Drafting a viable, meaningful, United Nations treaty on business and human rights would be daunting in the best of circumstances. It is even more challenging in the context of the current effort underway in Geneva. The negotiating process began in 2014 when the UN Human Rights Council, split by geography and ideology, voted to initiate the drafting process by a bare plurality of the Council’s 47 member states. Since then, the process has crept along at a snail’s pace, with a first draft of a treaty emerging only now, four years later.

The process has been boycotted by the United States, rebuffed by Russia, and held at arm’s length by even most potentially supportive states (including the European Union). At times the treaty initiative has appeared to be on life support. Nonetheless, a continuing commitment by Ecuador, the principal state sponsor of the process, joined by South Africa and buoyed by the strong support of a broad coalition of civil society organizations, has kept it going.

If there is a realistic hope for a treaty that is both diplomatically viable and meaningful for human rights, the draft treaty text newly released by Ecuador in July 2018 is on the right conceptual track. Unlike the draft “elements” of a treaty Ecuador proposed last year, which largely reflected an NGO wish list, the new text focuses on human rights priorities – prevention and remedy – while
ensuring state control of implementation, and jettisoning some elements that most troubled the business community.

The new text zeroes in on what victims need most. To prevent human rights violations, states parties must commit to require their companies to exercise human rights due diligence. Due diligence must include (article 9.2):

• monitoring and preventing the adverse human rights impacts of a company’s activities and those of its subsidiaries and entities it controls or to which it is directly linked [the extent of prevention required will need to be addressed];
• identifying and assessing actual or potential violations;
• reporting publicly and periodically on environmental and human rights, including “policies, risks, outcomes and indicators”;
• conducting pre- and post-environmental and human rights impact assessments and integrating the findings into business operations;
• including the above requirements in “all contractual relationships which involve business activities of transnational character”;
• “meaningful consultations” with potentially affected groups; and, where needed,
• financial guarantees such as insurance bonds to cover potential costs of compensation.

To remedy human rights violations, both home and host states of companies engaged in “business activities of a transnational character” will be required to provide remedies and to cooperate in
their enforcement (articles 5.1, 8, 10-11).

Among other remedies, failure to comply with due diligence duties “shall result in commensurate liability and compensation” in accordance with the treaty (article 9.4). [Negotiators will need to address the conditions and extent of such “commensurate” liability.

The new text also addresses the practical realities of access to justice (article 8). States must guarantee victims “appropriate access to information” relevant to remedies, court costs are to be minimized and waived where necessary to assure access to justice, states must determine needs for legal assistance to victims, and an international fund for legal aid to victims is to be created.

Following the traditional international law pathway, the treaty will be implemented and enforced by States parties. State laws are to mandate human rights due diligence by business and to afford victims access to judicial remedies. This conventional treaty approach – states agreeing on norms and undertaking to implement them by domestic legislation – should make it easier for wary states to join in serious treaty negotiations and, eventually, in a treaty.

Unlike last year’s “elements,” the new text contemplates no binding international enforcement mechanism. The treaty will create no international court where victims can sue companies or where business executives and corporations can be criminally prosecuted. It will not even establish a mechanism for complaints to an international treaty committee.

There will instead be international monitoring, oversight and prodding by a committee of experts (article 14.4). They are to receive and review progress reports by states and to make both general comments and state-specific recommendations for improvements. A conference of states parties will also review implementation — including any “further development” needed to fulfill the purpose of the treaty (article 14.5). International oversight will thus combine the self-reporting and non-binding review characteristic of early human rights treaties governing states, with the more recent innovation of a conference of states parties.

Many advocates for victims will find the absence of robust international enforcement disappointing. But if relying on enforcement by states parties proves to be the price of admission for a critical mass of states to join the treaty, then omitting international enforcement is likely a worthwhile concession. The value of broad state participation should outweigh the value added of an international court – witness the disappointing performance of the International Criminal Court.

States should find the draft treaty text appealing in concept. It puts them in the driver’s seat to adopt legislation of their own choosing to meet broadly stated treaty criteria, with no compulsory international override.

Global business organizations are not likely to welcome any treaty that imposes mandatory human rights due diligence and remedial obligations. Still, the business groups that emphatically rejected
last year‘s draft elements should take a fresh look. The preamble of the new text makes explicit, as business rightly insists, that the “primary responsibility” for human rights (including protecting people from abuses by business) remains with states. Gone is the reference in the “elements” to direct imposition of international law obligations on business. Gone also are the international courts or mechanisms for business to be sued or prosecuted. Gone, too, is the reference in the “elements” to the UN Sub-Commission “norms” of 2003 on business and human rights (which were widely rejected by states and business).

In contrast, a newly included provision (article 9.5) authorizes states to exempt small and medium size businesses from selected due diligence obligations, in order to avoid imposing undue administrative burdens.

Another major concern of business has been the relationship between this treaty and trade and investment treaties. The new text drops the claim in the “elements” that this treaty overrides trade and investment treaties. Instead, three more modest claims are made. The first should appeal to business: this treaty is “without prejudice” to state obligations under existing treaties (article 13.3). The second and third provisions (articles 13.6 and 13.7), for their part, are reasonable compromises: new trade and investment treaties should not conflict with this treaty and should uphold” human rights, and all trade and investment treaties, both existing and new, should be interpreted in a manner “least restrictive” of rights under this treaty.

Not that the new text is ready for signing tomorrow. Issues of both concept and language remain. If not satisfactorily resolved, they could derail the treaty process. Many have been helpfully noted by Carlos Lopez of the International Commission of Jurists in his blog at Opinio Juris.

This brief comment mentions only three. One involves what companies will be covered. Business organizations and most NGO’s argue that any treaty should cover all companies. South Africa advocates a treaty only for transnational corporations. Ecuador proposes a compromise by which application of the treaty would turn, not on the transnational nature of the company, but on the transnational nature of the business activity at issue.

Specifically, the treaty would apply to all “business activities of a transnational character.” These are defined (article 4.2) to include “any for-profit economic activity, including but not limited to productive or commercial activity, undertaken by a natural or legal person, including activities undertaken by electronic means, that take place or involve actions, persons or impact in two or more national jurisdictions.”

Ecuador’s approach has generated both substantive and definitional objections. Substantively, many human rights advocates criticize it for excluding companies whose business activities are exclusively national, but which can and do affect human rights. However, although further analysis is needed, the breadth of the foregoing definition – covering “actions, persons or impact” in two or more nations – may in practical effect cover all national companies of any significant size in today’s globalized economy.

There is also a definitional concern. While Ecuador’s definition may be adequate for purposes of imposing obligations of human rights due diligence, it might lack the precision required for criminal prosecutions under the treaty. This aspect deserves further examination.

A second issue arises from the treaty’s proposed imposition of civil liability (article 10.6) on companies in connection with the actions of their subsidiaries and business partners, depending on factors of control, foreseeable risk, or a “strong and direct connection” between the company’s conduct and the wrong. This language needs to be made more precise, and to make clear that the actionable act or omission must be that of the company itself, and not merely of its business partners, if the treaty is to avoid clashing with entrenched national law doctrines that limit piercing of the corporate veil.

Finally, the new text authorizes reversal of the burden of proof, subject to national law, “where needed” to assure the victim’s access to justice (article 10.4). While many national laws authorize reversal of the burden of proof in defined circumstances, this broad proposal would be less controversial if the circumstances were specifically defined in the treaty.

Overall, the new text seeks to strike a balanced compromise among the interests of human rights claimants, states and business. As a compromise, it will likely provoke significant objections, if not outright opposition, from human rights NGO’s. And it is not likely to persuade business organizations to drop their opposition to an expansive treaty. States, however, may find that it meets their concerns and respects their interests.

Taken as a whole, the preventive and remedial provisions of the new text actually go well beyond most (and perhaps all) current national laws. The treaty’s preventive provisions are broader than the most advanced national legislation today, namely the French loi de vigilance (due diligence law), which was adopted only in 2017. The treaty’s remedial provisions provide broader grounds of liability than current English case law on the business duty of care.

At the same time, although some provisions need to be clarified, the proposed text shows a degree of sensitivity to avoiding the imposition of unreasonable obligations on business.

The proposed treaty’s coming into force would not instantly revolutionize the world of business and human rights. But it would accelerate existing momentum for states to take more seriously their legal obligations to protect human rights from business abuse, and would encourage business to strengthen their human rights due diligence procedures. If widely ratified, the proposed treaty should
stimulate a proliferation of national laws imposing reasonable obligations on business to prevent human rights violations and, when violations occur, improving access to justice by victims.

The post At Last: A Draft UN Treaty on Business and Human Rights appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

Last week’s jurisdictional decision by the Supreme Court of Canada in Chevron v. Yaiguaje is a first-inning victory for the Lago Agrio plaintiffs, in their quest for a foreign court to enforce their $9.6 billion Ecuadorian judgment against Chevron for harm allegedly caused by Texaco’s oil pollution decades ago.

But first innings alone do not win ball games. The plaintiffs have a long way to go in Canada, and the toughest issues remain before them. As the Court made clear, “A finding of jurisdiction does nothing more than afford the plaintiffs the opportunity to seek recognition and enforcement of the Ecuadorian judgment.”

The only issues before the Canadian Supreme Court were jurisdictional: Can the Ecuadorian plaintiffs’ suit to enforce their judgment be heard in Canada at all? This broke down into two issues: Could an Ontario court entertain the suit against Chevron (the US-based parent company), and could it entertain the suit against Chevron Canada (the company’s Canadian subsidiary)? On both issues, the rulings were limited to jurisdiction over suits to “recognize and enforce a foreign judgment.”

The Court saw no need for Canadian courts to have a “real and substantial connection” to Chevron or the Ecuadorian case in order to hear an enforcement action. In regard to Chevron Canada, the Court held that Canadian courts have jurisdiction over Canadian companies.

Neither ruling was a shocker. The lower courts had already found jurisdiction. The Court affirmed their jurisdictional rulings. While there was some precedent and factual support for Chevron’s effort to avoid Canadian jurisdiction, the weight of authority supported the plaintiffs’ effort to be heard.

