directly related to the amount of damage caused, but it cannot exceed this limit.” “[I]f the damage is compensated for in excess of what was actually caused, enrichment without just cause occurs for the victim.” 712 For this reason, the majority of civil law countries do not accept enforcement of foreign decisions granting punitive damages. 713

The appealed judgment does not affirm that any basis existed under Ecuadorian law on which to impose punitive damages, and did not recognize, or much less respect, the current law which prohibits these damages, despite the fact that Chevron mentioned this repeatedly.714 Apart from a vague reference to “universal principles of law,” the only and alleged authorities of the lower court Judge were the writings of an Argentine, Ramón Pizarro,715 which was also the only and alleged authority on Civil Law that the plaintiffs mentioned as well. This author is entirely misquoted. This author only analyzes punitive damages as they are treated in Anglo-Saxon law; he does not attempt to state that they are applicable in legal systems that abide by a Civil Law tradition. 716 In fact, punitive damages may not be imposed in Argentina. The Supreme

[initials]

707 Muestra México Atraso, El Norte – Monterrey, November 2004, http://vlex.com/vid/78611048. 708 Article 1985 of the Civil Code of Peru. 709 See Articles 1556 and 2314 of the Civil Code of Chile. 710 The modern doctrine of these countries, like in Ecuador, also takes into account compensation for moral

damages, but this indemnity is limited to the damage caused, and was not requested by the plaintiffs in their complaint.

711 PICAZO-DÍEZ, Luís. Derecho de Daños [Damage Law]. Editorial Civitas. Madrid. 1999. Pg. 46. 712 GARCÍA, Laura and HERRERA, María, “El Concepto de los Daños Punitivos o Punitive Damages”

[“The Concept of Punitive Damages”], Revista Estudios Socio-Jurídicos [Journal of Socio-Legal Studies], Vol. 5, No. 001, Universidad del Rosario, Bogotá, Colombia, at pg. 213 (citing HENAO, Juan, “El daño. Análisis comparativo de la responsabilidad extracontractual del Estado en el derecho colombiano y francés” [“Damages. Comparative Analysis of the State’s Extra-Contractual Responsibility in Colombian and French Law], Universidad Externado de Colombia, Bogotá, at pg. 45).

713 LIPTAK, Adam, “Foreign Courts Wary of U.S. Punitive Damages,” The New York Times, March 26, 2008.

714 See Chevron Initial Alegato, submitted Jan. 6, 2011 at 5:55pm, at § 7.4.6. 715 Decision at 185. 716 See PICAZO-DÍEZ, Luís. Derecho de Daños [Damages Law]. Editorial Civitas. Madrid. 1999. Pg. 45.

[CERT.GEOTEXT] 182

Court of Argentina has categorically stated: “[t]hat ‘punitive damages’ have no place within our legal system…[t]hese so-called punitive damages are foreign to our system of civil liability.”717

Third, even by virtue of the law of countries such as the United States that permit punitive damages, the considerations on which the ruling was based to try to justify the indemnification are illegitimate and would not support this damages award. According to U.S. law, “[p]erhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.”718 This is due largely to the fact that due process demands that a “penalty should be reasonably predictable,” such that the actor can “look ahead with some ability to know what the stakes are in choosing one course of action or another.”719 These factors preclude the awarding of punitive damages in this case. What is most noteworthy is that there is no basis for determining that TexPet’s conduct in the Consortium’s operation was reprehensible, when the judgment attempted to impose a theory of strict liability and, consequently, even waived the need to prove that TexPet acted negligently, much less reprehensibly. Consequently, the lower court Judge did not specify an allegedly reprehensible conduct when he imposed punitive damages (apart from an imprecise reference to “the antisocial nature of the misconduct”720), and neither could he have done so, since TexPet’s work was supervised and approved by the State of Ecuador, and TexPet was complying with the regulations and standards in effect during the Consortium’s existence.721 In other words, the necessary reprehensibility, and thus also the necessary predictability, are utterly lacking when, as here, the award of punitive damages also depends (as, indeed, does the entire award of damages) on retroactive application of law.

