Thanks for the lengthy comment, Doug! You are needlessly apologetic about taking so long to reply—you weren’t obliged to reply, and for good or ill, posts on the internet last forever, so it’s never too late to comment.

I’m just going to comment very briefly, as I don’t want to steal too much thunder from Letters Blogatory’s upcoming mini-symposium on these issues, in which I’m delighted to say that you’ll be participating (readers, save the date! May 30. I’ll have an announcement about this soon). Here are two points for you to consider. I want to focus on the Cabrera and Calmbacher report allegations, which are to me the clearest and easiest to understand.

First, as I understand it Chevron made its case about the problems with these reports to the Ecuadoran trial court, and that court stated that it was not going to rely on them in making its factual findings. So if the court nevertheless relied on them, or if the court knowingly relied on reports derived from them—what Chevron has, I think, referred to as the “cleansed” reports—then it seems to me that the claim is really not that the judgment was obtained by fraud (i.e., that the Lago Agrio plaintiffs committed a fraud on the Ecuadoran court), but instead that the Ecuadoran court was not impartial or did not accord Chevron due process of law. In other words, because Chevron’s assertions about the reports were made known to the Ecuadoran court, it may be that Chevron is estopped even under the weak form of estoppel.

Second, I do not want to resort to crude generalizations about the quality of Latin American justice, and Ecuadoran justice in particular, in the 1990s, but it strains credulity to think that Chevron really expected the high quality of justice it represented to the US courts. As I’ve said elsewhere, without having any firsthand knowledge to back it up, my best guess is that Chevron thought the case would never be tried once it was dismissed in New York. I think the Lago Agrio plaintiffs’ ability to find a way to fund their litigation in Ecuador probably threw Chevron for a loop. Maybe you will agree with me that Chevron’s representations, in hindsight, were overly rosy.

One of the interesting things about this discussion, to me, is that people seem to have strong but opposing intuitions about the fair outcome. Your intuition, I think, is that no one agrees to be the victim of a massive fraud, and no one should be held to such an agreement, because enforcing an obviously fraudulent judgment is an affront to justice. My intuition is that the United States courts, no matter how slow and expensive, are one of the greatest mechanisms for arriving at just outcomes in today’s world, and that a highly sophisticated business that rolls the dice by getting a lawsuit against it dismissed in the US court in favor of a hearing in a country with a troubled judiciary and a history of political instability, and that achieves this by making somewhat over-the-top tributes to the quality of justice in the other country, shouldn’t be heard to complain when, predictably, things don’t go its way. A thought experiment: If the Lago Agrio plaintiffs had sued Texaco in Ecuador in the first instance, what’s your honest best guess about what Chevron’s response would have been?

Please accept my apologies for not commenting sooner on your post; my time has been consumed by the end-of-semester crunch.

You suggest three forms of estoppel: strong, weak and weakest. You think the strong form is “likely not defensible;” I agree. You think the weak form “may well be defensible,” and you ask what the law “should be on this important question.”

I will save a broader analysis of what the law should be for a future post. But whatever one’s view of the strong form, the Chevron case satisfies even the “weak” form, because the Lago Agrio judgment was obtained by fraud. The three questions you pose to plaintiffs – Who wrote the Cabrera and Calmbacher reports?, and, Are there record citations for certain materials in the judgment? – all go to the fraud question. (If plaintiffs have replied to your questions, they have not done so (unless I missed it) on Letters Blogatory.)

Whatever the broad outlines of the estoppel doctrine in forum non conveniens cases (again, I will try to address them in a future post), estoppel — as you pointed out in your March 23 post — is an equitable doctrine. In deciding whether to apply the strong, weak or weakest form of estoppel in this specific case, it is fair to ask what Texaco (and later Chevron) could reasonably be held to foresee, and, what risks they should reasonably be asked to assume. Some light is shed by the facts relating to the recent history of Ecuador’s judiciary.

First, granted, as an overall system, the Ecuadorian judiciary has never been a model of justice. Since at least 1995, the annual State Department Human Rights Country Reports consistently state that Ecuador’s judiciary is “constitutionally independent, but in practice is inefficient and susceptible to outside pressure” (or words to that effect). Annual Freedom House reports on Ecuador since at least 1994-95 consistently note problems of corruption in the judiciary.

That does not mean, of course, that justice could not be had in individual cases, such as those mentioned in the quotation included in your post above.