The Court’s rulings were grounded in considerations of comity and reciprocity. Comity calls for respect for the courts of other nations. In a world of global commerce and movable assets, the Court explained, economic confidence and legal security counsel the courts of country A to open their doors to efforts to enforce judgments of the courts of country B, so long as the courts of country B had jurisdiction. All that is required is a “real and substantial connection” between the courts of country B (here Ecuador) and the judgment debtor (Chevron) or the claim (Chevron’s alleged liability).

Reciprocity also leads to respect for foreign judgments, albeit for a different reason. If Canadian courts close their doors to suits to enforce another country’s judgments, how can Canada expect its own judgments to be enforced in foreign courts?

I claim no special expertise in international enforcement of foreign judgments; my field is international human rights law. But both the rationale and result of the Canadian jurisdictional ruling make sense to me.

Moreover, the ruling seems facially neutral with regard to human rights. It would equally allow Canadian jurisdiction over suits by a large corporation to enforce a foreign judgment against, say, an allegedly corrupt human rights lawyer. Supporters of the Lago Agrio plaintiffs may understandably celebrate their jurisdictional win. But in other cases, it could come back to bite them.

That brings us to the second inning. As “emphasize[d]” by the Canadian Supreme Court, “when jurisdiction is found to exist, it does not necessarily follow that it will or should be exercised … Establishing jurisdiction merely means that the alleged debt merits the assistance and attention of the Ontario courts.”

On remand, the Court continued, it may be open to Chevron and Chevron Canada to present “any or all” of their arguments against recognizing the Ecuadorian judgment. Chevron could argue, for example, that “the proper use of Ontario judicial resources justifies a stay under the circumstances; that the Ontario courts should decline to exercise jurisdiction on the basis of forum non conveniens; [or] that any one of the available defences to recognition and enforcement (i.e. fraud, denial of natural justice, or public policy) should be accepted …”

That brings us to the issue—fraud in the Ecuadorian litigation—that brought me into this matter (I represented Chevron against the plaintiffs’ effort to enforce their fraudulent judgment before the Inter-American Commission on Human Rights, and I have been an independent external consultant to the company). As the Canadian Court noted, “In 2014, Judge Kaplan of the [US] District Court [in New York] held that the Ecuadorian judgment had resulted from fraud — That decision and the underlying allegations of fraud are not before this Court.”

On remand, Chevron may now raise the issue of fraud. If it does, the overwhelming evidence of wrongdoing in the Ecuador litigation may come before Canadian courts. As I have detailed in prior posts on this page, all three grounds cited by the Canadian Court—“fraud, denial of natural justice, or public policy”—should block enforcement of the Lago Agrio judgment. The chicanery by which that judgment was produced would be a stain on any country’s judicial system.

Ironically, then, the upshot of Canada’s effort to show comity toward Ecuadorian courts could have the opposite effect: Canada’s exercise of jurisdiction may well drag Ecuador’s courts through the mud of their own making.

But not necessarily. If Chevron’s only material asset in Canada is Chevron Canada, and if Canadian courts decline to pierce the corporate veil between the parent company and its subsidiary, then plaintiffs’ effort to collect on their Ecuadorian judgment could fail, without the Canadian courts having to delve into the seamy underside of the Lago Agrio judgment.

Here, too, the Canadian ruling gives the plaintiffs no comfort. The Court cautioned that its jurisdictional ruling “should not be understood to prejudice future arguments with respect to the distinct corporate personalities of Chevron and Chevron Canada.” The Court took “no position on whether Chevron Canada can properly be considered a judgment-debtor to the Ecuadorian judgment. Similarly, should the judgment be recognized and enforced against Chevron, it does not automatically follow that Chevron Canada’s shares or assets will be available to satisfy Chevron’s debt.”

We shall see. Meanwhile, we also await the ruling on appeal from Judge Kaplan’s judgment in the US, as well as the final award of the panel in the international arbitration brought by Chevron against Ecuador over the Lago Agrio judgment. Like the Canadian jurisdictional ruling, those decisions, too, could turn on other issues, without necessarily reaching the fraud issues.

The shame of it is that the Lago Agrio lawyers’ world travels in search of a friendly forum would not be necessary, if they had not delegitimized their judgment by the unethical and illegal tactics used by some members of their legal team. Chevron has plenty of assets in the US, where it is headquartered. The US plainly has jurisdiction over Chevron. An honest Ecuadorian judgment could have been enforced in the US. However, even before Judge Kaplan enjoined enforcement in the US, multiple US courts had already found that the Lago Agrio judgment reeks of fraud.

As observed by leading human rights lawyers in their amicus brief on the appeal from Judge Kaplan’s ruling, “corruption in the judicial process violates human rights, both directly—by denying due process of law and a fair trial—and indirectly—by undermining the position of courts as guarantors of legitimate human rights claims and defenses.” The lawyers’ misconduct in the Lago Agrio litigation in Ecuador is a textbook example of how not to help the downtrodden.

The post Doug Cassel on <em>Yaiguaje</em> appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

I invited representatives of the plaintiffs to share their views of the merits of the ICC complaint here but have not heard back yet. Readers may, however, be interested in a piece by Kevin Jon Heller, who is sympathetic to the LAPs’ overall case, at Opinio Juris.

Lawyers for the Lago Agrio plaintiffs have now asked the International Criminal Court (“ICC”) to investigate Chevron executives. They accuse company execs of the supposed “crimes against humanity” of resisting enforcement of the judgment of Ecuadorian courts and of “maintaining” environmental contamination in Lago Agrio. Although plaintiffs’ legal theory is opaque, they appear to try to invent at least one new ICC crime—opposing enforcement of a court judgment—and possibly a second—refusing to concede liability which has not been established in credible judicial proceedings.

As such, their petition does not warrant so much as a preliminary inquiry. Among other fatal defects, it fails to allege criminal acts amounting to crimes against humanity, or to show the requisite criminal knowledge and intent. Moreover, it is not in the interests of justice.

At the outset, it is important to clarify what plaintiffs’ petition does not involve. It does not and cannot ask the ICC to investigate Chevron. The ICC has jurisdiction only over individuals, not corporations. While evolving legal standards may have a place in common law tort litigation against companies, inventing new offenses has no place in criminal charges against individuals. Thus the ICC’s “Elements of Crimes,” which guide the interpretation of its Statute, admonish that the definition of crimes against humanity “must be strictly construed”—not rewritten to suit a litigator’s wish list.

Plaintiffs’ ICC petition also does not, and cannot, bring a case for polluting the environment. Chevron has never operated in Ecuador. In 2001 Chevron effectively acquired Texaco. But Texaco ceased operating in Ecuador in 1992. The ICC has jurisdiction only over crimes committed after its treaty came into force in 2002. Neither Texaco nor Chevron operated in Lago Agrio after 2002.

Hence plaintiffs’ resort to creative drafting. They cannot ask the ICC to investigate Texaco’s alleged pollution. So they stretch to assert that Chevron executives committed crimes against humanity by “maintaining” the situation caused by Texaco’s alleged pollution.

No Criminal Act

Thus constrained, plaintiffs’ petition fails to allege any acts constituting crimes against humanity. Article 7 of the ICC Statute defines a “crime against humanity” as certain heinous acts “when committed as part of a widespread or systematic attack directed against any civilian population …”

What is an “attack”? Plaintiffs make much of the point that an attack need not be carried out by violent or military means. For example, the ICC statute defines apartheid as a crime against humanity.
But not every non-violent act or omission amounts to an attack. Here, the acts claimed by plaintiffs to amount to an attack are Chevron execs’ defending the company in the litigation and elsewhere from what they consider— rightly—to be fraudulent litigation and a fraudulent judgment. Exercising rights of self-defense against even a legitimate lawsuit—let alone a fraudulent one—is a legal right, not a criminal “attack.”

And if resisting the fraudulent Ecuadorian judgment were indeed an “attack,” then Chevron execs would not be the only ones in the dock. So, too, would be the international arbitrators who have repeatedly—and unanimously—ordered Ecuador not to enforce the judgment against Chevron. So, too, the United States federal judge who found the Ecuadorian trial and judgment to be fraudulent and accordingly enjoined its enforcement in the US. (See below.)

Even if Chevron execs’ legal defense could somehow be deemed an “attack,” that would still not suffice. In order to constitute a crime against humanity, an “attack” must be carried out by certain heinous acts that, in and of themselves, violate international law. Yet nowhere does the ICC Statute make defending oneself in a lawsuit or refusing to accede to enforcement of a judgment (even a legitimate judgment, let alone a fraudulent one) an international crime.

Cognizant of the need to allege actual crimes, plaintiffs’ petition claims that Chevron execs committed murder, extermination, deportation or forcible transfer, persecution, and “other inhumane acts.” But the only facts alleged to support these allegations are the refusal of Chevron execs to accept legal liability or to respect the fraudulent Ecuadorian judgments. Yet self-defense in litigation—far from amounting to murder or the other offenses—is a legal right under international law.

Knowledge and Intent

Even if plaintiffs had alleged criminal acts (they have not), that would still not suffice to show crimes against humanity. Under the ICC Statute, the acts must also be committed with criminal knowledge and intent. In addition, to constitute an “attack” on a civilian population, the perpetrator must act “with knowledge of the attack.”

None of these mental elements is satisfied by plaintiffs’ petition. Chevron execs had no reason to believe that their refusal to comply with the Ecuadorian judgment was criminal. On the contrary, they had every reason to believe that they were defending themselves from unlawful acts committed by the Lago Agrio plaintiffs’ lawyers.

The Chevron executives’ belief was (and is) reasonable. They commissioned and received reports by eminent environmental and public health experts, who consistently disavowed continuing adverse impacts in Lago Agrio resulting from Texaco’s operations two decades earlier. They also discovered private admissions by plaintiffs’ own environmental experts. A statement by one of plaintiffs’ consultants is illustrative of other such admissions: She was caught on videotape telling lead plaintiffs’ lawyer Steven Donziger that “all the reports are saying it’s [i.e., groundwater contamination] just at the pits and the stations and nothing has spread anywhere at all.”

