Fraudulent Ecuadorian Judgment Is Unenforceable Against Chevron’s Canadian Subsidiary

Supreme Court of Canada Rejects Request to Revive Dismissed Suit
Apr 8, 2019 2:00 PM ET
Press Release

SAN RAMON, Calif., April 8, 2019 /3BL Media/ - The Supreme Court of Canada has rejected a request to review a decision of the Court of Appeal for Ontario that a $9.5 billion Ecuadorian judgment against Chevron Corporation cannot be enforced against Chevron Canada Limited, an indirect subsidiary.  The Court of Appeal for Ontario’s decision, which is now final, dismissed all claims against Chevron Canada Limited, holding that it is a separate entity from Chevron Corporation and that its shares and assets cannot be seized by those seeking to enforce the corrupt Ecuadorian judgment. The Ecuadorian judgment itself has already been found by U.S. courts and an international tribunal in The Hague to have been obtained through fraud, bribery and corruption.

"We are pleased that the highest court in Canada has put an end to the plaintiffs’ lawyers’ attempts to enforce their corrupt Ecuadorian judgment against Chevron’s indirect subsidiary in Canada,” said R. Hewitt Pate, vice president and general counsel, Chevron Corporation.  “Canadian courts have rejected the plaintiffs’ efforts to circumvent the determination by U.S. courts that the Ecuadorian judgment against Chevron was procured through bribery, fraud and other racketeering activity. Any further efforts by the plaintiffs’ lawyers to continue this lawsuit in Canada would be an abuse of the country’s legal system and a waste of its judicial resources.” 

Because Chevron Corporation has never had any assets in Ecuador, the plaintiffs, led by adjudicated racketeer and suspended lawyer Steven Donziger, are attempting to enforce the Ecuadorian judgment in other jurisdictions. Donziger and his associates had sought to enforce the judgment against both Chevron Corporation, which has no assets in Canada, and Chevron Canada Limited, which was not a party to the Ecuadorian lawsuit. Today's decision confirms once and for all that the fraudsters cannot pursue Chevron Canada Limited's shares and assets.

Last September, an international tribunal administered by the Permanent Court of Arbitration in The Hague issued an award in favor of Chevron and its indirect subsidiary, Texaco Petroleum Company, finding that the Republic of Ecuador violated its obligations under international treaties, investment agreements and international law.  The tribunal —in a unanimous ruling by a panel including an arbitrator chosen by the Republic of Ecuador— held that a $9.5 billion judgment rendered against Chevron in Lago Agrio, Ecuador, in 2011 was procured through fraud, bribery and corruption and was based on claims that had been already settled and released by the Republic of Ecuador years earlier.  The tribunal concluded that the fraudulent Ecuadorian judgment “violates international public policy” and “should not be recognised or enforced by the courts of other States.”  As a matter of international law, this award confirms Chevron is not obliged to comply with the Ecuadorian judgment. 

In 2011, the plaintiffs obtained a $9.5 billion judgment against Chevron in an Ecuadorian court, but in 2014, a U.S. federal court found that the Ecuadorian judgment was the product of fraud and racketeering activity, including extortion, money laundering, wire fraud, witness tampering, judicial bribery, Foreign Corrupt Practices Act violations and obstruction of justice. The court prohibited enforcement of the Ecuadorian judgment in the United States. That decision is now final after having been unanimously affirmed by a U.S. court of appeals and denied review by the U.S. Supreme Court.

In 2018, Donziger was suspended from practicing law in New York State and Washington, DC as a result of his unlawful conduct in procuring the Ecuadorian judgment.

The plaintiffs’ other attempts to enforce the judgment in jurisdictions around the globe have also failed:

  • In November 2017, Brazil’s Superior Court of Justice unanimously rejected an attempt to enforce the Ecuadorian judgment in Brazil. Brazil’s Deputy Prosecutor General stated the judgment was “issued in an irregular manner, especially under deplorable acts of corruption.”

  • This followed a ruling by a court in Argentina in October 2017, which also denied recognition of the Ecuadorian judgment. An Argentine appeals court upheld this decision in July 2018, citing a lack of jurisdiction.

  • In December 2015, the Supreme Court of Gibraltar issued a judgment against Amazonia Recovery Ltd., a Gibraltar-based company set up by the plaintiffs’ attorneys and investors to receive and distribute funds resulting from the Ecuadorian judgment, awarding Chevron $28 million in damages.  The Court also issued a permanent injunction against Amazonia prohibiting the company from assisting or supporting the case against Chevron in any way. The court issued a similar ruling in May 2018 against directors of Amazonia, Frente de Defensa de la Amazonia, and Ecuadorian attorney Pablo Fajardo for their role in attempting to enforce the ruling, this time awarding $38 million in damages to Chevron. 

Chevron Corporation is one of the world's leading integrated energy companies. Through its subsidiaries that conduct business worldwide, the company is involved in virtually every facet of the energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power; and develops and deploys technologies that enhance business value in every aspect of the company's operations. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

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