Invictus: Speculation About Enforcement Of The Ecuadoran Judgment
Posted on February 9, 2012
In Latin, invictus means “unconquered.” The word is most familiar to English readers from William Ernest Henley’s poem of that name:
Out of the night that covers me,
Black as the pit from pole to pole,
I thank whatever gods may be
For my unconquerable soul.
In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.
Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds and shall find me unafraid.
It matters not how strait the gate,
How charged with punishments the scroll,
I am the master of my fate:
I am the captain of my soul.
In one sense it’s no wonder that Patton Boggs, the lawyers representing the Ecuadoran plaintiffs in the Lago Agrio case, titled their memorandum outlining their strategy for collecting damages from Chevron, “Invictus.” The Lago Agrio plaintiffs had overcome long odds, surviving a forum non conveniens dismissal of their initial lawsuit and prevailing in Ecuador after many years of bitter litigation. But “Invictus” is perhaps a telling choice in another sense, too. The poem is stoic, and stoicism is not really a philosophy suited for long-suffering litigants who believe themselves to be on the threshold of a great victory.
The memorandum lays out a comprehensive strategy for pursuing Chevron after the Ecuadoran courts enter judgment. The strategy includes both efforts to obtain recognition and enforcement in the United States and efforts to obtain recognition and enforcement abroad. But despite the memorandum’s emphasis on the desirability of enforcing the judgment in the United States, it’s been reported that the Lago Agrio plaintiffs have no intention of seeking to enforce the judgment in New York, and maybe not in the United States.
The obvious reason for being hesitant about seeking recognition in New York or the US is a fear that recognition will not be forthcoming. Judge Kaplan has been most receptive to Chevron’s arguments about the supposed partiality and corruption of the Ecuadoran courts, and perhaps other judges would be, too. Aside from the obvious, what are some other considerations that might lead the plaintiffs to seek recognition and enforcement abroad rather than in the United States? Here are some thoughts:
- Avoiding set-offs and indemnities. Chevron’s main strategy these days seems to be to ensure that even if the Ecuadoran judgment is enforced, someone else will foot the bill. The purpose of the investment treaty arbitration Chevron is pursuing against Ecuador is, in effect, to force Ecuador to indemnify Chevron for whatever damages Chevron is required to pay the plaintiffs. Chevron has also sued the Lago Agrio plaintiffs (and others) in New York on a RICO theory. Here, the idea seems to be that whatever Chevron is required to pay on the judgment, it will seek to recover back from the plaintiffs themselves. But the plaintiffs have a plausible argument that they are not subject to the personal jurisdiction of the court in New York. They may be wrong or they may be right. But if they bring a claim for recognition and enforcement in New York, then they waive the jurisdictional argument altogether. Indeed, if they bring the claim for recognition and enforcement anywhere in the United States, they are inviting Chevron to assert its RICO claim as a counterclaim.
- Concern about the penal nature of the judgment. The Ecuadoran judgment tops $18 billion, but only because Chevron has refused to apologize for its supposed torts. If Chevron had apologized, the judgment would have been reduced by half. This suggests that the judgment is half-punitive, punishing Chevron for its failure to apologize rather than compensating the plaintiffs for their injuries. (I have no idea whether Ecuadoran law would treat the issue this way, but this is how it seems to me, anyway). In states such as New York that have enacted the Uniform Foreign Money-Judgment Recognition Act, a “foreign judgment” potentially entitled to recognition and enforcement under the statute is defined as “any judgment of a foreign state granting or denying recovery of a sum of money, other than a judgment for taxes, a fine or other penalty, or a judgment for support in matrimonial or family matters.” It’s not clear from the text of the statute whether a judgment may be enforced to the extent it is compensatory rather than punitive. This statutory issue has been resolved in the more modern Uniform Foreign-Country Money Judgment Recognition Act, but the newer act has been adopted in only 17 states, primarily in the West and the Midwest. The newer statute makes it clear that a penal judgment is enforceable except to the extent it is penal. On these grounds, if the plaintiffs did decide to seek recognition and enforcement somewhere in the United States, perhaps they will do so in one of the jurisdictions that have adopted the newer statute.
- Concerns about comity. We have seen in recent weeks strong judicial resistance among some US judges (namely, the judges on the Second Circuit who vacated Judge Kaplan’s preliminary injunction) to sitting in judgment on other courts around the world. I believe this attitude is probably widespread, and that it reflects a true trend in the law towards more modesty in the extraterritorial application of US law. But I suspect that US appellate judges would be much less likely to reject an antisuit injunction aimed at preventing a multiplicity of suits within the United States then they have proved when faced with an
injunction aimed at preventing a multiplicity of suits around the world. So if the plaintiffs’ strategy is to engage in multiple proceedings at once, maybe it is better to do so outside of the United States
As an outsider to the case, of course I have no way of knowing if these speculations are right or wrong. But there’s no question that this case is like a game of three-dimensional chess, and that somewhere squads of lawyers are strategizing over each side’s best moves.