For similar reasons, the way in which Chevron allegedly submitted this case to trial, in comparison with the nature of the underlying conduct in question, does not constitute grounds for awarding punitive damages. However, it is clear in the lower court Judge’s judgment that this was the principal basis of his decision to award punitive damages.722

Because of a lack of grounds for finding conduct reprehensible, the lower court Judge is left with nothing more than to try to justify the award of punitive damages with a reference to Chevron’s

[initials]

717 Asociación Civil Club Atlético Boca Juniors v. Julian Martinez, National Chamber of Appeals, Federal

Civil and Commercial Division, Courtroom 2, dated October 27, 2005, Case 4.808/98 (citing Bustamante Alsina, J., LL. 1994-B, 860).

718 BMW of N. Am., Inc. v. Gore, 517 U.S. 559, p. 575 (1996), submitted as Annex 15 to Chevron’s brief of October 29, 2010 at 5:20 p.m.

719 Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, p. 2627 (2008), submitted as Annex 16 to Chevron’s brief of October 29, 2010 at 5:20 p.m.

720 Decision at 185. 721 Answer to complaint submitted at the Conciliation Hearing held on October 21, 2003 at 9:10 a m.,

Paragraphs §§ II.A.1.2-3, II.A.1.15, II.B.1, Record at 243-267 (246-247v, 253-253v). 722 Compare Decision at 184-85 (§ 14) with State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,

422-23 (2003), attached as Annex 17 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

[CERT.GEOTEXT] 183

alleged assets, referring “especially” to its “wealth.” 723 However, the U.S. courts have categorically rejected using the defendant’s wealth as a basis for determining punitive damages.724

Even more fundamentally, and as regards this same issue, it should be pointed out that illicit enrichment is not one of the recognized criteria used by the U.S. courts to assess punitive damages,725 but it is clear that the lower court Judge’s damages award depended in large part on notions of illicit enrichment. Although the Judge tried not to do it, he listed among the relevant factors “the benefits obtained through the wrong, as would be greater profits obtained by a lower cost of oil production,”726 which is not just a concept of unjust illicit enrichment, but is that on which the report of the expert paid by the plaintiffs, Jonathan S. Shefftz, on this matter was explicitly based, and is contained in the useless and illegal brief of September 16, 2010 at 5:15 p.m. Also, it is at least odd that the amount of punitive damages awarded by the Judge below (US$ 8.646 billion) is within US$ 200 million of, and just a few percentage points different from, the amount that the Cabrera report, which the Judge below allegedly did not use as a basis, recommended (US$ 8.42 billion).727 However, Mr. Cabrera recommended punitive damages for “unjustified enrichment.”728 Consequently, despite that Judge’s protests, it is clear that he based his award of punitive damages on factors that are not valid, not even in countries which, unlike Ecuador, permit them.

Even if considerations of unjust enrichment were appropriate as a basis for the award of punitive damages, which they are not, they would not even remotely justify the over US$ 8 billion that the Judge awarded. Chevron showed the judge that, by any rational calculation, TexPet only received approximately US$ 500 million from its work in connection with the Consortium.729

[initials]

723 Decision at 185. 724 See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 427 to 428 (2003), submitted as Annex

17 to Chevron’s brief of October 29, 2010 at 5:20 p.m. (“The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.”); Gore, 517 U.S. at 585 (“The fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitlement to fair notice” of its exposure to punitive damages); see also id. at 591 (Breyer, J., concurring) (“[Wealth] provides an open-ended basis for inflating awards when the defendant is wealthy . . . . That does not make its use unlawful or inappropriate; it simply means that this factor cannot make up for the failure of other factors, such as ‘reprehensibility,’ to constrain significantly an award that purports to punish a defendant’s conduct”).

725 See State Farm, 538 U.S. at 424 (using the “[defendants’] wrongfully obtained competitive advantages” or “illicit practice[s] [that] increased profits” to calculate punitive indemnification “is unconvincing” as a question of due process).

726 Decision at 185. 727 Amplifying expert report of Eng’r Richard Cabrera dated November 17, 2008 at 8:25 a m., Record at

152949 -153000 (152978). 728 Expert report of Eng. Richard Cabrera dated April 1, 2008 at 8:30 a m., § 7.3, at 55-56, Record at

134228-134289 (134284-134285); Plaintiffs’ Motion filed September 16, 2010 at 5:15 p.m., § 1.3, at 16-18. 729 See Chevron Initial Alegato, submitted January 6, 2011 at 5:55 pm, § 7.4.6, at 246-47.

