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For reasons that are not entirely clear, partisans of both Chevron and the the Lago Agrio plaintiffs have devoted some time to arguing their case in the legal blogosphere. I say that the reasons are not entirely clear because nothing in the litigation turns on whether the parties can persuade legal bloggers and other dilettantes of the merits of their case. But be that as it may, they’ve made the effort. On Chevron’s side, we’ve had a series of posts from Professor Doug Cassel of Notre Dame Law School, one of the authors of a brief Chevron submitted to the Inter-American Commission on Human Rights. On the plaintiffs’ side, we’ve had some responses from Karen Hinton, the plaintiffs’ public relations representative, and Aaron Page, one of their lawyers, and a lengthy memorandum. Of particular note: A recent post, with comments, at Opinio Juris, in which Cassel, Hinton, and Page participated, Cassel’s open letter to the human rights community, and a response to the open letter prepared by the plaintiffs’ legal team, available from Opinio Juris. The plaintiffs have also recently published a briefing paper giving an overview of the case.

Some questions for the plaintiffs

Since I started writing about the case, my attitude has been that I didn’t want to take sides on the issue of supposed corruption in the Ecuadoran proceedings. The main reason was laziness a lack of the time needed to evaluate the whole record for myself. Recently, however, the parties themselves have provided lengthy statements of their own positions on the question. I’ve been reading them carefully, and I have to say that I have found Professor Cassel’s materials, most especially portions of his memorandum dated April 10, pretty persuasive relative to the material the Lago Agrio plaintiffs’ representatives have been offering up. I’ll give reasons for this below. And so I offer the following editorial opinion for what it is worth:

Lago Agrio plaintiffs, I think you need to provide a lawyerly response to the latest Cassel memorandum. Leave the irrelevancies at the door. I know Professor Cassel was paid by Chevron for his work on the brief. I am not interested, for the moment, in whether in fact Chevron/Texaco polluted the Amazon or caused the plaintiffs to suffer personal injuries. I am not interested in whether Chevron misbehaved in Ecuador, as it alleges you misbehaved. 1 I am not interested in whether the BIT tribunal has overstepped its bounds. I am not even interested, for the moment, in my own favorite theory about the case, namely, that even if the Ecuadoran courts are not impartial, Chevron could still be bound by the judgment on account of the representations it (or Texaco) made to the court in New York (more on this below). I am interested in specific responses to the following points that Professor Cassel has made:

  • Who wrote the Cabrera report? The Cassel memorandum points to emails in which one of the plaintiffs’ lawyers seemingly admits that they wrote the report, unbeknownst to Chevron, and in which one seemingly admits that the report could constitute a fraud on the court because it was ghostwritten.
  • Who wrote the Calmbacher report? The Cassel memorandum points to testimony in which the supposed author of a report the plaintiffs submitted to the Ecuadoran court testified that he had not written the report or reached the conclusions in the report.
  • Are there record citations for some of the material in the judgment? The Cassel memorandum points to what seem to be some strong reasons to think that the judgment incorporates on information from the plaintiffs’ “private database”, which was not in the record, suggesting that the plaintiffs participated in some improper way in the preparation of the judgment. I have in mind the material following footnote 112 in the Cassel memorandum. Are there items in the record that the judge could have used as the source for this information?

I focus on these few points, rather than on some of the more complex points, because I think they should be simple to answer and seem much less contestable than, for example, the expert testimony of linguists about the authorship of the judgment or inferences about the plaintiffs’ supposed blackmail of the judge. I also think that these points, if unrebutted, call the legitimacy of the Ecuadoran proceedings into serious question, in my mind at least. And last, as far as I can tell these points are essentially unaddressed in the memorandum in which the plaintiffs make the case that the Ecuadoran proceedings were not marred by fraud (though at least the points about Cabrera and the judgment were raised in the Cassel open letter).

One totally appropriate response to these questions is: “We’ll make our case in court, not in the media or the blogosphere.” (This is similar to Aaron Marr Page’s response to Cassel in the comments to the OJ post). Fair enough. But given the amount of PR both sides have used in this case, I hope the plaintiffs will address these points.

Estoppel

Now let me address the estoppel issue. I’ve been sympathetic to the notion that since Texaco, later purchased by Chevron, made representations to the New York court about the quality of Ecuadoran justice, Chevron should be estopped to assert now that Ecuadoran justice is crappy. This idea comes in a strong form and a weak form. In the strong form, Chevron would be estopped both to assert that “the judgment was rendered under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law” (UFCMJRA § 4(b)(1)) and to assert that “the judgment was obtained by fraud that deprived the losing party of an adequate opportunity to present its case” (UFCMJRA § 4(c)(2)). 2 In the weak form, Chevron would be estopped to assert problems with the Ecuadoran judicial system, but not to assert fraud in the proceedings. In the weakest form, Chevron would be estopped to assert problems with the Ecuadoran judicial system, but only if they existed at the time Texaco made its representations.

