More on the new Brazilian Action in the Lago Agrio Case

Chief Justice John G. Roberts, Jr.
The Man of the Hour
Here is an unofficial translation of the Lago Agrio plaintiffs’ complaint seeking recognition and enforcement of their Ecuadoran judgment in Brazil.

In my last post on the case, I noted that both Brazil and Ecuador were parties to the Montevideo Convention, an OAS treaty that several South and Central American states have ratified. The Convention is a true judgments convention, providing for mutual recognition and enforcement of judgments provided the conditions of the Convention are met. Here is a summary of the main provisions:

  • The Convention applies to judgments “rendered in civil, commercial or labor proceedings in one of the States Parties.” If a state makes an appropriate declaration, the Convention also applies to “judgments in penal proceedings ordering compensation for damages resulting from an offense.” It does not appear from the OAS webpage on the treaty that either Ecuador or Brazil has made such a declaration, and there may be an issue, from Chevron’s perspective, about whether the judgment is penal in whole or in part. But under Article 4, even if the judgment is not enforceable in its entirety, it may be enforced in part.
  • Foreign judgments “shall have extraterritorial validity in the States Parties” if they meet eight requirements:
    1. They fulfill all the formal requirements necessary for them to be deemed authentic in the State of origin;
    2. The judgment, award or decision and the documents attached thereto that are required under this Convention are duly translated into the official language of the State where they are to take effect;
    3. They are presented duly legalized in accordance with the law of the State in which they are to take effect;
    4. The judge or tribunal rendering the judgment is competent in the international sphere to try the matter and to pass judgment on it in accordance with the law of the State in which the judgment, award or decision is to take effect;
    5. The party has been summoned or subpoenaed in due legal form substantially equivalent to that accepted by the law of the State where the judgment, award or decision is to take effect;
    6. The parties had an opportunity to present their defense;
    7. They are final or, where appropriate, have the force of res judicata in the State in which they were rendered;
    8. They are not manifestly contrary to the principles and laws of the public policy (ordre public) of the State in which recognition or execution is sought.

Some of these are merely requirements of form or procedure, but some are requirements of substance: the court that issued the award must have been “competent in the international sphere” to enter the award; the parties must have had an “opportunity to present their defense”; the judgment must not be “manifestly contrary” to the ordre public of the state of enforcement. Chevron’s obvious arguments are going to be that the supposed fraud in Ecuador deprived it of the opportunity to present its defense (though here the distinction between intrinsic and extrinsic fraud probably comes into play—Chevron made its claims of fraud to the Ecuadoran courts, and they were rejected), and that Brazilian public policy should not countenance enforcement of a supposedly fraudulent judgment. The plaintiffs are likely to say that the Convention is really just about ensuring the formal validity of judgments. I don’t know enough yet about the precedents under the Convention to say how much leeway Chevron will have in Brazil to raise the kinds of arguments it will want to raise.

The question of “competence in the international sphere” is left uncertain in the Convention itself. Brazil has made a reservation to this provision of the treaty, though the nature of the reservation is unclear from the OAS webpage. A later treaty, the Inter-American Convention on Jurisdiction in the International Sphere for the Extraterritorial Validity of Foreign Judgments, sets out rules for determining when the rendering court is to be deemed competent, but that Convention expressly excludes torts and in any event neither Brazil nor Ecuador has ratified it.

Photo credit: U.S. Supreme Court

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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