[CERT.GEOTEXT] 184

The judge paid no attention to this evidence when he ordered my client to pay over sixteen times this amount in punitive damages.

Finally, it is confirmed that the lower court Judge acted at the margins of the law in conditioning the imposition of punitive award of damages on whether or not Chevron offers “a public apology . . . to those affected by Texpet’s operations in Ecuador,” [and] “ published at the latest within 15 days, in the principal print media in Ecuador and in the country of the defendant’s domicile, on three different days.” This “lesson” for Chevron is to be “a symbolic measure of moral redress and of recognition of the effects of its misconduct.”730 The Judge below did not cite any law or judicial decision in Ecuador that would support such a condition and such sanction (which is completely unsurprising, since Ecuadorian law does not allow any punitive damages, conditional or otherwise). Instead, he cited only a decision of the Inter-American Court of Human Rights, Hermanos Gomez Paquiyauri v. Peru, which has no value under Ecuadorian law and which cannot be used as the basis of any ruling, [much] less in this proceeding which is governed by the rules of civil procedure. Furthermore, that case, which bears no similarity to this one, is criminal in nature, involving actions of the State, while this case is civil in nature and is between private parties by virtue of internal Ecuadorian law; and it also does not involve actions or even errors which, as in that case, the accused admitted. In this case, rather, the plaintiffs’ claims are, in the best case, unfounded and weak in evidence and at all times have been questioned in their entirety by my client.

Consequently, not only did the lower court Judge not identify any improper conduct by my client, but neither could he impose, pursuant to Ecuadorian law, any punitive sanction whatsoever, nonexistent in Ecuadorian law, much less deny my client its constitutional right to due process by sanctioning it solely because it defended itself, and imposing an additional cost of USD$ 8 billion if it exercised its right to file an appeal. The judge in trying to coerce an unfounded confession has sacrificed Chevron’s fundamental right to a defense, particularly its right of equal access to the court (the Judge did not put a price on the plaintiffs’ appeal), to his desire to insulate his egregious judgment from both appellate review here in Ecuador and any dispute over its enforcement abroad.

Therefore, that which is addressed in “Whereas Clause” FOURTEEN of the appealed ruling, regarding punitive damages, has no value, legal basis or evidence whatsoever, and should be revoked.

I. In the Court Order of March 4, 2011 which Clarifies and Expands upon the Judgment, the Judge Compounded the Myriad Errors in the Illegitimate Appealed Judgment.

In the order clarifying the expanding upon the judgment of March 4, 2011 at 3:10 p.m., which responded to Chevron’s motion for clarification and expansion of the judgment, the Judge below rejected its last opportunity to remedy some of the injustices committed in this case. As my

[initials]


[CERT.GEOTEXT] 185

client will explain in greater detail in a subsequent alegato, on almost every point it addressed, the court only compounded the judgment’s errors.

Aside from failing to remedy any of the issues discussed above, the court’s order clarifying and expanding upon the judgment further highlighted the indefensibility of the judgment. For example, the Judge below declared that he had “heard” and “decided” the “Texaco-Chevron merger issue” but simply ignored (yet again) the fact that the plaintiffs did not ask the court to lift the corporate veil between Chevron and Texaco in their complaint.731 The court also stated that the plaintiffs “relied on good faith and were tricked” by the reverse triangular merger between Texaco and a Chevron subsidiary, but yet again, the lower court Judge disregarded the fact that the plaintiffs were represented by sophisticated counsel and that Texaco expressly informed the plaintiffs of the existence of an agent that was sufficiently authorized to answer complaints in Ecuador.732 Likewise, in its ruling, the court on one hand purported to resolve the fraud permeating this lawsuit simply by discarding the Cabrera Report,733 but on the other hand, relied on the plaintiffs’ specialist Douglas Allen, who based his work on the Cabrera Report.734

