A Response to the Whytock/Robertson Proposal
Posted on May 30, 2012
Aaron Marr Page is the Managing Attorney at Forum Nobis pllc and an advocate for the Lago Agrio plaintiffs.
Chris Whytock and Cassandra Robertson have produced an excellent and timely piece of scholarship and kudos to Letter Blogatory for so keenly picking up on its import and hosting this symposium.
I must pause to note how sobering it is to realize that Whytock/Robertson’s work is so timely because only now, after a good half century of vigorous forum non conveniens (FNC) practice, are we seeing a FNC-dismissed foreign judgment readying to appear for enforcement. As Whytock/Robertson remind us, only 15% of FNC cases are actually refiled in the supposedly more convenient foreign forum, a reality long known to scholars, lawyers, and judges, even as they escort these plaintiffs like lemmings off a cliff, replete with inane chatter about how convenient it will be for them where they are going. Our system’s ability to neatly ignore or accept this reality, especially in the context of what is supposed to be a doctrine of equity, speaks volumes and is helpful to keep in mind as we start wading into the tricky realm of judging “adequacy” and assessing differences between national judiciaries and differing legal cultures.
I believe Whytock/Robertson correctly describe and analyze the tension between foreign judicial “adequacy” as pleaded by defendants at the FNC and enforcement stages, and within the boundaries they set I believe their proposed solution is necessarily correct. Our system does not ordinarily tolerate rank hypocrisy, and a defendant’s flip-flop on a complex issue like foreign judicial adequacy, neatly timed to its own self-interest, should be seen and rejected in this light. The onus seems clearly on those who would allow defendants to change their position at the enforcement stage to explain with clear reasons why we shouldn’t let common sense estoppel do its work here. Some may worry about defendants who genuinely didn’t realize that success on their FNC motion would foreclose a systemic inadequacy defense at enforcement—or, more realistically, defendants who noticed Whytock/Robertson’s “gap” earlier and feel entitled to capitalize on it before it closes. Whytock/Robertson’s proposal would address these concerns gently, by more clearly putting defendants on notice at the FNC stage and only applying to cases going forward. Personally, I’d say that past FNC defendants had plenty of notice implicit in the generally applicable principles of judicial and equitable estoppel, but if extra caution is what is required to implement the correct rule going forward, so be it.
I am not sure, however, whether the real action is likely to play out out on the particular battlefield Whytock/Robertson describe. As they note, FNC is almost never denied on the adequacy prong, and I would suggest that at least in part this is because judges can get to the same result on the second prong with the far less confrontational public/private convenience factors, without having to wholesale impugn foreign judicial adequacy. Whytock/Robertson’s proposed reforms at the FNC stage would not stop the next Chevron/Texaco from successfully arguing that, apart from adequacy, it is more convenient for it to litigate in a jungle 5,000 miles away than in a federal courthouse 20 miles from its headquarters.
A similar dynamic is suddenly brewing in the enforcement context, where, traditionally, judges did not have lower-hanging fruit available to avoid making wholesale determinations about foreign judicial adequacy. Most importantly, the original Uniform Act, as Judge Posner wrote in Society of Lloyds v. Ashenden, 233 F.3d 473, 477 (7th Cir. 2000), “does not support [the] retail approach” of challenging particular results in particular cases, but rather requires defendants to successfully impugn the foreign system “en gross.” The revised Uniform Act, however, appears to welcome the retail approach by offering judgment debtors two new discretionary grounds to resist enforcement, 4(c)(7)-(8), by alleging “circumstances that raise substantial doubt” about the foreign court or other due process issues with the specific proceeding.
The wisdom of revised Uniform Act in offering these new grounds is questionable. The comments offer little insight, and the ULC summary and other discussion either ignores the additions or at most suggests they were added to “correct and clarify gaps in the 1962 Act revealed in the case law over the last 40 years.” But courts’ rejection of the “retail approach” was hardly a “gap”: as Posner explained, it was a considered decision, essential to the “streamlined, expeditious method for collecting money judgments” that the Act seeks to achieve. I suspect (from experience) that defendants will not find it difficult to repackage their frustrated arguments from the underlying litigation—not to mention any actual errors “of law or of fact” that under Hilton v. Guyot, 159 U.S. 113 (1895), and the traditional rule would be unavailing on enforcement—into alleged due process issues or circumstances raising “substantial doubt” about a foreign court’s integrity. Even where such repackaging wouldn’t prevail on the merits, it may be enough in many cases to destroy the economic rationale behind enforcing some smaller judgments and in general does away with the hope for a “streamlined, expeditious system.”
