June 24, 2013 Articles

The Fifth Circuit Accepts Judicial Estoppel as a Basis for Discovery

By Monique Sasson

In its dispute with Chevron Corporation regarding the Lago Agrio litigation, the Republic of Ecuador has frequently been on the losing end of discovery applications filed by Chevron pursuant to 28 U.S.C. section 1782. In Republic of Ecuador, et al. v. John A. Connor, Chevron Corporation, et al., Nos. 12-20122/20123, 2013 WL 539011 (5th Cir. February 13, 2013), Ecuador filed its own section 1782 application in the U.S. District Court for the Southern District of Texas, seeking discovery from an individual and his company for use in the UNCITRAL arbitration pursued by Chevron under the United States-Ecuador Bilateral Investment Treaty (the BIT arbitration), stemming from the actions of the Ecuadorian courts. Chevron intervened and opposed the application. The district court ruled in Chevron's favor. However, the Fifth Circuit reversed the district court's order and remanded for determination of the scope of discovery. The Fifth Circuit held that because Chevron had "benefitted repeatedly against Ecuador and others that the arbitration is a 'foreign or international tribunal'" and that position was inconsistent with its argument in this dispute, "judicial estoppel is appropriate to make discovery" under Section 1782.

Origin of the Appeal
The origin of the BIT arbitration and the 1782 application in Connor is litigation commenced nearly two decades ago concerning the alleged environmental contamination of oil fields in Ecuador. In particular, there was court litigation in Ecuador that concluded with a multibillion dollar judgment against Chevron, and there was the BIT arbitration. In connection with the Ecuadorian court case and the BIT arbitration, Chevron sought discovery pursuant to section 1782 in several U.S. district courts. Ecuador did the same in the Southern District of Texas.

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