Yaiguaje v Chevron Corp Is Back In The Canadian Courts

Graham Henry (2L)

In the wake of the Supreme Court of Canada (SCC) decision granting jurisdiction last September, the case Yaiguaje v Chevron Corp. will begin again shortly in the Ontario Superior Court of Justice. This case is just one part of the legal epic often referred to as simply “The Chevron Case.” This Canadian iteration attempts to enforce the US$9.51 billion judgment leveled against Chevron by the Ecuadorian courts for environmental damage caused by oil extraction operations in an isolated region of Ecuador.

Maria Hortencia Punina standing on the farm owned by her father. The area has been badly contaminated by petroleum and open oil waste pits abandoned by the oil giant Texaco (now Chevron), which have led to the death of the farm’s livestock. (Photo credit: Caroline Bennett / Rainforest Action Network, Creative Commons, April 2010)

From the mid-1960s to 1992, Texaco (subsequently acquired by Chevron) had significant oil extraction operations in the Lago Agrio region of Ecuador’s jungles. As a result of this operation, an area of 1,500 square kilometers was disastrously polluted in such a way that the health, livelihoods, and future of the indigenous peoples in these communities were, and remain, threatened. For almost 23 years, those affected have been seeking legal accountability and environmental justice.

By 1993, Chevron no longer held any assets in Ecuador. Thus, 47 indigenous Ecuadorian plaintiffs, representing the affected communities, sought to hold Chevron accountable in New York, where the corporation’s head office is located. This effort was eventually rebuked in 2002 on the basis of forum non conveniens; the Ecuadorian courts were deemed the appropriate venue for the plaintiffs’ claim. In concert with this judgment, Chevron made a number of undertakings to honour the judgment of the Ecuadorian Courts.

Crude contaminates an open toxic pool in the Ecuadorean Amazon rainforest near Lago Agrio. It was abandoned by Texaco (now Chevron) after oil drilling operations ended in 1990 and was never remediated. (Photo credit: Caroline Bennett / Rainforest Action Network, Creative Commons, April 2010)

And so they went to Ecuador. In 2003, the plaintiffs filed suit in Ecuadorian Provincial Court and eight years later received a massive US$19 billion judgment in their favour. After several appeals took the case to the country’s highest court, the dollar amount settled at US$9.51 billion. However, Chevron refused to honour the judgment, alleging fraud and unfairness. According to its website, “Chevron is defending itself against false allegations that it is responsible for alleged environmental and social harms in the Amazon region of Ecuador.” Since Chevron is unwilling to honour the judgment, the plaintiffs have turned to foreign jurisdictions to enforce the ruling. Chevron succeeded in US District Courts where the enforcement of this judgment was blocked for reasons of fraud and racketeering. This ruling is currently on appeal.

And so they have come to Canada. In May 2012, the plaintiffs commenced an action against Chevron and two of its Canadian subsidiaries. Alan Lenczner, one of the top litigators in the country, took on the plaintiffs’ case. First heard in the Ontario Superior Court of Justice, the case climbed the judicial ladder on the preliminary question of jurisdiction. On this topic, the defendants argued that there must be a “real and substantial connection” between the Canadian court and the defendant or action.

Oral arguments before the SCC took place at the end of 2014. A coalition made up of U of T’s International Human Rights Program (IHRP), Mining Watch Canada (MWC), and the Canadian Centre for International Justice (CIJ) acted as intervenors. The judgment for was delivered on 4 September, 2015. Justice Clément Gascon, writing for the unanimous court, dismissed the appeal, rejected the jurisdictional tests proposed by Chevron, and found that Canadian courts did have jurisdiction over this matter. The Court found that a “real and substantial connection” only needs to exist between the foreign court and the litigants or with the subject matter of the dispute. Like the courts below, Justice Gascon found that “the approach favoured by Chevron is sound neither in law nor in policy.”

Cory Wanless, a lawyer with Klippensteins and an intervenor for IHRP, MWC, and CCIJ at the Supreme Court, said that Chevron’s “argument that there was a new jurisdictional test for enforcement actions was novel. Nobody had ever argued that before. No court has ever accepted that before. And every court that has looked at it, in fact, has specifically rejected it.” When asked why this jurisdictional issue was the battle Chevron decided to wage, Wanless explained that it

was part of Chevron’s overall goal of delaying payment and fighting every possible fight that they could fight. There’s a saying amongst litigators that goes ‘[the] defendant wins by not losing’ and that, to be honest, has kind of been Chevron’s tactic from the very start: [raising] every possible argument that they could [raise]…

This 23-year legal process has seen Chevron willing to engage in any and all legal battles in order to avoid paying the judgment. A now-famous comment by a Chevron spokesperson in a 2010 interview with GlobalPost summed up their position well when they vowed to fight the judgment, “until Hell freezes over, and then we’ll fight it out on the ice.”

While just one part of a much larger case, this decision is not without significance. Asked why this decision matters, Wanless said “[i]t’s a big victory because the highest court of the land has sent a very clear signal to Chevron, but also to corporations in general, that Canada is open to foreign plaintiffs who have successful judgments in other countries. [It] clarified, for the first time really, that there are no barriers to accessing Canadian Courts.”

So where are things headed now? Back at the Ontario Superior Court, the plaintiffs will now attempt to prove that the Ecuadorian judgment can and should be enforced against Chevron and Chevron Canada. The plaintiffs filed a motion in October 2015 to dramatically restrict the defences available to Chevron and then subsequently called for summary judgment. In response, Chevron has filed its own motion for production and/or a stay.

All this sets the stage for the next chapter in this legal epic: a top litigation firm in Canada representing a group of marginalized Ecuadorians versus one of the largest oil companies in the world armed with a deep war chest and a never-say-die attitude. Arguments will take place in Toronto in early March.