Finally, Chevron execs were well aware of the repeated orders by the international arbitral tribunal, convened under the Ecuador-US Bilateral Investment Treaty, directing Ecuador not to execute the judgment against Chevron until the tribunal completes its proceedings (which remain pending). All these orders were issued by unanimous vote of the three arbitrators – including the arbitrator selected by Ecuador, a distinguished international lawyer and scholar. Were Chevron execs supposed to believe that their resistance to the Ecuadorian judgment was somehow criminal, in the face of repeated rulings by the arbitral tribunal that the judgment could not be enforced?

Chevron executives, then, reasonably relied on their own experts, on admissions by plaintiffs’ experts, and on repeated arbitral awards to believe—rightly—that their resistance to the Ecuadorian judgment was and is lawful.

Interests of Justice

Even where (unlike here) a crime within the jurisdiction of the ICC is properly alleged, Article 53 of the ICC Statute directs the Prosecutor, in deciding whether to open an investigation, to consider whether there are “substantial reasons to believe that an investigation would not serve the interests of justice.”

The interests of justice could hardly be served by investigating a litigant for refusing to comply with a fraudulent judgment. As found by Judge Lewis Kaplan of the United States District Court in New York this March, the Ecuadorian judgment was, in fact, fraudulent.

In response to Steven Donziger’s appeal from Judge Kaplan’s ruling, an amicus brief was filed by a group of eminent human rights and anti-corruption jurists. While disclaiming any knowledge of the facts as found by Judge Kaplan, or any view on the merits of the Ecuadorian litigation or of the appeal, they succinctly summarized Judge Kaplan’s findings as follows:

• “Forged Reports of the Ecuadorian Plaintiff’s Expert: The Ecuadorian plaintiffs’ representatives affixed the signature of one of their American environmental experts to a report purporting to find pollution at two inspection sites. They then filed the report in the Ecuadorian action. The expert later testified, however, that he did not write the report and that, in fact, he had not found ‘that any site posed a health or environmental risk.’”
• “Coerced a Judge to Appoint a ‘Global’ Expert: The Ecuadorian plaintiffs’ representatives coerced an Ecuadorian judge, by threatening to file a complaint against him, so that he would cancel a previously agreed-upon set of site inspections and instead appoint a single, supposedly independent expert to make a ‘global’ assessment of damages. Although the judge initially refused to cancel the inspections, he later changed that ruling after the plaintiffs’ representatives threatened him.”
• “Bribed the Court-Appointed ‘Global’ Expert Through Money-Laundering: The Ecuadorian plaintiffs’ representatives funneled covert, illegal payments to the supposedly independent, global damages expert from funding sources in the United States, and provided other assistance to the expert, in order to ensure that the expert ‘would totally play ball with’ the plaintiffs’ team.”
• “Secretly Wrote the Court-Appointed ‘Global’ Expert’s Report: The Ecuadorian plaintiffs’ representatives then arranged for their U.S. consultants and others to secretly write most or all of the global expert’s report, which the expert then filed under his own name. Once the report was made public, the plaintiffs then attacked (their own) report for not coming up with a high enough damages figure in a submission written by their consultants. Those same consultants then also secretly wrote the expert’s reply to (their own) critique. The principal Appellant personally directed this entire charade.”
• “Obtained Orders in Their Favor Through Bribery: The last judge who presided over the Ecuadorian action, before the case was assigned to him, secretly paid an associate to ghostwrite the presiding judge’s orders in certain cases. As documented by photocopies of deposit slips (and other evidence), once the presiding judge took over their case the Ecuadorian plaintiffs’ representatives bribed the ghostwriter to write orders that would favor them. The court then issued the ghostwritten orders as its own decisions.”
• “Bribed the Judge to Issue a Judgment that They Secretly Wrote: Finally, the Ecuadorian plaintiffs’ representatives promised the presiding judge a cut of the proceeds from the enforcement of a judgment in their favor, in exchange for which the judge permitted them to secretly ghostwrite the judgment against Chevron, which the presiding judge then issued as the judgment of the court.”

Chevron executives can hardly be blamed—let alone subjected to criminal investigation—for refusing to honor such a judgment. As the human rights jurists concluded, “If the District Court’s factual findings are accurate in whole or significant part, the corruption of the judicial process in Ecuador undermined human rights and corroded the rule of law.”

Curiously, plaintiffs’ petition to the ICC quotes a portion of my own report filed with the United Nations in 2013. I wrote:

Fraudulent litigation against any defendant—including corporate defendants—deserves repudiation by the human rights community. First, it offends human rights principles. Perversion of the judicial process violates due process of law, an essential bulwark of human rights and the rule of law. Second, committing—or condoning—fraud in the pursuit of justice for human rights victims risks the credibility of the human rights movement. And third, if we fail to distance ourselves from fraudulent litigation against business corporations, business may be less inclined to take seriously its own human rights responsibilities.

After quoting this passage, plaintiffs’ petition responds that their legal team “merely pursues justice.” If that were true, I would be the first to applaud their vindication of human rights. But it is not true. As observed by the amicus brief of the human rights and anti-corruption jurists, the plea by plaintiffs’ lawyers “to look the other way in the name of human rights must be rejected. Advocates for human rights do not advance human rights by violating them …”

Even if plaintiffs’ petition were not otherwise fatally flawed, then, launching a criminal case before the ICC would not be in the interests of justice.

A proper judicial assessment of the environmental situation in Lago Agrio (or else a reasonable settlement based on credible scientific evidence) is still needed. For too long, any conceivably legitimate claims by the plaintiffs have been held prisoner by their lawyers’ misconduct. An ill-conceived and unfounded proceeding before the ICC will only further delay and distract from the justice which plaintiffs’ lawyers profess to seek.

The post Lago Agrio: Doug Cassel on the ICC Complaint appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

Two starkly differing narratives compete to explain the Lago Agrio environmental lawsuit against Chevron in Ecuador. Lead plaintiffs’ attorney Steven Donziger and his team paint the case as one of a powerful oil company heartlessly polluting the habitat of Amazonian villagers, and then compounding the harm by resisting accountability.

In contrast, Chevron points to strong evidence that any continuing environmental harm in Lago Agrio is caused by the ongoing operations of Ecuador’s State oil company—the only company pumping oil in Lago Agrio in the last twenty years. Yet the Plaintiffs long ago pledged not to sue the State company, in return for the State’s support of their suit against Chevron (which has never operated in Lago Agrio). Chevron’s predecessor, Texaco, did operate in a joint venture with the State oil company, but that venture and Texaco’s operations ended in 1992, after which Texaco cleaned up its agreed share of pollution. In Chevron’s view, the Lago Agrio lawsuit against the company has no environmental or legal basis, and has survived only by means of systematic fraud orchestrated by Donziger.

Amid a myriad of conflicting claims by Donziger and Chevron, two main debates stand out. First, did Texaco cause continuing environmental damage in Lago Agrio? Second, in an effort to prove Texaco’s alleged responsibility, did Donziger and some of his colleagues commit fraud?

Only the second issue—not the first—was the subject of a separate lawsuit filed by Chevron against Donziger in New York under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Last week federal Judge Lewis Kaplan, sitting without a jury, published a nearly 500-page opinion, in which he found that Donziger abused his control of the Lago Agrio litigation to carry out a systematic pattern of fraud, bribery, money laundering, extortion, witness tampering and obstruction of justice.

Observers who have not read the scientific evidence—which includes sworn admissions by the plaintiffs’ own experts renouncing their earlier claims of environmental harm, and explaining that those claims were based on unscientific assumptions fed to them by Donziger—may persist in believing the environmental strand in Donziger’s narrative. Judge Kaplan did not rule on the environmental issues. Explaining that they were not material to the RICO claims, the judge “assume[d]” that there is oil pollution in Lago Agrio and, “on that assumption,” that Texaco and perhaps Chevron “might” bear some responsibility. However, he added, “even if Donziger and his clients had a just cause—and the Court expresses no opinion on that—they were not entitled to corrupt the process to achieve their goal.”

By contrast, on the second issue—fraud—Kaplan’s opinion is devastating for Donziger. In several weeks of trial, Judge Kaplan heard 31 witnesses, and received written testimony by 37 more, together with thousands of exhibits. His opinion documents how Donziger habitually made knowingly false claims of dramatic environmental damage before courts, government officials, Chevron investors, and the public. Donziger even deceived those of his own co-counsel and funders who were not privy to his scheme. He and others in the know bribed and extorted Ecuadorian judicial officials, and then lied about it to courts and the public. In an effort to prevent Chevron from uncovering the truth, Donziger presented knowing falsehoods before federal judges in United States discovery proceedings.

Even in the RICO trial, Donziger repeatedly lied. Confronted with incriminating evidence, time and again he either evaded it altogether by saying nothing or asserting memory lapse, or he concocted lame, palpably unconvincing excuses. On point after depressing point, Judge Kaplan found that Donziger was not a credible witness.

Judge Kaplan aptly summarized the overriding lesson: “Justice is not served by inflicting injustice. The ends do not justify the means. There is no ‘Robin Hood’ defense to illegal and wrongful conduct. … The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador—and they knew it.”

In public statements Donziger attacks Kaplan’s ruling mainly on three grounds. First, he claims that Kaplan ruled contrary to the judgment of Ecuador’s highest court. That is yet another misleading claim. Ecuador’s National Court reviewed the Lago Agrio judgment in cassation—in which the court reviews only issues of law, not fact. The National Court explicitly declined to rule on the factual issues of whether Donziger committed fraud and other misconduct.

Second, Donziger accuses Kaplan of bias against the Lago Agrio plaintiffs and their lawyers. Donziger earlier leveled accusations of bias against federal Judge Jed Rakoff, who dismissed the original suit filed by Donziger in New York on grounds of forum non conveniens. Donziger’s PR agents also allege bias on the part of the international arbitral tribunal on the Lago Agrio case, which has repeatedly—and unanimously—ruled in favor of Chevron against Ecuador. Disagree with Donziger, and you, too, can be labeled as biased.

