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Ecuador Plaintiffs’ Enforcement Efforts Dealt Significant Setback by Canadian Court

Date: May 2, 2013

The Ecuadorian plaintiffs were dealt a noteworthy setback yesterday when the Superior Court of Ontario, stating that their assertions had “no basis in fact or law,” indefinitely stayed their attempt to recognize and enforce the judgment issued by Ecuador’s courts in Canada.

Premised on seeking to enforce the judgment against assets of Chevron Corporation subsidiaries that were not even parties to the Ecuadorian litigation, this decision is a significant impediment to the plaintiffs’ worldwide enforcement strategy.

The reason the plaintiffs have not filed– nor are they likely to– enforcement actions in the U.S. -where Chevron Corporation is headquartered- is because they know the judgment they obtained would not hold up to scrutiny in the U.S., where eight federal courts have already found the Ecuador trial to be tainted by fraud.

Since filing for enforcement and recognition in May of 2012, the plaintiffs’ lawyers and affiliates have touted Canada as a country that gives appropriate deference to judgments of foreign courts. Pablo Fajardo, attorney for the Lago Agrio plaintiffs said, “We chose Canada to go to first because it’s a country that has a great tradition of upholding foreign decisions and because its judiciary as a whole is well respected around the world.” The Ecuadoreans lead lawyer at Patton Boggs, James Tyrrell echoed the same sentiment in saying, “We’ve carefully selected the jurisdictions that we believe would be favorable for enforcement of the Ecuadorean judgment.” They went on to state that they believe that “Canadian judgments can be enforced on a streamlined basis in other Commonwealth nations.”

The ruling by Canada’s world-class and respected judiciary, should, if they are taken at their word, force the plaintiffs to concede that this development is potentially devastating to their legal strategy of seeking to launder the Ecuadorian judgment through Canada and courts of other Commonwealth nations.

The already bad year (see here, here and here) for the plaintiffs’ lawyers, just took another turn for the worse.