Villagers lose latest round in battle over Chevron pollution
Canadian judge separates liabilities of subsidiary and parent as Ecuadorians try to collect on damages award
Now entering its 24th year, an international legal war seeking to hold Chevron liable for oil pollution in the Amazon has featured battles in courtrooms from Ecuador to Canada. In a blow to Ecuadorian villagers who contend the company polluted their lands, an Ontario judge last week protected Chevron’s Canadian assets from being seized as part of the fight.
That is a big victory for the second-largest US fossil fuel company, because in 2011, Chevron lost a court case in Ecuador over the question of liability. As far as the Ecuadorian judiciary is concerned, Chevron owes about $9.5bn, plus interest, to the villagers.
But the energy giant, contending that the Ecuadorian judgment was obtained by fraud, has refused to pay. Chevron has no assets in Ecuador, so there is nothing there for plaintiffs to seize. That is why the case migrated north to Canada, where a subsidiary has operations the villagers would like to liquidate to cover their verdict.
But in a highly technical 35page opinion, Judge Glenn Hainey of the Ontario Superior Court of Justice made a sharp distinction between Chevron, the parent corporation and Chevron Canada, the subsidiary. Chevron Canada was not the defendant in Ecuador and as a legally separate entity, the judge held, could not be held responsible for its parent’s liabilities.
Chevron hailed the decision. “Once again, the plaintiffs’ attempts to enforce their fraudulent judgment have been rebuked,” R Hewitt Pate, Chevron’s vice-president and general counsel, said.
Karen Hinton, a New Yorkbased spokeswoman for the villagers, said her clients would appeal against Hainey’s ruling and predicted a swift reversal. “The villagers expect to proceed later this year with their seizure of Chevron’s assets to force the company to respect multiple [Ecuadorian] court judgments that found it” liable for massive contamination, Hinton said.
The story began in 1993 with a lawsuit filed in New York federal court against Texaco (which Chevron acquired in 2001). Brought on behalf of poor rural Ecuadorians, the complaint was dismissed by US courts and restarted in 2003 in Ecuador.
Eight years later, it led to the multibillion-dollar verdict now at issue.
Chevron countered that any pollution resulting from Texaco’s activities in the rain forest was the responsibility of the Ecuadorian government to clean up — and, in any event, the verdict was tainted by the misconduct of the villagers’ lawyers, led by New York-based attorney Steven Donziger.
To drive home that last point, Chevron sued Donziger in 2011, obtaining a US judgment that he violated anti-racketeering laws by turning the Ecuadorian suit into the equivalent of an extortion scheme.
In 2016, a federal appeals court upheld the ruling, finding that Donziger and his colleagues engaged in coercion, fraud and bribery in Ecuador. The decisions make it impossible for the villagers to collect on the Ecuadorian verdict in the US. That brings us to Canada.
The legal complexities in this branch of the litigation proliferate. In a separate part of his ruling on Friday, Hainey said that if somehow the Ecuadorians succeeded in moving forward with their action in Canada — for example, if a higher court reversed his finding that the subsidiary should be shielded — then the oil company would be allowed to fight asset seizures by pointing to the evidence of fraud presented in the US racketeering case.
Meanwhile, on other fronts, the plaintiffs have started legal proceedings to enforce the controversial Ecuadorian judgment in both Argentina and Brazil.
Chevron may have won this battle, but the legal war shows no sign of letting up.