Fortunately, because Kaplan details the evidence and his reasoning, we are not left merely to take his word for it. We can read his opinion and judge for ourselves. And while one may disagree with this or that factual finding, the overall, cumulative weight of misconduct summarized in the opinion is overwhelming. Donziger’s conduct is blatantly unethical; his word consistently unreliable.

Finally, Donziger claims the RICO trial was unfair because Kaplan did not admit evidence of environmental damage. But environmental evidence is immaterial to the issue of attorney misconduct. Whether in a good cause or a bad one, lawyers may not commit fraud, bribery and extortion. Donziger did have an opportunity to present evidence of environmental harm where it was relevant—in the Ecuador trial—but he trashed that trial by fabricating evidence and by bribing, extorting and deceiving judicial officials.

The practical effect of Kaplan’s opinion partially vindicates Chevron’s decision to forego its claims for money damages, thereby avoiding a jury trial. Chevron requested (and won) exclusively equitable relief—an injunction against enforcing the Lago Agrio judgment in US courts, and a constructive trust on the hundreds of millions of dollars in fees Donziger contracted to reap personally if the judgment is enforced.

Whatever Chevron’s view of a jury trial, the company gained an important advantage in a bench trial. A jury trial would end in an unspecified or relatively general verdict. There would be no 500-page opinion, and no detailed findings on the evidence of misconduct. In contrast, Kaplan’s judicial opinion gives Chevron what even a favorable jury verdict could not deliver—specific, detailed, reasoned findings of fraud, bribery, extortion and other misconduct. The company can now seek to use those findings against efforts by Donziger and his colleagues to enforce their bogus judgment. (Already they are attempting to enforce the Lago Agrio judgment in Argentina, Brazil, Canada and Ecuador.)

Still, there remains a downside risk to Chevron’s decision to waive money damages. Federal courts of appeals are divided on whether private plaintiffs can pursue purely injunctive relief under RICO. Donziger will no doubt appeal on this issue (among others). If the Court of Appeals or Supreme Court rules that private plaintiffs cannot obtain injunctive relief under RICO, Chevron may lose on a point of law what it gained on findings of fact.

But even if Kaplan’s judgment were reversed on the RICO question (or some other issue of law), so long as the appellate courts do not disturb his findings of fact, those findings might retain persuasive value before enforcement courts (at least in rule of law countries).

As rightly lamented by one of Donziger’s former co-counsel and by Judge Kaplan, the most painful result of Donziger’s misconduct is that his clients still have no credible adjudication of their claims. Environmental harm was not material to the RICO ruling. Nor was it credibly addressed by the hopelessly compromised Ecuadorian rulings in the Lago Agrio case.

So the real victims of Donziger’s crime spree are two-fold. The Lago Agrio villagers now have their environmental claims tied up in judicially condemned fraud and misconduct by their attorneys. More generally, the human rights movement takes a hit to its credibility—its most valuable asset—whenever the good name of human rights is hijacked by corrupt lawyers.

The bottom line remains a need for the long-time litigators—the Lago Agrio plaintiffs, Chevron, and Ecuador, in genuine consultation with the indigenous and other communities of Lago Agrio—to agree on an independent and impartial mechanism, tasked to render a credible assessment of whether there is continuing harm to the environment and public health caused by oil pollution in Lago Agrio, and, if so, who is responsible (whether Texaco or the State oil company). Only then will the villagers of Lago Agrio finally receive the due process to which they are justly entitled. Spending further fortunes on protracted litigation on the Lago Agrio judgment, the RICO case and the international arbitration may be important to Donziger, Chevron and Ecuador, but will most likely spell only more delay for the most vulnerable parties in the case.

The post Chevron Wins. What Now? appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

To update the late Senator Everett Dirksen of Illinois, “$9 billion here, $9 billion there—pretty soon you’re talking real money.” In manipulating their $19 billion Lago Agrio judgment against Chevron (reduced last week to a mere $9.5 billion), Ecuadorian courts have proved to be no more serious than Dirksen’s quip.

Their latest performance is the November 12 ruling by a three-judge panel of the National Court of Justice (formerly the Supreme Court) slicing the judgment against Chevron in half. In a 222-page opinion, the National Judges declined even to consider extensive evidence that the plaintiffs’ lawyers and trial court judges colluded, through fraud, bribery and assorted chicanery, to stick Chevron with a $9.5 billion tab for environmental clean-up. On the other hand, the National Judges threw out the lower courts’ doubling of the award, through punitive damages unauthorized by Ecuadoran law, which were to have been paid only if Chevron declined to make a public apology. (Chevron declined the invitation).

Cassation

Two aspects of context should be borne in mind in evaluating the new ruling. First, the National Judges sat, not as a court of appeal, but as a court of cassation. Their competence was thus limited to issues of law, not fact—such as the evidence of fraud. Further, their cassation review was technically only of the 2012 affirmance by an appellate court, and not of the original, fraud-infected judgment of the trial court. So the trial court’s bogus judgment against Chevron was doubly insulated from real scrutiny by the National Court. In contrast, the conditional award of punitive damages—a clear error of law by the trial court, affirmed by the appellate court in 2012—was struck down unanimously by the National Court.

The Judges

One may reasonably question the independence and impartiality of the National Court panel. Like all 21 current National Court judges, they are brand new. They were named to the Court only in 2012 by a three-member “Transitional Judicial Council.” The Council was composed entirely of loyalists of Ecuadorian President Rafael Correa—who had previously praised the judgment against Chevron as the most important in the nation’s history. The Council was chaired, not by a lawyer, but by an engineer formerly on Correa’s payroll.

According to a prominent Ecuadorian law professor, quoted by former Ecuadorian Justice Minister Vladimiro Álvarez Grau in testimony for Chevron in the pending New York RICO trial against some of the plaintiffs’ lawyers, the “single objective” of the Transitional Judicial Council was “to capture the Judiciary on the Executive Branch’s behalf.” By January 2013, the mission was accomplished: “Now the whole Judiciary is captured. [ellipsis] [J]udges have been removed nationally, only to be replaced by judges belonging to Alianza País.” (Álvarez Grau testimony, ¶ 108 and n. 192.) (Alianza País—Alliance for the Country—is Correa’s party.)

In a post, Ted Folkman notes that, because Álvarez Grau is a political opponent of Correa, the objectivity of his assessment is open to doubt. Fair enough. But the same cannot be said of former Spanish Judge Baltasar Garzón. Precisely because he was viewed as an ideological sympathizer with Correa, Garzón was invited by Correa to join an International Oversight committee to evaluate the work of the Transitional Judicial Council. In a 102-page report issued in December of 2012, Garzón and his fellow overseers from Argentina, Brazil, Chile, Guatemala and Mexico, unanimously concluded that the highly subjective criteria used by the Transitional Judicial Council in interviewing candidates for the National Court could result in “arbitrary” and “unchecked” (“sin ningún tipo de control”) selections, thereby elevating to the National Court certain candidates in place of others who otherwise scored higher in the selection process. (Informe Final de la Veeduría Internacional a la Reforma de la Justicia en Ecuador, p. 58). They recommended that the National Court review the “genuineness” of its own selection process and hear objections from candidates who were excluded. (Id. at 99.)

The Garzón committee cited several examples of questionably seated National Court judges. One was the very judge who recently authored the National Court ruling on Chevron. Before his final interview with the Transitional Judicial Council, Judge Wilson Andino Reinoso had scored only in 33rd place, well out of the running for the 21 seats on the National Court. He had failed, as required, to submit for review any samples of pleadings or judgments he had written as a lawyer or judge. But in the interview—in which he touched on such favored Correa themes as the Incan Goddess Pacha Mama, and the right to water—Judge Andino was deemed a star. The Transitional Judicial Council awarded him enough points to vault past 15 candidates who otherwise outscored him. Even so, he barely limped onto the Court, finishing 18th among 21 winners.

The Garzón panel did not mention another aspect of Judge Andino’s qualifications—his brother is Mauro Andino, a Correa heavyweight in Ecuador’s National Assembly.

How did the Chevron case happen to be assigned to Judge Andino? We may never know. But the respected Vice Dean of the San Francisco University law school in Quito, Farith Simon, notes that this case assignment is one in a series of “suspicious coincidences,” in which judges who made it onto the National Court only because of favorable interview scores ended up being assigned to the cases of greatest interest to President Correa.

Punitive Damages

When I read the original $18 billion judgment entered against Chevron in 2011, one telltale sign of its illegitimacy was that it included $9 billion in punitive damages. From my work over the years on reparations for victims of human rights violations in Latin America, I knew of no legal authority for punitive damages in Ecuador, and no prior award of punitive damages in Ecuador.

One measure of the lack of integrity (or competence) of the 2012 ruling of the Ecuadorian appeals court against Chevron was its affirmance of this illegal award. The appeals court also affirmed the order making the punitive damages conditional—to be paid only if Chevron refused to apologize. That order, too, is unheard of in Latin America and unauthorized by Ecuadorian law.

The National Court panel has now unanimously agreed. Neither punitive damages, nor conditioning their cancellation on a public apology, are authorized by Ecuadorian law. Moreover—or so the panel thought—these remedies were in any event unauthorized, because the plaintiffs had not requested them. (In fact, evidence in the New York RICO trial suggests that plaintiffs not only requested, but granted themselves these remedies, by secretly drafting the judgment, which the trial court judge then signed as if it were his own. We shall see how the federal court in New York rules on this evidence.)

Fraud

The National Court declined to consider the evidence of fraud. As a court of cassation, it could address only issues of law, not fact.

While that sounds plausible, the National Court rulings on mixed issues of law and fact turned on unsupported and erroneous assertions of fact. Article 76.7 of Ecuador’s Constitution guarantees the right of defense, including conditions of equality between the parties, access by both parties to all documents in the case, the right to reply to the arguments of the other party, the right to challenge or present rebuttal evidence to evidence presented by the other party, the obligation of expert witnesses to appear before the judge and to be interrogated, and, above all, the right to be heard by independent and impartial judges. If the evidence presented by Chevron had been considered and accepted, the conclusion would follow that these rights were systematically and flagrantly violated.

