International Business- Homework

A. Oil in Ecuador – Prelude to a Lawsuit

Though petroleum exploration in Ecuador dates back to 1878,[footnoteRef:1] this story truly began in 1964 when a fourth level subsidiary of Texaco, Texaco Petroleum Co. (TexPet), and Gulf Oil Co (Gulf), entered into a twenty-eight year agreement with the Ecuadorian government to explore for, and produce, oil across three and a half million acres of land[footnoteRef:2] in the northern Oriente region.[footnoteRef:3] Though the area had largely been looked over by other oil companies, TexPet struck its first producing well early in 1967, which spewed almost 3,000 barrels in its first day.[footnoteRef:4] With the oil and resultant money flowing, the terms of the agreement were modified in 1974, when a relatively new law resulted in a state oil company, known as PetroEcuador today, assumed a 25% ownership stake in the venture.[footnoteRef:5] During the remaining period of the partnership, TexPet maintained a 37.5% ownership stake in the oil exploration and production venture, with Gulf Oil and PetroEcuador owning the rest. Gulf Oil relinquished its ownership interest to PetroEcuador in 1976 in exchange for $82.1 million.[footnoteRef:6] Though they were now the minority owner, Texaco remained the principal operator of the production operations until 1990,[footnoteRef:7] when TexPet transferred operational control to Petroamazona, a subsidiary of PetroEcuador.[footnoteRef:8] TexPet then relinquished its ownership stake in 1992, leaving PetroEcucador as the 100% owner and operator going forward. [1: Texaco, Inc. Texaco in Ecuador: Background on Texaco Petroleum Company’s Former Operations in Ecuador, http://www.texaco.com/sitelets/ecuador/en/history/background.aspx (last visited May 31, 2014).] [2: Book at 15] [3: See Aguinda v. Texaco, 303 F.3d 470, 473 (2nd Cir. 2001); Supra note 3.] [4: Book at 16] [5: Luciene J. Dhooge, Aguinda v. ChevronTexaco: Mandatory Grounds for the Non-Recognition of Foreign Judgments for Environmental Injury in the United States, 19 J. of Transnat. L. & Pol’y 1,5 (Fall 2009) (citing Republic of Ecuador v. ChevronTexaco Corp., 376 F. Supp. 2nd 334, 340 (S.D.N.Y. 2005). ] [6: Id. at 5 (citing Judith Kimerling, Indigenous Peoples and the Oil Frontier in Amazonia: The Case of Ecuador, ChevronTexaco and Aguinda v. Texaco, 38. N.Y.U. J. Int’l L. &. Pol’y 413, 420 n. 17 (2006)).] [7: Id. at 5 (citing Republic of Ecuador, 376 F. Supp. 2nd at 340-41).] [8: Id. ]

B. Ecuadorian Fallout Comes to the United States

In 1993, just a year after TexPet’s exit from Ecuador, a class action lawsuit, Aguinda v. Texaco, was filed in the Southern District of New York against its parent company, Texaco, Inc. The complaint alleged, generally, that Texaco’s “negligent, reckless, intentional and outrageous acts” have caused “property damage, personal injuries, increased risk of cancer and other diseases.”[footnoteRef:9] Specifically, they alleged that Texaco engaged in such damaging activities as the spilling of an estimated 16.8 million gallons of oil from the pipelines it built and maintained, discharging toxic wastes in open pits, burning oil wastes in open pits without adequate temperature and pollution controls, and spreading oil on the roads.[footnoteRef:10] All of these allegations were claimed to be in violation of industry and international standards.[footnoteRef:11] The plaintiffs sought compensatory and punitive damages, litigation costs, and equitable relief.[footnoteRef:12] [9: Complaint, Aguinda v. Texaco, Inc., 93 CV 7527 1, 3 (S.D.N.Y. Nov. 3. 1993).] [10: Id. at 23-6.] [11: Id. at 23.] [12: Id. at 36-7.]

