Chevron was responsible for oil drilling contamination in a wide swathe of Ecuador's northern jungle and must pay nearly £6 billion in damages and clean-up costs, in what appears to be the highest damage award issued in an environmental lawsuit.
But the ruling by an Ecuadorean judge - nearly £5.4 billion plus a legally-mandated 10% reparations fee - was far below the £17 billion recommended by a court-appointed expert and whether the plaintiffs - including indigenous groups who say their hunting and fishing grounds in Amazon River headwaters were decimated by toxic wastewater that also raised cancer rates - can collect remains to be seen.
Chevron called the decision "illegitimate and unenforceable" and said it would appeal. It has long contended it could never get a fair trial in Ecuador and has removed all assets from the politically volatile Andean country, whose left-wing president Rafael Correa had voiced support for the plaintiffs.
The company, which earned nearly £12 billion last year, said it did not believe the judgment "enforceable in any court that observes the rule of law".
The marathon, high-stakes case, fraught with corporate espionage and geopolitical intrigue, has been winding its way through US and Ecuadorean courts for more than 17 years.
Even Hollywood had a role, with Chevron successfully forcing documentary filmmaker Joe Berlinger to surrender out-takes from his documentary, Crude, about the dispute, a decision upheld by a US appeal court.
Those out-takes were used in an attempt to show that a plaintiffs' lawyer, Steven Donziger, had both denigrated and unethically influenced Ecuadorean justice.
The plaintiffs' lead lawyer, Pablo Fajardo, called the 187-page judgment "a great step that we have made toward the crystallisation of justice", but added that "we are not completely satisfied" with court-specified damage award. He said the plaintiffs were discussing whether to appeal.
The suit was originally filed in a New York federal court in 1993 against Texaco and dismissed three years later after the oil company argued that Ecuador was the proper venue to hear the case. Chevron bought Texaco in 2001 and the suit was refiled in Ecuador two years later.
Though it had only 47 named plaintiffs, the suit sought damages on behalf of 30,000 people for environmental contamination and illnesses that allegedly resulted from Texaco's operation of an oil consortium from 1972 to 1990 in a Rhode Island-sized oil patch dug out of virgin rainforest.
Yesterday's ruling was hailed by environmentalist groups Amazon Watch and Rainforest Action Network as "proving overwhelmingly that the oil giant is responsible for billions of gallons of highly toxic waste sludge deliberately dumped into local streams and rivers, which thousands depend on for drinking, bathing, and fishing".
Local indigenous leader Guillermo Grefa of the Kichwa people, was quoted by the plaintiffs as saying "we can now tell our neighbours and those affected that justice exists. They can now dream of drinking clean water that doesn't have petroleum residues like what we've had to drink up until now".
Chevron invested tens of millions in its legal defence as well as counter-attacks against the plaintiffs and Ecuadorean officials. It has long argued that a 1998 agreement Texaco signed with Ecuador after a £25 million clean-up absolves it of any liability in the case.
Chevron sought relief in a half-dozen US federal courts and requested binding arbitration in an international tribunal in the Netherlands.
The oil company even used corporate spies to clandestinely videotape meetings with Ecuadorean officials in which the men posed as contractors seeking oil contamination clean-up contracts. The two even coaxed the trial judge - who later resigned as a result - into saying he expected to rule against Chevron.
Issued by Judge Nicolas Zambrano from a ramshackle court in the provincial city of Lago Agrio, yesterday's ruling gives Chevron 60 days to set up an escrow account in Ecuador through which the damages would be distributed.
If upheld and enforced, the award would substantially exceed the £3.1 billion originally awarded to victims of the 1989 Exxon Valdez oil spill in Alaska's Prince William sound. That jury award was later cut to £317 million by the US Supreme Court.
Other major environmental damage payments include the £294 million paid by Union Carbide in 1989 to India's government for the lethal gas leak five years earlier in Bhopal that killed an estimated 15,000 people.Reuse content