Canadian court rules against Ecuador indigenous community in Chevron pollution case

May 25, 2018

An Ontario Appeals Court panel of judges ruled Wednesday that Chevron Canada cannot be held responsible for the toxic pollution left behind in the Amazon rain forest by Texaco in the 1970s and 80s, before it was bought by Chevron.

Ecuadorian leader, Janeth Cuji, of the Kichwa Nation, speaks in Toronto, April 16 in the Chevron pollution case.

“The legal arguments advanced by the (Indigenous people) cannot succeed,” wrote Justice William Hourigan in the decision. “If this court endorsed this interpretation, it would result in significant changes to fundamental principles of our corporate law.”

Chevron Canada is 100-per cent owned by U.S.-based Chevron Corporation via a chain of seven subsidiaries.

Alan Lenczner, a lawyer for the Indigenous peoples, argued that the companies actually operate as a single entity and had sought to have a $9.5-billion (U.S.) Ecuadorian Supreme Court ruling against Chevron Corp. enforced against Chevron Canada.

“This decision must be resisted to protect the rights of Indigenous peoples from corporate injustice all over the world.”

R. Hewitt Pate, vice-president of Chevron Corporation, welcomed the ruling in a statement. “We are pleased that the Ontario Court of Appeal has affirmed the trial court’s clear application of legal principles that show that Chevron Canada Limited is a separate legal entity that cannot be dragged into this fraudulent litigation,” Pate said.

Chevron Corp sucessfully prevented the Indigenous people from enforcing the Ecuadorian judgement in the U.S. by bringing fraud charges against their lead lawyer, Steven Donziger. A New York judge ruled that Donzinger had corrupted the Ecuadorian proceedings by bribing the judge and ghost writing an expert report.

The New York ruling prohibited the Ecuadorians from seeking to get Chevron Corp. to pay in the U.S., but it did not prevent them from going to other jurisdictions where the company operates. The current case was launched in Ontario in 2012.

The Ontario judges grappled with trying to reconcile their duty to provide justice for victims while upholding corporate law.

“On the one hand, the appellants have suffered devastating loss through no fault of their own. On the other, on the finding of the United States courts, the Ecuadorian judgment against Chevron Corporation was the result of a massive fraud,” wrote Hourigan.

The decision was not unanimous.

In a separate opinion, Justice Ian Nordheimer agreed with the result, but took issue with some of the arguments made in the majority ruling.

“The (lower) judge’s blanket conclusion … that ‘Chevron Canada is not an asset of Chevron’ is one that is completely detached from real-world realities,” Nordheimer wrote.

“It is crystal clear that Chevron Canada is an asset of Chevron Corporation.”

“All of Chevron Canada’s shares are owned by Chevron Corporation (albeit indirectly), and, as the evidence in this case makes dear, it is ultimately controlled, for all practical purposes, by Chevron Corporation.”

In the ruling, Hourigan boiled his decision down to the following: “The question for determination in this case is whether this court is prepared to sacrifice certainty for the sake of expediency.”

Nordheimer countered: “With respect, I believe that puts the question too starkly. It is not a question of expediency. It is a question of equity.”

Nordheimer argued that the ruling against the Ecuadorians shouldn’t be seen as establishing a blanket rule preventing a subisidary from ever being held accountable for a ruling against its parent corporation.

“I would reframe the question: Is this court prepared to recognize that there may be situations where equity would demand a departure from the strict application of the corporate separateness principle in the context of the enforceability of a valid judgment?

“I suggest that that question should be answered in the affirmative.”

Credit: The Minneapolis Star,

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