One Last Post On The Lago Agrio Canadian Proceedings (For Now)

With apologies to those of you who are not Chevronologists and who just want to read a good ol’ fashioned § 1782 case, I’d like to say just a bit more about the corporate separateness issue, in light of the LAPs’ brief, which became available to me just recently. The LAPs do want to get at Chevron Canada’s assets, and I think that nothing in their brief really changes the views I expressed on that point in my prior post.

But the LAPs also say they want to get at the shares of Chevron Canada’s stock, which they say are an asset of Chevron’s, subject to being taken on execution. Now, there may be a point of Ontario law here—in Massachusetts, shares of stock cannot be taken on execution but can only be reached by an equitable action to reach and apply, or a special statutory reach-and-apply proceeding very similar to the equitable action. I don’t want to get into that level of detail here, and I don’t know what Canadian law has to say about such issues. I see two bigger-picture issues here. First, does Chevron Corp. itself have a legal or equitable interest in those shares? Of course, it’s the ultimate beneficial owner, but the shares (according to Chevron, and the point does not seem to be in dispute) are actually owned by Chevron Canada Capital Company, a Nova Scotia corporation that is not a party to the Canadian action. Second, leaving that point aside, there’s the somewhat metaphysical question of where the shares “are” for purposes of execution. Suppose Chevron had a parcel of land in California that the LAPs wanted to take on execution. Wouldn’t Chevron have to come to the United States if it wanted to seize the property? Or take Chevron’s US bank accounts—the same basic principle applies. At first glance at least, it seems to me that the same rule may well apply here. If Chevron is interested not just in recognition but in enforcement, it should go where the property is, and it’s not clear to me that the shares of Chevron Canada are in Ontario. I don’t see this point developed in the briefs, so maybe I am wrong to emphasize it.

One last point. I know as well as anyone that clever corporate lawyers can come up with a very sound corporate structure that a court can proceed to ignore if it feels moved by what it perceives, rightly or wrongly, as the equities of a particular case. Look no further than this recent First Circuit decision, about which I’ll say no more. So I think that it would be wrong to express too much confidence that the court will respect the corporate niceties here.

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.

Leave a Reply

Your email address will not be published. Required fields are marked *