Fraudulent Ecuadorian Judgment against Chevron Subsidiary

Source: 1/20/2017, Location: North America

A Canadian court has ruled that the fraudulent Ecuadorian judgment against Chevron Corporation cannot be enforced against Chevron Canada Limited, an indirect subsidiary. The court found that Chevron Canada Limited is a separate entity from Chevron Corporation, not a party to the Ecuadorian lawsuit and not a debtor to the judgment. In its decision, the court stated, "Chevron [Corporation] and Chevron Canada are separate legal entities with separate rights and obligations." As a result, the court found that "plaintiffs' claim cannot succeed against Chevron Canada" and dismissed the claim against it.

In a related ruling, the court also rejected an attempt by the plaintiffs to prohibit Chevron Corporation from using the extensive evidence of fraud committed by the plaintiffs as part of the company's defense against the recognition and enforcement action in Canada.

"Once again, the plaintiffs' attempts to enforce their fraudulent judgment have been rebuked," said R. Hewitt Pate, vice president and general counsel, Chevron Corporation. "We are confident that any jurisdiction that examines the facts of this case and the misconduct committed by the plaintiffs will find the Ecuadorian judgment illegitimate and unenforceable."

In its decision, the Canadian court referenced the 2014 U.S. federal court decision, which found that a judgment issued against Chevron Corporation by a court in Ecuador was the product of fraud and racketeering activity, including extortion, money laundering, wire fraud, witness tampering and obstruction of justice. The U.S. court also prohibited the Ecuadorian judgment from being enforced in the United States. This decision was unanimously affirmed by the United States Court of Appeals for the Second Circuit in 2016, which stated that Donziger and his team engaged in a "parade of corrupt actions...including coercion, fraud and bribery."

Because Chevron Corporation has no assets in Ecuador, the plaintiffs, led by American attorney Steven Donziger, are attempting to enforce the fraudulent judgment in other jurisdictions, including Canada, Argentina and Brazil. In Canada, Donziger and his team were seeking to enforce the judgment against both Chevron Corporation, which has no assets in Canada, and Chevron Canada Limited, which is not a party to the Ecuadorian lawsuit. Today's decision prevents them from pursuing Chevron Canada Limited's assets.

The Ecuadorian judgment is being questioned in other jurisdictions as well. In 2015, Brazil's Federal Prosecutor's Office issued a recommendation to the country's Superior Court of Justice that the judgment not be recognized for enforcement, finding that it was "issued irregularly, especially under uncontested acts of corruption" and that recognizing it would violate Brazilian and "international public order." Similarly, in 2016, Argentina's public prosecutor's office recommended that its National Court reject the effort to recognize the Ecuadorian judgment in that country.

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