Chevron 2011 Annual Report Download - page 53

Chevron Corporation 2011 Annual Report 51
Chevron and Texpet led an arbitration claim in Septem-
ber 2009 against the Republic of Ecuador before an arbitral
tribunal presiding in the Permanent Court of Arbitration in
e Hague under the Rules of the United Nations Commis-
sion on International Trade Law. e claim alleges violations
of the Republic of Ecuador’s obligations under the United
States–Ecuador Bilateral Investment Treaty (BIT) and
breaches of the settlement and release agreements between the
Republic of Ecuador and Texpet (described above), which are
investment agreements protected by the BIT. rough the
arbitration, Chevron and Texpet are seeking relief against the
Republic of Ecuador, including a declaration that any judg-
ment against Chevron in the Lago Agrio litigation constitutes
a violation of Ecuador’s obligations under the BIT. On Febru-
ary 9, 2011, the Tribunal issued an Order for Interim
Measures requiring the Republic of Ecuador to take all mea-
sures at its disposal to suspend or cause to be suspended the
enforcement or recognition within and without Ecuador of
any judgment against Chevron in the Lago Agrio case pend-
ing further order of the Tribunal. On January 25, 2012, the
Tribunal converted the Order for Interim Measures into an
Interim Award. Chevron led a renewed application for fur-
ther interim measures on January 4, 2012, and the Republic
of Ecuador opposed Chevron’s application and requested that
the existing Order for Interim Measures be vacated on Janu-
ary 9, 2012. On February 16, 2012, the Tribunal issued a
second Interim Award mandating that the Republic of Ecua-
dor take all measures necessary (whether by its judicial,
legislative or executive branches) to suspend or cause to be
suspended the enforcement and recognition within and with-
out Ecuador of the judgment against Chevron and, in
particular, to preclude any certication by the Republic of
Ecuador that would cause the judgment to be enforceable
against Chevron. Chevron expects to continue seeking perma-
nent injunctive relief and monetary relief before the Tribunal.
rough a series of recent U.S. court proceedings initi-
ated by Chevron to obtain discovery relating to the Lago
Agrio litigation and the BIT arbitration, Chevron has
obtained evidence that it believes shows a pattern of fraud,
collusion, corruption, and other misconduct on the part of
several lawyers, consultants and others acting for the Lago
Agrio plaintis. In February 2011, Chevron led a civil law-
suit in the Federal District Court for the Southern District of
New York against the Lago Agrio plaintis and several of
their lawyers, consultants and supporters, alleging violations
of the Racketeer Inuenced and Corrupt Organizations Act
and other state laws. rough the civil lawsuit, Chevron is
seeking relief that includes an award of damages and a decla-
ration that any judgment against Chevron in the Lago Agrio
litigation is the result of fraud and other unlawful conduct
and is therefore unenforceable. On March 7, 2011, the Federal
District Court issued a preliminary injunction prohibiting the
Lago Agrio plaintis and persons acting in concert with them
from taking any action in furtherance of recognition or
enforcement of any judgment against Chevron in the Lago
Agrio case pending resolution of Chevron’s civil lawsuit by the
Federal District Court. On May 31, 2011, the Federal District
Court severed claims one through eight of Chevron’s com-
plaint from the ninth claim for declaratory relief and imposed
a discovery stay on claims one through eight pending a trial
on the ninth claim for declaratory relief. On September 19,
2011, the U.S. Court of Appeals for the Second Circuit
vacated the preliminary injunction, stayed the trial on Chev-
ron’s ninth claim, a claim for declaratory relief, that had been
set for November 14, 2011, and denied the defendants’ man-
damus petition to recuse the judge hearing the lawsuit. e
Second Circuit issued its opinion on January 26, 2012 order-
ing the dismissal of Chevron’s ninth claim for declaratory
relief. On February 16, 2012, the Federal District Court lifted
the stay on claims one through eight.
e ultimate outcome of the foregoing matters, including
any nancial eect on Chevron, remains uncertain. Manage-
ment does not believe an estimate of a reasonably possible loss
(or a range of loss) can be made in this case. Due to the
defects associated with the Ecuadorian judgment, the 2008
engineer’s report on alleged damages and the September 2010
plaintis’ submission on alleged damages, management does
not believe these documents have any utility in calculating a
reasonably possible loss (or a range of loss). Moreover, the
highly uncertain legal environment surrounding the case
provides no basis for management to estimate a reasonably
possible loss (or a range of loss).
Note 15
Taxes
Income Taxes
Year ended December 31
2011 2010 2009
Taxes on income
U.S. Federal
Current $ 1,893 $ 1,501 $ 128
Deferred 877 162 (147)
State and local
Current 596 376 216
Deferred 41 20 14
Total United States 3,407 2,059 211
International
Current 16,548 10,483 7,154
Deferred 671 377 600
Total International 17,219 10,860 7,754
Total taxes on income $ 20,626 $ 12,919 $ 7,965
In 2011, before-tax income for U.S. operations, including
related corporate and other charges, was $10,222, compared