Ecuadorian Villagers Barred From Enforcing Massive Environmental Judgment Against Chevron Canada

This is my ninth instalment about this case.  It probably won’t be my last. 

In the latest chapter of Yaiguaje v. Chevron Corporation, 2018 ONCA 472, the Court of Appeal for Ontario rejected arguments by the Ecuadorian villagers who are seeking to enforce a US$9.5 billion judgment against Chevron Corporation in Ontario.  The villagers argued that the Execution Act (“Act”) permitted execution on Chevron Canada’s shares and assets to satisfy the Ecuadorian judgment.  Secondly, they argued that the court should pierce the corporate veil between Chevron Canada and Chevron Corporation in order to render Chevron Canada’s shares and assets “exigible” i.e. – subject to seizure and sale to satisfy the judgment.

Justices Hourigan, Huscroft and Nordheimer heard the case.  All three justices dismissed the appeal, however, Justice Nordheimer wrote separate reasons which may give the Ecuadorian’s a glimmer of hope in seeking leave to appeal from this decision to the Supreme Court of Canada.   

Background

From about 1964 to 1992, Texaco Inc. drilled for and extracted oil in the Oriente region of Ecuador which were the villagers’ traditional lands.  The oil company’s activities resulted in extensive environmental pollution.  In 2001, Texaco was acquired by Chevron Corporation.  Following an eight year trial and two appeals in Ecuador, the villagers obtained a US$9.5 billion judgment against Chevron Corporation.  They sought to enforce their judgment in the United States.  However, Chevron Corporation obtained an order in the state of New York holding that the Ecuadorian judgment had been obtained by fraud and preventing enforcement proceedings anywhere in the United States.  As a result, the villagers sought to enforce the Ecuadorian judgment against the assets of Chevron Canada in Ontario.  After a number of proceedings, including a jurisdictional issue that went all the way to the Supreme Court of Canada, the matter came back to the Superior Court of Justice in Ontario where a motion was brought for summary judgment.  Justice Hainey, the motion judge, dismissed the villagers’ claims on both of its arguments.  The villagers appealed the decision to the Ontario Court of Appeal. 

The Execution Act Argument

The villagers argued that section 18(1) of the Act allows the sheriff to seize any interest of a judgment debtor and that Chevron Corporation has an “indirect interest” in Chevron Canada.  The villagers submitted that because this case involves the enforcement of a foreign judgment, the court must, for the reasons of comity, interpret the Act in an expansive manner to facilitate the collection of the debt.  Justices Hourigan and Huscroft (the majority decision was written by Justice Hourigan) disagreed.  They held that enforcement of a foreign judgment is done in accordance with domestic law.  One cannot have one set of enforcement rules for domestic judgments and a second far more expansive set of rules for foreign judgments.  

The majority held that the declaration that the villagers sought, i.e. that the shares of Chevron Canada were exigible was “a legal impossibility”.  A corporation’s shares do not belong to the corporation but to its shareholders.  In fact, under the Canada Business Corporations Act, corporations are prohibited from owning their own shares.  The Act, is procedural only and does not grant substantive rights to judgment creditors.  Its only function is to facilitate the collection of judgments to enforce a judgment debtor’s existing rights.  In other words, there must be an existing legal right which permits seizure of the assets.  Chevron Canada does not hold such a right.  A shareholder (albeit indirect) of a corporation does not have a right to claim a proportionate share of the corporation’s assets while it is ongoing.  That right only arises if and when the corporation is wound up because at that point there is no existing entity capable of holding the assets.  

Granting the order sought by the villagers would ignore the corporate separateness of the subsidiaries in between Chevron Corporation and Chevron Canada.  In addition, the proposed interpretation of the Act would have a significant policy impact on how corporations carry on business in Canada.  As a result, they rejected this ground of appeal. 

Piercing the Corporate Veil Argument

The villagers alternatively submitted that the court had the ability to pierce the corporate veil “when the interests of justice demanded it”.  They relied on Justice Bertha Wilson’s passage in the Supreme Court of Canada case of Kosmopoulous v. Constitution Insurance (“Kosmopoulous”),  when she said that the corporate veil can be lifted when to enforce it would yield a result “to flagrantly opposed to justice, convenience or the interests of the Revenue”.   

