Chevron 2013 Annual Report Download - page 51

Chevron Corporation 2013 Annual Report 49
to be “embargoed,” requiring third parties to withhold 40
percent of any payments due to Chevron Argentina S.R.L.
and ordering banks to withhold 40 percent of the funds in
Chevron Argentina S.R.L. bank accounts. On December
14th, 2012, the Argentinean court rejected a motion to revoke
the Freeze Order but modied it by ordering that third par-
ties are not required to withhold funds but must report their
payments. e court also claried that the Freeze Order relat-
ing to bank accounts excludes taxes. On January 30, 2013,
an appellate court upheld the Freeze Order, but on June 4,
2013 the Supreme Court of Argentina revoked the Freeze
Order in its entirety. On December 12, 2013, the Lago Agrio
plaintis served Chevron with notice of their ling of an
enforcement proceeding in the National Court, First Instance,
of Argentina. Chevron intends to vigorously defend against
the proceeding. Chevron continues to believe the provincial
court’s judgment is illegitimate and unenforceable in Ecuador,
the United States and other countries. e company also
believes the judgment is the product of fraud, and contrary to
the legitimate scientic evidence. Chevron cannot predict the
timing or ultimate outcome of the appeals process in Ecuador
or any enforcement action. Chevron expects to continue a
vigorous defense of any imposition of liability in the
Ecuadorian courts and to contest and defend any and all
enforcement actions.
Chevron and Texpet led an arbitration claim in
September 2009 against the Republic of Ecuador before an
arbitral tribunal presiding in the Permanent Court of Arbi-
tration in e Hague under the Rules of the United Nations
Commission 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 judgment against Chevron in the Lago
Agrio litigation constitutes a violation of Ecuador’s obliga-
tions under the BIT. On February 9, 2011, the Tribunal
issued an Order for Interim Measures requiring the Republic
of Ecuador 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 Chevron in
the Lago Agrio case pending 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 further interim measures on Janu-
ary 4, 2012, and the Republic of Ecuador opposed Chevron’s
application and requested that the existing Order for Interim
Measures be vacated on January 9, 2012. On February 16,
Note 14 Litigation – Continued
On July 2, 2013, the provincial court in Lago Agrio
issued an embargo order in Ecuador ordering that any funds
to be paid by the Government of Ecuador to Chevron to sat-
isfy a $96 award issued in an unrelated action by 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 must be paid to the Lago
Agrio plaintis. e award was issued by the tribunal under
the United States-Ecuador Bilateral Investment Treaty in
an action led in 2006 in connection with seven breach of
contract cases that Texpet led against the Government of
Ecuador between 1991 and 1993. e Government of Ecua-
dor has appealed the tribunal’s award. A Federal District
Court for the District of Columbia conrmed the tribunal’s
award, and the Government of Ecuador has appealed the
District Court’s decision.
Chevron has no assets in Ecuador, and the Lago Agrio
plaintis’ lawyers have stated in press releases and through
other media that they will seek to enforce the Ecuadorian
judgment in various countries and otherwise disrupt
Chevron’s operations. On May 30, 2012, the Lago Agrio
plaintis led an action against Chevron Corporation,
Chevron Canada Limited, and Chevron Canada Finance
Limited in the Ontario Superior Court of Justice in Ontario,
Canada, seeking to recognize and enforce the Ecuadorian
judgment. On May 1, 2013, the Ontario Superior Court of
Justice held that the court has jurisdiction over Chevron and
Chevron Canada Limited for purposes of the action, but
stayed the action due to the absence of evidence that Chevron
Corporation has assets in Ontario. e Lago Agrio plaintis
appealed that decision. On December 17, 2013, the Court of
Appeals for Ontario armed the lower court’s decision on
jurisdiction and set aside the stay, allowing the recognition
and enforcement action to be heard in the Ontario Superior
Court of Justice. Chevron has appealed the decision concern-
ing jurisdiction to the Supreme Court of Canada and, on
January 16, 2014, the Court of Appeals for Ontario granted
Chevron’s motion to stay the recognition and enforcement
proceeding pending a decision on the admissibility of the
Supreme Court appeal.
On June 27, 2012, the Lago Agrio plaintis led an
action against Chevron Corporation in the Superior Court of
Justice in Brasilia, Brazil, seeking to recognize and enforce the
Ecuadorian judgment. On October 15, 2012, the provincial
court in Lago Agrio issued an ex parte embargo order that
purports to order the seizure of assets belonging to separate
Chevron subsidiaries in Ecuador, Argentina and Colombia.
On November 6, 2012, at the request of the Lago Agrio
plaintis, a court in Argentina issued a Freeze Order against
Chevron Argentina S.R.L. and another Chevron subsidiary,
Ingeniero Nortberto Priu, requiring shares of both companies