Texaco moved to dismiss the suit based largely on the doctrine of forum non conveniens, believing that Ecuador was a more appropriate forum. For such a dismissal, the court stated that “a defendant must demonstrate (1) that there exists an adequate alternative forum[footnoteRef:13] and (2) that the ordinarily strong presumption of favoring the plaintiff’s chosen forum is overcome by a balance of the relevant factors of private and public interest weighing heavily in favor of the alternative forum.”[footnoteRef:14] With regards to the first prong, the plaintiffs argued that Ecuador’s jurisdiction was inadequate due to the country not recognizing tort claims or class actions and certain procedural difficulties with claims of this type.[footnoteRef:15] Judge Rakoff found that these arguments were insufficient, as section 2241 of the Ecuadorian Civil Code expressly provides for tort actions,[footnoteRef:16] most nations do not allow class actions,[footnoteRef:17] and certain procedural hurdles regarding the requirement of preliminary administrative agency action existed in the United States as well.[footnoteRef:18] With regards to the second prong, Rakoff’s analysis was based on the public and private interest factors laid out by the U.S. Supreme Court in Gulf Oil Corp. V. Gilbert. The ‘“private interest” factors include the relative ease of access to sources of proof, the cost of obtaining attendance of willing witnesses, the availability of compulsory process for obtaining attendance of unwilling witnesses, the possibility of viewing the relevant premises and other such practical concerns.”[footnoteRef:19] Given the location of the damage and the location of the relevant parties, the balance weighed in favor of Ecuador on this factor.[footnoteRef:20] The “public interest” factors include the local interest in the controversy, court congestion, avoidance of any unnecessary problems in application of foreign law, and avoidance of imposing jury duty on residents having no relationship to the controversy.”[footnoteRef:21] Here again, the factors weighed heavily in favor of Ecuadorian jurisdiction.[footnoteRef:22] Rakoff further explained that “the notion that a New York jury (which plaintiffs demanded) applying Ecuadorian law (which likely governs here) could meaningfully assess what occurred in the Amazonian rainforests in Ecuador in the 1960’s and early 1970’s is problematic on its face.”[footnoteRef:23] After weighing all of the factors, and following eight years of pre-trial actions in the United States, the motion was ultimately granted on May 30, 2001 by Judge Rakoff summarily stating that “the record overwhelmingly establishes that these cases have everything to do with Ecuador and nothing to do with the United States.”[footnoteRef:24] It should also be noted that the decision was influenced by Texaco agreeing to submit to jurisdiction in Ecuador.[footnoteRef:25] The plaintiffs immediately appealed to U.S. Court of Appeals for the Second Circuit, which affirmed the decision on August 16, 2002, on the condition that Texaco also agree to not pursue a statute of limitations defense that might ordinarily be at its disposal.[footnoteRef:26] [13: Aguinda v. Texaco, Inc., 142 F. Supp. 2d 534, 538 (S.D.N.Y. May 30, 2001) (citing DiRienzo v. Philip Servs. Corp., 232 F.3d 49, 56 (2d Cir. 2000); Evolution Online Sys., Inc. v. Koninklijke PTT Nederland N.V., 145 F.3d 505, 510 (2d Cir. 1998); PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 73 (2d Cir. 1998)).] [14: Id. (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-57, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981), reh'g denied, 455 U.S. 928, 71 L. Ed. 2d 474, 102 S. Ct. 1296 (1982); Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-10, 91 L. Ed. 1055, 67 S. Ct. 839 (1947); DiRienzo, 232 F.3d at 56-57; PT United Can Co., 138 F.3d at 73-74.).] [15: Id. at 539-45.] [16: Id. at 541.] [17: Id. At 541.] [18: Id. at 542-3.] [19: Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (Mar. 10, 1947).] [20: Aguinda, 142 F. Supp. 2d 534, 548.] [21: Id. at 551.] [22: Id.] [23: Id. at 546 (quoting language from Memorandum Order, Aguinda v. Texaco, 2000 WL 122143 at *1 (Jan. 21, 2000)).] [24: Aguinda, 142 F. Supp. 2d 534, 537.] [25: Id. at 538.] [26: Aguinda v. Texaco, 303 F.3d 470, 480 (2nd Cir. 2001).]

