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Lago Agrio: The Argentine Supreme Court’s Decision, In English

Here is a translation of the Argentine Supreme Court’s decision vacating the embargo of the assets of Chevron’s subsidiaries and affiliates in Argentina.

BREAKING: Argentine Supreme Court Lifts Embargo of Chevron Assets In Lago Agrio Case

Bloomberg is reporting that the Argentine Supreme Court has lifted the embargo of Chevron’s assets (technically, I suppose, the assets of its subsidiaries and affiliates in Argentina, although I haven’t yet figured out exactly what the opinion says) in Argentina that the Lago Agrio plaintiffs had obtained in aid of the $19 billion Ecuadoran judgment against Argentina. Bloomberg’s article focuses on the implications of the ruling for Chevron’s joint venture with YPF, a recently nationalized energy company in Argentina.

I suppose, in light of Argentina’s recent rule of law woes, that there is more than one way to spin this decision. Perhaps the LAPs will say that the Argentine justice system is hopelessly political and responded to political pressures from a government desperate to attract foreign investment. (A bit ironic, no?) And I suppose that Chevron could say that if even Argentina is not going to cooperate with the LAPs recognition and enforcement efforts, then the LAPs have little chance of success.

More to come! In particular, I am going to try to figure out how the latest decision squares, or doesn’t square, with the views that the LAPs’ lawyers expressed in their press conference earlier this month.

Update: The Lago Agrio plaintiffs have described the Argentine court’s decision as a “temporary setback.” The claim the decision is contrary to Article 5 of the Inter-American Convention on Execution of Preventive Measures, which provides that a “person affected” by an embargo under the Convention has the right to be heard by the judge of the court in the country where the main case is pending—here, Ecuador—and that therefore there was no denial of due process. The Argentine court disagreed with this reading of Article 5, holding that since the Ecuadoran court had already decided to extend the embargo to the subsidiaries, thus making a return trip to the Ecuadoran courts futile.

Lago Agrio: Doug Cassel on the Argentine Attorney General’s Opinion

We welcome back Notre Dame law professor and Chevron advocate Doug Cassel, who offers a view of the Argentine Attorney General’s opinion on the embargo of Chevron’s assets in the country and her request for action by the Argentine Supreme Court. Doug focuses on the two issues I mentioned in my post on the opinion: the application of the embargo to Chevron subsidiaries and affiliates that were not parties to the Ecuadoran litigation, and the Attorney General’s claim that the embargo was at odds with Argentina’s national interest and its energy policy in particular.

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.