The Wall Street Journal reports that Chevron has been ordered to pay $8.6 billion to clean up oil pollution in Ecuador. Included in the ruling is a demand that Chevron apologize or pay twice the ordered amount.
Adding to the intrigue, Chevron uncovered a plaintiff’s memo revealing their strategy of enforcing the ruling worldwide. Chevron could be forced to defend itself in many countries, and this may set up a dangerous precedent for other oil companies as well.
BP Oil Spill Lawsuit
In a tangentially related matter, Reuters reports that BP is currently being sued by state pension funds in Ohio and New York. The plaintiffs are alleging that BP used misleading information regarding its safety processes. They claim they were led to believe that BP had a lower risk than it did in reality.
This lawsuit could mean great returns for investors in Ohio and New York, who lost millions in investments from BP’s disastrous oil spill.
If both of these lawsuits go through the way they are, it could mean billions in damages for the oil companies and set up a precedent of future lawsuits for other environmental damage. Chevron is being sued in Ecuador for damage done in the country, while BP is being sued for damage done far away from its investors.
This could have far-reaching consequences for oil companies and the way they do business. In the BP case, the investors felt they were misled about BP’s safety process. If they are allowed to recover for a bad investment, then oil companies will need to take steps to protect themselves. Whether this means a simple disclaimer to investors or more open disclosures of safety processes is unclear at this point. What is clear is that this could end up being very expensive.
It is important to note that neither of these lawsuits is over by any means. In Chevron’s case, CNN reports that they are planning to fight the verdict because, as Chevron says, “The Ecuadorian court’s judgment is illegitimate and unenforceable.”
In BP’s case, the lawsuit is literally just beginning. Taking a huge corporation to court is generally a long, drawn out process, this could take years to make it through the courts.
The lawsuits could have far-reaching consequences for both oil companies and investors. For now, however, both situations will simply need to be monitored. Much can still change and there is still a lot of litigation to witness. In the mean time, now may be a popular time to jump on and file suit against oil companies. A favorable verdict could mean a big payout for plaintiffs.