C. Key Events During Litigation - The Release of TexPet and a Change in Ownership

In 1995, while the litigation in New York was ongoing, TexPet entered into an agreement with PetroEcuado and the Ecuadorian Government to remediate some of the affected areas in the region. As a part of the Remedial Action Plan (RAP), TexPet was to be responsible for remediating 161 pits and 7 spill areas, which was a number roughly equivalent to TexPet’s ending ownership percentage of 37.5%. PetroEcuador was then responsible for remediating the remaining 264 pits. By 1997, the remediation was completed at a cost to TexPet of approximately forty million dollars. The remediation efforts seemingly met the requirements of the RAP and were signed off on September 30, 1998 by TexPet, PetroEcuador, Petroproduccion and, most importantly, the Minister of Energy and Mines acting on behalf of the Ecuadorian government. This approval released TexPet from further liability in this matter according to the terms of the RAP.

A second major event during the U.S. litigation that impactied the storyline was the change in ownership for Texaco. After previously failing to agree to terms in 1999, Chevron agreed in October of 2000 to acquire Texaco in a thirty-six billion dollar deal.[footnoteRef:27] By the time regulators approved the deal in September of 2001, the deal was valued at over $46 billion. Texaco shareholders would receive .77 shares of stock in the new Chevron Texaco for every share of Texaco stock it held.[footnoteRef:28] [27: See Andrew Ross Sorkin & Neela Banerjee, Chevron Agrees to Buy Texaco for Stock Valued at $36 Billion, N.Y. Times, Oct, 16, 2000, http://www.nytimes.com/2000/10/16/business/chevron-agrees-to-buy-texaco-for-stock-valued-at-36-billion.html.] [28: Michael Davis, FTC Approves Acquisition of Texaco by Chevron, Houston Chron., Sept. 8, 2011, http://www.chron.com/business/article/FTC-approves-acquisition-of-Texaco-by-Chevron-2054018.php.]

D. Back to Where it All Began

In 2003, a renewed lawsuit, known as the Lago Agrio litigation, was filed in Ecuador.[footnoteRef:29] Though the players for the plaintiffs remained virtually the same, including Maria Aguinda Salazar, Chevron was now the named defendant after acquiring Texaco roughly two years earlier. This case was also brought under the newly adopted Ecuadorian Environmental Management Act (EMA) of 1999,[footnoteRef:30] which allows individuals to bring direct actions like this for the first time in Ecuador, but damages may only be recovered that benefit the community and not individual plaintiffs directly.[footnoteRef:31] According to Barrett, the plaintiffs team actually helped draft this law as the case proceeded in New York.[footnoteRef:32] Though Chevron sought dismissal of the suit on the grounds that the retroactive application of this law was not in accordance with Ecuadorian law, the court did not have jurisdiction over Chevron, the lapse of the statute of limitations,[footnoteRef:33] and the 1995 release, the case was still allowed to proceed.[footnoteRef:34] The trial process was filled with seemingly endless motions, appeals and evidence to try to bolster each side’s case, resulting in over two hundred thousand pages of court records.[footnoteRef:35] Ultimately, the biggest points of contention were the validity of the expert reports and the evidence samples gathered. The most critical and controversial was the report of the independent expert, Richard Stalin Cabrera Vega, who recommended in 2008 that Chevron should be held liable for $27 billion in damages.[footnoteRef:36] [29: Complaint, Aguinda v. Chevron Corp., No. 002-2003 (Super. Ct. of Nueva Loja, May 7, 2003) (Ecuador).] [30: ] [31: Manuel A. Gomez, The Global Chase: Seeking the Recognition and Enforcement of the Lago Agrio Judgment Outside of Ecuador, 1 Stanford J. Litig. 429,436-7 (June 2013). See also Id. at note 37.] [32: 74] [33: Chevron was not the party during the 2nd Circuit decision. ] [34: Id. at 437-8.] [35: Id. at 438 (citing Aguinda v. Chevron Corp., No. 002-2003 (Super. Ct. of Nueva Loja, Feb. 14, 2011) (Ecuador) judgment at 35, 40).] [36: Id. at 439.]

