Right place and cause, but it’s the wrong case
“I sit back and dream. I cannot believe what we have accomplished. Important people interested in us. A new paradigm of not only a case, but how to do a case. Chevron wanting to settle. Billions of dollars on the table. A movie, a possible book. I cannot keep up with it all.” — From the notebook of the defendant in the case of Chevron Corp. vs. Steven Donziger.
The story unfolding this week in a Toronto courtroom pivots on a central question: Can Chevron Canada Ltd., described as a seventh-level whollyowned subsidiary of Chevron Corp., be held financially accountable for the environmental devastation delivered upon the Oriente region of Ecuador by Texaco Inc.?
The simple facts are these: in the late 1960s, Texaco led an oil company consortium that began extracting commercial crude in the Amazonian jungle. In 1993, Texaco was sued in the state of New York over an estimated 18.5 billion tonnes of toxic sludge that leached through open pits or direct dumping into the region around Lago Agrio, affecting approximately 30,000 Ecuadorian villagers.
That suit was ultimately dismissed on the grounds of forum non conveniens. Ecuador, not New York, was ruled the appropriate venue for the case.
The suit was relaunched in Ecuador in May 2003, seeking damages and remediation for environmental harm. By that time Texaco had been taken over by Chevron.
In 2011, an $18-billion (U.S.) judgment was rendered in Lago Agrio against Chevron, a sum later reduced to $9.5 billion.
Ever since, the Indigenous plaintiffs have been seeking a forum to collect on that judgment.
As recently as November, courts in Argentina and Brazil dismissed the plaintiffs’ reach as extra-territorial. Chevron has no assets in Argentina.
So here we are at the Ontario Court of Appeal.
The plaintiffs do not allege wrongdoing by Chevron Canada. This is not in dispute. The essence of the case is extraordinarily important: can a hydraheaded corporation escape financial responsibility by claiming that the legal domicile is the wrong one?
In the contemporary world of massive multinational corporations, particularly in the extractive industries, can one subsidiary be immune from financial enforcement when another is found guilty?
The history books are full of legal tragedies where a North American corporate entity escaped liability for the disasters of their subsidiaries. Bhopal comes to mind.
In the Chevron case, there are two tragedies.
The first is the environmental nightmare delivered upon the Huaorani people.
The second is that for all its merits, the case is a mess.
The reader might well wonder: if a court in Ecuador ruled that Chevron had to pay up, why was the finding not enforced by the courts in New York, as was the expectation?
I hope I am not belittling the gravity of the proceedings when I note that this is the point of the story where we pivot to a script that reads more Hollywood than University Avenue.
The protagonist is the abovenamed Steven Donziger, a Harvard-trained lawyer who by all accounts took up the environmental case with, as a New York court would find, the honest desire to improve conditions for the group known as the Lago Agrio Plaintiffs (LAPs).
That desired outcome, U.S. District Judge Lewis Kaplan would find, was overdue and Donziger, a journalist welltravelled in Latin America before he trained as lawyer, seemed the right pitbull for the job.
What wasn’t right was the way in which the case against Chevron was pursued. At the beginning of his 484-page ruling in Chevron Corp. vs. Steven Donziger, Kaplan summarized his conclusion that Donziger and the Ecuadorian lawyers he led “corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, ‘global expert’ to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger handpicked and paid to ‘totally play ball’ with the LAPs. They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the courtappointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court’s judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment.”
Kaplan described the case as extraordinary, sad and, yes, Hollywood-esque. The takeaway was this: given the “abundant evidence” that the Ecuadorian court’s decision was neither fair nor impartial, its finding against Chevron was not entitled to recognition in New York.
Donziger was found guilty of wire fraud, witness tampering, money laundering and more, and was prevented from profiting “in any way from the egregious fraud that occurred here.” He appealed. Ten months ago, the United States Supreme Court declined to hear it.
What Kaplan’s decision did not do was bar enforcement of the Lagro Agrio judgment elsewhere in the world. So here we are. Of course, the story is even messier than that. Alberto Guerra, a former Ecuadorian judge who had been removed from the bench and who testified to ghostwriting the Lago Agrio multibillion-dollar decision for sitting judge Nicolas Zambrano, was relocated to the United States. Chevron paid for the move and, as of the time of Kaplan’s ruling, was paying him $10,000 a month for living expenses, plus a leased car. Guerra claimed that he feared retaliation from the Republic of Ecuador for testifying in the case.
So the peoples of the Amazonian rain forest are triple losers. They lost financially in the ’60s when Texaco drilled for that black gold. They lost environmentally in the decades that followed. And they have consistently lost judicially.
Canada is the right place to fight the global fight against transnational extractive companies. I just fear that we have the right cause, but the wrong case, before us.
“The (plaintiffs) wrote the Lago Agrio court’s judgment themselves.” U.S. JUDGE LEWIS KAPLAN IN DISMISSING CHEVRON CASE