Granted, the National Court might arguably have abstained from finding a violation of the right to defense, on the ground that in cassation it could not consider issues of fact (such as whether the judge was bribed by the plaintiffs). But the Court instead made affirmative findings. Chevron, it ruled (p. 75 of the Spanish original, my translation) “has had access to justice, that is to say it has had effective protection of its rights and interests, without there being any obstacle to its exercise of the right to defense, and it has as well obtained a judicial decision in conditions of equality [ellipsis]” Yet the evidence in the New York trial makes these assertions laughable.

The National Court opinion bristles with defensive nationalist rhetoric. The judges lament, for example (p. 91, my translation), that Chevron “alleges the existence of procedural fraud, a very serious accusation made against the administration of justice, casting shadows of suspicion over the adjudicative function of Ecuadorian jurisdictional organs [ellipsis]” In reply, they assure us (p. 102), “The Ecuadorian State is a constitutional State of rights and justice, social and democratic, which guarantees a high level of protection of rights, as well as mechanisms to make effective every right consecrated in the Constitution [ellipsis]” President Correa would be proud.

The judges also contend (p. 96) that Chevron has had “decades of time” to pursue its allegations of fraud. In fact, most evidence of fraud became clear only after the trial court judgment in 2011, and even more, only after the appeals court affirmance in early January 2012. The blockbuster revelations of the last two years are thus subject to review only by cassation. And, as the National Judges repeatedly stress throughout their opinion, in cassation they cannot consider issues of fact.

The Judges (pp. 101-02) go on to lecture Chevron for not bringing its complaints of fraud to Ecuadorian prosecutors. Even if realistic, criminal complaints would afford Chevron no relief from paying the multi-billion dollar judgment. But in fact, any prosecutor who dared to cross Correa by calling into question the integrity of what the boss calls the most important judgment in the nation’s history, had better look for a different line of work. Even so, although the Judges either did not know or did not mention the fact, Chevron did send complaints to Ecuador’s national prosecutor. Unsurprisingly, they went nowhere.

I am not certain whether there is any further legal recourse theoretically available to Chevron in Ecuador. If there is none, then Ecuador is in violation of international human rights treaties requiring effective remedies—not cassation alone—for fraudulent judgments. But even if there is a theoretical Ecuadorian remedy before the Constitutional Court (another Correa fiefdom) or otherwise, there is no reason to expect that Chevron could get a fair shake in Correa country.

Petroecuador

Petroecuador is Ecuador’s State oil company. Although Chevron has never operated in Ecuador, Texaco—for whose pollution the Ecuadorian courts now seek to hold Chevron liable—ceased drilling in Lago Agrio over 20 years ago. Only Petroecuador has continued operation in Lago Agrio since then. Chevron argued before the Ecuadorian courts that any resulting environmental damage is the responsibility of Petroecuador, not Chevron. As the National Court opinion notes (p. 116), Petroecuador publicly admitted to 175 oil spills during the period from 2005 to 2008 alone.

Petroecuador, then, is an indispensable party to any fair resolution of the questions of who spilled what and when, and who should pay for any clean-up. Yet the National Court dismissed arguments that Chevron could not be saddled with responsibility for Petroecuador’s spills. The Court observed that the plaintiffs had sued only Chevron. Adjudicating Petroecuador’s responsibility in a case to which it was not party, said the Court, would violate Petroecuador’s rights to defense and due process.

The Court fortified this position by finding no need to prove that Chevron (or Texaco) caused any environmental harm. Strict liability applies to polluters in Ecuador, the Court ruled; hence no proof of causation of harm is needed. Whatever sense this might make in a single-polluter case, it is hardly sensible where a multinational company is ordered to pay for pollution most likely caused by a State enterprise.

The law, of course, is capable of reasonably resolving multi-party issues of pollution and causation. Such questions arise regularly in countries everywhere. Whatever the correct legal solution may be under Ecuadorian procedure, it cannot reasonably be to hold Chevron liable for Petroecuador’s spills.

But no matter: In what passes for high-stakes justice in Ecuador, the National Court could not even hint at liability for Petroecuador. The State oil company is Correa’s leading source of revenue. The judges know that they can be removed from the National Court as easily as they were installed.

Texaco’s Release

In 1995 Texaco and Ecuador agreed that, in return for Texaco’s clean-up of its agreed share of pollution resulting from its prior joint venture with the Ecuadorian State oil company, Ecuador would release Texaco from liability for diffuse or collective damage to the environment. The International Arbitration Tribunal hearing Chevron’s claims against Ecuador recently ruled that, while the release does not preclude claims by third parties for individual harm, it does bar third party claims for diffuse harm, because at the time of the 1995 agreement, only the Ecuadorian State could assert diffuse claims, and hence it had power to give a full release. (First Partial Award on Track I, 17 September 2013, par. 108.)

The National Court reached an opposite conclusion. I have never taken a position on the right answer to this complicated question. It is noteworthy, however, that the Ecuadorian judges neither mentioned the arbitral award, nor squarely confronted its reasoning—although they must have been aware of both.

Conclusion

Neither the lengthy opinion of the National Court, nor the manner of selection of its judges, and in particular of the judge who authored its opinion in the case against Chevron, should commend themselves to outside observers. If there is to be a fair and reasonable judgment in the Lago Agrio case, it will have to come from adjudicators in some forum not beholden to Rafael Correa.

The post Lago Agrio: Doug Cassel on the New Ecuadoran Judgment appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

In his recent post on the new arbitral award in the Chevron-Ecuador investment treaty arbitration, Ted Folkman wondered, first, whether Chevron “will seek to use the ultimate arbitral award as the basis for an argument against recognition and enforcement of the Ecuadoran judgment.” I can’t speak for the company, but public record sources make it pretty clear that the answer is, “Yes.”

The web site italaw.com, created by Professor Andrew Newcombe of the law faculty of the University of Victoria in British Columbia, Canada, includes documents from numerous arbitrations. The site has a significant but incomplete set of documents from the Chevron Ecuador arbitration.

It includes the tribunal’s April 9, 2012 procedural order which bifurcated the proceedings. Paragraph 2 of that order defined track 1 to address “preliminary legal issues arising from the Settlement Agreements.” It left track 2 to address “all extant issues which may be required finally to decide the Parties’ dispute.”

Track 1 was largely but not finally resolved by the tribunal’s First Partial Award of September 17, 2013. There the tribunal determined that Chevron was entitled to enforce the 1995 settlement agreement and the 1998 “final release” granted by the government of Ecuador to Texaco. The tribunal further ruled that the release covered, not only contractual claims, but all legal claims by the government, including claims of “diffuse” or collective environmental harm. Finally, the tribunal decided that, because only the government was entitled under Ecuadoran law as it stood in 1995 and 1998 to bring such claims, the government had the capacity to, and did, release all such diffuse or collective environmental claims, regardless of who might later try to assert them.

In so ruling, the tribunal confirmed the view—not disputed by either party—that the release did not cover individual claims for personal environmental harm. The tribunal deferred to track 2—the oral hearing on which is scheduled for January 2014—the issue of whether the Lago Agrio lawsuit included any such individual claims, or was instead a collective claim for diffuse harm. The tribunal also deferred certain ancillary issues relating to the releases.

So the track 1 partial award narrowed the issues, but still did not finally resolve the legal effect of the 1995 settlement and the 1998 release. Specifically, the award did not decide whether the claims by the Lago Agrio plaintiffs are “diffuse,” so that they have already been settled and are thus barred, or “individual,” in which case they were not settled and could be pursued in the Lago Agrio litigation.

When the tribunal does reach the issue of collective vs. individual claims, however, the prospects for Ecuador do not look encouraging. The Lago Agrio judgment recites the plaintiffs’ express claim that, based on their “collectively recognized” rights, they seek what amount to collective—not individual—remedies, such as cleaning up alleged oil contamination. They also ask that Chevron be ordered to pay money—not to any individuals, in individualized amounts—but to the Amazon Defense Front, to be used “exclusively for the ends determined” in the judgment, namely environmental clean-up and health programs—quintessentially collective relief.

Track 2 will also deal with all other “extant issues.” They may include at least those issues raised by Chevron prior to the bifurcation order. Those issues are plainly relevant to any future recognition or enforcement of the Lago Agrio judgment. Chevron’s September 6, 2010 memorial on the merits (accessible on the italaw web site) argued, among other points, that the Lago Agrio litigation was “permeated with fraud,” the Ecuadorian government colluded with plaintiffs to improperly influence the court, the court “succumbed to corruption,” the Ecuadorian judiciary lacks independence, and Ecuador denied due process to Chevron.

Chevron’s March 20, 2012 supplemental memorial (also on italaw) added arguments (among others) that the Lago Agrio judgment was “fraudulent,” that Ecuador is incapable of providing Chevron an “impartial” tribunal, and that the Lago Agrio litigation amounts to a “denial of justice.”

So if Chevron wins on some or all of these issues before the tribunal, the company will have plenty of ammunition to oppose recognition and enforcement of the Lago Agrio judgment. Lest there be any doubt as to its intentions, the track 1 award notes that, among other relief, Chevron asks the tribunal to “[d]eclare that enforcement of the Lago Agrio Judgment within or without Ecuador would be inconsistent with Ecuador’s obligations under the Settlement Agreements, the BIT and international law.”

Ted also asked “why the tribunal was not required to give issue-preclusive effect to the Ecuadoran judgment,” in light of Texaco’s agreement to accept Ecuadoran jurisdiction. The short answer is that while the legal effect of Texaco’s agreement has been argued by the parties before the arbitral tribunal, the issue has not yet been decided by the tribunal. So it, too, may possibly be ruled on in track 2.

Wholly aside from the New York UFMJRA statutory exceptions to recognition of a judgment based on fraud, denial of due process or lack of an independent court, Chevron argues that Texaco agreed to accept Ecuadoran jurisdiction only over the same claims as in the Aguinda litigation, namely individual damage claims (albeit presented in a class action). Texaco did not, Chevron argues, agree to accept Ecuadoran jurisdiction over “diffuse” or collective claims of environmental damage, which the government of Ecuador asserted in the Aguinda litigation were solely its rights to assert, and not those of the private plaintiffs. In contrast, Ecuador now argues that the Aguinda and Lago Agrio litigations are essentially the same.

