Douglass Cassel is Notre Dame Presidential Fellow and Professor of Law at the University of Notre Dame Law School. He was also an advocate for Chevron in proceedings before the Inter-American Commission on Human Rights.  Views expressed herein are his personal views, and not necessarily those of Notre Dame Law School, Chevron or any other entity.

My scholarly pursuits in international human rights law have not previously inquired into domestic law doctrines of forum non conveniens and enforcement of foreign judgments. My limited acquaintance with these doctrines arises mainly from a single case: the litigation against Chevron for alleged environmental damage in Ecuador. That litigation supplies an instance of the issues posed in this symposium: namely, the circumstances in which defendants who succeed in dismissing suits in US courts on grounds of forum non conveniens should later be permitted to defeat enforcement of a resulting foreign judgment on the ground that it is illegitimate.

Fortunately, two contributors to this symposium—Christopher Whytock and Cassandra Burke Robertson (“W & R”)—recently published a thoughtful analysis of these broader issues in the Columbia Law Review. Another contributor, Professor Ronald Brand, is a leading expert in the field. In such company, perhaps the most useful contribution I can make is to test the analysis and recommendations made by W & R against the facts of the Chevron case, and to ask whether the comparison suggests any modification or refinement of their analysis.

The Litigation Against Chevron

In 1993 residents of the Amazon sued Texaco in federal court in New York for oil pollution in Ecuador. In 2001 the District Court dismissed the suit on grounds of forum non conveniens. A Chevron subsidiary thereafter merged with Texaco, and Chevron defended the dismissal on appeal. The Court of Appeals affirmed in 2002. The following year a related lawsuit was filed in Ecuador. This led in 2011 to an $18.2 billion Judgment against Chevron, which plaintiffs now hope to enforce.

After Ecuadorian courts upheld the Judgment on appeal early this year, plaintiffs asked the Inter-American Commission on Human Rights to press Ecuador to enforce it against Chevron. I co-signed an amicus brief for Chevron opposing their request, on the ground (among others) that the Ecuadorian Judgment was “illegitimate, involves fundamental due process violations, and was not the product of independent and impartial judges.” (I was compensated for my time; plaintiffs later withdrew their request.)

As I have detailed elsewhere, the Ecuadorian proceedings amounted to a fraud in which some (not all) of plaintiffs’ lawyers colluded with Ecuadorian judges. Strong evidence—never convincingly refuted by plaintiffs—indicates, for example:

1. Lawyers for plaintiffs forged the signature on the “report” of their expert, Dr. Charles Calmbacher, falsely claiming that he found widespread environmental problems, when in fact he did not;
2. Plaintiffs’ lawyers and consultants ghost wrote the report of the Court’s supposedly “independent” expert on damages, Mr. Cabrera, even drafting it in English (a language he does not understand, so that his report had to be translated for him at the last minute);
3. In an effort to conceal their fraud, plaintiffs’ lawyers later paid Cabrera thousands of dollars in hush money from their “secret” bank account;
4. Once their fraud was discovered, plaintiffs hustled to present “cleansing” witnesses—who nonetheless relied on Cabrera’s fraudulent report; and
5. The Judgment contains data found nowhere in the judicial record, (see also here) but which appear verbatim in plaintiffs’ internal files, complete with identical mistakes and idiosyncratic symbols and punctuation.

Not surprisingly, several US federal courts have found these machinations to be fraudulent. As summarized by one federal judge, “… [W]hat has blatantly occurred in this matter would in fact be considered fraud by any court.”

Whytock and Robertson: The Need for Consistent Standards to Assess the Adequacy of Foreign Courts

In their article W & R point out that under existing law, the standard used at the “front end” of litigation, to determine whether a suit in a US court should be dismissed in favor of a more convenient foreign forum, differs markedly from the standard used at the “back end,” to determine whether to enforce a resulting foreign judgment.