As the Lago Agrio litigation played out, another major storyline in this saga developed with the filming of the documentary Crude: The Real Price of Oil.[footnoteRef:37] The documentary attempted to capture the whole story of the Ecuadorian pollution and contains many candid looks at the judicial process in Ecuador.[footnoteRef:38] The film also illustrated the new political support for the Lago Agrio litigation with a filmed visit to the pollution sites by newly elected President Rafael Correra.[footnoteRef:39] Governmental support was something that the cause had been lacking and needing prior to Correra’s election. [37: Crude: The Real Price of Oil (Entendre Films 2009).] [38: It should be worth noting that ] [39: Id. at ch. 14.]

The Ecuadorian plaintiffs ultimately prevailed, as on February 14, 2011, Judge Nicolas Zambrano issued a 188 page decision against Chevron.[footnoteRef:40] Under the verdict, Chevron was obligated to pay $8.6 billion in compensatory damages and an additional $8.6 billion in punitive damages if it did not apologize within fifteen days. From this money, Chevron was ordered to pay $864 million to the Amazon Defense Front (ADF), as the ten percent available to the plaintiffs directly under the EMA, even though the ADF was not a named plaintiff.[footnoteRef:41] The initial compensatory damages were “intended for groundwater and soil remediation, the restoration of native flora, fauna, and aquatic life, the implementation of a potable water system, a healthcare system and the rebuilding of ethnic communities and cultures.”[footnoteRef:42] [40: Aguinda v. Chevron Corp., No. 002-2003 (Super. Ct. of Nueva Loja, Feb. 14, 2011) (Ecuador) [hereinafter Lago Agrio verdict].] [41: See Gomez, supra note 30, at note 37, 72.] [42: Id. at 441 (citing Lago Agrio verdict, supra note 36 at 178,179, 181-4).]

E. Seeking Enforcement Abroad and Chevron Trying to Block it

Though the plaintiffs had claimed an initial victory with the Ecuadorian verdict, TexPet had long since ceased operations and Chevron did not “have any refineries, storage terminals, oil wells or other properties that could be seized to pressure the company to pay.”[footnoteRef:43] As a result, the plaintiffs were forced to seek enforcement elsewhere and stave off legal challenges by Chevron. The seven forums that have been utilized to either seek or block enforcement of the Lago Agrio verdict are discussed below. [43: Joe Carroll & Karen Gullo, Chevron’s $17 Billion Ecuador Judgment May Be Unenforceable, Analysts Say, Bloomberg, Feb. 15, 2011, available at http://mobile.bloomberg.com/news/2011-02-14/chevron-to-appeal-adverse-judgment-in-ecuador-pollution-case.html (quoting Mark Gillman, an analyst at Beckmark Co.).]

1. Actions in Ecuador

The greatest fight in Ecuador for the plaintiffs was not enforcement of the verdict, as Chevron had no real assets in Ecuador to satisfy the judgement, but to ensure that the verdict remained viable on appeal for potential global enforcement. Chevron appealed the verdict on March 9, 2011, less than a month after the initial decision,[footnoteRef:44] but it was dismissed in January of 2012. It was actually at this moment that the Lago Agrio plaintiffs actually earned the right to seek enforcement of the Lago Agrio judgment, as “the trial court decision became readily enforceable once the Provincial Court of Sucombios confirmed it” on appeal.[footnoteRef:45] Chevron then exercised their right for review with the National Justice Court of Ecuador (NJCE), which in November of 2013 did strike the potential punitive damages of $9.5 billion, holding that there was no legal basis to fine Chevron for not apologizing, but allowed the verdict to stand otherwise.[footnoteRef:46] [44: Gomez, supra note 30, at note 79 (citing Chevron’s Memorandum in Support of appeal dated Mar. 9, 2011).] [45: Id. at 443.] [46: Alexandra Valencia, Chevron Appeals to top Ecuador Court in Pollution Case, Reuters, Dec. 23, 2013, available at http://www.reuters.com/article/2013/12/23/us-chevron-ecuador-idUSBRE9BM0V020131223.]

