Posts Tagged Ecuador
Chevron /Ecuador: Ontario Court of Appeal emphasises third parties in piercing the corporate veil issues.
Update 5 April 2019. The Supreme Court yesterday refused leave to appeal hence the Court of Appeal’s judgment now stands firmly.
In Chevron Corp v Yaiguaje, the Canadian Supreme Court as I reported at the time confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. Following that ruling both parties files for summary judgment, evidently advocating a different outcome.
The Ontario Court of Appeal have now held in 2018 ONCA 472 Yaiguaje v. Chevron Corporation that there are stringent requirements for piercing the corporate veil (i.e. by execution on Chevron Canada’s shares and assets to satisfy the Ecuadorian judgment) and that these are not met in casu.
Of particular note is Hourigan JA’s argument at 61 that ‘the appellants’ proposed interpretation of the [Canadian Corporation’s] Act would also have a significant policy impact on how corporations carry on business in Canada. Corporations have stakeholders. Creditors, shareholders, and employees, among others, rely on the corporate separateness doctrine that is long-established in our jurisprudence and that is a deliberate policy choice made in the [Act]. Those stakeholders have a reasonable expectation that when they do business with a Canadian corporation, they need only consider the liabilities of that corporation and not the liabilities of some related corporation.’ (emphasis added by me, GAVC)
Blake, Cassels and Graydon have further review here. Note that the issue is one of a specific technical nature: it only relates to veil piercing once the recognition and enforcement of a foreign ruling is sought.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.
2018 ONCA 472, Amazon, assets, Canada, Chevron, Chevron Corp v Yaiguaje (, Chevron Ecuador, Chevron Texaco, Corporate social responsibility, Corporate veil, CSR, Ecuador, Enforcement, Forum non conveniens, https://www.canlii.org/en/on/onca/doc/2018/2018onca472/2018onca472.html?resultIndex=9, Jurisdiction, Kiobel, Recognition and enforcement, Rule of law, Supreme Court
Chevron /Ecuador: Canadian Supreme Court confirms flexible gatekeeping for recognition and enforcement.
In Chevron Corp v Yaiguaje, the Canadian Supreme Court confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. I have reported on the case’s overall background before. More detail on the case is provided here by Border Ladner Gervais, as do McMillan (adding a critical note) here, and I am happy to refer – suffice to say on this blog that an accommodating approach to the very willingness of courts to entertain a recognition and enforcement action is not as such unusual to my knowledge. It is very much a case of comity to at least not blankly refuse to hear the case for enforcing a judgment issued by a foreign court.
Much more challenging will be the merits of the case, for one imagines the usual arguments against will certainly exercise the Canadian courts.
Finally, even if Chevron assets in Canada were not to suffice to meet the considerable award (in particular if the courts further down the line were to keep the mother company out of the action), any success in Canadian courts, however small, no doubt will serve applicants’ case for recognition in other jurisdictions.
2015 SCC 42, Amazon, assets, Canada, Chevron, Chevron Corp v Yaiguaje (, Chevron Ecuador, Chevron Texaco, Corporate social responsibility, Corporate veil, CSR, Ecuador, Enforcement, Forum non conveniens, http://www.canlii.org/en/ca/scc/doc/2015/2015scc42/2015scc42.html, Jurisdiction, Kiobel, Recognition and enforcement, Rule of law, Supreme Court Canada
Postscript 18 March 2014: the US distict Court of New York confirmed an earlier temporary injunction early March 2014 against enforcement in the US. /////
The United States Supreme Court has denied Chevron certiorari in the enforcement leg of the Ecuadorian ruling against the company. The official log may be found here. The Second Circuit Court of Appeal had earlier removed an initial injunction, barring enforcement of the underlying Ecuadorian ruling which granted inhabitants of the affected Amazon area damages of 18 billion USD.
The ruling goes back to Chevron’s acquisition of Texaco, and the pollution caused by Texaco operations in the area affected, in the 1980s and 90s. Many of the corporate social responsibility issues linked to private international law (on which I have work in progress together with Charlotte Luks here and where the USSC heard oral arguments in Kiobel here) are not in fact relevant to this case. Rather, the case throws light on the difficulties which may arise in trying to enforce a judgment of a third country in a jurisdiction such as the United States. Chevron essentially argue that rule of law principles have been violated in the Ecuadorian rulings on the liability, consequently barring enforcement in the US. Denial of certiorari is quite routine (the USSC being able to cherry pick its cases) and typically signals that the Court sees no new points of law to be settled in the case. Denial has no impact on the merits of the underlying case and reasons for denial of certiorari are never given. This latest development therefore is exactly that: the latest, however by no means the last.
FYI rule of law considerations, in particular rights of the defense, are one of the very few grounds which may lead an EU court to reject enforcement of a judgment of another EU court, under the Brussels I Regulation.
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