Lago Agrio Court: STJ Rejects Ecuadoran Judgment
Posted on December 1, 2017
The Chevronologists among you know that the Lago Agrio plaintiffs have tried to obtain recognition of their Ecuadoran judgment in three jurisdictions: Argentina, Brazil, and Canada. The attempt in Argentina failed last month. The proceedings in Canada were rejected by the first instance court in January 2017 but are still on appeal. The LAPs, perhaps sensing a defeat, abandoned their efforts in Brazil in September 2017, though the case there proceeded nevertheless. Later in September, a reporting judge recommended that the STJ deny recognition.
Now the STJ, Brazil’s highest appellate court in non-constitutional cases, has refused recognition of the Ecuadoran judgment. The text of the decision is not yet available (to me, at least), so I can’t comment on the reasoning. I hope to have comment soon.
But it’s worth viewing this development in the context of the original Invictus strategy. The strategy was to put pressure on Chevron by seeking enforcement in several jurisdictions around the world. But how much pressure does it seem Chevron is feeling? Not much. The only proceeding that is still pending is in Canada. The situation there is as follows:
- The lower court granted summary judgment for Chevron on ordinary corporate law grounds. I have opined that the decision seems correct.
- Chevron tried and failed to squelch the LAPs’ appeal by asking the court to require the LAPs to provide nearly $1 million in security against costs to prosecute its appeal. So the appeal will proceed.
- As I’ve said, I don’t think the appeal has very good prospects. But even if the LAPs win the appeal, there would still have to be a trial on whether the judgment is entitled to recognition notwithstanding the Cabrera fraud and what Judge Kaplan found was the Guerra fraud.
- Chevron no doubt would argue that the Kaplan findings are entitled to preclusive effect, but even if it loses that argument, it would still have a trial about the fraud.
The reason I spell all this out is just to say that the LAPs have a lot of hurdles to pass in order to win in the one jurisdiction where their claims are still live. So I don’t think there is a lot of pressure being put on Chevron at the moment. That could change for a few reasons. It could change if Ecuador has a success against Chevron in their treaty arbitration (recall that Ecuador has seemed to do much better than Donziger did at trial seeking to show that the Ecuadoran judgment was not ghostwritten, and if Ecuador is successful, its success could affect the issue of preclusion). It could change if the Ontario appellate court rejects the lower court’s conclusions about corporate separateness. But all of that is speculative at the moment.