Texaco, headquartered in White Plains, New York, which is within the Second Circuit's venue, is now known as ChevronTexaco Corp. after merging with Chevron last year.

Although the plaintiffs had filed suit in Manhattan federal court seeking some $1 billion in damages, the Second Circuit said that all the plaintiffs live in Ecuador or Peru, that they sustained their alleged injuries there and their relevant medical and property records are also located in those countries.

The appeals panels said it would also be difficult for a U.S. court to handle the cases.

"If these cases proceeded to trial, it would be onerous for a New York court to manage the translation difficulties arising from cases with 55,000 putative class members of different indigenous groups speaking various dialects," the court said.

ALLEGATIONS OF DUMPING

"In addition it would be far more feasible for an Ecuadorian court to view the polluted areas in question than for a New York court to do so," the appeals panel said.

The ruling marked the second time the appeals court had considered whether Manhattan was the proper location for the litigation filed here in 1993 and 1994 by residents of the Oriente region of Ecuador and residents of Peru who live downstream from Ecuador's Oriente region.

The plaintiffs alleged that a Texaco subsidiary dumped an estimated 30 billion gallons of toxic waste into their environment while extracting oil from the Ecuadorean Amazon between 1964 and 1992.

They alleged that instead of pumping the substances back into emptied wells, the Texaco subsidiary dumped them in local rivers, directly into landfills or spread them on the local dirt roads.

They also alleged that the Ecuadorean Pipeline, constructed by Texaco, leaked large amounts of petroleum into the environment. The Indians alleged that they and their families suffered various injuries, including poisoning and development of precancerous growths.

Although Texaco denied allegations in the suits, the merit of the cases was never decided by the trial or appeal courts. Instead arguments focused on where the cases should be heard.

Joseph Kohn, one of the lawyers representing the Indians, told Reuters that the legal team is evaluating the ruling to determine whether to pursue further appeals.

"We do think the court made it clear that if the courts in Ecuador don't hear the cases, they will be heard in the United States," said Kohn of Philadelphia's Kohn Swift & Graf. "One way or another, our clients will get the merits heard in court."

The trial court had originally dismissed the suits in 1996 and 1997 on grounds that Ecuador would be the better location.