Unanimous Ontario Court of Appeal decision: Ecuadoreans can seek Chevron damages in Canada and Chevron’s two Canadian subsidiaries ordered to pay $100,000 in costs

Significant Victory in Oil Pollution Case Against Chevron, Ontario Court of Appeal ordered Chevron’s two Canadian subsidiaries to pay $100,000 in costs by Union of Communities Affected by Texaco, December 18, 2013, Ecowatch
Indigenous and farmer communities in Ecuador scored a major victory over Chevron yesterday when an Ontario appeals court ruled they have the right to pursue enforcement of a $9.5 billion Ecuadorian court judgment against Chevron’s assets in Canada. Chevron used substandard methods to handle toxic waste derived from oil production at their Ecuadorian sites from 1964-1990. Evidence from previous trials showed Chevron dumped 18 billion gallons of toxic wastewater into unlined pits, which contaminated the soil, underground water, rivers and streams. The court also ordered Chevron’s two Canadian subsidiaries to pay $100,000 in costs to the Ecuadorians.

The decision was lauded by the leaders of the Ecuadorian communities and their lawyers. “This order will allow us the opportunity to hold Chevron accountable for fleeing the scene of its environmental crimes in Ecuador after a valid judgment was entered against it,” said Pablo Fajardo, the lead Ecuadorian lawyer for the villagers. Humberto Piaguaje, a Secoya indigenous leader who is the director of the Assembly of Affected Communities, said: “This decision is momentous. It proves Chevron cannot hide behind legal technicalities to avoid justice.

Members of roughly 80 indigenous and farmer communities in Ecuador’s northern Amazon region, the villagers won their judgment in 2011 after a hotly-contested eight-year trial that Chevron insisted take place in the South American nation. But Chevron has refused to pay the judgment and has stripped most of its assets from Ecuador to avoid collection, forcing the villagers to file lawsuits to satisfy the judgment in places where Chevron has assets. The Ecuadorians have launched such proceedings in Brazil and Argentina as well as Canada. Just last month, Ecuador’s Supreme Court affirmed the finding of liability against Chevron but cut the damages amount roughly in half, to $9.5 billion. By contrast, BP’s liability for the relatively smaller Gulf of Mexico spill is approaching $40 billion.

The Canadian appellate panel took wry note of Chevron’s long history of forum shopping, citing the company’s earlier promise to U.S. courts to abide by any adverse judgment in Ecuador as a condition of the case being moved there in 2001. The Ontario court also took a veiled swipe at U.S. federal judge Lewis A. Kaplan for trying to issue an injunction purporting to block the Ecuador judgment. A U.S. appeals court unanimously reversed Kaplan just last year. “The picture from the above history is an obvious one,” the panel wrote. “For 20 years, Chevron has contested the legal proceedings of every court involved in this litigation—in the U.S., Ecuador and Canada. Chevron even sought, and briefly obtained, a global injunction against enforcement of the Ecuador judgment. “In these circumstances, the Ecuadorian plaintiffs should have an opportunity to attempt to enforce the Ecuadorian judgment in a court where Chevron will have to respond on the merits,” the panel ruled.

The panel ruled that jurisdiction over Chevron in Canada “properly opens the door to this hugely significant decision of Ecuador’s highest court possibly being recognized and enforced in a jurisdiction, Ontario, where enforcement may be significant to the parties.” The latest decision represents a stunning reversal of fortune for the oil giant, which just finished a six-week trial in New York before Judge Kaplan where it alleged the Ecuadorian plaintiffs and their lawyers had obtained the Ecuador judgment by fraud. The Ecuadorians assert that Chevron is using the fraud allegations to distract attention from its environmental crimes and growing liability in Ecuador. Counterclaims have been filed against Chevron in the New York case.