The treatment given by the Judge below to the merits of the plaintiffs’ case and the damages awarded are equally reprehensible. For example, the Judge below did not take into account the only settling expert report in the case (the report for Sacha 53).735 In addition to substituting the opinion of the court-appointed settling experts with his own lay opinion, the Judge below failed to recognize that the primary objective of the settling experts was to issue a neutral opinion, one that the court could not simply dismiss as an obstacle to its rendering a judgment that subjectively favors one of the parties.. Moreover, in several parts of the ruling, the Judge below admitted that it awarded damages against Chevron that are speculative at best. For example, the Judge below ordered Chevron to pay for water-remediation projects, but did not even identify the bodies of water to be remediated or specify how they should be cleaned.736 After asserting that it is not appropriate for the Judge to provide such basic details, the Judge below essentially delegated his (non-delegable) judicial function to the Amazon Defense Front by allowing it to make that determination.737

VI. PETITIONS.

Based on what has been indicated herein, I hereby appeal to the court above, from the judgment of February 14, 2011, at 8:37 a.m. and from the court’s clarification and expansion of the judgment of March 4, 2011, at 3:10 p.m., in all aspects unfavorable to me, and ask that the

731 Ruling of March 4, 2011 at 3:10 p m., at 2-3. 732 Id. at 5. 733 Id. at 8. 734 Id. at 14-15. 735 Id. at 11-12. 736 Id. at 17-18. 737 Id. at 18.


Sole Chamber of the Provincial Court of Justice of Sucumbíos revoke the judgment handed down by the Acting President of the Court, and, declaring it null and void, find as follows:

A. PRINCIPAL PETITION. Nullification of the Entire Proceeding:

Nullity of the entire proceeding from Page 1 of the record, for any of the grounds that in some way relate to the most serious errors that impair the validity of the proceeding, which include but are not limited to:

A.1. Nullification of the proceedings due to lack of Jurisdiction of the President of the Provincial Court of Justice of Sucumbíos to hear a lawsuit against Chevron.

A.2. Nullification of the proceedings due to lack of competent jurisdiction of the Court below to hear this case. The President of the Provincial Court of Justice of Sucumbíos does not have competent jurisdiction to hear actions for contingent damages contemplated in the Civil Code.

A.3. Nullification of the proceedings due to improper joining of actions: It is improper to join in the same lawsuit, actions derived from Articles 2241 and 2256 (current Articles 2214 and 2229) of the Civil Code, with actions arising under the Environmental Management Act.

A.4. Nullification of the proceedings due to violation of the procedure applicable to the case. Summary verbal proceedings are not applicable to hear and decide lawsuits based on Articles 2241 and 2256 (current Articles 2214 and 2229) of the Civil Code.

A.5. Nullification due to violation of the guarantees of due process and omission of substantial procedural requirements.

A.6. Nullification of the proceedings due to falsification of the signatures of the plaintiffs in the ratification of the complaint, pursuant to Article 1698 of the Civil Code, and Articles 339 and 341 of the Penal Code. The judgment is nothing but the culmination of proceedings that were defective starting with the complaint itself, which must be declared null and void.

A.7. Nullification of the complaint due to failure to appear before the Clerk of the court below, by the plaintiffs [who] did not know how to read and write, to place their fingerprints, in accordance with law (Article 1010 of the Code of Civil Procedure, in correlation to Article 8 of the Regulations on the Assembling of Case Files and Judicial Records).

A.8. Nullification of the proceedings due to lack of representative capacity and power of attorney of the plaintiffs’ common counsel, on account of defects incurred in the ratification of the complaint, both on account of the falsification of the plaintiffs’ signatures, as well as due to the failure to appear by the plaintiffs who did not know how to or were unable to sign, before the Court clerk.

[initials]

A.9. Nullification of the proceedings due to procedural fraud. The plaintiffs have perpetrated acts of intentional misconduct and procedural fraud that invalidate the

[CERT.GEOTEXT] 187

proceedings and obligate the Sole Chamber of the Provincial Court of Sucumbíos to declare the nullification of the entire case.

