What happens when a lawyer bribes a corrupt judge in Ecuador to issue a US$19-billion judgment against a major oil and gas company in America, and then fails to have the Ecuadorian judgment recognized in the United States because it was secured via “corruption” and “fraud”?
The logical step is to attempt to have the fraudulent Ecuadorian judgment enforced in Canada against completely uninvolved Canadian subsidiaries.
And why not? Canadian niceness permeates all our international relationships. We want to be seen as being courteous to other countries, even to the extent of honouring the judgments of crooked and dishonest courts. Consistent with our national nicety, the Supreme Court of Canada in 2015 ruled that an Ontario Court should entertain enforcement proceedings against Chevron Canada, stemming from an Ecuadorian judgment against its parent company, Chevron Corp. This in spite of court-tested proof that the Ecuadorian judgement was procured via racketeering — including bribes, fraud, extortion, obstruction of justice, and other criminal offences. Further, Chevron Canada is an entirely separate legal entity that had nothing to do with events in Ecuador.
It’s not like the Supreme Court of Canada did not know the history of the case. A judge in Ecuador had ruled to hold Chevron liable for oil pollution in the Ecuadorian Amazon — which had been caused by Texaco, a company Chevron purchased in 2001 — despite a written commitment by the Ecuadorian government to legally remove any liability. In 2014, U.S. District Court Judge Lewis Kaplan ruled that the Ecuadorian judgment was unenforceable in the United States, and took the unusual further step of issuing an injunction against enforcement. In his 495-page decision, the judge set out, among other things, that the Ecuadorian court’s judgment was marred by fraud and corruption, that the plaintiffs’ team (led by American attorney Steven Donziger) had used bribes to arrange for the ghostwriting of a court expert’s report, court orders, and the massive court judgment itself, and that Donziger had been personally involved in the fraud. Donziger, undeterred, is now attempting to enforce the judgment in a number of international forums, including Brazil, Argentina and Canada.
The Supreme Court of Canada ruled that Canadian courts should ignore the substance and procedure on which foreign judgments are based, and instead pay attention more to the debt obligations established by a “court of competent jurisdiction.” In finding that the Ecuadorian case could be heard for enforcement proceedings in Canada, the Supreme Court reiterated that “exceptional circumstances” alone were the only sufficient grounds not to recognize a foreign judgment.
Translation: Paying an Ecuadorian judge $500,000 to pretend you didn’t write his judgment for him doesn’t qualify as “exceptional circumstances.” Protecting Canadians from fraudulent foreign courts is less important than dutifully keeping up international appearances.
It all sounds very Canadian.
Thankfully, the Ontario Superior Court of Justice ruled last month that Chevron Canada’s assets are not available to satisfy the Ecuadorian judgment; that this is not an appropriate case to pierce the corporate veil of a Canadian company that is a completely separate business entity with nothing to do with what allegedly happened with Texaco in Ecuador. The court also stated that Chevron Canada could defend itself using reference to the findings of corruption and fraud against the plaintiffs by the U.S. judge. Score one for the rule of law.
Our judicial system should not have allowed Chevron Canada to be dragged into court in the first place. Why pay more respect to a corrupt Ecuadorian judgment than to the decision of Judge Kaplan in the United States, which was upheld on appeal? Why ignore the findings that the plaintiffs engaged in illegal acts in procuring the Ecuadorian court judgment?
If Canadian nicety is willing to sacrifice the rule of law for the sake of international congeniality, every single multinational corporation in Canada should be terrified what new judgments will issue from corrupt courts in corrupt Third World countries. Because in Canada, we’ll apparently get to hear them all.
Jay Cameron is a lawyer with the Justice Centre for Constitutional Freedoms
To read this article at The Financial Post, click here.