Chevron (Ecuador)

Latest:  Read detailed summaries of the hearing in September 2016.

The Chevron case involves a decades-long dispute between members of Ecuadorian communities and the Chevron Corporation. The plaintiffs are seeking to enforce in Canadian courts a US$9.5 billion Ecuadorian judgment against Chevron for environmental damage. Lawyers have fought for years in several countries over who’s responsible for pollution in the Ecuadorian rainforest. The plaintiffs argue that the judgment can be enforced in Canada because Chevron has a Canadian subsidiary, Chevron Canada.

The 47 plaintiffs are residents of the Sucumbíos and Orellana provinces in Ecuador. The plaintiffs represent approximately 30,000 residents of Sucumbíos province whose lands, waterways and livelihoods were harmed by environmental pollution over a period of about 18 years, from 1972 to 1990, by Texaco, an oil company that later merged with Chevron.

Chevron is a U.S. corporation incorporated in Delaware, with its head office in San Ramon, California. Chevron Canada is an operating company and a seventh level subsidiary of Chevron with its registered head office is in Calgary. Chevron Canada employs over 700 people, including 13 employees in Ontario selling lubricant and chemical products.

Chevron, which now has no assets in Ecuador, argues that a 1998 agreement Texaco signed with Ecuador after a US$40 million cleanup absolves it of liability. It claims Ecuador’s state-run oil company is responsible for much of the pollution in the oil patch that Texaco quit more than two decades ago.

The plaintiffs sought recourse, in part, under the U.S. Alien Tort Statute. In 2001, the U.S. district court dismissed the action based on the doctrine of forum non conveniens, holding that Ecuador was the more appropriate venue than the United States. Chevron was later found liable for the pollution in an Ecuadorian court and ordered to pay $9.5 billion to the plaintiffs. That is the judgment the plaintiffs are seeking to enforce in Ontario.

On May 1, 2013, the Ontario Court of Appeal released its judgment and concluded that Ontario is an “appropriate jurisdiction” to determine whether the Ecuadoran judgment should be enforced. The court rejected the argument that there must be a “real and substantial connection” between the case and Ontario. Rather, it is sufficient that there was a real and substantial connection between the case and Ecuador. Chevron Canada had also argued, unsuccessfully, that it was not involved in the polluting and that allowing the action to proceed would violate the principle of the “corporate veil,” under which subsidiaries are often considered separate entities from their corporate parents and are not liable for their actions.

Separately, in March 2014, the U.S. District Court for the Southern District of New York ruled that the $9.5 billion Ecuadorian judgment was the product of fraud and racketeering activity and therefore unenforceable. The U.S. Second Circuit Court of Appeals upheld the District Court’s ruling in 2016.

CCIJ Intervention at the Supreme Court of Canada

CCIJ, in partnership with Mining Watch Canada and the International Human Rights Program (IHRP) of the University of Toronto Faculty of Law intervened jointly in the case before the Supreme Court of Canada. We argued that the Court of Appeal was correct in deciding that it is sufficient for Canadian jurisdictional purposes that there was a real and substantial connection between the facts of a case and the foreign country where a judgment is rendered. We also submitted that there is no consistent common law principle governing when Canadian courts will “pierce the corporate veil”. This area of law has been poorly defined and inconsistently applied in Canada and similar jurisdictions, and offers little reliable guidance to claimants or defendant corporations.

In September 2015, the Supreme Court of Canada issued its judgment. The Court agreed that it is sufficient for Canadian jurisdictional purposes if there is a real and substantial connection between the facts of a case and the foreign country where a judgment is rendered. As a result, the case continues in Canada and the plaintiffs will have the chance to argue that they should be able to access Chevron Canada’s assets to satisfy the judgment.

CCIJ, Mining Watch Canada and IHRP were represented pro bono at the Supreme Court of Canada by Murray Klippenstein and Cory Wanless of Klippensteins and Renu Mandhane of the IHRP.

Ontario Superior Court

The plaintiffs are now seeking to enforce the judgment. Chevron asserted several defences, including that the judgment in Ecuador was fraudulently obtained. Justice Glenn A. Hainey of the Ontario Superior Court held a four-day hearing in September 2016. CCIJ and IHRP partnered to monitor the hearing, and IHRP students wrote detailed summaries of the proceedings. CCIJ thanks Samer Muscati and Hanna Gros at IHRP for their work on this project, and particularly thanks all the students who attended the hearing and wrote the summaries: Bethanie Pascutto, Brandon Pasternak, Erinn Wattie, Sammy Bayefsky, Arianne Sawh, Quinn Keenan, Justine Desmond, Simon Fraser, Raeya Kackiw and Karlson Leung.

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