The Court of Appeal held that Kosmopoulous was decided thirty years ago and since that time the law has developed.  In the case of Trans-America  Life Insurance Co. of Canada v. Canada Life Assurance Co. (“Transamerica”) (decided in 1996), Justice Sharpe held that there are only three circumstances where the court will pierce a corporate veil:  (1)  when the court is construing a statute, contract or other document; (2) when the court is satisfied that a company is a “mere façade” concealing the true facts; and (c) when it can be established that the company is an authorized agent of its controllers or its members, corporate or human.  The majority held that the Court of Appeal has repeatedly rejected an independent just and equitable ground for piercing the corporate veil in favour of the approach taken in Transamerica.  The Transamerica test is consistent with the principle reflected in the various business corporation statutes in Canada that corporate separateness is the rule.  

The majority held that it is important that the courts be rigorous in their application of the Transamerica test because the rule is provided for in the statute and stakeholders of corporations have a right to believe that, absent extraordinary circumstances, they may deal with the corporation as the actual person.  It held that Transamerica effectively modified Kosmopoulous and that the question for determination in this case is whether this court is prepared to sacrifice certainty for the sake of expediency. 

There was no suggestion or evidence that Chevron Canada was established or used for a fraudulent or improper purpose.  The majority rejected the argument that they should in effect “do the right thing” for the Ecuadorian villagers because at this stage the equities of the case were far from clear.  On one hand the appellants had suffered devastating loss through no fault of their own.  On the other hand, the United States court had found that the Ecuadorian judgment was the result of a massive fraud.  The court held that what they were really being asked to do was to assist the villagers in doing an end-run around the United States courts by breaking with well-established jurisprudence where there is no principled basis to do so.  They dismissed the appeal on that ground as well.

Justice Nordheimer’s Dissent

Justice Nordheimer agreed with the result reached by his colleagues.  He also agreed with their analysis of the case in respect of the Act.  However, Justice Nordheimer did not agree with the analysis of the majority judges concerning whether to pierce Chevron Canada’s corporate veil. 

He held that Transamerica, the case that the majority had heavily relied upon, could be distinguished on the facts.  Transamerica dealt with imposing liability on a party whereas in this situation, the issue concerned enforcing a judgment debt.  In the latter situation, liability has already been established.  The proceeding has moved past the hurdle of finding liability to a stage that concerns the remedies that are available to enforce a valid judgment.  In Justice Nordheimer’s view, Transamerica could not simply be lifted out of the liability context and dropped into and applied to the judgment enforcement context.  In fact, Justice Nordheimer held that it would be very difficult to conceive of a factual situation where the Transamerica test could be met, that is where the corporate structure would be found to have been used as a shield for fraudulent or improper conduct solely in the context of enforcing a judgment. 

Justice Nordheimer also disagreed with his colleagues’ reading of the Kosmopoulous case and found that he could see situations where the court would be willing to lift the corporate veil in the interest of third parties who would otherwise suffer as a result of that choice.  He found that the Ecuadorian villagers might well fall into that category were it not for the findings of the United States courts respecting the fraudulent manner in which the judgment had been obtained.  In Downtown Eatery (1993) Ltd. v. Ontario (“Downtown Eatery”), a 2001 decision of the Court of Appeal, the court pierced the corporate veil despite expressly finding that neither the corporate structure or the reorganization leaving the judgment debtor corporation without assets was fraudulent.  It did so because the reorganization created an injustice.  Justice Nordheimer held that Downtown Eatery was arguably more relevant than Transamerica because it post-dated Transamerica and was involved in enforcement of a judgment debt as opposed to finding of liability. 

Finally, the majority’s finding that Chevron Canada was not an asset of Chevron Corporation was one that Justice Nordheimer found was “completely detached from real-world realities”.  He found that it was crystal clear that Chevron Canada was an asset of Chevron Corporation as that term is understood in common business parlance.  All of Chevron Canada’s shares are owned by Chevron Corporation (albeit indirectly) and it is ultimately controlled for all practical purposes by Chevron Corporation.  He held that the question was not whether the court was prepared to sacrifice certainty for the sake of expediency, it was whether the court was prepared to recognize that there may be situations where equity would demand a departure from the strict application of corporate separateness principle in the context of enforceability of a valid judgment whether foreign or domestic.  However, he found that the United States court’s finding that the Ecuadorian judgment was obtained by fraud put the apparently valid foreign judgment in question.  Canadian courts have not yet been called upon to make their own determination of the validity of the judgment.  Absent such a finding, even on Justice Nordheimer’s approach, the judgment could not be enforced.   