Chevron’s subsidiaries have an estimated $15 billion of assets in Canada, more than enough to pay for the entire Ecuador judgment which just last month was unanimously affirmed by Ecuador’s Supreme Court. The villagers hope to use any funds collected to clean-up the billions of gallons of toxic waste Chevron was found to have dumped in their ancestral lands from 1964 to 1992, when the company operated almost 400 well sites under the Texaco brand. The decision technically reverses a trial court decision that imposed a stay after finding that the villagers could establish jurisdiction over Chevron, but could not target the assets of Chevron because they were held by wholly-owned subsidiaries. The panel did not make a final ruling on whether the Ecuadorians could seize the assets of subsidiaries to satisfy a judgment against the parent company, saying that issue would have to be decided during the enforcement action. “The appellate decision represents a significant step forward in the two-decade battle by Ecuadorians for justice against one of the world’s most profitable corporations,” said Anton Tabuns, a Canadian lawyer who represents the villagers. “We look forward to moving into the merits of recognizing the legitimate judgment from Ecuador in Canada,” he said. “Chevron’s two-decade history of forum shopping and obstructionism must end now.”

Chevron is expected to appeal the ruling to Canada’s Supreme Court, but it is unclear whether that appeal—even if accepted—will stay the enforcement proceeding. Under Canadian law, enforcement proceedings are heard by a judge and not a jury.

The trial court decision in Ecuador, which came down in 2011, was based almost entirely on Chevron’s own scientific evidence documenting the company’s substandard practices. … The latest decision also underscores that the separate fraud action in New York federal court initiated by Chevron will not impact foreign enforcement actions, which take place in accordance with each country’s laws where the actions are filed. In the New York case, Judge Kaplan has come under criticism for his displays of bias against the Ecuadorians. Kaplan, who presided over the case from the bench after Chevron dropped damages claims to avoid a jury, also has no authority to block the Ecuador judgment from being enforced in other countries, according to prior decision of New York’s federal appellate court. … In Canada, Chevron subsidiaries can produce anywhere between $2 billion and $4 billion annually in dividends for the parent company, according to estimated by the plaintiffs. Chevron also has been forced to hire major law firms in Venezuela and Colombia in anticipation of enforcement actions being filed in those countries, according to sources. A Chevron comptroller, Rex Mitchell, recently testified under oath in the New York case that the enforcement actions would cause “irreparable harm” to the company’s global operations. [Emphasis added]

Ontario court revives Chevron Amazon pollution case by Jeff Gray, December 17, 2013, The Globe and Mail
The Ontario Court of Appeal has revived the hopes of a group of Ecuadorean villagers trying to seize Canadian assets from Chevron Corp. to satisfy a multi-billion-dollar judgment against the oil giant in their country over pollution in the Amazon. In a decision released Tuesday, the latest move in the 20-year saga of what may be the biggest environmental lawsuit in the world, the appeal overturned a May ruling by Ontario Superior Court Justice David Brown. Justice Brown found that Ontario courts had jurisdiction over the case against Chevron but still granted a stay in the action, concluding that Chevron Canada Ltd.’s assets were not directly owned by San-Ramon, Calif.-based Chevron Corp. But a three-judge panel at Ontario’s highest court, in a unanimous decision released Tuesday, sided with the Ecuadoreans. The ruling, which could still be appealed to the Supreme Court of Canada, does not decide on whether Chevron will have to pay up with its Canadian assets – only that the Ecuadoreans deserve their day in an Ontario court to have their case heard.

Referring to comments from a Chevron spokesman that the company would “fight this until hell freezes over” and then “fight it out on the ice,” Justice James MacPherson of the Court of Appeal writes: “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 the appropriate jurisdiction. At this juncture, Ontario is that jurisdiction.” Lawyers for Amazonian villagers have been trying to use Canadian courts, and courts in a handful of other countries, to collect on a controversial $19-billion (U.S.) judgment levelled in 2011 against the company in Ecuador over oil pollution. An Ecuadorean court recently knocked the amount down to $9.5-billion on appeal.