2. Actions in the United States

To block potential enforcement in the United States, Chevron filed suit against one of the plaintiffs’ key attorneys, Steven Donziger, two weeks prior to the Lago Agrio verdict based on the Racketeering Influenced and Corrupt Organizations Act (RICO).[footnoteRef:47] In March of 2011, soon after the release of the Lago Agrio judgment, the court granted a preliminary injunction against enforcement.[footnoteRef:48] Chevron’s victory was short lived, as the U.S. Court of Appeals for the Second Circuit “issued an order denying the Ecuadorian plaintiffs' attempt to recuse Judge Lewis Kaplan, vacating Judge Kaplan's preliminary injunction against enforcement of the Ecuadorian judgment against Chevron, and staying Chevron's claim for a declaratory judgment that the Ecuadorian judgment is unenforceable.”[footnoteRef:49] [47: See Press Release, Chevron, Chevron Files Fraud and RICO Case Against Lawyers and Consultants Behind Ecuador Litigation (Feb. 1, 2011) available at http://www.chevron.com/chevron/pressreleases/article/02012011_chevronfilesfraudandricocaseagainstlawyersandconsultantsbehindecuadorlitigation.news.] [48: See Dan Levine and Braden Reddall, U.S. Judge Halts Damages Enforcement Against Chevron, Reuters, Mar. 7, 2011, available at http://www.reuters.com/article/2011/03/08/chevron-ecuador-idUSN0723703920110308.] [49: See Press Release, Chevron, Chevron Statement on United States Second Circuit Court of Appeals Order (Sept. 19, 2011) available at http://www.chevron.com/chevron/pressreleases/article/09192011_chevronstatementonunitedstatessecondcircuitcourtofappealsorder.news.]

On March 4, 2014, the quest to collect on the Ecuadorian verdict was dealt a serious blow when U.S. District Judge Lewis Kaplan ruled, in a nearly 500 page opinion, that the award would be unenforceable in the United States due to findings of fraud on the part of the plaintiffs’ lead counsel, Steven Donziger.[footnoteRef:50] The court did point out the good initial intentions of Donziger[footnoteRef:51] and that Chevron might even be liable for the pollution in Ecuador, but that the tactics employed by Donziger and the legal team were so egregious that it would be an injustice to allow enforcement in the United States. The court found that Donziger and his associates submitted fraudulent evidence, coerced a judge to select an “impartial” expert that was selected by Donziger’s team, paid a Colorado firm to write the expert’s report, misled U.S. courts to prevent these revelations from coming to light, wrote the final verdict themselves and promised $500,000 to the judge in return for the verdict they wanted.[footnoteRef:52] It is worth noting that the some of the evidence for the allegations was actually gathered from the outtakes of the movie Crude.[footnoteRef:53] Ironically, the movie that was intended to help Donziger’s case turned out to be quite damaging. The decision was appealed to the Second Circuit, but on August 8th, 2016, the panel unanimously ruled that they found “no basis for dismissal or reversal” and affirmed the ruling of the District Court.[footnoteRef:54] [50: Mica Rosenberg, Chevron wins a round in U.S. suit against lawyer in Ecuador case, Reuters, Apr. 25, 2014 available at http://www.reuters.com/article/2014/04/26/us-chevron-ecuador-appeal-idUSBREA3P00220140426.] [51: Opinion, Chevron v. Donziger 11 Civ. 0691 1, 4 (Mar. 3, 2014).] [52: Id. at 2.] [53: 183-184] [54: ]