Regards,

Blair

Court Of Appeal Vacates Its Security for Costs Order in Ecuadorian Litigation against Chevron

When I last reported on this case Yaiguaje v. Chevron Corporation 2017 ONCA 827, less than a month ago, I reported that Justice Gloria J. Epstein of the Ontario Court of Appeal had ordered that the Ecuadorian plaintiffs post security for costs of more than $942,000 in order to continue with an appeal from a summary judgment order dismissing their against Chevron Canada.  In a decision released on October 31, 2017, a three judge panel of the Ontario Court of Appeal unanimously reversed Justice Epstein’s decision and vacated her order.  The panel (Justices Hoy, Cronk and Hourigan) held that the unique factual circumstances of this case compelled the conclusion that the interests of justice required that no order for security for costs be made.  Unlike their colleague, Justice Epstein, the panel concluded that the motion for security for costs was simply a tactical move made by Chevron to end the litigation.

 

The panel agreed that under rules of civil procedure, the court may make an order for security for costs where it is “just” to do so.   It held that the rule, as written, was permissive not mandatory and that even where the requirements of the rule have been met, a motion judge has discretion to refuse to make the order.  The panel held that the overarching principle to be applied in all of the circumstances is the justness of the order sought.

 

Because Justice Epstein’s decision was discretionary, it should be afforded deference.  However, an error in principle is one of the bases on which the court may interfere with a discretionary order. 

 

The panel held that in deciding motions for security for costs, judges are obliged to first consider the specific provisions of the rules governing such motions and then effectively take a step back and consider the justness of the order sought in all the circumstances of the case, with the interests of justice at the forefront.  They held that Justice Epstein had failed to take into account the second part of that analysis and that failure constituted an error in principle.  It therefore fell to the appeal panel to conduct the necessary analysis of the justness of the order.

 

In concluding that no order for security for costs should be made in this case, the panel considered the following:

 

1. the Ecuadorian plaintiffs were seeking to enforce a judgment in which they have no direct economic interest.  Funds collected on the judgment will be paid into a trust and net funds are to be used for environmental rehabilitation or health care purposes in Ecuador.   In essence, this is public interest litigation;
2. although there is no direct evidence of impecuniosity before Justice Epstein, the panel held that it would be highly impractical to obtain this evidence from the representative plaintiffs, let alone the 30,000 people who would indirectly benefit from the enforcement of the judgment.  The court found “there can be no doubt that the environmental devastation to the appellants’ lands has severely hampered their ability to earn a livelihood” and that if they accept the findings that underlie the Ecuadorian judgment, Texaco Inc. contributed to the appellants’ misfortune;
3. in contrast, Chevron Corporation and Chevron Canada have annual gross revenues in the billions of dollars.  It is difficult to believe that either of these two corporations require protection for costs awards that could amount to a miniscule fraction of their annual revenues;
4. there should be no bright line rule that a litigant must establish that litigation funding is unavailable to successfully resist a motion in an appeal for security for costs.  In this case counsel for the appellants advised the court that he was operating under a contingency arrangement and there was evidence that Chevron Corporation has sued some of the appellants’ former third party funders and the funders withdrew their financial support;
5. it can’t be said that this case is wholly devoid of merit;
6. there is no doubt the legal arguments asserted by the appellants are innovative and untested but that does not foreclose the possibility that one or more of them may eventually prevail; and
7. the history of the litigation which has been ongoing for almost 25 years makes it clear that Chevron has and will employ all available means to resist enforcement of the judgment.  This reality makes it difficult to accept that the motion for security for costs is anything more than a measure intended to bring an end to the litigation. 
    
   For all of those reasons, the court set aside Justice Epstein’s order and denied Chevron’s motion to require the Ecuadorian plaintiffs to post security for costs on the appeal.      

Regards,

Blair

Ecuadorian Villagers Ordered to Post Security for Chevron's Legal Costs

This is yet another chapter in the long-running saga in the case of Yaiguaje v. Chevron Corporation (2017 ONCA 741).  It is also the seventh time that this case has been a subject of a blog post by me. 

 

In this instalment, Justice Gloria J. Epstein, of the Ontario Court of Appeal, ordered that the Ecuadorian plaintiffs post security for costs of over $940,000  –  approximately $591,000 for Chevron Canada and $352,000 for Chevron Corporation – in order to continue with an appeal from a summary judgment order dismissing the plaintiffs’ action against Chevron Canada. 