B. FIRST SUBSIDIARY PETITION. Partial Nullification of the Proceedings:

B.1. Nullification due to lack of sufficient authorization to waive the judicial inspections, insofar as express authorization was not obtained from each of the plaintiffs, based on the ruling of January 22, 2007, at 9:00 a.m., found on pages 125,656 to 125,658 (reverse), which should be considered jointly with the ruling of January 29, 2007, at 10:00 a.m., which qualified as an ancillary matter the fact that 7 plaintiffs had not ratified the waiver of judicial inspections, found on pages 126,152 to 126,152 (reverse).

B.2. Nullification of the entire proceedings under Judge Ordóñez subsequent to August 26, 2010, that is, as of the ruling of August 31, 2010, at 4:00 p.m., found on page 197,740 of the record.

C. SECOND SUBSIDIARY PETITION. Obligation for The Court to Recuse Itself:

In the event, which is not conceded, that the Provincial Court does not declare the nullification of the proceedings, it should recuse itself, and therefore abstain from deciding on the merits, based on one or more of the following considerations:

C.1. The judge erred in failing to recuse himself from pronouncing judgment against Chevron which, as has been proven in the record, is not a legitimate adversary party to be sued in this litigation.

C.2. The judge should have recused himself from pronouncing judgment on the merits, because Petroecuador’s absence in these proceedings prevented the proper defendant parties from being included in this multiple-defendant matter.

C.3. Likewise, the judge should have recused himself from pronouncing judgment on the merits, because his ruling therein is related to public property and/or to the property and infrastructure of Petroecuador, a state-owned company, without those in charge of that company being included so that the judgment could be executed and/or so that they could defend their interests to the extent that they might be affected.

D. THIRD SUBSIDIARY PETITION. Plaintiffs’ Lack of Standing:

In the event, which is not conceded, that the Sole Chamber of this Provincial Court does not declare the nullification of the proceedings and does not recuse itself from pronouncing judgment on the merits, based on this appeal I ask the Court to revoke the judgment handed down by the Acting President of the Provincial Court of February 14, 2011, at 8:37 a.m., because it is contrary to essential law, and you should dismiss the complaint on the grounds that the plaintiffs lack standing, based, among other things, on the following considerations:

D.1. Failure to provide legal foundation of the plaintiffs’ claims:


D.1.1 Application of the Environmental Management Act of 1999 to find liability for damages violates the principle of non-retroactivity of the law.

D.1.2 Articles 2214 and 2229, on which the judgment is based, have been improperly applied, because individual damages were not claimed or demonstrated, nor was liability attributed for the same.

D.1.3 Actions based on Articles 2214 and 2229 of the Civil Code are barred by the statute of limitations pursuant to Article 2235 of the Civil Code itself.

D.1.4 Article 2236 is inapplicable to this case and cannot serve as a foundation for payment of indemnifications or redress of harm that has already occurred.

D.1.5 The judge ordered a possible payment of punitive damages, which has no legal basis in Ecuadorian law and was not claimed by the plaintiffs.

D.1.6 There is no legal or procedural foundation allowing the judge to lift the corporate veil of TexPet, Texaco Inc. or Chevron, which was not even moved for by the plaintiffs.

D.2. Failure to meet the requirements to apply the tort liability regime:

D.2.1 The court below incorrectly concluded, without foundation, that the plaintiffs had proven the elements of tort liability.

D.2.2 There is no wrongful act proven. The practices of TexPet did not violate its duty of care as an operator, as the judge arbitrarily concluded.

D.2.3 The damage has not been validly proven. The finding of damage by the judge contradicts the evidence validly produced in the proceedings and is the result of falsification and manipulation on the plaintiffs’ part of the reports of the experts nominated by the plaintiffs for the judicial inspections.

D.2.4 The alleged damage that the judge unjustifiably attributed to Chevron was duly REMEDIED to the satisfaction of the Ecuadorian Government, which represents all the citizens, Petroecuador and its Affiliates. Likewise, much of that damage was remedied by the Ecuadorian State and/or Petroecuador, who assumed responsibility for the environmental condition of the area of the former concession,


releasing Texpet and also Chevron from all legal and contractual liability.

D.2.5 The relationship of causality has not been validly established. The analysis of causality in the challenged judgment incorrectly applied the law and ignored the absence of evidence of causality. The judge obligated my client to respond for acts that, in the proceedings, have been demonstrated to have been caused by third persons.