2. Chevron on the Offensive

In recent years, Chevron has aggressively pursued those that were involved with the case and/or stood to benefit from it. In May of 2014, Chevron announced a settlement with the major firm of Patton Boggs in which they agreed to release any claims against the firm in exchange for them withdrawing from the case and agreeing pay a $15 million settlement.[footnoteRef:55] Then in February of 2015, they settled with the principal funder of the lawsuit, James Russell DeLeon. In return, he agreed to pay withdraw his support from the lawsuit and assign his 7% stake in the outcome to Chevron.[footnoteRef:56] A few months later in May of 2015, another settlement was reached with Woodford Litigation Funding, Ltd, a U.K. based investment firm, whereby they agreed to withdraw their support of the case and assign any monetary benefits that had been promised from the proceeds of the case to Chevron.[footnoteRef:57] A fourth settlement occurred in September of 2015, when Chevron settled with the H5 firm in return for withdrawing their support and their 1.25% interest in the outcome.[footnoteRef:58] The most recent domino to fall was a company called Amazonia that was started by Donziger to manage the proceeds from the lawsuit. In a default judgement, the Supreme Court of Gibraltar enjoined them from actions relating to the lawsuit and awarded $28 million in damages, largely attorney fees, to Chevron.[footnoteRef:59] [55: https://www.chevron.com/stories/Chevron-Corporation-Reaches-Settlement-Agreement-With-Patton-Boggs-Law-Firm] [56: https://www.chevron.com/stories/Financial-Backer-of-Fraudulent-Ecuador-Litigation-Withdraws-Support-Settles] [57: https://www.chevron.com/stories/Another-Key-Funder-of-Fraudulent-Ecuador-Litigation-Against-Chevron-Withdraws-Support] [58: https://www.chevron.com/stories/h5-settles-with-chevron-over-ecuadorian-lawsuit] [59: https://www.chevron.com/stories/supreme-court-of-gibraltar-rules-against-donziger-offshore-company-awards-chevron-28-million]

3. International Arbitration under the U.S-Ecuador Bilateral Investment Treaty (Treaty)

Though not directly related to the Lago Agrio trial suit itself, Chevron and Texaco filed a claim against Ecuador before the Permanent Court of Arbitration (PCA) in 2006.[footnoteRef:60] In its final award, nearly five years after the claim was filed, the tribunal held that Ecuador itself was liable in the amount of approximately $96 million plus pre and post award interest.[footnoteRef:61] Ecuador attempted, unsuccessfully, to have the award set aside in the Netherlands.[footnoteRef:62] This award was also unsuccessfully appealed by Ecuador in the U.S. Court system. On June 6, 2016, the U.S. Supreme Court denied review of a 2015 decision by the U.S. Court of Appeals for the D.C. Circuit which had upheld the award.[footnoteRef:63] Citing the need to “fulfill our international obligations,” the Ecuadorian Central Bank ultimately paid $112 million (award plus interest) just over a month later.[footnoteRef:64] [60: See Press Release, Chevron, Chevron Wins Arbitration Claim Against the Government of Ecuador (Mar. 30, 2010) available at http://www.chevron.com/news/press/release/?id=2010-03-30.] [61: Final Award, Chevron Corp. v. Repub. of Ecuador, UNCITRAL Arb., PCA Case No. 2007-2, at 141-42 (Aug. 31, 2011).] [62: Gomez, supra note 30, at 447.] [63: http://www.reuters.com/article/us-usa-court-chevron-idUSKCN0YS1G6] [64: http://www.reuters.com/article/ecuador-chevron-idUSL1N1A908V]