 

Background in Ecuador

 

From 1964 to 1992, Texaco Inc., its subsidiaries and various partners engaged in oil extraction activities in the Lago Agrio region of Ecuador’s Amazon basin.  Litigation followed against Texaco alleging a variety of environmental, health and other tort claims related to Texaco’s extraction activity.  Texaco and the Ecuadorian plaintiffs finalized a settlement in 1998.  Chevron Corporation acquired Texaco in 2001.  Litigation continued to take place concerning the validity and the effect of the settlement. 

 

The Ecuadorian plaintiffs in this case represent approximately 30,000 indigenous villagers from Ecuador’s Oriente Region.  After seven years of litigation, in February of 2011, an Ecuadorian trial court found Chevron liable for US$17.2 billion.  The amount of the judgment was subsequently reduced to US$9.5 billion.

 

Chevron, which has no assets in Ecuador, refused to acknowledge the Ecuadorian judgment.  The plaintiffs have sought to enforce the judgment in various jurisdictions around the world.    

 

North American Litigation

 

Chevron sought and obtained a global anti-enforcement injunction against the plaintiffs in the United States District Court for the Southern District of New York.  The District Court judge found that the Ecuadorian judgment had been obtained by fraud and prohibited the judgment from being enforced in the United States.  On appeal, the United States Court of Appeal, Second Circuit, held that the plaintiffs could seek to enforce the judgment in any country in the world where Chevron had assets. 

 

In 2012, the plaintiffs commenced an action in Ontario against Chevron and Chevron Canada, seeking to enforce the judgment.  Chevron and Chevron Canada initially disputed whether Ontario courts had jurisdiction simpliciter to recognize and enforce the judgment.   Ultimately, the Supreme Court of Canada, in a decision released in September 2015, held that Ontario courts had jurisdiction over the enforcement action.  However, the Supreme Court also held that Chevron and Chevron Canada were free to argue against enforcement based on their separate corporate personalities and any other applicable defences. 

 

After the Supreme Court ruled, the enforcement proceedings came back before Justice Hainey of the Ontario Superior Court of Justice on two motions for summary judgment.  Chevron Canada moved for summary judgment against the plaintiffs and the plaintiffs moved for summary judgment against Chevron Canada.  In addition, the plaintiffs moved to strike the defences pleaded by Chevron in its statement of defence. 

Summary Judgment Ruling

Chevron is a Delaware company with its head office in California.  Chevron Canada is a seventh level indirect subsidiary of Chevron with its head office in Calgary, Alberta.  The plaintiffs, in addition to seeking payment of the US$9.5 billion, also sought a declaration that the shares of Chevron Canada are exigible to satisfy the Ecuadorian judgment. 

 

Justice Hainey found in favour of Chevron Canada on both issues and granted summary judgment in its favour.  He held that the shares and assets of Chevron Canada were not exigible and available for execution and seizure pursuant to the Execution Act to satisfy the Ecuadorian judgment.  He also held that Chevron Canada’s corporate veil should not be pierced so that its shares and assets were available to satisfy the judgment.

 

Court of Appeal’s Security for Costs Ruling

 

The plaintiffs have appealed that decision to the Ontario Court of Appeal.   Chevron Canada and Chevron sought an order for security for costs in excess of over US$1 million, US$160,000 for the appeal and the rest for the previous proceedings. 

 

Justice Epstein held that the general principles for posting security for costs applied to such a motion in the Court of Appeal.  Under Ontario's rules of civil procedure, an order for security for costs could be made where plaintiffs are ordinarily resident outside of Ontario.  Justice Epstein found that in this case there was no dispute that the Ecuadorian plaintiffs reside outside of Ontario.  The issue and relevant considerations were:  could they demonstrate on a balance of probability that they were impecunious and, if not, could they demonstrate that there was a good chance of success on the appeal.

 

Novel Submission by Plaintiffs

 

In addition, the Ecuadorian plaintiffs also advanced what the judge referred to as “a novel submission”, one that their counsel submitted should become part of the law pertaining to security for costs, i.e. that in an action for recognition and enforcement of a foreign judgment which was tantamount to a class action, security for costs should never be ordered. 

 

Justice Epstein found that the plaintiffs could not demonstrate impecuniosity.  They had filed no evidence as to their finances beyond three settlement agreements which she held were not “evidence” in any event. 

 

As for the merits of the appeal, Justice Epstein agreed with Justice Hainey’s analysis and concluded that the plaintiffs did not have a good chance of success on the appeal. 

