Court dismisses Ecuadorian villagers' lawsuit asking Chevron Canada to satisfy $9.5 billion judgement against parent co. in oil pollution case
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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)
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...
Author: Colin Perkel, The Canadian Press via City News (Canada)
The Canadian subsidiary of U.S.-based oil giant Chevron Corp. cannot be held liable for a US$9.5-billion award a court in Ecuador ordered against the parent company in favour of Ecuadorian villagers, Ontario’s top court ruled on Wednesday. Even though the Court of Appeal expressed sympathy for the plight of the Indigenous villagers, it found that ordering Calgary-based Chevron Canada to pay them in what it called a “tragic case” would amount to twisting current laws out of all recognition...[T]he Appeal Court said, Canadian courts must decide cases based on the laws and jurisprudence in place in Canada. What the villagers argued, the panel said, found no support in either legislation or case law...The Canadian action, which began in 2012, aimed to have Chevron Canada pay even though the villagers alleged no wrongdoing against the company...[T]hey argued Chevron Corp. should not be able to hide behind a subsidiary to avoid its creditors...The villagers were partially successful on appeal in terms of costs. Hainey had awarded $533,001 to Chevron Canada and $313,283 to Chevron Corp. after rejecting the villagers’ argument that the litigation was in the public interest and, at most, they should only have to pay a nominal amount...
Author: Marco Chown Oved, The Star (Canada)
The Indigenous people from Ecuador who have been living for decades on land poisoned by oil companies have had their appeal for redress against Chevron Canada rejected. 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 rainforest by Texaco in the 1970s and 80s, before it was bought by Chevron. The Ontario court has ruled that Chevron Canada cannot be held liable, even though it owned by Chevron Corporation through a chain of subsidiaries. “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.”...Patricio Salazar, the lead Ecuadorian lawyer for the Indigenous peoples said his clients will be seeking leave to appeal the decision to the Supreme Court...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...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 decision was not unanimous...
Author: Court of Appeal for Ontario (Canada)