An appeals court in The Hague has cancelled $9.5 billion in damages handed down by an Ecuadoran court against American energy giant Chevron for causing oil pollution in the Amazon jungle, Quito said Friday.
The original ruling dates back to 2011 and was twice upheld on appeal in Ecuador, but Chevron took its protest to The Hague's Permanent Court of Arbitration, claiming it had already been exonerated of any wrongdoing.
The Dutch court decided Ecuador was guilty of "denial of justice" and ordered it to annul its sentence against Chevron, Ecuador's public prosecutor Inigo Salvador said.
Chevron's lawyers had argued that the plaintiffs had "promised payments" to an Ecuadoran judge "in return for being permitted to draft significant portions" of the ruling against the American multi-national.
"We are concerned that a court can ask a state to cancel a judgment by a national court in a case between private entities," said Salvador.
The long-running saga stems from Chevron's acquisition of former rival Texaco in 2001, thus inheriting an existing litigation that has now lasted 25 years.
Although Chevron has never worked directly in Ecuador, Texaco Petroleum operated in the South American country from 1964 to 1990 and was accused of causing environmental damage.
Thousands of indigenous villagers from the Lago Agrio region claimed they had fallen ill and even developed cancer from pollution in their water supply.
An Ecuadoran court originally ordered Chevron to pay $19 billion in damages -- one of the largest ever rulings against an oil company for environmental pollution -- before the country's supreme court upheld the ruling but halved the amount.
Chevron claimed it had already been cleared of responsibility and called the ruling "illegitimate."
It filed a fraud case against Ecuador at a district court in New York, winning that and a $96 million award against the South American country.
Ecuador had already "freed the company of any responsibility for the same environmental claims" that formed the basis of the subsequent "fraudulent Ecuadoran sentence," said Chevron vice president R. Hewitt Pate in a statement sent to AFP.
The Hague court's ruling, given on August 30 but only published in Ecuador on Friday, did not include any damages awarded to Chevron, Salvador said.
The court's ruling, that covered 520 pages, found Ecuador responsible for "having violated" an investment protection treaty between Washington and Quito.
It also ordered Ecuador to ensure no "new enforcement actions" were launched against Chevron to try to obtain damages.
Villagers had previously launched bids in the US, Canada, Brazil and Argentina to seize Chevron assets in order to enforce payment of the Ecuadoran court's original ruling.