Yesterday I promised to take a look at the defenses to enforcement of the Ecuadoran judgment that remain for trial in Ontario. Here is an overview.

Which Defenses Are Left?

The LAPs’ counsel conceded that the claim that the Zambrano judgment was ghostwritten by the LAPs’ lawyers is a permissible defense. The defense could arise on any one of a number of theories: judgments obtained by fraud; judgment obtained in an unfair process; or judgments contrary to Canadian concepts of fundamental justice. The details are not quite the same as they would be in an American court—apparently in Canada a biased court is said to lack jurisdiction. But in any event, the defenses relating to the ghostwritten judgment are in.

Chevron’s second jurisdictional defense, which we would call a personal jurisdiction defense, is also in. The defense here is that Chevron Corp. never did business in Ecuador, didn’t waive its objection to personal jurisdiction (didn’t “attorn”, as the Canadians like to say), and had no connection with Ecuador. This motion is closely related to the corporate separateness motion—it focuses on whether the LAPs went after the right entity.

Which Defenses Did The Court Strike?

Chevron claimed that the LAPs’ claim in Ecuador was based on retroactive application of an Ecuadoran law enacted after the Ecuadoran state gave a release following the remediation (or supposed remediation) of polluted sites, and that their claim therefore violated Canadian ideas of fundamental justice. The judge rejected this argument. Many countries legislate retroactively, and the practice is not impermissible. Moreover, the judge concluded that whether the release applied to bar the claim was itself a matter that was for the Ecuadoran courts to determine and that could not be relitigated in Canada.

The judge also rejected Chevron’s argument that the judgment could not be recognized because recognition would “constitute” a violation of the Republic of Ecuador’s obligation under international law to suspend enforcement of the judgment. The judge held that Ecuador’s failure to obey the award was not contrary to “our Canadian view of basic morality,” and thus that the defense was no good. I might have put this differently—the LAPs, not Ecuador itself, are the plaintiffs, so it is hard to see why Ecudaor’s violations of international obligations should matter.

What Comes Next?

I am not privy to either party’s maneuverings—believe me, I’ve asked—but if I had to guess I would guess that Chevron will now seek to show that Judge Kaplan’s findings of fact should be given preclusive effect, which means, in effect, that Chevron will seek recognition (not enforcement) of the US judgment. I’m not sure how that will play out. There may be issues about the identity of the parties in the two cases, since (if I recall) only some of the LAPs actively litigated in New York: ordinarily a party that defaults is not bound by issue preclusion because he did not actually litigate the issue in the first action; but maybe the court would say that all of the LAPs’ interests were adequately represented by the LAPs’ counsel in New York. There may be other barriers to preclusion, too.