Moreover, at the time of the forum non conveniens litigation in the late 1990s and through the district court’s ruling in 2001 and the final appellate ruling in 2002, there was good reason to believe that the Ecuadorian judiciary was markedly improving. As noted by Freedom House (1997-98 annual report), Ecuador’s Supreme Court until 1997 “was appointed by the legislature and thus subject to political influence.” But constitutional amendments adopted in 1997 (and a new Constitution adopted in 1998) gave Supreme Court justices – for the first time — indefinite tenure, as well as the power to fill future vacancies on their court by a two thirds vote of the sitting justices. New justices, with no limit on their tenure, were recommended by a screening committee and appointed by the Congress in 1997.

According to the 1999 State Department Country Report,

“The Supreme Court that took office in 1997 publicly recognized the shortcomings of the judicial system and pledged to improve the quality and training of judges. In May 1998, the Supreme Court supervised the selection by open competition of all appellate judges. A new Judicial Council, charged with administering the court system and disciplining judges, took office in the fall of 1998. In November the council’s disciplinary committee fired two judges …”

It was during this reform period that Texaco told the US courts that the company believed a fair trial could be had in Ecuador. While the reforms did not eliminate serious problems in the Ecuadorian judiciary, they did amount to a meaningful effort to improve. For the next several years – until well after the forum non conveniens litigation concluded – the State Department, even while annually reporting that “in practice the judiciary is susceptible to outside pressure and corruption,” also noted efforts to “depoliticize and modernize the system.”

But three years after the district court ruling (and two years after the appellate ruling) on forum non conveniens, Ecuador’s judiciary took a dramatic turn for the worse. It was decapitated: In late 2004 and early 2005 (well before President Correa took office in 2007), President Lino Gutierrez and the Congress, in quick succession, fired and replaced the entire Constitutional Court; fired and replaced the entire Supreme Electoral Tribunal; and fired and replaced 27 of the 31 justices of the Supreme Court.

For the coup de grace, in April 2005 President Gutierrez fired the entire Supreme Court (including the 27 new justices, who had been appointed only months earlier to replace those appointed in 1997). For the next seven months, Ecuador was left without a Supreme Court.

Meanwhile the newly subservient Constitutional Court effectively ruled out any judicial challenges by the former justices to their dismissals. Worse, it did so at the express request of President Gutierrez “to prevent trial judges from admitting for processing” constitutional challenges against the dismissals.

The facts are detailed in the report of the Inter-American Commission on Human Rights, which last August sent the case of the 27 fired justices to the Inter-American Court of Human Rights, where it is now pending. The Commission concluded that under the constitutional amendments by which the 27 justices were appointed with life tenure in 1997, Ecuador’s Congress “did not have the legal power to terminate the functions of the Supreme Court justices.” The Commission further found that Ecuador had thereby violated the rights of the fired judges, under the American Convention on Human Rights, to fair trials, judicial protection and freedom from ex post facto laws.

You suggest, Ted, that by asking to have the case tried in Ecuador, “the company more or less took the risk that the political winds would not blow its way.” So stipulated. But did the company take the further risk that the life-tenured justices of a reformed Supreme Court – along with the judges of every other high court in the country – would unconstitutionally be dismissed en masse? And that Ecuador would be left without a Supreme Court for seven months? With the concomitant blow to any shred of judicial independence in the country?

Some risks, it seems to me, exceed those a company should be held reasonably to assume. The 2004-05 institutional massacre of the Ecuadorian judiciary was not merely a systemic deficiency of the sort dogging the courts in many developing countries. It was an extraordinary, radical – and fatal – assault on the independence of the judiciary.

So as not to belabor this already lengthy comment, I will not detail here the further assaults on the tattered remnants of Ecuadorian judicial independence perpetrated by President Correa. They are summarized in my April 10 reply to the Lago Agrio plaintiffs, to which your post links. That reply, for example, quotes the president of one Superior Court as stating in 2011 that in her 26-year career, “I have never seen the independence of the Judiciary reduced to such truly alarming levels as now.” She added that there is “no judge who is not afraid.”

This is the factual background against which the “weak estoppel” case should be assessed. As you note, Texaco took the precaution of reserving the right to challenge an Ecuadorian judgment, not only for fraud in the case (as occurred here), but also on the systemic grounds 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.” If ever that clause in the Uniform Act found facts to match, the case of Ecuador since late 2004 fits the bill. In my view it would not be equitable to hold Texaco (and now Chevron) estopped by statements made by company lawyers during Ecuador’s judicial reform period from later challenging a judgment rendered after the radical collapse of judicial independence in the country, a collapse so extreme as not to be reasonably foreseeable or fairly assumed as a risk.