They note two key differences in the standards ex ante and ex post. First, the standard for whether a foreign forum is deemed “adequate” for purposes of a forum non conveniens dismissal is far more lenient than the standard later used to assess a resulting foreign judgment. With rare exceptions, a more convenient foreign forum is deemed “adequate” so long as the defendant can be sued there. Yet any resulting foreign judgment may be denied enforcement if it is tainted by fraud or by violations of due process, or was entered by courts lacking independence and impartiality. The same foreign court deemed adequate for purposes of forum non conveniens may thus be deemed inadequate for purposes of enforcing its judgment.

The second difference involves adequacy for whom. At the forum non conveniens stage, the issue is whether the foreign forum is adequate for the plaintiff. But at the enforcement stage, the question is whether the foreign forum violated important rights of the defendant.

Two conclusions (among others) flow from these differing standards. As W & R observe, from the defendant’s point of view, it can be entirely consistent to argue that a suit in US court should be dismissed, because plaintiffs have an adequate forum in another country, but then later to oppose enforcement of a resulting foreign judgment because the foreign forum was fundamentally unfair to the defendant.

Second, the plaintiff may lose twice: first he is dismissed out of a US court and relegated to a foreign court, and then later he may be denied enforcement of any judgment entered by the foreign court. Calling this a “transnational access-to-justice gap,” W & R propose various reforms, centered on the theme that consistent standards of foreign judicial adequacy should be used at both the front and back ends of such litigation.

Similarities to the Chevron Litigation

At the foregoing level of generality, the litigation against Chevron is a reasonably good fit for the W & R thesis. At the front end, the litigation in New York was dismissed on grounds of forum non conveniens, based on a lenient standard of “adequacy” of the foreign forum for the plaintiffs.

In upholding the dismissal, the Court of Appeals in 2002 articulated the standard as follows:

Ordinarily, the requirement of an adequate alternative forum “will be satisfied when the defendant is “amenable to process” in the other jurisdiction. In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative …”

Texaco expressly agreed to be sued in Ecuador. Hence the ordinary standard was met: the defendant was “amenable to process” in the foreign forum.

In contrast, any future enforcement of the Ecuadorian Judgment in a US court will depend on a much stricter standard. Most US States have laws modeled on either the 1962 Uniform Foreign Money-Judgments Recognition Act or its 2005 revision. With somewhat different formulations, both versions allow or require denial of enforcement based on fraud, denial of due process, or lack of independent and impartial courts in the foreign forum.

Relying on a New York statute based on the 1962 Uniform Act, a federal court in New York last year went so far as to issue a worldwide injunction against enforcement of the Ecuadorian Judgment. Although that sweeping injunction was reversed on appeal, nothing in the reversal took issue with the underlying findings of fraud in the Ecuadorian litigation. Because of that fraud, now recognized by several US courts, plaintiffs may be unable to enforce their judgment in New York (or anywhere else in the US).

Also consistent with the W & R thesis, the forum non conveniens dismissal turned on whether the plaintiffs had an adequate forum in Ecuador. The District Court and Court of Appeals focused on arguments that Ecuadorian courts would not allow plaintiffs to proceed on their claims or to obtain justice. The Court of Appeals noted, for example, “The record shows that several plaintiffs have recovered judgments against TexPet and PetroEcuador for claims arising out of the very facts here alleged.” The Court of Appeals also relied on the District Court’s finding that there was “no evidence of impropriety by Texaco or any past member of the Consortium in any prior judicial proceeding in Ecuador; [and] there are presently pending in Ecuador’s courts numerous cases against multinational corporations without any evidence of corruption; …”

The expectation that Ecuadorian courts would not shortchange the plaintiffs proved correct. In fact, as noted above, the Ecuadorian judiciary colluded with plaintiffs’ counsel to perpetrate a fraud on Chevron. Now, consistent with the W & R thesis, the issues in any future US enforcement proceedings will focus on whether the Ecuadorian proceedings were unfair to the defendant.