In September of 2009, Chevron filed a second claim against Ecuador in the PCA.[footnoteRef:65] The first notable decision in this second claim was the fourth interim award issued on February 7, 2013,[footnoteRef:66] which stated that Ecuador was “‘to take all measures at its disposal’ and ‘take all measures necessary’ to suspend or cause to be suspended the enforcement and recognition both within and without Ecuador of that Lago Agrio judgment.”[footnoteRef:67] On September 17, 2013, the panel made its fifth ruling in the case finding unanimously that the relief sought in the judgment against Chevron in Ecuador was extinguished by the Texaco settlement with the Ecuadorian government in 1995, as Chevron was deemed to be a “releasee” under that agreement.[footnoteRef:68] As a result, if the Lago Agrio plaintiffs ultimately prevail in the enforcement of the Ecuadorian award, Ecuador should have to indemnify Chevron for any losses they incur based on the terms of the 1993 Treaty between the United States and Ecuador.[footnoteRef:69] Though this result is still being challenged, the ultimate rulings in the Netherlands, U.S. Courts, and payment by Ecuador in first major arbitration dispute between Chevron and Ecuador should make that indemnification more likely if it this case is ultimately decided in Chevron’s favor and Chevron is forced to pay somewhere. [65: Claimants Notice of Arbitration, Chevron Corp. v. Repub. of Ecuador, UNCITRAL Arb. PCA Case No. 2009-23, (Sept. 23, 2009) available at http://italaw.com/cases/documents/1748.] [66: 4th Interim Award on Interim Measures, Chevron Corp. v. Repub. of Ecuador, UNCITRAL Arb. PCA Case No. 2009-23, (Feb. 7, 2013) available at http://italaw.com/cases/documents/1748.] [67: Id. at 29.] [68: First Partial Award on Track 1, Chevron Corp. v. Repub. of Ecuador, UNCITRAL Arb. PCA Case No. 2009-23 at 45 (Sept. 17, 2013) available at http://italaw.com/cases/documents/1748.] [69: Roger Parloff, Chevron wins major arbitration victory, Fortune (Sept. 18, 2013 5:03 PM), http://features.blogs.fortune.cnn.com/2013/09/18/chevron-wins-major-arbitration-victory/.]

4. Global Enforcement of the Ecuadorian Decisions

Given that enforcement in the United States looked difficult right after the verdict, and now appears almost impossible, the Lago Agrio plaintiffs have also sought to enforce their awards in at least Argentina, Brazil, and Canada to date. This is no easy task[footnoteRef:70] and, thus far, their level of success can best be described as minimal. In Argentina, the plaintiff’s claimed an early victory in November 2012, when a trial court froze the assets of Chevron’s Argentine subsidiaries.[footnoteRef:71] That victory was short lived though, as on June 4, 2013, Argentina’s Supreme Court of Justice vacated the judgment of the trial court with costs.[footnoteRef:72] The prospects do not look good going forward as their Attorney General has recommended non-enforcement in light of the fraud verdict in the U.S.[footnoteRef:73] The plaintiffs also tried to seek enforcement in Brazil when they filed with the Superior Tribunal of Justice in June of 2012.[footnoteRef:74] Data on the proceedings has been seemingly scarce, but in May of 2015, the Brazilian Prosecutor also recommended that enforcement of the verdict not be recognized due to the findings of fraud in the U.S.[footnoteRef:75] [70: See Manual A. Gomez, The Global Chase: Seeking the Recognition and Enforcement of the Lago Agrio Judgment Outside of Ecudaor, Stanford J. of Complex Lit., (Aug. 2013) (discussing the complex legal issues in enforcement of foreign judgements with an emphasis on Brazil and Argentina).] [71: Supra note 1, at 2.] [72: Aguinda Salazar v. Chevron Corp., Sup. Ct. of Arg. 253 XLIX at 5 June 4, 2013 (English Translation) available at http://www.scribd.com/doc/146306585/Argentine-Supreme-Court-Ruling-English-Translation-in-Aguinda-v-Chevron-Lifting-Embargo-that-had-been-obtained-against-Chevron-in-attempted-enforce (last visited May 31, 2014).] [73: Roger Parloff, Fortune, Here’s why Ecuador’s $9.5 Billion Judgement Against Chevron is Headed to Canada (Sept. 11, 2016).] [74: Eduardo Garcia, Ecuador Plaintiffs Target Chevron’s Assets in Brazil, Reuters, June 27, 2012, available at http://www.reuters.com/article/2012/06/28/us-ecuador-chevron-idUSBRE85R01I20120628.] [75: https://lettersblogatory.com/2015/05/21/lago-agrio-update-on-the-brazilian-enforcement-proceeding/]