 

Justice Epstein considered in detail the plaintiffs argument that the court should adopt “a new approach” to recognition and enforcement actions.  However, she did not accept the plaintiffs submission that the action was analogous to a class proceeding.  She held that even if she were to accept that argument, this would not prevent security for costs being ordered where justice of the case warrants it.

 

Justice Epstein held that litigants seeking to enforce a foreign judgment should not be put in a more advantageous position than domestic litigants.  The Supreme Court of Canada’s earlier decision in the case did not change that principle.  It stood for the proposition that Canadian courts should take a "generous approach" in finding jurisdiction to allow litigants holding foreign judgments to bring enforcement actions.  Justice Epstein held that she did not read the SCC's decision as saying that when such enforcement actions are brought before Canadian courts they should be treated differently than cases involving domestic litigants.  In fact, she held that the Supreme Court’s Chevron decision actually undercut the plaintiffs argument.   In that decision, Justice Gascon had held, “enforcement is limited to measures – like seizures, garnishments or executions – that can be taken only within the confines of the jurisdiction, and in accordance with its rules” and that “whether recognition and enforcement should proceed depends entirely on the enforcing forum’s laws”.   


As a result, the Court of Appeal was unable to accept as a general rule, that courts should approach security for costs differently in an appeal involving enforcements of foreign judgments and ordered that the Ecuadorian plaintiff's post security for costs.


Regards,


Blair

   

Ecuadorean Villagers Continue Legal Battle Against Chevron

Yaiguaje v. Chevron Corporation 2017 ONSC 135 (CanLII)

 

The saga continues.  This case returned to the Ontario Superior Court of Justice for consideration after a hearing at the Supreme Court of Canada.  Forty-seven individual plaintiffs in this action, representing approximately 30,000 indigenous Ecuadorian villagers, are suing Chevron and Chevron Canada to attempt to enforce a  US$9.5 billion judgment.  The enforcement proceedings first came before the Ontario Court where a motions judge - Justice D.M. Brown (now on the Ontario Court of Appeal) - held that the Ontario Court had jurisdiction to recognize and enforce the Ecuadorian judgment but on his own motion stayed the proceedings.  The Ontario Court of Appeal over-ruled Justice Brown’s imposition of a discretionary stay but upheld his decision on the jurisdictional issue.  The Supreme Court of Canada upheld the decision of the Court of Appeal. 

 

The enforcement proceedings came back before Justice Hainey of the Ontario Court on two motions for summary judgment.  Chevron Canada moved for summary judgment against the plaintiffs and the plaintiffs moved for summary judgment against Chevron Canada.  In addition, the plaintiffs moved to strike the defences pleaded by Chevron in its statement of defence.  

 

The judgment arose out of a dispute involving the exploration of a region in Ecuador by the Texaco Oil Company between 1964 and 1992.  When the plaintiffs commenced proceeding in Ecuador in 2003, Texaco had then merged with Chevron.

 

In the Ontario action, the plaintiffs are seeking to enforce the Ecuadorian judgment of approximately US$9.5 billion made against Chevron against both Chevron and Chevron Canada.

 

Chevron is a Delaware company with its head office in California.  Chevron Canada is a seventh level indirect subsidiary of Chevron with its head office in Calgary, Alberta.  In the Ontario action the plaintiffs, in addition to seeking payment of the US$9.5 billion, are was also seeking a declaration that the shares of Chevron Canada are exigible to satisfy the Ecuadorian judgment and the appointment of an equitable receiver over the shares and assets of Chevron Canada.  Chevron Canada took the position that it had nothing to do with the Ecuadorian proceedings, was not a judgment debtor under the Ecuadorian judgment and therefore being a separate legal entity, should not be subject to enforcement proceedings in Ontario. 

 

Justice Hainey considered the following two issues:

 

1. Are the shares and assets of Chevron Canada exigible and available for execution and seizure pursuant to the Execution Act to satisfy the Ecuadorian judgment against Chevron; and

 

2. If not, should Chevron Canada’s corporate veil be pierced so that it’s shares and assets are available to satisfy the judgment?   

 

He held in favour of Chevron Canada with respect to both issues.

 

On the first issue, Justice Hainey found that Chevron Canada is not an asset of Chevron.  It is a separate legal person.  The Execution Act, which is a procedural statute, does not create any rights in property but merely provides for the seizure and sale of property in which a judgment debtor already has a right or interest.  It does not establish a cause of action against Chevron Canada.  Chevron Canada is not the judgment debtor under the Ecuadorian judgment and therefore the Execution Act does not apply to it with respect to that judgment. 

