Transnational Dispute Management
Volume I, issue #02 - May 2004
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About TDM

Focussing on recent developments in the area of Investment arbitration and Dispute Management, regulation, treaties, judicial and arbitral cases, voluntary guidelines, tax and contracting.

TDM is supported by CEPMLP / Dundee, the International Bar Association and other law firms, international organizations and companies.

Editor-in-Chief

Editor-in-Chief is Thomas Wälde, Professor of International Energy Law (and former Executive Director) of the Centre for Energy, Petroleum and Mineral Law and Policy (CEPMLP) at the University of Dundee, the internationally leading graduate school in oil, gas and energy law and policy. Professor Wälde is the former principal UN adviser on oil, gas, energy and investment law.

Judith Kimerling "Uncommon Ground: Occidental's Land Access and Community Relations Standards and Practices in Quichua Communities in the Ecuadorian Amazon" Law and Anthropology Vol. 11 (2001)

Patricia Feeney

In Judith Kimerling's well-researched article (she spent the summers 1998-2000 visiting affected communities in Ecuador's oil sites in the Amazon) Occidental's claims to be a model of environmental and social responsibility are effectively demolished. The company, which operates under the name of Oxy, despite being ISO 1400 1 certified, maintains a policy of concealment refusing to disclose information about its plans and operations to affected people. Worse still, Oxy systematically conceals the fact from local communities that its drilling activities will almost inevitably lead to the expropriation of indigenous lands. Kimerling describes the company's community relations approach as "paternalistic", one that relies on relatively cheap handouts in the "beads and trinkets" tradition to curry favour with community leaders. The article exposes the unreliability of the EIA and the sloppiness of the socio-cultural analysis.

Oxy's much touted community assistance programmes are shown to be ill conceived and, in the main, unsuccessful. The Oil and Gas Journal (Apr. 21, 1997) may perhaps be forgiven its original enthusiastic piece about Oxy's projects as from Kimerling's own account the company seems to have made an effort initially in Rio Jivino and Limoncocha. But once sustainable development proved harder and costlier than anticipated, Oxy's commitment to its new "model" diminished. After "showcasing" the projects in it is promotional video "The Human Face of Petroleum" (and in the Oil and Gas Journal), Oxy appears to have lost interest and most have since petered out. The short-lived adult training programmes run by the company were popular, but without proper follow-up activities people soon lost their newly acquired skills.

So much for community relations, but Oxy's environmental record is little

better. There is evidence that Oxy has hidden serious environmental damage caused when heavy rains and flooding interrupted drilling of the first Laguna exploratory well. Abandoned drums and containers of chemicals were washed into the swamp from the drill site near Lake Limoncocha. Oxy has never admitted its responsibility for the subsequent pollution and has instead tried to shift the blame onto eco-tourism. The EMP's water monitoring programme carefully excludes the site of the spill and the lake. For Kimerling, the Laguna Spill shows "how easy it is for oil companies to hide environmental problems in remote areas, and wrap themselves in a veneer of corporate responsibility and international standards".

The article tracks the company's most recent entry into a Quichua community, in El Eden. With breaktaking cynism, Oxy informs the El Eden community that the well is dry, while simultaneously announcing the expansion of Block 15 in the international press (Oil and Gas Journal, May 31 1999). The way the company handles complaints from local people similarly leaves much to be desired. Oxy assures residents that any concerns they may have are unfounded. When residents persist with their complaints, Oxy challenges them to prove allegations in technical terms, which, as Kimerling notes, "are alien to their culture and for the most part unavailable to them".

The company, which retains for itself the best legal advice, nevertheless

discourages local communities from seeking help from environmental and

indigenous people's NGOs. This has led to serious misunderstandings about the nature of the agreements communities have entered into with the company. If cordial overtures are not successful then Oxy gets its way by threatening or obtaining expropriation. In the USA Oxy promotes itself as a champion of the right of indigenous people to say 'no' to oil development and claims to support their efforts to secure title to their land. But on the ground, its policy is to solicit expropriation of the land at all production sites. Kimerling puts forward a number of reasons why expropriation rather than renting indigenous lands might be advantageous. It makes it easier for Oxy to deflect environmental oversight by local residents. It can also help Oxy limit legal liability for pollution in Block 15. Under the contract it is the parastatal, Petroecuador, which owns the land thereby making it more difficult for affected communities to sue Oxy for damages in US courts.

Kimerling acknowledges that some of the blame for this lamentable state of affairs lies with the Government of Ecuador, which has failed to control or closely supervise Oxy's operations. Ecuador has not enacted enabling legislation or regulations to implement ILO Convention 169 (which it has ratified) or the collective indigenous and environmental rights in the Constitution. Despite the recent proliferation of international agreements recognising the rights of Indigenous people and guaranteeing protection of the environment, the rule of law has not yet reached Amazonian oil fields.

Meanwhile, Oxy and other private corporations set standards, interpret and monitor them and then evaluate their own performance. Judith Kimerling's article is a forceful reminder why voluntary codes and self-assessment fall woefully short of what is expected or required to ensure responsible corporate behaviour.