Differences With The Chevron Litigation

The fit between the W & R theses and the Chevron litigation, however, is not perfect. At the forum non conveniens stage, in order to find that the Ecuadorian forum was adequate, the US courts went well beyond a bare finding that Texaco had agreed to be sued in Ecuador. Even after plaintiffs abandoned arguments that Ecuadorian courts were corrupt, the District Court on its own initiative ordered and conducted, and the Court of Appeals reviewed, a searching inquiry into whether “the courts of Ecuador can exercise with respect to the parties and claims here presented that modicum of independence and impartiality necessary to an adequate alternative forum.”

The US courts answered this question in the affirmative. Relying on an affidavit from Ecuador’s Attorney General, the District Court observed:

While no one claims the Ecuadorian judiciary is wholly immune to corruption, inefficiency, or outside pressure, the present Government of Ecuador, headed by a former law school dean, has taken vigorous steps to further the independence and impartiality of the judiciary.

The District Court also relied on the annual State Department Country Report on Human Rights in Ecuador. The Report noted signs of improvement in Ecuadorian courts as follows:

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 Judicial Council, charged with administering the court system and disciplining judges, took office in the fall of 1998. In November 1999, the Council’s disciplinary committee fired two judges and two court employees for their role in the release of suspected drug traffickers. All four faced criminal charges. During the year, the Judicial Council removed at least two judges and a number of minor officials from their jobs.

Indeed, the District Court ex ante arguably went as far in examining the independence, impartiality and integrity of Ecuador’s judiciary as might a US court ex post in deciding whether to enforce a resulting Ecuadorian judgment. The District Court found “not the slightest indication, in any of the papers submitted on this issue, of any impropriety on the part of Texaco or any of its affiliates, or indeed on the part of any present or former member of the Consortium, with respect to any judicial or administrative proceeding of any kind in Ecuador.”

The District Court observed that “numerous cases against multinational corporations” were then pending in Ecuador’s courts. Yet:

None of the submissions here alleges corruption of the judiciary or the judicial process on the part of any of these corporations. On the contrary, the Chairman of Ecuador’s judicial disciplinary committee, who while in private practice successfully litigated numerous cases against TexPet, affirms that Ecuadorian courts do not give preferential treatment to multi-national companies like Texaco.

Again, this opinion was vindicated by later events: far from giving “preferential treatment” to Chevron, Ecuadorian courts colluded with plaintiffs.

The Ecuadorian plaintiffs thus did not suffer the “transnational access-to-justice gap” articulated by W & R. At the front end, they received a serious examination of the adequacy of Ecuadorian courts for plaintiffs. And if, at the back end, they prove unable to enforce their Judgment in US courts, any gap will be one of their own making. If the residents of the Amazon are ultimately denied relief for any just claims they may have, the fault lies not with US laws on forum non conveniens or enforcement of foreign judgments, but in the misconduct of plaintiffs’ own lawyers.

None of this suggests that the Chevron case invalidates the overall pattern of a transnational access-to-justice gap flagged by W & R; it does suggest, however, that the Chevron case does not fully fit the pattern.

Whytock & Robertson’s Recommendations

W & R recommend a series of reforms, at both the front and the back end, to overcome the transnational access-to-justice gap. Here I comment only on their proposals at the enforcement stage.

As a general matter, they argue that “if the defendant argues at the forum non conveniens stage that a foreign judiciary is adequate, the defendant should be estopped from arguing at the enforcement stage that the same foreign judiciary is inadequate.”

In general I agree: assuming (as do W & R) that in future the same standards of adequacy should be applied at both stages, innocent plaintiffs should not be victimized by defendants calling foreign courts adequate at the front end (forum non conveniens) but inadequate at the back end (enforcement).

But what about plaintiffs who are not innocent? For such plaintiffs, I must take issue with the W & R thesis. Estoppel is an equitable doctrine. Courts of equity do not grant relief to plaintiffs with unclean hands. Where—as in the Chevron case—plaintiffs orchestrate a fraud in a foreign court, they ought not to be given the benefit of relief via estoppel in a US court.

