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An end to the enforcement saga? Yaiguaje v. Chevron Corporation and the Preservation of the Corporate Veil

Author: Megan L. Mah, WeirFoulds LLP (Canada), Published on: 30 May 2018

In its recent decision in Yaiguaje v. Chevron Corporation, 2018 ONCA 472, the Court of Appeal...reiterates the test for piercing the corporate veil in the context of the enforcement of a judgment...The appellants are indigenous peoples of Ecuador who were affected by extensive environmental pollution caused by oil exploration...One of the corporations involved in the oil operations was an indirect subsidiary of Texaco Inc., which is now part of Chevron Corporation...As Chevron Corporation had no assets in Ecuador, the appellants...subsequently commenced an action in Ontario, attempting to enforce the Ecuadorian judgment against Chevron Canada...On appeal, the Court of Appeal addressed...the addition of an intermediary subsidiary as a party to the action, the introduction of fresh evidence, and the appropriate measure of a costs award in the context of public interest litigation...The appellants did not allege any wrongdoing against Chevron Canada, but pleaded that because Chevron Corporation wholly owned and controlled Chevron Canada, it beneficially owned Chevron Canada's assets...[T]he Court...reaffirmed the principle of corporate separateness, which holds that corporations are separate entities from their shareholders, capable of carrying on business and incurring debts on their own behalf.  The Court also clarified that a corporation's assets are its own and do not belong to related corporations, such as subsidiaries.  Therefore, the Court held that the appellants' interpretation was not supported by the wording of the Execution Act and would violate fundamental principles of corporate law...

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