Earlier this month, a federal judge in the Southern District of New York spun a new twist in the long-standing legal battle over environmental contamination in the Lago Agrio region of Ecuador. In a 485-page ruling, Judge Lewis Kaplan ruled that lawyers leading the Lago Agrio plaintiffs' prosecution of claims against Chevron (which acquired the alleged contaminator, Texaco) used corrupt means to secure an $18 billion judgment from an Ecuadorian court. See Chevron Corp. v. Donziger et al, S.D.N.Y. 11-00691.
In a recent decision, the Ninth Circuit Court of Appeals ruled that parties cannot agree under a contract to limit the scope of judicial review of an arbitration award as delineated by the Federal Arbitration Act (the "FAA"). This ruling complements a 2008 Supreme Court case, Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), where the Court held that a clause in an arbitration agreement providing for expanded judicial review beyond what was provided for in the FAA was unenforceable. In light of the Ninth Circuit's new ruling, parties also cannot go the other way and curtail the scope of review to which the parties are entitled under the Federal Arbitration Act.