This is one of the reasons why Chevron should not now be estopped from arguing fraud, on the ground that its lawyers argued on appeal in 2001 that “Ecuador can and does dispense independent and impartial justice.” What happened in the subsequent Ecuadorian proceedings was not merely fraud; it was a fraud perpetrated by plaintiffs.

W & R further suggest that US courts at the enforcement stage “ordinarily should not accept case-specific defenses against enforcement.” Their rationale is that, if a defendant argued at the forum non conveniens stage that a foreign judicial system was adequate, the defendant should be relegated to foreign remedies for any ensuing fraud.

This proposal is in tension with both the 1962 and the 2005 Uniform Acts, both of which recognize that enforcement of a foreign judgment may be denied if—as in the Chevron case—“the judgment was obtained by fraud.”

In my view the Uniform Acts have the better of the argument. Even where a foreign judicial system is adequate in general, if a particular foreign judgment is nonetheless obtained by fraud and is not remedied by foreign courts, US courts should not be compelled to enforce a fraud. Our judges preside over courts of justice, not courts of “gotcha.”

Finally, W & R consider what should happen if a foreign judiciary, adequate at the time of a forum non conveniens dismissal, subsequently changes and becomes inadequate before a judgment is entered and enforced.

They propose that the answer should turn on foreseeability. Defendants who vouched for the adequacy of a foreign judiciary should bear the risk of reasonably foreseeable changes. On the other hand, defendants should not be estopped from complaining of changes in a foreign judiciary that were “not reasonably foreseeable.” In such cases, W & R argue, a foreign judgment tainted by such changes should not be enforced by US courts. Instead, US courts should offer the plaintiffs the opportunity to re-litigate their claims in US courts on an expedited basis. I agree.

(W & R would condition this proposal on the defendant’s reimbursing the plaintiffs for having litigated in the defendant’s preferred forum. While this may make sense for innocent plaintiffs, it hardly makes sense where, as in the Chevron case, the plaintiffs were the architects of their own demise, by participating in fraud in the foreign forum.)

In the Chevron case, as noted above, at the time the adequacy of the Ecuadorian forum was litigated in 2001, the plaintiffs could produce and the US courts could find no evidence of serious inadequacies in Ecuadorian suits against multinational corporations, including Texaco’s Ecuadorian subsidiary. State Department reports commended several years of positive trends in the Ecuadorian judiciary.

In contrast, two years after the dismissal on grounds of forum non conveniens was upheld on appeal, Ecuador’s judiciary suffered radical and not reasonably foreseeable changes. As I noted in a prior posted comment, in 2004 Ecuador’s new President and Congress fired and replaced the entire Constitutional Court, the entire Supreme Electoral Tribunal, and nearly all of the Supreme Court Justices. In 2005, the President followed up by firing the entire Supreme Court—including the new justices appointed only months earlier. For seven months Ecuador was left with no Supreme Court. This institutional beheading of the judiciary was not reasonably foreseeable.

Nor have matters improved since these blows to judicial independence were struck. Since taking office in 2007, current Ecuadorian President Rafael Correa has continued systematically to undermine judicial independence. As the president of one Superior Court stated in 2011, during 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.”

When the forum non conveniens dismissal was litigated a decade ago, there was no reason to foresee that the independence of Ecuador’s judiciary would sink to such a low. The logic of the W & R position, then, should not estop Chevron from complaining of the frontal assault on the independence of Ecuador’s judiciary, begun in 2004 and continuing to the present.

Conclusion

W & R make an invaluable contribution to scholarship and to justice by highlighting and dissecting the mismatch between the ex ante doctrine of forum non conveniens and the ex post doctrine of enforcement of foreign judgments, as both doctrines are currently applied. Although the Chevron case shows that their thesis and recommendations do not fully fit every case (what thesis does?), their approach is an excellent template for understanding these issues, so long as it is applied with a degree of flexibility to account for important variants in individual cases.