Chevron and the federal government have been involved in an ongoing disagreement over oil deposits in California. The oil deposits at the center of the contract dispute are said to be worth approximately $37 billion.
The U.S. Court of Claims has now ruled that Chevron should be reimbursed in unspecified damages as a result of this misunderstanding. The court ordered that the damages still need to be determined concerning the "government's 'bad faith' conduct and abusive discovery tactics."
What's significant regarding this lawsuit is the lengthy nature of the dispute. Chevron first filed the lawsuit back in 2004. At that time, Chevron and the government had co-operated the oil field for more than 50 years. The government apparently then agreed that Chevron should be allowed to sell a portion of the government's stake to another company, but what the government's share was in the field remained in dispute.
The government was accused of "bad faith" litigation tactics going back as far as February of 2007 regarding production of documents. The federal judge has ordered the government to reimburse Chevron for 42 percent of its legal fees for the two years following 2007.
Especially when businesses are involved in dealings with state and federal governments, they need an aggressive business and commercial attorney to make certain that their own needs are covered. The federal government can use its authority to strong-arm businesses to give in to the government's demands.
Yet businesses still have a right to make a profit, and the government cannot take opportunities away from business without compensating companies in some way. Businesses also have the right to be reimbursed for being forced to litigate matters that should have been easily resolved.
Source: Bloomberg, "Chevron Wins Suit Against U.S. Over California Oil Field," by Andrew Zajac and Tim Schoenberg, May 9, 2013