It could be, then, that in deciding on whether the Lago Agrio lawsuit includes individual claims, for purposes of deciding whether it was barred by the 1998 release, the tribunal may consider the same issue in order to pass on the legal effect of Texaco’s acceptance of Ecuadoran jurisdiction. But there is no guarantee that it will. As noted above, track 2 will address only those issues which, in the judgment of the tribunal, are “required” in order to decide the dispute between Chevron and Ecuador.

I have never taken a position on the legal effect of the release; my focus as a human rights advocate has been on the gross violations of due process in the Lago Agrio litigation. But reading the arbitral tribunal’s recent decision in light of the assertedly “collective” rights recognized in the Lago Agrio judgment, it appears that Chevron has good reason to celebrate the tribunal’s unanimous decision.

The post Doug Cassel on the New Partial Arbitral Award appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

The Attorney General begins by pointing out that the legal framework under which the Argentine lower courts purported to enforce the Ecuadorian judgment against Chevron is the Inter-American Convention on Execution of Preventive Measures (“the Convention”). She notes that the Argentine and Danish corporations affected by the embargo, which was ordered by the Argentine lower court and largely upheld by the appellate court, seek relief based on Article 12 of the Convention. Article 12 provides (in its official English text), “The State of destination may decline to execute a letter rogatory concerning preventive measures that are manifestly contrary to its public policy (ordre public).” In other words, the argument by Chevron’s Argentine and Danish affiliates was that enforcing the Ecuadorian judgment is against Argentine public order.

The Attorney General first addresses the right of defense and due process. She observes that only Chevron was sued in Ecuador and appeared in the Ecuadorian proceeding. The company’s Argentine and Danish affiliates, which are separate corporations from Chevron, were not sued and did not appear in Ecuador. Nonetheless the Ecuadorian judge purported to make the judgment enforceable, not only against Chevron, but against all of Chevron’s subsidiaries and affiliates.

The Attorney General then explains (in my unofficial English translation):

In this way, the Ecuadorian judge ordered a measure extending the effects of a finding of liability ordered against one party to others, who were not part of that proceeding, and without that decision having been preceded by a due process in which those affected were able to exercise their right of defense.

This violation of the right of defense of the affected parties cannot be cured in the present proceeding, in which review by the judges of the requested State does not include the merits, legal validity or scope of the embargo and the defenses are limited to those contemplated by articles 4, 5 and 12 of the Convention.

The Attorney General then observes that the right of legal defense is part of Argentine public order and one of the essential principles of Argentina’s legal order. She continues (my unofficial translation):

In the context of recognition of foreign judgments, the exercise of the right of defense requires that the parties to the foreign proceeding have had the possibility to appear and to present their arguments, offer and present evidence, be notified of the decision and be able to appeal from it. Such are the minimum contents of the guarantee of due process (article 18 of the National Constitution) and these elements are part of the local public order.

After citing Argentine Supreme Court jurisprudence to that effect, the Attorney General notes that all Argentine and international norms on recognition of foreign judgments expressly require that the right of defense has been guaranteed in the foreign jurisdiction.

She concludes that the lower court order, enforcing a foreign judgment in which the right of defense was not assured, departed from the Convention. In effect, she says, article 12 of the Convention contemplates that a State is not required to respect a request or a letter rogatory manifestly contrary to that State’s public order.

She continues that both Argentine and international treaties, as well as the laws of most other States, make enforcement of foreign judgments subject to domestic public order and to fundamental public policies. Public order, she adds, is also a condition of the majority of norms on international judicial cooperation. And a requested State does not delegate the question of its public order to foreign judges.

In sum, she concludes that the foregoing suffices to reject the execution in Argentina of the Ecuadorian judgment which is manifestly contrary to Argentine public order.

She then recommends that the Supreme Court accept review of the lower court’s embargo order and immediately stay its effect, until the Court rules on the merits. The lower court’s order is a matter of “institutional gravity.” The Supreme Court’s intervention is necessary to avoid “irreparable and irreversible prejudice to essential national interests.” These include public interests relating to the energy policy and economic development of the nation. A stay is also required to preserve the efficacy of the Supreme Court’s review.

She concludes by asking the Supreme Court to admit the request for extraordinary review, to order an immediate stay of the lower court’s embargo order, and upon review to revoke the embargo order.

The post Lago Agrio: Doug Cassel on the Argentine Attorney General’s Opinion appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

Case-Specific Exceptions Generally

First, Ted questions whether case-specific grounds for non-enforcement of foreign judgments are needed, so long as the systemic inadequacy of a foreign judicial system is a ground for non-enforcement. If the foreign system is inadequate, so the argument goes, no judgment emanating from it need be enforceable in the US. Conversely, if the foreign system is adequate, it should be trusted to correct any case-specific problems. Either way, there is no need for a case-specific ground for non-enforcement.

But the world is not that neat. Judicial systems worldwide are not black and white: most do not fall into clearly defined categories of either good enough always to be trusted, or bad enough never to be trusted. At the extremes, yes, such all-or-nothing categories can be defensible. For example, I would support a general rule, or at least a very strong presumption, in favor of enforcing any final judgment from Britain, and against enforcing any final judgment from (today’s) Zimbabwe.

The judiciaries in most countries, however, are not so clearly acceptable or unacceptable. They are mixed bags, often doing a reasonably good job, but with frequent exceptions. In such a world, we should not have to condemn an entire foreign judiciary merely because it might fail to correct serious problems in individual cases. Nor should we be bound to swallow individual judgments contrary to our fundamental principles, on the artificial assumption that since the system of which they are part is deemed adequate in general, therefore every individual judgment it produces must be deemed adequate as well. In the real world, we need not only systemic, but also case-specific, exceptions to enforcement of foreign judgments.

Forum Non Conveniens Cases

Second, Ted argues that whatever the rule on enforcement generally, the grounds for non-enforcement of a foreign judgment resulting from a defendant’s successful forum non conveniens motion should be more limited. Once a defendant vouches for the adequacy of a foreign system for FNC purposes, he argues, the defendant should be barred by a “new kind of estoppel” from a case-specific challenge to any resulting foreign judgment.

The flaw in this suggestion is the same as the flaw in the first: it assumes an all-or-nothing view of the adequacy of a foreign judiciary. More realistic is the approach taken by Texaco (defended by Chevron on appeal) when it agreed to accept jurisdiction in Ecuador: Texaco agreed to be bound by any resulting Ecuadorian judgment—but subject to the grounds for non-enforcement set forth in the New York statute. The implicit representation by Texaco was that it accepted the adequacy of the Ecuadorian judiciary in 2001 in general, but not to the point of extending a carte blanche. Texaco agreed to be sued, not defrauded.

Ted argues that equity “should be flexible enough to deal with new situations.” After all, he adds: “It’s equity, man!” But new or old, the essence of equity is fairness. A defendant which agrees to accept a foreign jurisdiction but only subject to conditions—and whose acceptance on that basis is approved by US courts, as in the Texaco case—should not, in fairness, be held to accept a resulting foreign judgment, no matter how fraudulent and no matter how badly deteriorated the foreign judiciary has subsequently become. (This conclusion is even stronger where the plaintiffs orchestrated or directly participated in the foreign fraud.)

Foreseeability

This brings me to Ted’s third point: that Ecuador’s judiciary has never been that good and that Chevron should have assumed the risk that the “political winds in Ecuador” would not continue to “blow its way.” This is a matter of degree. I agree that Texaco should have assumed the risks that the reformist winds of the period when the FNC motion was decided would not continue to blow in Ecuador, and that future political change might even lead to a retrenchment. Such variability was reasonably foreseeable.

But unless one applies a rule of strict liability, there are limits to foreseeable and assumable risk. By contemporary Latin American standards, the subsequent deterioration of Ecuador’s judiciary was so exceptional as not to be reasonably foreseeable. In the decade since Texaco accepted Ecuador’s jurisdiction, no country in Latin America—except Ecuador—has experienced the wholesale, summary dismissal of all the judges of all its top courts (Supreme Court, Constitutional Court, Electoral Tribunal) even once (let alone twice, as in the case of Ecuador’s Supreme Court). No Latin American judiciary—except Ecuador’s—has been left topless with no Supreme Court at all for over half a year. Nor did Ecuador’s exceptionalism result from a single, aberrational change of government: the independence of its judiciary has now plummeted through several consecutive presidents.

I have worked on judicial reform in Latin America for decades. In 2000, around the time Texaco’s FNC motion was litigated, I was elected by the Organization of American States to serve on the Board of the Justice Studies Center of the Americas, which promotes judicial reform throughout the hemisphere. I visited Ecuador during those years. I know of no one at the time who foresaw or predicted anything like the collapse of Ecuadorian judicial independence that began in 2004 and continues to the present.

One measure of Ecuador’s dramatic descent is reflected in the World Bank’s Rule of Law Index. In 2000 Ecuador ranked respectably—with countries such as Mexico, Brazil and Peru—in the middle of the third quartile of nations worldwide. Ecuador then was well ahead of bottom-feeders like Honduras, Guatemala and Paraguay. By 2010, however, Ecuador had fallen to nearly the bottom of the fourth quartile, and was ranked ahead of only one other Latin American nation (Venezuela, where the “rule of law” has been reduced to the “rule of Chavez”). (See the attached table).

Bottom Line

As Chris Whytock and Cassandra Robertson document, there exists a serious problem of the use of forum non conveniens motions, not to relocate justice, but to delay and defeat justice. Ted Folkman proposes to deal with the problem at the back end: by imposing estoppel (to an unfair degree in my view) and assumption of risk (even of what seem to me to be not reasonably foreseeable risks)—thus ensuring enforcement of foreign judgments (whether or not they are conscionable).

