Canada - Supreme Court dismisses Chevron appeal in Ecuador environmental damages case

Date of publication: 
4 September 2015

Supreme Court of Canada rules Ecuador villagers can go ahead with US$9.5-billion legal case against Chevron

A group of Ecuadoran villagers can proceed with a legal claim that asks an Ontario court to help them collect on a US$9.5-billion judgment they obtained in Ecuador against global oil giant Chevron Corp., the Supreme Court of Canada has ruled.

The Supreme Court’s ruling, issued Friday, upholds a similar finding reached by the Ontario Court of Appeal in December 2013.

The court found simple reasons to confirm Ontario’s jurisdiction to hear the Ecuadoran villagers’ enforcement case. It said the original lawsuit, a claim for environmental damages in the Amazon jungle, was properly brought in Ecuador. And it said the Ecuadoran plaintiffs had every right to bring the claim against Chevron, since it was able to serve notice of the enforcement claim at the company’s office in Mississauga, Ont.

“Traditional, presence-based jurisdiction is satisfied,” Justice Clement Gascon wrote in the unanimous, seven-judge ruling.

The court starkly rejected Chevron’s arguments that it would be improper to hear the case in Ontario because the company has few assets there.

“In today’s globalized world and electronic age, to require that a judgment creditor wait until the foreign debtor is present or has assets in the province before a court can find that it has jurisdiction in recognition and enforcement proceedings would be to turn a blind eye to current economic reality,” Justice Gascon wrote.

Humberto Piaguaje, a spokesman for the Ecuadoran villagers, said the Supreme Court decision marks the “beginning of the end of Chevron’s abusive and obstructionist litigation strategy” to avoid paying the judgment.

Yet the decision does not translate into an instant payday for the Ecuadoran villagers. The ruling merely casts aside a technical challenge Chevron had hoped would block villagers’ attempts to enforce the Ecuadoran judgment debt in a Canadian court. The case now returns to an Ontario judge, who will determine whether the Ecuadoran judgment can be properly recognized and enforced in Canada.

“A finding of jurisdiction does nothing more than afford the plaintiffs the opportunity to seek recognition and enforcement of the Ecuadorian judgment,” the judge wrote.

That may not be easy. A U.S. federal judge ruled in March 2014 that the Ecuadoran judgment was the product of extensive fraud and corruption, a point Chevron is bound to make in the Ontario courts as the case progresses.

The Supreme Court mentioned that U.S. federal court fraud ruling in its judgment, but made no further comment in its Friday ruling. “That decision and the underlying allegations of fraud are not before this court,” it said.

Indeed, Chevron signalled Friday that the U.S. fraud finding is likely to play a significant role in any Ontario trial court proceedings on whether to enforce the Ecuador ruling.

“Today’s decision has no bearing on the legitimacy or enforceability of the fraudulent Ecuadorian judgment,” the company said. “The facts remain, as Chevron Corp. established in the United States, that the Ecuadorian judgment is the product of fraud and other misconduct, and is therefore illegitimate and unenforceable.”

The Ecuadoran case has been before courts for decades. The villagers say Texaco Inc., a company that was bought by Chevron in 1993, polluted some 1,500 square kilometres of land and water in the Ecuadoran Amazon between 1972 and 1990.

Villagers first tried to sue the company in U.S. federal court, but in 1993 Chevron succeeded in convincing a U.S. judge that Ecuador would be the more appropriate place to fight the claim.

After the case finally made its way back to Ecuador, the trial took eight years. In February 2011, Judge Nicolas Zambrano Lozada of the Sucumbios Provincial Court of Justice in Ecuador found Chevron responsible for the pollution and ordered the company pay damages of US$18.2 billion. An Ecuadoran appellate court later reduced the award to US$9.5 billion.

The plaintiffs have since launched enforcement actions in several jurisdictions, including Canada. The judgment was filed in Ontario in 2012. Chevron fought the enforcement on the grounds it has few assets in Ontario, and that its Canadian subsidiary has no connection to the Ecuador case. A judge agreed in May 2013, but the Ontario Court of Appeal overturned that ruling in December 2013.

That set the stage for the Supreme Court case. In Friday’s ruling, the court flatly rejected Chevron’s arguments. “[T]he approach favoured by Chevron is sound neither in law nor in policy,” Justice Gascon wrote.

Canadian courts are often asked to apply the so-called “real and substantial connection” test before hearing lawsuits over incidents that took place in foreign jurisdictions. But the Supreme Court found that this test refers only to lawsuits that are starting from scratch, not the enforcement of judgments that were properly heard abroad.

The proper test for the “recognition and enforcement” of a foreign judgment is limited to whether it made sense for the original lawsuit to be brought in the foreign jurisdiction. In this case, since the pollution took place in Ecuador, there was little dispute on that front.

