Tag Archives: Lago Agrio

Lago Agrio: What’s Left For Trial, And What’s Next In Canada?

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

Which Defenses Are Left?

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

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

Oil barrels in Ecuador
Oil barrels in Ecuador. Credit: Julien Gomba

As expected, the Ontario Superior Court has rejected the Lago Agrio plaintiffs’ attempt to seize the assets of an indirect Chevron subsidiary, Chevron Canada Ltd., to satisfy the multi-billion dollar judgment they obtained against the ultimate parent, Chevron Corp., in Ecuador. The court found no basis on which the assets of the indirect subsidiary could be reached on execution (the only tricky part here, in my view, is whether the shares of an indirect subsidiary can be reached, but really that’s not so tricky), and it found no basis for corporate veil-piercing. The practical implication is that barring a successful appeal, the Lago Ario plaintiffs will not be able to collect on their judgment in Canada. (The decision left over the possibility that another Chevron entity could be added to the case, but it is difficult to see why the outcome would be different for that entity than it was for Chevron Canada Ltd.).

The plaintiffs seem to think that equity requires a different result, but in order to make that argument, they have to ignore the whole course of the proceedings in the United States. Remember that they could have sought recognition of the Ecuadoran judgment in the United States, where Chevron Corp., the judgment debtor, has plenty of assets, but if I recall right, they made a decision not to do so. And they then were found to have obtained the judgment in Ecuador by fraud, which prevents them from seeking recognition in the United States now even if they wanted to. They say that equity requires courts in third countries to ignore corporate separateness to allow them to recover, but in light of what happened in New York, where’s the equity in that?
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