A better approach would be to deal with the problem at the front end, by raising the bar for granting FNC motions. (This is one part of what Whytock and Robertson recommend.) US courts should be more realistic in assessing the adequacy of foreign fora for FNC purposes. Even this, however, will not solve the problem: as my initial post in the symposium outlined, the US District Court that ruled on Texaco’s FNC motion did in fact conduct a realistic review of the adequacy of Ecuador’s judiciary at the time. So W & R’s further recommendation is also important: US courts granting FNC motions should retain jurisdiction, so that where the foreign judgment in a FNC case is so deficient as to be unenforceable, the US courts can resume proceedings on an expedited basis.

The post Response to Ted Folkman appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

In Page’s rhetorical view, the fraud in the Ecuadorian litigation against Chevron was a triviality in a teapot that should not deter US judges from enforcing the resulting Judgment.  He defends his co-counsel by implying that they are merely innocent inhabitants of an imagined worldwide conspiracy.  He goes so far as to suggest that impugning Ecuador’s battered judiciary is “racist”. Each point merits a response.

First, Page hyperbolizes that “[e]very argument Chevron lost at trial” in Ecuador becomes an instance of fraud.   Yet the examples in my post—plaintiffs’ forging and falsifying their own expert’s testimony; their ghost writing the testimony of the court’s “independent” expert; their paying him hush money from a secret account; and their Judgment, portions of which can only have come from plaintiffs’ internal files—would be fraud in any court.

Second, Page takes comfort in the possibility that the fraud was “intrinsic” fraud (as opposed to “extrinsic” fraud), and hence not a ground for non-enforcement of the Judgment in the US under the 1962 Uniform Act.  If plaintiffs had committed their fraud unilaterally, and deceived the Ecuadorian courts, Page would clearly be right: that would be intrinsic fraud.  But in fact, the evidence indicates that plaintiffs acted in collusion with the Ecuadorian court.  Because the fix was in, Chevron did not have an adequate opportunity to present its case.  The collusive fraud was thus arguably “extrinsic fraud,” which is grounds for non-enforcement under both the 1962 and the 2005 Acts.

In any event, as Page recognizes, under the 2005 Act, intrinsic fraud may be grounds for non-recognition when it amounts to “circumstances that raise substantial doubt about the integrity of the rendering court with respect to the judgment,” or the proceeding “was not compatible with the requirements of due process of law.”  Plaintiffs’ fraud in Ecuador easily meets both standards.

In addition, at least under the 2005 Act, the Ecuadorian Judgment should be unenforceable in the US for violating public policy.  As the commentary explains, “Public policy is violated … if … enforcement of the foreign-country judgment would tend clearly to injure … the public confidence in the administration of law, or would undermine ‘that sense of security for individual rights, whether of personal liberty or of private property, which any citizen ought to feel.’” Again, the collusive fraud in Ecuador meets both standards.

Page next complains that his co-counsel are being vilified as members of an imagined worldwide conspiracy that includes “all” plaintiffs’ lawyers, “including such prominent firms as Patton Boggs.”  For a “full roster of the conspiracy,” Page refers readers to my post.  In fact, my post explicitly alleged misconduct only by “some (not all) of plaintiffs’ lawyers.”  And as Page well knows, I have expressly exempted both Patton Boggs and Page from any accusations of misconduct.  As stated in my publicly posted reply to his earlier letter,

References herein to plaintiffs’ lawyers, and to the misconduct specified herein, do not include the law firm of Patton Boggs or any of its lawyers who represent plaintiffs in various proceedings before U.S. courts, Forum Nobis PLLC [Page’s law firm] or any of its lawyers, or other law firms and lawyers who began to represent plaintiffs only recently.”  I likewise do not suggest that those law firms or lawyers participated in the misconduct described in this letter. …

Finally, Page complains that US judges are apt to give more credence to British than to Ecuadorian courts.  “This sort of double standard,” he objects, “is inappropriate and troubling. To be blunt, it is seen by the Ecuadorians as part and parcel of the arrogant and even racist mentality …”

But to admit that Ecuador’s judiciary is not equal to Britain’s is not racism; it is reality.  For example, the current State Department Country Report on Human Rights in Ecuador reports “credible allegations” that

verdicts delivered by judges were not actually written by them. In the libel suit brought by President Correa against the newspaper El Universo … the presiding judge published a 156-page decision 25 hours after the hearing. In similar cases such decisions usually take at least two weeks (and often significantly longer) to produce. The defendants alleged that the decision was not written by the presiding judge, but rather copied onto the judge’s computer from an external memory device.

Does that sound like a judiciary equal to Britain’s?

And if Page’s point is that not that he, but that Ecuadorians, have high regard for their judiciary, he should consult Ecuadorians.  According to Latinobarometro, only three in ten Latin Americans have confidence in their judiciaries.  The figure is almost certainly lower in Ecuador.

The post Response to Aaron Marr Page appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

My scholarly pursuits in international human rights law have not previously inquired into domestic law doctrines of forum non conveniens and enforcement of foreign judgments. My limited acquaintance with these doctrines arises mainly from a single case: the litigation against Chevron for alleged environmental damage in Ecuador. That litigation supplies an instance of the issues posed in this symposium: namely, the circumstances in which defendants who succeed in dismissing suits in US courts on grounds of forum non conveniens should later be permitted to defeat enforcement of a resulting foreign judgment on the ground that it is illegitimate.

Fortunately, two contributors to this symposium—Christopher Whytock and Cassandra Burke Robertson (“W & R”)—recently published a thoughtful analysis of these broader issues in the Columbia Law Review. Another contributor, Professor Ronald Brand, is a leading expert in the field. In such company, perhaps the most useful contribution I can make is to test the analysis and recommendations made by W & R against the facts of the Chevron case, and to ask whether the comparison suggests any modification or refinement of their analysis.

The Litigation Against Chevron

In 1993 residents of the Amazon sued Texaco in federal court in New York for oil pollution in Ecuador. In 2001 the District Court dismissed the suit on grounds of forum non conveniens. A Chevron subsidiary thereafter merged with Texaco, and Chevron defended the dismissal on appeal. The Court of Appeals affirmed in 2002. The following year a related lawsuit was filed in Ecuador. This led in 2011 to an $18.2 billion Judgment against Chevron, which plaintiffs now hope to enforce.

After Ecuadorian courts upheld the Judgment on appeal early this year, plaintiffs asked the Inter-American Commission on Human Rights to press Ecuador to enforce it against Chevron. I co-signed an amicus brief for Chevron opposing their request, on the ground (among others) that the Ecuadorian Judgment was “illegitimate, involves fundamental due process violations, and was not the product of independent and impartial judges.” (I was compensated for my time; plaintiffs later withdrew their request.)

As I have detailed elsewhere, the Ecuadorian proceedings amounted to a fraud in which some (not all) of plaintiffs’ lawyers colluded with Ecuadorian judges. Strong evidence—never convincingly refuted by plaintiffs—indicates, for example:

1. Lawyers for plaintiffs forged the signature on the “report” of their expert, Dr. Charles Calmbacher, falsely claiming that he found widespread environmental problems, when in fact he did not;
2. Plaintiffs’ lawyers and consultants ghost wrote the report of the Court’s supposedly “independent” expert on damages, Mr. Cabrera, even drafting it in English (a language he does not understand, so that his report had to be translated for him at the last minute);
3. In an effort to conceal their fraud, plaintiffs’ lawyers later paid Cabrera thousands of dollars in hush money from their “secret” bank account;
4. Once their fraud was discovered, plaintiffs hustled to present “cleansing” witnesses—who nonetheless relied on Cabrera’s fraudulent report; and
5. The Judgment contains data found nowhere in the judicial record, (see also here) but which appear verbatim in plaintiffs’ internal files, complete with identical mistakes and idiosyncratic symbols and punctuation.

Not surprisingly, several US federal courts have found these machinations to be fraudulent. As summarized by one federal judge, “… [W]hat has blatantly occurred in this matter would in fact be considered fraud by any court.”

Whytock and Robertson: The Need for Consistent Standards to Assess the Adequacy of Foreign Courts

In their article W & R point out that under existing law, the standard used at the “front end” of litigation, to determine whether a suit in a US court should be dismissed in favor of a more convenient foreign forum, differs markedly from the standard used at the “back end,” to determine whether to enforce a resulting foreign judgment.

They note two key differences in the standards ex ante and ex post. First, the standard for whether a foreign forum is deemed “adequate” for purposes of a forum non conveniens dismissal is far more lenient than the standard later used to assess a resulting foreign judgment. With rare exceptions, a more convenient foreign forum is deemed “adequate” so long as the defendant can be sued there. Yet any resulting foreign judgment may be denied enforcement if it is tainted by fraud or by violations of due process, or was entered by courts lacking independence and impartiality. The same foreign court deemed adequate for purposes of forum non conveniens may thus be deemed inadequate for purposes of enforcing its judgment.

The second difference involves adequacy for whom. At the forum non conveniens stage, the issue is whether the foreign forum is adequate for the plaintiff. But at the enforcement stage, the question is whether the foreign forum violated important rights of the defendant.

Two conclusions (among others) flow from these differing standards. As W & R observe, from the defendant’s point of view, it can be entirely consistent to argue that a suit in US court should be dismissed, because plaintiffs have an adequate forum in another country, but then later to oppose enforcement of a resulting foreign judgment because the foreign forum was fundamentally unfair to the defendant.

Second, the plaintiff may lose twice: first he is dismissed out of a US court and relegated to a foreign court, and then later he may be denied enforcement of any judgment entered by the foreign court. Calling this a “transnational access-to-justice gap,” W & R propose various reforms, centered on the theme that consistent standards of foreign judicial adequacy should be used at both the front and back ends of such litigation.

Similarities to the Chevron Litigation

At the foregoing level of generality, the litigation against Chevron is a reasonably good fit for the W & R thesis. At the front end, the litigation in New York was dismissed on grounds of forum non conveniens, based on a lenient standard of “adequacy” of the foreign forum for the plaintiffs.

In upholding the dismissal, the Court of Appeals in 2002 articulated the standard as follows:

Ordinarily, the requirement of an adequate alternative forum “will be satisfied when the defendant is “amenable to process” in the other jurisdiction. In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative …”

Texaco expressly agreed to be sued in Ecuador. Hence the ordinary standard was met: the defendant was “amenable to process” in the foreign forum.