I think the strong form is likely not defensible. 3 But I think the weak version may well be defensible, even as to judicial conditions that did not exist at the time of the representations. In part, I hold this view because I think comity requires it, particularly in cases where the action is heard in a foreign court because the complaining party wanted it there, and in part because I think that as a matter of policy US courts should not encourage expensive and time-consuming ancillary litigation about the adequacy of foreign proceedings at the behest of the parties who asked to have the case sent abroad. With regard to Ecuador in particular, I find it difficult to believe that Chevron really thought, before President Correa came to power in 2007, that the Ecuadoran judiciary was a model of impartiality. I’ve criticized the plaintiffs’ use of the Staats report (e.g., in my post of March 23, 2012 and in my response to a comment by Karen Hinton), but the data set on which the report relies seems to show that the Ecuadoran judiciary was not fully independent even before President Correa’s term began. It seems likely to me that Chevron thought that if the case was dismissed in New York, it would never be tried in Ecuador. But whatever Chevron/Texaco thought, I think it is fair to say that by declining the home-field advantage and asking to have the case tried in a developing country, the company more or less took the risk that the political winds would not blow its way.

Professor Cassel, in response to a comment I left at the most recent Opinio Juris post, asserts that the Second Circuit has rejected estoppel under US law, and that an arbitral tribunal has rejected estoppel as a matter of international law. I will leave the international law issue to the side and just consider where things stand in the US. It’s true that in Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011), the Second Circuit held that Chevron was not estopped to raise claims against Ecuador in the BIT arbitration because of the stipulations Texaco made as a condition of obtaining a forum non conveniens dismissal in New York. But I don’t think the matter is as settled as Professor Cassel believes. For one thing, the Lago Agrio plaintiffs may seek recognition and enforcement in a US jurisdiction other than New York, and while I think the Second Circuit’s decision (or rather the underlying final judgment) would likely have issue-preclusive effect, it’s not clear to me that the Texaco stipulation, on its face, would apply in states whose law on recognition and enforcement differs in some respect from New York’s. For another thing, I think the Second Circuit’s decision rests on a sound basis (the lack of a true conflict between the BIT arbitration between Chevron and Ecuador and the Lago Agrio litigation between the plaintiffs and Chevron) that is entirely independent of the court’s broader conclusions about estoppel, so it’s possible to read the Second Circuit’s discussion of this point as an extended dictum. Third, the decision addresses only the stipulation itself and not the representations of fact concerning the Ecuadoran courts that Chevron/Texaco made to the New York courts. In my post of February 15, 2011, I quoted one such encomium (albeit from an appellate brief) at some length:

Ecuador’s Government is a constitutional democracy with executive, legislative, and judicial branches. Its judicial branch, headed by the Supreme Court, includes special purpose courts and lower courts, which use a Civil Code based on Roman law. Thus, Ecuadorian legal norms are similar to those in many European nations. Ecuador’s Constitution guarantees due process and equal protection, and its courts provide important procedural and substantive rights, as former Supreme Court Justices of Ecuador, jurists, and practicing lawyers informed the District Court in affidavits.

* * *

In response to the District Court’s January 31, 2000 Memorandum Order, the parties submitted evidence concerning the independence and impartiality of Ecuador’s judiciary following the short-lived coup in January 2000. That evidence further proves that Ecuador provides an adequate legal forum and that its judicial system is even stronger today than previously.

Ecuador reaffirmed its commitment to democracy following the failure of the January 21, 2000 military coup. Its democratic, constitutional government continues today, and its judiciary remains independent. Ecuador’s military is not interfering with the judiciary’s or government’s activities. The current Government of Ecuador has taken and continues to take “vigorous steps to further the independence and impartiality of the judiciary.”

* * *

Plaintiffs’ next argument is that Ecuador’s courts are corrupt, but “the argument that the alternative forum is too corrupt to be adequate ‘does not enjoy a particularly impressive track record.’” The most persuasive evidence that Ecuador can and does dispense independent and impartial justice in these cases is the record of corruption-free litigation against Texaco’s subsidiary and other companies. This record provides practical proof that litigants can and do obtain fair treatment and relief in Ecuador’s courts, including in cases relating to Consortium activities. The circumstances in Ecuador are not remotely like those that prevailed in Liberia when this Court decided Bridgeway Corp., which involved a “dysfunctional foreign legal system[].” The opposite is true in Ecuador.

These cases also have received substantial attention from the Ecuadorian government and media, environmental groups, human rights groups, indigenous organizations and other non-governmental organizations. This attention will continue regardless of forum. The public scrutiny these cases will receive in Ecuador and/or Peru will further assure a fair adjudication of plaintiffs’ claims.

I have not gone back through the SDNY docket to see whether, for example, Chevron submitted expert reports, testimony, or whatever, along those same lines. But it seems to me that it is still open to the plaintiffs to argue that such representations to the court have some sort of estoppel effect, even if Texaco’s stipulations themselves do not.

And one last point: even if the issue of estoppel were closed in this case, as Professor Cassel suggests, I think it’s important to think about what the law should be on this important question.

Photo credit: Daderot/Hohum

Notes:

  1. Question: suppose the Lago Agrio plaintiffs obtained their Ecuadoran judgment by fraud, and Chevron were guilty of attempted fraud in Ecuador. Would the plaintiffs’ fraud be grounds for non-recognition?
  2. I cite the Uniform Foreign-Country Money Judgment Recognition Act for convenience; most of the action in the US has been in New York, whose enactment of the Uniform Foreign Money-Judgment Recognition Act provides similar but not identical language, see CPLR § 5304.
  3. In a post on a paper by Christopher A. Whytock and Cassandra Burke Robertson that addresses these issues, I pointed out that Whytock & Robertson had reached a conclusion that is counterintuitive to me, namely that a party should have a stronger, not a weaker, claim for estoppel arising out of systematic problems with the judiciary than out of fraud in the particular case.