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 A scathing judgment issued by a U.S. judge this week against their
lawyer will cast a long shadow over cases filed in Canada, Brazil
and Argentina, where the plaintiffs are seeking Chevron assets as
payment because the oil giant no longer has a presence in Ecuador.
U.S. District Judge Lewis Kaplan handed down a 500-page decision
that found American lawyer Stephen Donziger used "corrupt means" to
help villagers from the Lago Agrio region win the historic $18
billion judgment against Chevron in Ecuador in 2011. The damage
award was later revised down to $9.5 billion. While Kaplan's
decision bars Donziger and the villagers from enforcing the
Ecuadorean ruling in the United States, it is not binding in pending
cases elsewhere.
Of the three cases, the Canadian one seems to have progressed the
farthest, with an appeals court there ruling in December that the
province of Ontario was a proper jurisdiction for the plaintiffs to
press the company to pay up. Chevron has asked for an appeal of that
ruling to be heard by Canada's Supreme Court.
Vaughan Black, a professor at the Schulich School of Law in Halifax,
Nova Scotia, thinks Kaplan's ruling will resonate if the Canadian
case ends up being considered on its merits.
"Basically an Ontario court would have to look at all the evidence
again and start at the beginning," Black said. "I suppose there is
always the possibility that they could take a different view of
which witnesses were credible, but the New York court didn't even
think it was a close call. So it doesn't look very promising for the
Ecuadorean plaintiffs."
The sprawling environmental case stretches back to the 1990s, when
the villagers first tried to seek compensation for contamination in
northeastern Ecuador by Texaco starting in 1964. Chevron acquired
Texaco and for 20 years has been fighting the case as well as
Donziger, who has spent most of his career representing the
Ecuadorean plaintiffs.
The foreign courts will ultimately have to decide how to weigh the
evidence presented against Donziger, which Kaplan said proved the
judgment in Ecuador was tainted by fraud, against the underlying
claims of the villagers who say they were sickened by decades of
pollution.
The cases in Argentina and Brazil are moving slowly. But the Ontario
appeals court in December reversed a lower court decision and found
Canada should be a forum to hear Ecuadoreans' claims.
Chevron has resisted the Ecuador plaintiffs at every turn. "We're
going to fight this until hell freezes over. And then we'll fight it
out in the ice," a company spokesman once said.
"Chevron's wish is granted," the December 17 Ontario Court of Appeal
decision said, referring to the spokesman's quote. "After all these
years, the Ecuadorean plaintiffs deserve to have the recognition and
enforcement of the Ecuadorean judgment heard on the merits in an
appropriate jurisdiction. At this juncture, Ontario is that
jurisdiction."
CAST A SHADOW
Canada's Supreme Court could decide whether to grant a hearing of
the appellate decision in May, according to Canadian legal experts.
If it takes up the case, the Supreme Court will likely only consider
the narrow question of Canadian jurisdiction.
Should the Supreme Court agree with the appellate decision, the
entire case will go back to the original court, said Schulich's
Black.
That's when Chevron could bring to bear reams of documents it
introduced in the New York case, including Donziger's personal
notebook, purporting to show he ultimately corrupted the case by
submitting fraudulent evidence, bribing a judge, ghost-writing the
judgment and covering up his wrongdoing.
In the Canadian case, Donziger is not representing the 47 Ecuadorean
plaintiffs who are standing in for the larger community of 30,000
affected residents.
"The U.S. court can't annul the Ecuador judgment," said Sara Seck on
the Faculty of Law at Western University in London, Ontario. "It
casts a shadow on it, but it's going to be up to Canadian courts to
decide what to do."
Chevron believes Judge Kaplan's ruling in the Southern District of
New York will be a game changer for the cases being fought in
foreign courts.
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"No judge in any country that respects the rule of law will
entertain the enforcement of the corruption judgment," Chevron's
General Counsel R. Hewitt Pate said on a call with reporters. "I
think the opinion will carry great weight. ... We will share the
contents of the opinion with the other judges in Argentina, Brazil
and Canada."
But Donziger's camp says making the ruling available will not be
enough to sway the other proceedings.
BRAZIL, ARGENTINA TO COME
In 2011, Kaplan issued a decision blocking the plaintiffs from
trying to enforce the Ecuadorean judgment anywhere in the world, but
the 2nd U.S. Circuit Court of Appeals in New York overturned that
ruling.
In his opinion on Tuesday, Kaplan carefully said his order against
Donziger "does not 'disrespect the legal system ... of the country
in which the judgment was issued' or those of 'other countries' in
which the (Lago Agrio plaintiffs) now, or later may, seek to enforce
the judgment."
Donziger's lawyer Deepak Gupta said he would appeal Kaplan's
decision and the villagers would continue to battle it out abroad.
In Brazil, the villagers' case is waiting to be heard by a court,
said Chevron spokesman Morgan Crinklaw.
In Argentina, the Supreme Court reversed a freezing of Chevron's
Argentine assets last year, but the enforcement case is still
pending, he said. Chevron brought the case to the International
Court in the Hague in 2009, claiming it was denied justice in
Ecuador. That arbitration is ongoing.
In a confidential memo produced as part of the New York trial,
Patton Boggs — the law firm that became involved in 2010 to help
Donziger enforce the Ecuador judgment — suggests 24 countries where
the plaintiffs could potentially study options to enforce the
Ecuador judgment.
"We don't have a system where one single trial judge, whether they
are in New York or anywhere else can appoint themselves a worldwide
fact-finding commission and essentially preclude or persuade other
courts not to enforce a judgment," Gupta said. He said he could not
comment on the memo or on what future efforts there might be to try
to enforce the judgment in other countries.
Alan Lenczner, the lawyer representing the Ecuadorean plaintiffs in
Canada, said Kaplan's ruling has "zero" impact on the ongoing
proceedings in Canada.
The case still faces two jurisdictional questions before it is even
heard on the merits. One is whether Canada can enforce a foreign
judgment, and the other is whether a Chevron subsidiary in the
country can be held responsible for the parent's action.
If the plaintiffs can win the court battle, they hope to recover in
Canada as much of the Ecuadorean judgment as possible.
Ultimately, all the international legal wrangling has left the real
victims of the legacy of environmental damage out in the cold, said
Judith Kimerling, an environmental law professor at The City
University of New York, Queens College. Kimerling represents a group
of indigenous Ecuadoreans suing Donziger in New York state court for
unjust enrichment and seeking to recover resources to clean up the
polluted area.
"There are real people with real injuries and legitimate claims
behind all this," Kimerling said. "It is a very sad day for the
victims and for the environment because it makes it more difficult
for them to get remedies."
(Additional reporting by Joseph Ax in
New York and Euan Rocha in Toronto; editing by Howard Goller and
Frank McGurty)
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