In contrast, any future enforcement of the Ecuadorian Judgment in a US court will depend on a much stricter standard. Most US States have laws modeled on either the 1962 Uniform Foreign Money-Judgments Recognition Act or its 2005 revision. With somewhat different formulations, both versions allow or require denial of enforcement based on fraud, denial of due process, or lack of independent and impartial courts in the foreign forum.

Relying on a New York statute based on the 1962 Uniform Act, a federal court in New York last year went so far as to issue a worldwide injunction against enforcement of the Ecuadorian Judgment. Although that sweeping injunction was reversed on appeal, nothing in the reversal took issue with the underlying findings of fraud in the Ecuadorian litigation. Because of that fraud, now recognized by several US courts, plaintiffs may be unable to enforce their judgment in New York (or anywhere else in the US).

Also consistent with the W & R thesis, the forum non conveniens dismissal turned on whether the plaintiffs had an adequate forum in Ecuador. The District Court and Court of Appeals focused on arguments that Ecuadorian courts would not allow plaintiffs to proceed on their claims or to obtain justice. The Court of Appeals noted, for example, “The record shows that several plaintiffs have recovered judgments against TexPet and PetroEcuador for claims arising out of the very facts here alleged.” The Court of Appeals also relied on the District Court’s finding that there was “no evidence of impropriety by Texaco or any past member of the Consortium in any prior judicial proceeding in Ecuador; [and] there are presently pending in Ecuador’s courts numerous cases against multinational corporations without any evidence of corruption; …”

The expectation that Ecuadorian courts would not shortchange the plaintiffs proved correct. In fact, as noted above, the Ecuadorian judiciary colluded with plaintiffs’ counsel to perpetrate a fraud on Chevron. Now, consistent with the W & R thesis, the issues in any future US enforcement proceedings will focus on whether the Ecuadorian proceedings were unfair to the defendant.

Differences With The Chevron Litigation

The fit between the W & R theses and the Chevron litigation, however, is not perfect. At the forum non conveniens stage, in order to find that the Ecuadorian forum was adequate, the US courts went well beyond a bare finding that Texaco had agreed to be sued in Ecuador. Even after plaintiffs abandoned arguments that Ecuadorian courts were corrupt, the District Court on its own initiative ordered and conducted, and the Court of Appeals reviewed, a searching inquiry into whether “the courts of Ecuador can exercise with respect to the parties and claims here presented that modicum of independence and impartiality necessary to an adequate alternative forum.”

The US courts answered this question in the affirmative. Relying on an affidavit from Ecuador’s Attorney General, the District Court observed:

While no one claims the Ecuadorian judiciary is wholly immune to corruption, inefficiency, or outside pressure, the present Government of Ecuador, headed by a former law school dean, has taken vigorous steps to further the independence and impartiality of the judiciary.

The District Court also relied on the annual State Department Country Report on Human Rights in Ecuador. The Report noted signs of improvement in Ecuadorian courts as follows:

The Supreme Court that took office in 1997 publicly recognized the shortcomings of the judicial system and pledged to improve the quality and training of judges. In May 1998, the Supreme Court supervised the selection by open competition of all appellate judges. A Judicial Council, charged with administering the court system and disciplining judges, took office in the fall of 1998. In November 1999, the Council’s disciplinary committee fired two judges and two court employees for their role in the release of suspected drug traffickers. All four faced criminal charges. During the year, the Judicial Council removed at least two judges and a number of minor officials from their jobs.

Indeed, the District Court ex ante arguably went as far in examining the independence, impartiality and integrity of Ecuador’s judiciary as might a US court ex post in deciding whether to enforce a resulting Ecuadorian judgment. The District Court found “not the slightest indication, in any of the papers submitted on this issue, of any impropriety on the part of Texaco or any of its affiliates, or indeed on the part of any present or former member of the Consortium, with respect to any judicial or administrative proceeding of any kind in Ecuador.”

The District Court observed that “numerous cases against multinational corporations” were then pending in Ecuador’s courts. Yet:

None of the submissions here alleges corruption of the judiciary or the judicial process on the part of any of these corporations. On the contrary, the Chairman of Ecuador’s judicial disciplinary committee, who while in private practice successfully litigated numerous cases against TexPet, affirms that Ecuadorian courts do not give preferential treatment to multi-national companies like Texaco.

Again, this opinion was vindicated by later events: far from giving “preferential treatment” to Chevron, Ecuadorian courts colluded with plaintiffs.

The Ecuadorian plaintiffs thus did not suffer the “transnational access-to-justice gap” articulated by W & R. At the front end, they received a serious examination of the adequacy of Ecuadorian courts for plaintiffs. And if, at the back end, they prove unable to enforce their Judgment in US courts, any gap will be one of their own making. If the residents of the Amazon are ultimately denied relief for any just claims they may have, the fault lies not with US laws on forum non conveniens or enforcement of foreign judgments, but in the misconduct of plaintiffs’ own lawyers.

None of this suggests that the Chevron case invalidates the overall pattern of a transnational access-to-justice gap flagged by W & R; it does suggest, however, that the Chevron case does not fully fit the pattern.

Whytock & Robertson’s Recommendations

W & R recommend a series of reforms, at both the front and the back end, to overcome the transnational access-to-justice gap. Here I comment only on their proposals at the enforcement stage.

As a general matter, they argue that “if the defendant argues at the forum non conveniens stage that a foreign judiciary is adequate, the defendant should be estopped from arguing at the enforcement stage that the same foreign judiciary is inadequate.”

In general I agree: assuming (as do W & R) that in future the same standards of adequacy should be applied at both stages, innocent plaintiffs should not be victimized by defendants calling foreign courts adequate at the front end (forum non conveniens) but inadequate at the back end (enforcement).

But what about plaintiffs who are not innocent? For such plaintiffs, I must take issue with the W & R thesis. Estoppel is an equitable doctrine. Courts of equity do not grant relief to plaintiffs with unclean hands. Where—as in the Chevron case—plaintiffs orchestrate a fraud in a foreign court, they ought not to be given the benefit of relief via estoppel in a US court.

This is one of the reasons why Chevron should not now be estopped from arguing fraud, on the ground that its lawyers argued on appeal in 2001 that “Ecuador can and does dispense independent and impartial justice.” What happened in the subsequent Ecuadorian proceedings was not merely fraud; it was a fraud perpetrated by plaintiffs.

W & R further suggest that US courts at the enforcement stage “ordinarily should not accept case-specific defenses against enforcement.” Their rationale is that, if a defendant argued at the forum non conveniens stage that a foreign judicial system was adequate, the defendant should be relegated to foreign remedies for any ensuing fraud.

This proposal is in tension with both the 1962 and the 2005 Uniform Acts, both of which recognize that enforcement of a foreign judgment may be denied if—as in the Chevron case—“the judgment was obtained by fraud.”

In my view the Uniform Acts have the better of the argument. Even where a foreign judicial system is adequate in general, if a particular foreign judgment is nonetheless obtained by fraud and is not remedied by foreign courts, US courts should not be compelled to enforce a fraud. Our judges preside over courts of justice, not courts of “gotcha.”

Finally, W & R consider what should happen if a foreign judiciary, adequate at the time of a forum non conveniens dismissal, subsequently changes and becomes inadequate before a judgment is entered and enforced.

They propose that the answer should turn on foreseeability. Defendants who vouched for the adequacy of a foreign judiciary should bear the risk of reasonably foreseeable changes. On the other hand, defendants should not be estopped from complaining of changes in a foreign judiciary that were “not reasonably foreseeable.” In such cases, W & R argue, a foreign judgment tainted by such changes should not be enforced by US courts. Instead, US courts should offer the plaintiffs the opportunity to re-litigate their claims in US courts on an expedited basis. I agree.

(W & R would condition this proposal on the defendant’s reimbursing the plaintiffs for having litigated in the defendant’s preferred forum. While this may make sense for innocent plaintiffs, it hardly makes sense where, as in the Chevron case, the plaintiffs were the architects of their own demise, by participating in fraud in the foreign forum.)

In the Chevron case, as noted above, at the time the adequacy of the Ecuadorian forum was litigated in 2001, the plaintiffs could produce and the US courts could find no evidence of serious inadequacies in Ecuadorian suits against multinational corporations, including Texaco’s Ecuadorian subsidiary. State Department reports commended several years of positive trends in the Ecuadorian judiciary.

In contrast, two years after the dismissal on grounds of forum non conveniens was upheld on appeal, Ecuador’s judiciary suffered radical and not reasonably foreseeable changes. As I noted in a prior posted comment, in 2004 Ecuador’s new President and Congress fired and replaced the entire Constitutional Court, the entire Supreme Electoral Tribunal, and nearly all of the Supreme Court Justices. In 2005, the President followed up by firing the entire Supreme Court—including the new justices appointed only months earlier. For seven months Ecuador was left with no Supreme Court. This institutional beheading of the judiciary was not reasonably foreseeable.

Nor have matters improved since these blows to judicial independence were struck. Since taking office in 2007, current Ecuadorian President Rafael Correa has continued systematically to undermine judicial independence. As the president of one Superior Court stated in 2011, during her 26-year career, “I have never seen the independence of the Judiciary reduced to such truly alarming levels as now.” She added that there is “no judge who is not afraid.”

When the forum non conveniens dismissal was litigated a decade ago, there was no reason to foresee that the independence of Ecuador’s judiciary would sink to such a low. The logic of the W & R position, then, should not estop Chevron from complaining of the frontal assault on the independence of Ecuador’s judiciary, begun in 2004 and continuing to the present.

Conclusion

W & R make an invaluable contribution to scholarship and to justice by highlighting and dissecting the mismatch between the ex ante doctrine of forum non conveniens and the ex post doctrine of enforcement of foreign judgments, as both doctrines are currently applied. Although the Chevron case shows that their thesis and recommendations do not fully fit every case (what thesis does?), their approach is an excellent template for understanding these issues, so long as it is applied with a degree of flexibility to account for important variants in individual cases.

The post <em>Forum Non Conveniens,</em> Enforcement of Foreign Judgments, and the Chevron Litigation appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.