This is the case that keeps
on giving – both blog posts and reader interes - although the legal saga that has generated all of those words
may have come to an end.
Earlier this year, the
Supreme Court of Canada refused to hear an appeal from a decision of the
Ontario Court of Appeal that had dismissed all claims seeking to enforce an
Ecuadorian judgment against an indirect subsidiary of Chevron Corporation in
Ontario. The SCC’s dismissal of the Ecuadorian villagers application for leave
to appeal meant that the appeal court’s ruling that Chevron Canada is a
separate legal entity from Chevron Corp., has ended the litigation here in
Canada. Subsequently, US and Canadian media have reported that the
Ecuadorian plaintiffs have now settled their action against Chevron by agreeing
to dismiss their Ontario enforcement proceedings and to pay costs to
Chevron. The plaintiffs’ other enforcement actions have been dismissed by
courts in Brazil, Argentina and Gibraltar. Further, an international
tribunal in The Hague found that the U.S. $9.5 billion judgment that the
Ecuadorian courts had rendered against Chevron had been procured through fraud,
bribery and corruption and were based on claims that had already been settled
and released by Ecuador years earlier. As a result, the tribunal
concluded that the Ecuadorian judgment violated international public policy and
should not be recognized or enforced by the courts of other countries.
U.S. courts had already found
that the Ecuadorian judgment against Chevron was a product of fraud and
racketeering and had prohibited the judgment from being enforced in the United
States. In addition, U.S. District Judge Lewis Kaplan ordered Chevron’s
U.S. lawyer Steven Donziger to pay Chevron $3.4 million U.S. in
attorney’s fees. Donziger told news services that his total liability in
fines add up to about U.S. $10 million.
Chevron had filed a Racketeer
Influenced Corrupt Organizations Act (“RICO”) lawsuit against Donziger and his
law firm alleging that they had engaged in multiple acts of extortion and money
laundering, wire fraud, witness tampering, bribery and obstruction of justice
to procure the Ecuadorian judgment. Justice Kaplan found in Chevron’s
favour and held Donziger in contempt for breaching the RICO judgment. The
RICO judgment prevented Donziger from profiting from his fraud by selling
interests in the Ecuadorian judgment. The court found that Donziger had
used a large portion of the U.S. $2.3 million that he had raised
personally. U.S. $1.5 million went to directly or indirectly to Donziger
or into related accounts.
Donziger told news
organizations that the costs sanction against him was based on a bogus case by
Chevron. “Chevron has used 60 law firms and 2,000 lawyers to attack me
because I helped win a landmark environmental judgment in Ecuador against the
company for dumping billions of gallons of toxic waste in indigenous and
ancestral lands.”
A Brief History of the
Proceedings
In 1993, a group of
Ecuadorian citizens of the Oriente Region of the Amazon river basin filed a
class action lawsuit in the U.S. Federal Court against Texaco and in 1994 a
group of Peruvian citizens living downstream from the Oriente Region also filed
a class action lawsuit against Texaco in U.S. Federal Court. Both
complaints alleged that between 1964 and 1992, Texaco’s oil operations had
polluted the rainforests and rivers in Ecuador and Peru resulting in massive
environmental damage and damage to the health of those who lived in the
region. In 2002, the U.S. Federal Court dismissed both lawsuits on forum
non-conveniens grounds holding that Ecuador was the more appropriate forum for
litigating these claims. Texaco agreed that the courts in Ecuador and/or
Peru would have jurisdiction over the plaintiffs’ claims.
In 2003, the villagers
brought a class action lawsuit against Texaco (which had been acquired by
Chevron in 2001) in Ecuador alleging severe environmental contamination of the
land where Texaco had conducted its oil operations. The plaintiffs
alleged that this contamination had led to increased rates of cancer as well as
other serious health problems for residents of the region.
In early 2008 an independent
expert recommended to the court that Chevron should pay between $7 and $16
billion U.S. in compensation for the pollution. In November 2008, the expert
increased his damage estimate to $27 billion U.S. In 2008 Chevron
reportedly lobbied the U.S. government to end trade preferences with Ecuador
over the lawsuit. Following allegations of judicial misconduct, the
original trial judge recused himself from the case and a new judge was
appointed. In September 2010 the plaintiffs submitted a new damages
assessment stating that the costs had risen to between $90 and $103 billion
U.S.
In February 2011 the
Ecuadorian judge issued a ruling against Chevron in the lawsuit. Chevron
was ordered to pay U.S. $8.6 billion in damages and clean-up costs with damages
increasing to $18 billion if Chevron did not issue a public apology.
Chevron reported publicly that it believed that the ruling was illegitimate and
unenforceable and filed an appeal. In January 2012 a panel of three
judges from the Ecuadorian Provincial Court of Appeal upheld the ruling.
Chevron subsequently appealed to Ecuador’s National Court of Justice. In
October 2012 the Ecuadorian court issued an order permitting the plaintiffs to
seize about $200 million of Chevron’s assets located in that country.
However, later the Ecuadorian Supreme Court upheld the August 2012 ruling for
environmental damage but reduced the damages to $9.5 billion U.S. Chevron
further appealed to Ecuador’s National Court of Justice in the Constitutional
Court and in 2019 the court upheld the U.S. $9.5 billion judgment against the
company.
On September 26, 2013, I
reported that Chevron had obtained a global anti-enforcement injunction against
the plaintiffs in the United States District Court in New York. However,
the US Court of Appeal, Second Circuit reversed the injunction and held that
the plaintiffs could seek to enforce the Ecuadorian judgment in any country in
the world where Chevron had assets.
On a motion in the Ontario
Superior Court of Justice, Justice Brown (as he was then) stayed the
enforcement proceedings against the defendants, which included Chevron
Canada. That ruling was later set aside by the Ontario Court of Appeal
which held that the plaintiffs did not deserve to have their entire case fail
on the basis of an argument that had not even been made on the motion and
allowed the enforcement action against Chevron to proceed in Ontario.
That decision was later upheld by the Supreme Court of Canada. However,
going back to court, the Ontario Court of Appeal eventually determined that
Chevron Canada could not be held to answer for a judgment against Chevron
because to do so would ignore the corporate separateness of Chevron Canada as a
multi-level subsidiary of Chevron.
Patricio Salazar, one of the
lawyers for the Ecuadorian villagers, said that the Supreme Court of Canada’s
ruling left the U.S. parent company Chevron as the sole defendant and the
plaintiffs would proceed immediately to trial to force Chevron to comply with
the Ecuadorian judgment.
Regards,
Blair
