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2 Jun 2011

Lawrence Hurley, New York Times

Chevron Looks to Arbitrators to Save It From $18B Pollution Payout

The final battle in Chevron's…war against…[a] judgment over oil pollution in Ecuador is likely to be fought behind closed doors…The Peace Palace…is home to the Permanent Court of Arbitration, whose specialty is resolving international legal disputes. Although litigation continues both in Ecuador and New York over the…ruling against Chevron, experts say the arbitration court…could have a crucial role to play. That is because the court is currently considering a 2009 claim brought by Chevron against Ecuador in which the…company claims…[that Ecuador] violated a bilateral trade agreement between it and the United States…[W]hat the…arbitration panel concludes could be decisive, according to experts such as Peter McGrath…a specialist in environmental law. "The mechanism through which everything will be sorted out will be the arbitration," McGrath said…In essence, the arbitration boils down to whether Ecuador has to indemnify Chevron from any losses it may incur as a result of the judgment in Lago Agrio.