Two years ago, lawyers at Patton Boggs were pondering what to do
if their clients ever managed to get a judgment in a two-decade
environmental litigation crusade against Chevron in Ecuador.
Since Chevron had no assets in Ecuador and U.S. courts had
viewed the Ecuadorean court proceedings with a "jaundiced eye,"
the firm concluded that filing lawsuits in countries outside the
United States could be a "more expedient" way to collect on what
later turned out to be an $18.2 billion judgment.
That strategy, outlined in an August 2010 memo code-named
"Invictus" that surfaced in discovery in related litigation in
the United States, was finally executed on Wednesday as the
Ecuadorean plaintiffs filed a lawsuit in Canada to enforce the
award. The suit, filed in the Superior Court of Justice in
Ontario, is the first attempt to collect on the February 2011
award since the 2nd U.S. Circuit Court of Appeals lifted an
injunction that had prevented the plaintiffs from pursuing
The suit is expected to be the first of more to come. "We
believe that in the month of June at least another action will
be presented in another jurisdiction," said Pablo Fajardo, the
lead Ecuadorean attorney for the plaintiffs, who spoke via an
English translator in a conference call on Thursday. While he
did not name the countries, Fajardo told Reuters in March that
the plaintiffs would target Chevron's assets in Panama and
Lawyers for the plaintiffs presented a number of legal
reasons why they picked Canada as home for their first lawsuit.
Alan Lenczner of Lenczner Slaght Royce Smith Griffin, the
Canadian lawyer handling the Ontario lawsuit, said Canada's
legal system presents limited defenses with which Chevron could
challenge enforcement. Those included whether the judgment was
secured by fraud, if Chevron was denied justice or an
opportunity to be heard, and whether enforcing it went against
In an interview, the Ecuadoreans' lead lawyer at Patton
Boggs, James Tyrrell, pointed to another factor in picking
Canada: Its status as a member of the Commonwealth of Nations,
mainly countries that were formerly British colonies. If the
Canadian courts say the plaintiffs can collect on the Ecuadorean
award, "you can take the Canadian judgment on a streamlined
basis and enforce the judgment" in countries such as Britain, he
"We've carefully selected the jurisdictions that we believe
would be favorable for enforcement of the Ecuadorean judgment,"
Under Canadian case law, including a 2003 decision by the
Supreme Court of Canada called Beals v. Saldanha, Chevron cannot
revive arguments about fraud that were previously heard by the
Ecuadorean court or that could have been heard by it, said
Stephen Pitel, a law professor at the University of Western
Ontario. "We need something that's new," he said.
But Chevron spokesman Kent Robertson said the company could
still argue that the Ecuadorean court was "complicit in the
fraud." Chevron has long argued that corruption and bribery in
the Ecuadorean judicial system led to the ruling.
In a 2011 decision enjoining enforcement of the award, U.S.
District Judge Lewis Kaplan determined there was "ample evidence
of fraud in the Ecuadorean proceedings." The 2nd U.S. Circuit
later vacated the injunction, but Chevron could still urge the
Canadian courts to consider Kaplan's fraud finding.
Chevron could also argue that enforcing the award would run
contrary to public policy. An international arbitration panel in
February ordered Ecuador to do what it could to prevent enforcement of the judgment. Robertson said Chevron believes
that Ecuador is already in breach of that order. "It can be
argued that enforcement of a fraudulent judgment, particularly
one that is currently being scrutinized by an arbitration panel,
runs contrary to public policy goals and values," he said in an
But since the plaintiffs weren't parties to the arbitration,
there's nothing stopping them from asking Canada to enforce the
judgment, Lenczner said. And even if Canada didn't enforce the
award, that's just one out of 30 countries where Chevron has
assets. Meaning the fighting could keep going for years to come.
(Reporting by Nate Raymond)
Follow us on Twitter @AlisonFrankel, @nateraymond, @ReutersLegal | Like us on Facebook