November 10, 2015
On September 4, 2015, the Supreme Court of Canada released its long awaited judgment in Chevron Corp v. Yaiguaje, 2015 SCC 42. Justice Gascon, writing for a unanimous Supreme Court panel, permitted 30,000 Ecuadorian villagers to pursue the enforcement of their Ecuadorian Judgment against Chevron in Ontario. In coming to its conclusion, the Supreme Court held that there is no need to prove a real and substantial connection between the enforcement forum and either the judgment creditor or the dispute. Additionally, it is not necessary that the foreign debtor contemporaneously possess assets in the enforcing forum. Jurisdiction was established between the foreign court and the original action and between Ontario and Chevron Canada.
The oil-rich region of Ecuador, Lago Agrio, has suffered extensive environmental pollution because of the presence of global oil companies. The Ecuadorian villagers have long sought legal remedies for the harms that stemmed from the pollution. In 2013, an appellate Ecuadorian court upheld a lower court decision in favour of the villagers and set the damages owed by Chevron at US$9.51 billion. Chevron has refused to pay.
Since the Ecuadorian judgment was obtained, Chevron has implemented a “scorched earth” approach to avoid payment. Chevron commenced a proceeding in the United States alleging that the Ecuadorian judgment was the result of fraud and bribery (the Supreme Court of Canada commented that the allegations of fraud and related decisions were not before it in making its decision).
Following proceedings in the United States which were discontinued, representatives of the 30,000 villagers commenced enforcement and recognition proceedings in Ontario, which were ultimately appealed to the Supreme Court of Canada. The main issues before the Supreme Court were: 1) whether it was necessary for a real and substantial connection to exist between the defendant or the dispute and Ontario for jurisdiction to be established; and, 2) whether the Ontario courts had jurisdiction over Chevron Canada as a third party to the judgment for which recognition and enforcement is sought.
Whether it was necessary for a real and substantial connection to exist between the defendant or the dispute and Ontario for jurisdiction to be established: No!
The Supreme Court held that it is not a requirement for there to be a real and substantial connection between the defendant or the action and the enforcing court in order for jurisdiction to exist in recognition and enforcement proceedings. Justice Gascon wrote that a real and substantial connection as alleged by Chevron had never been a requirement under Canadian law in the context of recognition and enforcement proceedings. In that context, it is only necessary that the foreign court had a real and substantial connection with the litigants or with the subject matter of the dispute. Since the pollution occurred in Ecuador, the Ecuadorian court had jurisdiction over the underlying dispute.
Justice Gascon provided several reasons for this conclusion. First, enforcement and recognition proceedings are different than proceedings of first instance and therefore it is logical that a different test would be applied to establish jurisdiction. Secondly, principles of fairness, order, reciprocity, and comity militate against imposing overly rigorous barriers to establishing jurisdiction. Finally, the Supreme Court recognized that the Ontario legislature has not enacted barriers to enforcing foreign judgments.
Whether the Ontario courts had jurisdiction over Chevron Canada as a third party to the judgment for which recognition and enforcement is sought: Yes!
The second issue before the Supreme Court was whether the Ontario courts had jurisdiction over Chevron Canada, which was not a named defendant in the Ecuadorian judgment. The Supreme Court found that jurisdiction had been established because Chevron Canada operates a place of business in Ontario. Justice Gascon relied on the Supreme Court’s decision in Club Resorts Ltd. v. Van Breda to outline the ways that jurisdiction may be established, and that Chevron Canada’s place of business in Mississauga established a traditional ground of presence-based jurisdiction. However, no finding of liability was made against Chevron Canada.
The Supreme Court’s decision did not recognize and enforce the Ecuadorian judgment. The issue before the Supreme Court was limited to jurisdiction. The over 20 year journey of 30,000 Ecuadorian villagers for payment from Chevron for wrongs relating to pollution is not at an end. However, the judgment creditors overcame a significant hurdle.
The decision serves as a coherent review and clarification of jurisdictional principles, but the Supreme Court did not create any new principles of law. While the case is fascinating because of the amount of money at stake and the lurid facts, the Supreme Court’s decision is a straightforward application of private international law principles.
*This post was co-authored by Jeff Van Bakel and Brittany Tovee