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Lago Agrio: Ontario Case Stayed Pending Appeal To The Supreme Court of Canada

In a somewhat surprising development, Justice MacPherson, who wrote the Ontario Court of Appeals’s decision in Yaiguaje v. Chevron, has stayed that decision pending the outcome of Chevron’s application to the Supreme Court of Canada. The decision was surprising—to me, at least, though I welcome the view of Canadian lawyers—because of the tenuousness of Chevron’s claim of irreparable harm: Chevron pointed to the risk that if it won, it might be unable to recover the costs of the proceedings form the Lago Agrio plaintiffs. These costs are, of course, minuscule compared to what is at stake in the case, but Justice MacPherson felt it was enough to justify a stay.

Here is a copy of the papers Chevron filed with the Supreme Court, and here are the papers that Chevron’s Canadian subsidiary filed.

Case of the Day: Yaiguaje v. Chevron Corp.

The case of the day is Yaiguaje v. Chevron Corp., 2013 ONCA 758. This is the appeal of the Ontario Superior Court’s decision staying the Lago Agrio plaintiffs’ action for recognition and enforcement of the Ecuadoran judgment, which we covered in May 2013. Antonin Pribetić has early reaction to the new decision at The Trial Warrior, as does Doug Cassel here at Letters Blogatory. As I did in the prior post, I am not going to try to comment at length about the merits of the decision—I will leave that for the Canadian lawyers—but instead just to give my big-picture impressions.

The Court of Appeal agreed with the lower court that the lower court had jurisdiction. I gave my reasons in the prior post for believing, at least from an American perspective, that this is basically right. Here is my non-technical statement of my view:

Leaving doctrine aside, if I sue you in the Canada and win a judgment for damages, and if you have assets in the United States, and if a US court decides that it lacks personal jurisdiction over you when I bring an action for recognition and enforcement of the Canadian judgment, then you have effectively found a way to shield your assets from your creditors, which is contrary, in my opinion, to public policy. The merits of the case have already been decided; I am simply trying to collect what a court has found I am owed.

The Court of Appeal, in insisting that the plaintiffs need only show a “real and substantial connection” with Ecuador (the country where the merits were litigated), not Canada (the country where recognition is sought), seems sympathetic with my reasoning.

But the Court of Appeal disagreed with the lower court that a stay was appropriate. I was lukewarm about the stay in the prior post. Again speaking non-technically: it may be true that at the end of the day there will be little if anything available to be taken on execution in Ontario, but presumably a judgment creditor can be trusted to seek recognition and enforcement only in jurisdictions where it is efficient to do so. I could imagine an argument about forum shopping and gamesmanship, but in the context of this case it would be difficult for Chevron to make such an argument with a straight face, insofar as Chevron has spent a lot of time and money in effect opposing recognition and enforcement in the United States, a jurisdiction where the plaintiffs have not and probably will not ever seek to have the judgment recognized. As the court noted: “it is a risky practice for a judge to second-guess counsel on strategy in the name of judicial economy.”

William Blake, Lucifer, from Dante Inferno Canto 34
Hell Freezes Over
I present to you the best part of the judgment without comment:

Even before the Ecuadorian judgment was released, Chevron, speaking through a spokesman, stated that Chevron intended to contest the judgment if Chevron lost. He said: “We’re going to fight this until hell freezes over. And then we’ll fight it out on the ice.”

Chevron’s wish is granted. After all these years, the Ecuadorian plaintiffs deserve to have the recognition and enforcement of the Ecuadorian judgment heard on the merits in an appropriate jurisdiction. At this juncture, Ontario is that jurisdiction.

Case of the Day: Van Damme v. Gelber

The case of the day is Van Damme v. Gelber, 2013 ONCA 388. Thanks to friend-of-Letters-Blogatory Antonin Pribetić for bringing it to light at the Trial Warrior Blog.

Nahum Gelber was a Canadian national living in Monaco. Alexandre Van Damme claimed that he had a contract with Gelber to purchase a painting Gelber owned. But Gelber refused to deliver the painting and argued that the person who purported to enter into the contract on his behalf lacked authority.

The contract had an exclusive New York choice of forum clause. Van Damme sued for specific performance in the New York Supreme Court. He also sought an order from the Ontario Superior Court of Justice prohibiting the sale or movement of the painting from its location Gelber’s son’s home in Toronto, pending the outcome of the New York case. Gelber, in opposing the Ontario application, argued that Ontario was forum non conveniens, and that “New York is the more appropriate forum.” The parties entered into a consent order in Ontario, which stated that the order was without prejudice to arguments either party wished to make contesting the jurisdiction of the New York courts.

Gelber then moved to dismiss the New York action for want of jurisdiction, arguing that because he was not a party to the contract, he was not bound by the choice of court clause, and thus that the contract did not vest the New York court with jurisdiction. The court deferred a decision, and so Gelber answered the complaint and filed a cross-claim against his supposed agent. The parties conducted discovery, and they then cross-moved for summary judgment. Gelber argued both the jurisdictional point and the substantive points. For example, he argued that the contract was void for lack of mutuality of obligation, that Van Damme had abandoned the contract, and that Van Damme had failed to perform his own obligations under the contract. The judge granted Van Damme’s motion and denied Gelber’s motion, finding that Gelber was indeed a party to the contract. Gelber sought a rehearing and appealed, but the case was finally resolved by a final judgment. Van Damme then sought recognition and enforcement in Ontario, which he received, and Gelber appealed.

The main question was whether, by litigating issues other than the issue of personal jurisdiction in New York, Gelber had, as the Canadians say, attorned to the jurisdiction of the New York court. The answer was yes. I am not going to delve into why the answer was yes—I will leave that to the Canadians—but it is worth noting that the principle is the same in American law. Under Section 5(a)(2) of the UFCMJRA, a court may not refuse to recognize or enforce a foreign money judgment on personal jurisdictional grounds if the defendant appeared voluntarily in the proceeding, other than for the purpose of contesting jurisdiction. (Of course, this was a judgment for specific performance, not for damages, so the statute would not, strictly speaking, apply). Gelber’s argument that specific performance was not an appropriate remedy was waived, but in any case the appellate court thought specific performance was an appropriate remedy under Canadian law in the circumstances of the case.

When I read the facts, and particularly the bit about forum non conveniens, I was hoping for a test of my thesis that there should be some sort of estoppel to prevent a party from arguing forum non conveniens in country A and then opposing recognition and enforcement of the judgment from country B. No such luck!