3 responses to “BREAKING: Ontario Judge Stays Ecuadoran Plaintiffs’ Recognition and Enforcement Action Against Chevron”

1. Alejandro Manevich

   May 2, 2013

   Ted, many thanks for posting the decision. I don’t expect that this is the last chapter in the Canadian part of this story, but Justice Brown is a very highly respected judge, and his reasons (in my view) are typically learned, thoughtful, and thorough. We will see what the Court of Appeal makes of them.

   One thing that struck me on my first read of the decision was what Justice Brown did not do. He rejected the defendants’ argument that a precondition to recognition and enforcement of a foreign judgment is the existence of a nexus (“real and substantial connection”) between the proceeding to enforce and the jurisdiction: for example, that the defendant is domiciled there, or has assets there. I gather from reading his reasons that there is a split in the US appellate jurisprudence on this question. As Justice Brown notes, however, this appears to be pretty much a question of first impression in Canada. (There are a couple of Quebec cases on enforcing foreign arbitral awards that have suggested such a nexus would be required, albeit in obiter dicta. Interestingly, the issue is addressed in the Uniform Law Commission of Canada’s model Court Jurisdiction and Proceedings Transfer Act, which presumes a real and substantial connection to exist in any proceeding for the enforcement of a foreign judgment or arbitral award. Query, though, what would suffice to rebut the presumption!)

   Justice Brown instead granted a stay of the proceedings as an exercise of the Court’s inherent jurisdiction to control its own process. In brief, the facts before the Court indicated that Chevron had no assets in Ontario, had never had any assets there, and there was no prospect of it having any in future. Further, the evidence offered no basis to pierce the corporate veil between Chevron and Chevron Canada. In short, Justice Brown saw the recognition proceedings as consuming valuable judicial resources – especially in light of the exceptionally litigious history of the dispute – while serving no useful purpose.

   Now that does seem to raise an interesting question about how one balances the principle of judicial economy with international comity in the context of recognition of foreign judgments. I could see someone making the argument that in effect Justice Brown has done indirectly what he insisted the Court cannot do directly. But discretionary decisions such as this one are typically granted deference on appeal, whereas a question of law (such as whether a real and substantial connection is needed to enforce a foreign judgment) are reviewed on a correctness standard. That said, the Court of Appeal could certainly conclude that nonetheless in this case the discretion was exercised on the basis of an incorrect principle, and is therefore susceptible to review.

   I very much look forward to reading your views on this!

   Alex

   Reply
   1. Ted Folkman

      May 2, 2013

      Thanks, Alex, for your comments! I agree with you on the importance of the judge’s personal jurisdiction analysis. I have long thought it was wrong (as a matter of American constitutional law, at least) to require a showing of what we would call minimum contacts in a recognition and enforcement case. The merits have already been litigated; why should a judgment debtor be able to stash assets in a jurisdiction where it is not subject to personal jurisdiction on ordinary principles? But on the facts of this case, where the plaintiffs made no showing that Chevron had assets in Ontario, I can see the wisdom of the judge’s exercise of discretion. I leave it to you and other Canadian readers to comment on the merits or demerits of the decision as a matter of Ontario and Canadian law!

      Reply
2. A First Look at Yaiguaje v. Chevron | Letters Blogatory

   May 2, 2013

   […] I reported yesterday, the Superior Court in Ontario has stayed the Lago Agrio plaintiffs’ case for recognition and […]

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