The legal fireworks are far from over. The Ecuadoran villagers must now convince an Ontario judge that the Ecuador ruling is sound. That won’t be easy. Chevron’s top in-house lawyer once vowed the company will fight the Ecuadoran case “until Hell freezes over, and then fight it out on the ice.”

dhasselback [at] nationalpost [dot] com


SCC dismisses Chevron appeal in Ecuador environmental damages case

CTV News Channel: ‘This is their best chance’

Mike Blanchfield, The Canadian Press –

4 September 2015

OTTAWA — The Supreme Court of Canada has dismissed an attempt by oil giant Chevron to block Ecuadorian villagers from using an Ontario court to collect billions in damages for environmental contamination.

The 7-0 ruling allows the case to proceed in Canada, but it makes no finding on the merits of the long-running legal saga that has played out in courtrooms across the Western Hemisphere.

The key issue at play was whether there was a real and substantial connection between the villagers and the dispute on one hand and the province of Ontario on the other.

The high court decided there was no need to prove that connection, as long as a foreign court assumed valid jurisdiction over a case.

“Canadian courts, like many others, have adopted a generous and liberal approach to the recognition and enforcement of foreign judgments,” Justice Clement Gascon wrote for the court.

Chevron Corp. has no assets in Ecuador, but that country’s highest court has affirmed a $9.5 billion US judgment against the company, so the villagers pursued its subsidiary, Chevron Canada.

The Supreme Court made clear that it was not prejudicing any future decision in the case. But it said the Chevron entities had to show up in an Ontario court, where they were free to defend the action.

“A finding of jurisdiction does nothing more than afford the plaintiffs the opportunity to seek recognition and enforcement of the Ecuadorian judgment,” Gascon wrote.

“I take no position on whether Chevron Canada can properly be considered a judgment-debtor to the Ecuadorian judgment,” he added.

“Similarly, should the judgment be recognized and enforced against Chevron, it does not automatically follow that Chevron Canada’s shares or assets will be available to satisfy Chevron’s debt.”

Lawyers for the villagers have turned to courts in Brazil and Argentina, as well as in Canada, to collect and Gascon said there is nothing wrong with a creditor looking around in foreign jurisdictions for a way to enforce a judgement against a company.

The Friday decision upheld a December ruling by the Ontario Court of Appeal, which said the villagers could pursue their action for damages in a Canadian court.

The appeal court ruling overturned a lower court judge, who found that Chevron Canada should not be held responsible for the judgment because its assets are not directly owned by the California-based multinational.

The Supreme Court did not address another key issue put forth by Chevron — that subsidiaries are separate and should not be held liable for the actions of their corporate parents.

It was simply enough that Chevron Canada was properly served at its office in Mississauga, Ont., the court said.

“Where jurisdiction stems from the defendant’s presence in the jurisdiction, there is no need to consider whether a real and substantial connection exists,” it said.

The Ecuadorian villagers have not gone after Chevron in the U.S. because a New York judge ruled in favour of the company, saying the judgment in Ecuador was obtained through fraudulent and corrupt means. That matter is under appeal as well.

Chevron said in a statement that the decision “has no bearing on the legitimacy or enforceability of the fraudulent Ecuadorian judgment.” It called the Ecuador court decision “illegitimate and unenforceable.”

The fraud judgment in New York was not an issue before the Supreme Court.

Amazon Watch, an advocacy group for aboriginal people in several Latin American countries, said the ruling shows the law has finally “caught up” with Chevron, accusing the company of “spending billions on retaliatory legal attacks seeking to delay justice rather than fulfilling its legal obligations.”


Canada top court rules for Ecuador villagers in suit against Chevron

5 September 2015

The Supreme Court of Canada on Friday ruled in favor of Ecuadorian villagers seeking to enforce a multi-billion dollar judgment against the Chevron Corporation. In 2011, the 30,000 villagers secured a $17.2 billion judgment in an Ecuador court against Chevron for environmental damage to a rain forest in the Lago Agrio region of Brazil. Damages were subsequently reduced by an appeals court to $9.5 billion. Friday’s 7-0 ruling means that the Ecuadorians may pursue the judgment against Chevron in Canada through its subsidiary, Chevron Canada Limited. Chevron has put up a vigorous legal battle to avoid the fine, arguing that, because the damage was perpetrated by Texaco between 1972 and 1990, before it was bought out by Chevron in 2001, and because Texaco signed an agreement with Ecuador to absolve it of responsibility after a $40 million cleanup effort, Chevron should not be required to pay out for its former competitor.

This is one of several legal battles waged in the last few years regarding Chevron’s practices in Ecuador. In March of last year, Judge Lewis Kaplan of the US District Court for the Southern District of New York ruled that US courts could not be used to enforce the Ecuadorian ruling against Chevron. In ruling Kaplan stated that the Ecuadorian proceedings were fraught with corruption and the punishment did not “justify the means.” Later that month, Chevron filed suit in the Southern District of New York against attorney Steven Donziger for $32 million in fees relating to a suit it won against his firm for fraud and racketeering throughout the course of the 2011 Ecuadorian litigation.

Link to judgment –