Of course, such repackaging is a concern with the traditional discretionary factors as well, as the Chevron case so dramatically illustrates. Every argument Chevron lost at trial, it seems, eventually morphs into a violation of due process, then when the court rejects the due process claim becomes a fraud on the court, then when the court rejects the fraud claim becomes a fraud, then when the court rejects the fraud claim becomes a fraud by the court on Chevron. As its losses have grown, the “fraud” this poor company is suffering has grown proportionally: by last count, it now includes not just the plaintiffs and all their diverse experts and lawyers (including such prominent firms as Patton Boggs, Motley Rice, and Keker & Van Nest), but the Ecuadorian trial court itself, the three-judge appeals panel that affirmed the trial court, and soon, perhaps, the 21 judges on Ecuador’s National Court of Justice, not to mention Ecuador’s president, its national oil company, an international cabal of environmentalists and financiers, and any nation that would dare consider enforcing the judgment. For a full roster of “the conspiracy,” see Doug Cassel’s post.
Packaged as “fraud,” much of this nonsense will be cut out by the intrinsic/extrinsic rule, and the rest will be dealt with by common sense—as will other overwrought allegations of Ecuador’s incompatibility with due process. Despite some dramatic counter-examples, I still believe judges are pretty good at seeing through the self-serving allegations of a frustrated litigant, and I still have faith in the integrity of the overall comity-based scheme so memorably described by Judge Cardozo in Loucks v. Standard Oil, 120 N.E. 198 (N.Y. 1918), wherein “courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness” and even more importantly “are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home.”
Of course, such restraint and humility does not always prevail. In the Chevron case, last year we saw a district judge issue an unprecedented global injunction under the Declaratory Judgment Act enjoining any attempt to enforce the Ecuadorian judgment in any country in the world, after making a finding on two weeks’ briefing (and relying “almost exclusively on the declaration of … an avowed political opponent of the country’s current President, Rafael Correa,” see Naranjo, infra) that Chevron was likely to be able to show that Ecuador “does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” Try explaining that piece of judicial workmanship to your foreign national lawyer colleagues: not easy.
But that injunction was subsequently, and rather sternly, vacated the day after oral argument on appeal by the Second Circuit, which emphasized in its published opinion a very “Cardozian” sort of humility, applicable not just when a court considers declaring “that another country’s legal system is corrupt or unfair” but also before it considers pronouncing on issues pertaining to the legitimacy of a foreign judgment under foreign law and how “the laws of France, Russia, Brazil, Singapore, Saudi Arabia or any [other] countries with widely varying legal systems” might address those issues. Chevron Corp. v. Naranjo, 667 F.3d 232, 244 (2d Cir. 2012); see also In re Chevron Corp., 650 F.3d 276, 294 (3d Cir. 2011) (“Though it is obvious that the Ecuadorian judicial system is different from that in the United States, those differences provide no basis for disregarding or disparaging that system. American courts, though justifiably proud of our system, should understand that other countries may organize their judicial systems as they see fit.”).
In summary, while I think that Whytock/Robinson’s proposal of more rigorous FNC standards and subsequent estoppel is the right approach to the “gap” they identify, and further that estoppel is certainly appropriate wherever Chevron will attack Ecuadorian judicial adequacy as a general proposition (as it must in New York, which has not adopted the new grounds of the revised Uniform Act), the larger reality is that the Ecuadorians don’t need estoppel to prevail in enforcement proceedings, and estoppel if applied still won’t deal with Chevron’s repackaging its frustrated underlying complaints into “fraud,” violations of “public policy” or “natural justice,” or whatever else the enforcement exceptions of the local jurisdiction require. The Ecuadorians will dispense with these objections on their merits, even though, after 20 years of litigation, we are getting perilously close to the “lifetime of litigation” “until hell freezes over” that the company’s general counsel promised years ago and its still the company’s official policy today (a bald-faced abuse of process that warrants its own consideration). All the Ecuadorians need, fundamentally, are enforcement jurisdictions that exercise the basic tenets of mutual respect for the rule of law as they exist in different jurisdictions, and a dose of the humility that Judge Cardozo described. In one of Chevron’s early U.S. discovery actions, the Ecuadorians’ lawyer asked the judge to at least suspend his judgment on the merits of Chevron’s various fraud claims until the Ecuadorian court of primary jurisdiction (and with expertise in the applicable law) could make its own determination. “Believe me, if this were the High Court in London, you can be sure I’d wait,” the judge responded—his way of telling the lawyer that, no, he was not likely to wait on anything from anybody in Ecuador. (“About the same as the likelihood that the Ecuadorian Air Force is going to take over New Jersey,” to borrow another of his quips.) This sort of double standard is inappropriate and troubling. To be blunt, it is seen by the Ecuadorians as part and parcel of the arrogant and even racist mentality that led Chevron to dump 16 billion gallons of produced water into the waterways of a delicate ecosystem relied on by indigenous groups and other residents for their sustenance, rather than injecting it into underground formations as it would have in the United States (or in London).
For international lawyers, I think it is not too much to say that this mentality is poison for the efficient functioning and long-term survival of a what is fundamentally a comity-based system (and likely to remain so for quite some time) in an increasingly global and multipolar environment. As Letters Blogatory and my fellow symposium participants have been quick to recognize, the final chapter of the Chevron case is going to tell a powerful story about the international law of our time. Stay tuned.