The one country where plaintiffs have seen some success is Canada, which “has been recognized as a favourable jurisdiction for the recognition and enforcement of foreign judgments.”[footnoteRef:76] The initial enforcement action was filed in May of 2012.[footnoteRef:77] In May of 2013, Superior Court Justice Brown “found that Ontario courts had jurisdiction over the case against Chevron but still granted a stay in the action, concluding that Chevron Canada Ltd.’s assets were not directly owned by San-Ramon, California based Chevron Corp.”[footnoteRef:78] On appeal, a three judge panel unanimously decided in December of 2013 that the action can proceed.[footnoteRef:79] In April of 2014, the Supreme Court of Canada (SCC) then agreed to hear Chevron’s appeal of the Ontario Court of Appeal’s decision.[footnoteRef:80] As with most cases before the Supreme Court in the United States, the issues before the SCC did not go to the merits of the specific case, but focused on the procedural aspect of jurisdiction.[footnoteRef:81] The court ultimately held that jurisdiction by the Ontario courts was proper, despite Chevron not having assets in the province stating that “in today’s globalised world and electronic age, to require that a judgment creditor wait until a foreign debtor is present and has assets in the province before a court can find that it has jurisdiction in recognition and enforcement proceedings would be to turn a blind eye to current economic reality.”[footnoteRef:82] The case was set to resume in September of 2016 in the Ontario Superior Court of Justice with motions for dismissal by both Chevron Corporation and Chevron Canada, a subsidiary.[footnoteRef:83] Unfortunately, Chevron Corporation has no assets in Ontario to directly satisfy any judgment enforcement, while Chevron Canada has assets, but it will be tough to make them liable for events as a subsidiary, unless the corporate veil is pierced, which is a tough proposition.[footnoteRef:84] [76: Be-Nazeer Damji, International Association of Defense Counsel Newsletter (May 2014). ] [77: Gomez, supra note 30, at 449 (citing Plaintiff’s Statement of Claim at ¶Yaiguaje v. Chevron, No. CV-12-454778 (Can. Ont. Super. Ct. J. Sept. May 30, 2012)).] [78: Jeff Gray, Ontario Court Revives Chevron Amazon Pollution Case, The Globe and Mail (Dec. 17, 2013), http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/ontario-court-revives-chevron-amazon-pollution-case/article16003269/.] [79: Id.] [80: John Spears, Supreme Court to Hear Chevron Appeal of Ecuador Environmental Case, The Star (Apr, 3, 2014), http://www.thestar.com/business/2014/04/03/supreme_court_to_hear_chevron_appeal_of_ecuador_environmental_case.html.] [81: Supra note 5 at 243. ] [82: Chevron v. Yaiguaje, 2015 SCC 42 (Can).] [83: Supra note 76.] [84: Id.]

Conclusion - What We Know and What We Still Don’t

In researching this case, it’s obvious that oil exploration and production operations in Ecuador caused extensive pollution, environmental damage, and possible, if not likely, health effects on the Ecuadorian people. It is also obvious that this dispute is nowhere near done over twenty three years later, as potentially viable enforcement actions continue in Canada and the arbitration proceedings before the PCA remain, plus new forums for enforcement could be brought into the picture.[footnoteRef:85] [85: Gomez, supra note 30, at 430-31.]

What we don’t know yet is if Chevron will, or even should, be liable, as it was not involved in any of the pollution activities and Texaco seemingly had a “get out of jail free” card from the Ecuadorian government. As result, t is also uncertain whether any money will ever be paid to the Ecuadorian plaintiffs, as the Lago Agrio verdict stands, but enforceability remains in doubt. Regardless, the case merits further monitoring and discussion in academia and beyond for years to come.