A corrupt case finally ends in disgrace

On July 10, 2018, Steven Donziger, a New York lawyer and a basketball buddy of Barack Obama’s, was suspended indefinitely from the practice of law in the state of New York.

A New York court ordered the suspension for professional misconduct, based on “uncontroverted evidence” that Donziger and his legal team helped secure a judgment against Chevron Corp. in Ecuador through dishonesty and chicanery. Specifically: “judicial coercion, corruption of a court expert and ghostwriting of his report, misrepresentations concerning the expert’s independence, obstruction of justice, witness tampering, improperly threatening criminal prosecution, and judicial bribery.” While Donziger contested the process, the court ruling notes that he “chose not to challenge the underlying factual findings.”

Donziger had been the driving force behind a case that pit Amazonian plaintiffs in Ecuador against Chevron for environmental damage done by Texaco (that was later remediated to the satisfaction of the Ecuadorian government). Chevron purchased Texaco in 2000.

The case has wound its painful way through the judicial systems in five separate countries and appears to have finally come to an end. Argentina has joined Brazil in refusing to recognize and permit enforcement of the Ecuadorian court’s US$8.4 billion judgment against Chevron. The Ontario Court of Appeal refused to enforce the judgment in Canada when the plaintiffs tried shopping it up here.

Now that Chevron is exonerated, it is time for a postmortem review. There are lessons for Canada to learn here — if there is any inclination to learn them.

In 2015, the Supreme Court of Canada decided the Ecuadorian judgment would be heard for enforcement proceedings in Ontario against Chevron Canada, despite an American court already having found the ruling had been obtained by fraud. This is because, under the principle of international comity, Canada focuses on the obligation in the foreign judgment not on the process or substance of the decision.

Because of the court’s decision, for nearly four years, Chevron Canada has been compelled to defend its assets and its reputation against an unlawfully obtained foreign judgment all while enduring media coverage that vilified the company based on the fraudulent judgment. The shameful enforcement proceedings have cost Chevron Canada millions in legal fees, with no hope of ever being compensated now that it has prevailed. That is unjust.

And it’s embarrassing for a functioning democracy like Canada, where the rule of law is supposed to be a foundational principle of our legal order.

In considering where to invest, companies increasingly scrutinize not just the regulatory and tax framework in the jurisdiction where they intend to operate, but also whether or not that country upholds the rule of law. Countries such as Venezuela, Zimbabwe, Cuba, and more recently, South Africa, have become bywords of caution to the investment community because they have suddenly changed the rules that govern ownership. Investors observing the Chevron Canada case will surely want to be sure of safeguards here to protect them against this kind of stunt again.

At the moment, there is nothing to stop someone else from following Donziger’s disgraceful blueprint in Canada. The Ecuador case would be relatively easy to reproduce with the following recipe: find a social-justice tale in a foreign country, bribe a foreign judge, taint the proceedings, bask in the adoration of biased media who love a good environmentalist yarn, enforce the judgment in Canada, rinse and repeat.

There will surely be other Donzigers, so it’s time for some national soul searching. What was it about this case that caused the Supreme Court of Canada to have more respect for a corrupt Ecuadorian judgment than the thorough and uncontroverted decision of the U.S. District Court, whose ruling was upheld on appeal?

Why did the Supreme Court of Canada ignore the ruling that Donziger’s team committed illegal acts in procuring the Ecuadorian court judgment? Why wasn’t that sufficient warning?

Should Canada recognize the judgments of countries with compromised judiciaries for enforcement here? Why should Canada be more concerned with keeping up international appearances at the expense of the investors who have placed their trust in Canada’s representation that it upholds the rule of law?

Is it now clear enough from this case that allowing Chevron Canada to be dragged through the courts for four years has hurt Canada’s international reputation?

If Donziger had not been exposed and censured in the U.S., the fraudulent case against Chevron Canada may ultimately have been successful here. That should worry us all. Clearly Canada has problem and it needs to fix it — before this happens again.

THERE ARE LESSONS FOR CANADA TO LEARN HERE — IF THERE IS ANY INCLINATION TO LEARN THEM.