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February 14, 2013
  Republic of Ecuador v. Connor - Fifth Circuit
Headline: Fifth Circuit Imposes Judicial Estoppel Against Chevron in Discovery Dispute with Republic of Ecuador

Area of Law: judicial estoppel, ancillary discovery

Issue Presented: Whether Chevron may claim that an arbitration proceeding under the US-Ecuador Bilateral Investment Treaty is not a "proceeding in a foreign or international tribunal" for purposes of avoiding discovery under 28 U.S.C. § 1782 when it has benefitted from asserting the contrary position repeatedly throughout related litigation.

Brief Summary: After a court in Ecuador issued a multi-billion dollar judgment against Chevron, Chevron filed for arbitration under the US-Ecuador Bilateral Investment Treaty (BIT). Throughout a long span of litigation, Chevron repeatedly sought discovery under 28 U.S.C. § 1782, which allows a district court to order a party to produce documents for use in a "proceeding in a foreign or international tribunal," by asserting that the BIT arbitration was an "international tribunal." However, when Ecuador requested discovery under § 1782 in this case, Chevron changed its argument to claim that the BIT arbitration was not an international tribunal, and the U.S. District Court for the Southern District of Texas denied Ecuador's request for discovery. On appeal, the U.S. Court of Appeals for the Fifth Circuit held that Chevron was judicially estopped and prevented from asserting that the arbitration is not an international tribunal, due to the repeated benefits it received from its prior opposing argument.

Extended Summary: An Ecuadorian court issued a multi-billion dollar judgment against Chevron Corporation as a result of environmental litigation. Under the US-Ecuador Bilateral Investment Treaty (BIT), Chevron filed for arbitration, asserting that the Ecuadorian trial resulted in a miscarriage of justice and that Ecuador's involvement in the litigation violated its rights.

Throughout the initial litigation and the BIT arbitration, Chevron and Ecuador have sought discovery under 28 U.S.C. § 1782, which allows a district court to order a party to produce documents for use in a "proceeding in a foreign or international tribunal." Chevron was granted many discovery requests, and Chevron repeatedly asserted that the BIT arbitration was an international tribunal. In this action, however, Chevron changed its argument in response to a § 1782 discovery request by Ecuador, and Chevron now claimed that the BIT arbitration was not an international tribunal. The U.S. District Court for the Southern District of Texas denied Ecuador's discovery request, and, on appeal, Ecuador asked the U.S. Court of Appeals for the Fifth Circuit to find that Chevron is judicially estopped from claiming the BIT arbitration is not an international tribunal due to its repeated assertions to the contrary.

Chevron argued to the Fifth Circuit that (1) its contrary position on a question of law is not amenable to judicial estoppel; (2) a prior Fifth Circuit opinion affords it a basis for a contrary legal argument; (3) Chevron did not benefit from its prior assertions that the BIT arbitration was an international tribunal; and, (4) the nature of the tribunal is a jurisdictional element of § 1782 that cannot be settled by estoppel.

After hearing oral arguments, the Fifth Circuit held that § 1782 has no jurisdictional element, but is a grant of authority to the federal courts. Further, the Fifth Circuit held that judicial estoppel is not barred from being applied to any question of law; rather, estoppel may apply where a party clearly asserts any contrary position, not just a factual position. Finally, the Fifth Circuit held that Chevron benefitted from its earlier claims that the BIT arbitration was an international tribunal, and that these claims were not irrelevant to the prior orders granting Chevron's discovery requests. As a result, the Fifth Circuit held that Chevron is judicially estopped from asserting the inconsistent position that the BIT arbitration is not an international forum. The court reversed the district court's decision and remanded for a determination of whether Ecuador's discovery request should be granted.

For the full opinion, please see: http://www.ca5.uscourts.gov/op...2/12-20122-CV0.wpd.pdf.

Panel: Circuit Judges Davis, Jones, and Smith

Argument Date: 12/03/2012

Date of Issued Opinion: 2/13/2013

Docket Number: No. 12-20122 cons. w/ No. 12-20123

Decided: Reversed and Remanded

Case Alert Author: Julie Goodrich

Counsel: Gene C. Schaerr, Winston & Strawn, L.L.P., for Plaintiff-Appellants Republic of Ecuador and Diego Garcia Carrion. James C. Ho, Gibson, Dunn & Crutcher, L.L.P., for Defendant-Appellees John A. Connor and GSI Environmental, Inc., and Intervenor-Appellee Chevron Corporation.

Author of Opinion: Judge Jones

Case Alert Circuit Supervisor: Aaron-Andrew P. Bruhl

    Posted By: Aaron Bruhl @ 02/14/2013 11:57 PM     5th Circuit  

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