D.2.6 The court below did not identify valid evidence of causality involving TexPet with respect to any of the alleged damage, and ignored evidence of other possible causes.

D.2.7 The determination of alleged “environmental damage” made by the court below is completely speculative, without foundation and without any valid evidence.

D.2.8 The valuation of the damage is absolutely arbitrary; proper grounds have not been laid for the same, and it has no basis in any valid evidence.

D.3. The complaint should have been be rejected on the grounds of res judicata, based on the settlement agreements signed with the Government of Ecuador and the provincial and local governments.

D.4. The judgment awards the plaintiffs more than what they requested, violating the limits of the principle of congruency.

E. FOURTH SUBSIDIARY PETITION. Violations by the Judge in the admission and weighing of the evidence, which obligate the Sole Chamber of the Provincial Court to revoke the judgment and in its place to render another one that dismisses the lawsuit on the grounds of lack of evidence:

E.1. The judge incorrectly concluded that the plaintiffs had legally proven the existence of damage in the area of operation of the former Petroecuador-TexPet Consortium, as well as the liability of my client. This conclusion contradicts all of the valid evidence produced in these proceedings.

E.2. The judge violated the legal provisions applicable to the admission and weighing of documentary evidence.

E.3. The judge violated the legal provisions applicable to the admission and weighing of the testimony of witnesses.

E.4. The judge violated the legal provisions applicable to the admission and weighing of expert evidence.

[initials]

E.5. Misinterpretation of the principle of sound judgment and arbitrary, discretional application of the evidence.

[CERT.GEOTEXT] 190

E.6. The procedural evidence demonstrates that conditions that expose local residents to harmful concentrations of hydrocarbons or metals within the area of the former concession do not exist.

E.7. The Plaintiffs have admitted that the damage has not been proven, and the judge has ignored that admission.

E.8. The disqualification by the court below of the methodology of the experts who were nominated by Chevron unfounded and is biased.

E.9. The court below improperly indicated that there is contamination in the area of the former concession.

E.10. The Court improperly identified harm to human health and loss of indigenous culture in the concession area.

E.11. As specifically indicated herein, the judge refused to consider critical evidence submitted by Chevron.

E.12. The judge admitted the conclusions of supplementary reports of experts contracted and paid by the plaintiffs, which, pursuant to law, had no evidentiary value. The court below improperly based itself on a document submitted by the plaintiffs on September 16, 2010, at 5:15 p.m. and the attachments thereto, of “specialized consultant[s]” contracted and paid by the plaintiffs, which is not proper evidence and simply perpetuates the plaintiffs’ fraud.

E.13. The judge below refused to allow the settling experts to complete their necessary work, even though he recognized in the ruling that there are contradictory (divergent) opinions and conclusions.

E.14. The judge refused to open summary evidentiary proceedings with respect to the essential errors alleged by Chevron.

Consideration of the Appeal

This pleading appeals everything in the judgment that is unfavorable to my client, and the fact that specific allegations are made in no way limits the scope of this appellate petition, which should be considered in its entirety and not be limited to the prayer-for-relief section. Despite the extensive, well-founded presentation that my client has made, I hereby state for the record that the detailed arguments of my appeal will duly set forth in the briefs which, in defense of my clients interests, I shall file in due time at this appellate level.

For service of process, I indicate Court Mailbox 63 of the Palace of Justice of the city of Nueva Loja (Lago Agrio).

The following attorneys are authorized to intervene on behalf of my client: Enrique Carvajal Salas; Patricio Campuzano Merino; Alberto Racines Enríquez; and Diego Larrea Alarcón,


who may individually or jointly submit on my behalf and that of my client all filings necessary to pursue this case, and who may intervene in any procedural hearing.

I sign in my capacity of Counsel of Record of Chevron Corporation, in accordance with the publicly recorded power of attorney on file in this case.

[signature] Dr. Adolfo Callejas Ribadeneira

Attorney Pichincha Bar Association Member No. 1138

[stamp:] SUCUMBÍOS PROVINCIAL COURT Office of the President

Received in Nueva Loja on March 9, 2011 at 4:05 p.m. in 2 copies

[signature] Clerk of Court