 

Justice Hainey accepted the argument of Chevron Canada that if the plaintiffs’ position was correct, the debts of individual shareholders could be enforced against the assets of any Ontario company.

 

With respect to the second issue and the piercing of the corporate veil, the plaintiffs argued that it would be an injustice to the indigenous people of Ecuador whose way of life had been ruined by Chevron’s polluting activities to declare the shares and assets of Chevron Canada separate from those of Chevron.  The plaintiffs argued that Chevron had total effective control over Chevron Canada and that ownership was not a corporate separateness issue once judgment was issued against a guilty party.  In this case the plaintiffs argued that the court should pierce the corporate veil because if it did not, it would yield a result “to flagrantly opposed to justice” in this situation.

 

However, Justice Hainey was not going to depart from over 100 years of well-established corporate law that held that Chevron and its indirect subsidiary, Chevron Canada, are separate legal entities with separate rights and obligations.

 

The principle of corporate separateness provides that shareholders of a corporation are not liable for the obligations of the corporation.  Assets of the corporation are owned exclusively by the corporation not by the shareholders and as a result Chevron did not have any legal or equitable interest in the assets of Chevron Canada. 

 

Justice Hainey held that the proper approach to piercing the corporate veil was enunciated in the Trans-America Life Insurance v. Canada Life Assurance case by the Ontario Court of  Appeal in 1997.  In that case, Justice Sharpe held that there were two requirements before the corporate veil would be pierced:

1. There must be complete control or domination by the parent over the subsidiary so that the subsidiary does not in fact function independently; and
    
2. There must be conduct akin to fraud that would otherwise unjustly deprive claimants of their rights.

 

Justice Hainey held that the admission by the plaintiffs that Chevron Canada had itself done nothing wrong was fatal to their claim. Accordingly, he granted summary judgment against the plaintiff and dismissed their claim against Chevron Canada.

 

There was divided success on the second part of the motion, i.e. the plaintiffs’ motion to strike Chevron’s statement of defence in its entirety.

 

The plaintiffs’ motion was brought under subrule 21.01(12)(b) of the Rules of Civil Procedure.  The plaintiff alleged that Chevron’s entire statement of defence should be struck because it raised defences that had no reasonable prospect of success in an action to enforce a foreign judgment in Ontario pursuant to the Supreme Court of Canada’s decision in Beals v. Saldanha.

 

Chevron’s statement of defence raised a number of defences but primarily the following.

 

1. The Ecuador court did not have jurisdiction over it;
2. The Ecuador judgment was based on a law that was applied in a retroactive manner;
3. Chevron was denied standards of fairness and natural justice in Ecuador;
4. The Ecuador judgment was obtained by fraud (as found by a District Court judge in New York);
5. Recognition and enforcement of the Ecuador judgment would constitute a violation of the obligations of Ecuador under international law; and
6. All of the above offended Canadian standards of natural justice and public policy for the recognition and enforcement of foreign judgments.

 

Justice Hainey held that the issue he needed to decide was whether it was "plain and obvious" that the defences raised by Chevron had no chance of success because they were not permitted defences to an action to recognize and enforce a foreign judgment in accordance with the Supreme Court of Canada’s decision in Beals.  

 

In Beals, the SCC held that the defences of fraud, public policy and lack of natural justice are available defences. 

 

Accordingly, insofar as Chevron had raised the defence that the Ecuador judgment was obtained by fraud, that portion of the statement of defence was allowed to stand. 

 

Interestingly, Justice Hainey did not strike the portion of Chevron’s statement of defence that pleaded that the Ecuador court did not have jurisdiction over it for reasons other than judicial corruption and bias, i.e. that it never attorned to the jurisdiction of the court, that it never conducted any business in Ecuador and that there is no real and substantial connection between Chevron Canada and Ecuador.  It seems to the writer that those defences could have, and should have been raised, in Ecuador and cannot be re-litigated here in Ontario. 

 

Where Chevron pleaded matters concerning the retroactive applicable of the law and that recognizing and enforcing the Ecuadorian judgment would constitute a violation under international law, Justice Hainey found that it was plain and obvious that these defences did not fall under the narrow Beals exception and could be struck. 

The plaintiffs have indicated that the will appeal this decision to the Ontario Court of Appeal.  

Regards,

Blair