Justice Brown did side with lawyers for the Ecuadoreans in finding that his court did have jurisdiction over the matter. However, he concluded that it had the discretion to put the case aside until evidence was brought forward that Chevron Corp. actually has any assets in Ontario, noting that any battle between the two sides would use a vast amount of court resources. The battle between the Ecuadoreans and Chevron has seen its share of plot twists, including allegations of bribed judges, faked evidence and other wrongdoing made by both sides in U.S. courts and in a long-standing and bitter public-relations battle. Chevron has refused to pay the Ecuadorean judgment, alleging that it is the result of fraud.

Both sides have also been battling in a New York courtroom in recent months, where Chevron has accused U.S. lawyers and supporters of the Ecuadoreans of engaging in racketeering, allegations they deny. In October, one of the former Ecuadorean judges on the case testified that he and another judge accepted bribes from the plaintiffs. The plaintiffs have challenged the judge’s account by saying it was tainted by payments from Chevron.

As part of a plan to try to get the massive 2011 judgment recognized in countries around the world, the plaintiffs hired prominent Toronto litigator Alan Lenczner to launch proceedings against Chevron in Ontario and force the company to pay up with its Canadian subsidiary’s assets. Mr. Lenczner said he was pleased with the ruling, which would allow his case to go forward. “It’s been 20 years,” he said. “It’s time to bring this to a conclusion.” But a conclusion of any kind could still be years away. Whatever the result of the court battle in the U.S., Chevron could end up bringing its claims about fraud and bribery north to Canada to battle against being forced to pay the judgment. Chevron said in a statement that the appeal ruling only allows the case to go forward, and does not address whether the Ecuadorean judgment was “procured by fraud” or whether it should be enforced against Chevron Corp. or its Canadian subsidiary. The company says it is “evaluating next steps” and a possible appeal to the Supreme Court of Canada. [Emphasis added]

Ecuadoreans can seek Chevron damages in Canada, A lower judge had ruled the plaintiffs had no access to assets of Chevron’s Canadian subsidiary by BBC News, December 17, 2013
An Ecuadorean indigenous group can seek enforcement of a $9.5bn (£5.8bn) judgement against US petrol giant Chevron in the Canadian courts, an Ontario appeals court has ruled. Ecuadorean courts awarded the damages in 2011 and 2013 after the villagers sued over 18 years of pollution of the Amazon jungle in the Lago Agrio region. Chevron has refused to pay, arguing the judgement was obtained through bribery. Chevron is expected to appeal against the ruling to the Supreme Court. The oil firm has also challenged the judgment under an international trade agreement between the US and Ecuador.

Tuesday’s decision by the Ontario appeals court is the latest turn in the two-decade old case between Texaco, which has since been bought by Chevron, and the Lago Agrio villagers. The unanimous decision by the three-judge panel overturns the ruling of an Ontario superior court justice, who found in May that Chevron had no assets in Canada and the plaintiffs could not gain access to the assets of Chevron’s Canadian subsidiary. Chevron was found guilty in Ecuador in 2011 of “extensively polluting” the Lago Agrio region between 1972-90. The company was ordered to pay $18bn in damages to the residents as a result of various environmental and health concerns, an amount subsequently reduced by a higher court.

Plaintiffs ‘deserve enforcement’
The residents say that the oil company knowingly dumped 18 billion gallons (68bn litres) of toxic waste water and spilled 17 million gallons of crude oil into the rainforest while operating in north-east Ecuador. The affected area covers 4,400 sq km (1,700 sq miles) along the border with Colombia. The pollution has led to health problems such as cancer and birth defects, the villagers and their supporters say. In the Canadian case, the villagers asked for a judgment against Chevron’s assets held in Canada. “After all these years, the plaintiffs deserve to have the recognition and enforcement of the [Ecuadorean] judgment heard on the merits in an appropriate jurisdiction,” the Canadian judges wrote in their decision. “At this juncture, Ontario is that jurisdiction.” The decision was signed by Justice James MacPherson and agreed by Justices Eileen Gillese and William Hourigan. Chevron said it was evaluating its next steps, including a possible appeal against the ruling to the Supreme Court of Canada. [Emphasis added]

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