Ecojustice Blog – Special Update Posted on November 10, 2017 (updated: November 10, 2017)

Battle to enforce $9.5-billion fine against Chevron could change corporate environmental law

Aaron WardLawyer
Photo by Caroline Bennett, Rainforest Action Network

In 1993, Ecuadorian Indigenous peoples filed a case against oil conglomerate Chevron Corporation for dumping billions of gallons of toxic waste into their ancestral lands and waters in a case called Yaiguaje v. Chevron Corporation. Almost 25 years later, Chevron’s Ecuadorian subsidiary was dissolved, and left in its wake poisoned waterways and devastation for the local communities that rely on them for drinking water and fishing.

Now, 47 Indigenous Ecuadorians, representing more than 30,000 villagers, are playing an expensive game of legal ping-pong, to have a $9.5-billion USD judgement enforced against Chevron’s subsidiaries, including Chevron Canada.

In 2013, an Ecuadorian court ruled that Chevron must pay for the environmental harms it caused. When Chevron refused to pony up the cash, the Ecuadorian appellants were forced to take their battle abroad. In the most recent legal battle, the Ecuadorian plaintiffs successfully appealed a decision in Canada that would have required them to post nearly $1-million CAD for Chevron’s legal fees.

Chevron and its 1,500 subsidiary companies have annual gross revenues in the billions of dollars. Conversely, the Ecuadorian villagers are of very modest means and have pledged to pay any eventual judgment into a public trust for healthcare and environmental remediation. This disparity was recognized by the Court, which stated “that Chevron Corporation has and, it may be anticipated, will employ all available means to resist enforcement of the Ecuadorian judgment. […] this reality makes it difficult to accept that the motion for security for costs was anything more than a measure intended to bring an end to the litigation.”

For its part, Chevron has asserted that the Ecuadorian verdict is the product of fraud, and that cleanup of any legacy contamination is the responsibility of the Ecuadorian Government.

This latest decision is a shot across the bow by Ontario’s highest Court that shows they will not tolerate companies using litigation tactics that derail public interest litigation. While acknowledging the uphill battle toward enforcement that the Ecuadorian villagers face, the Court wrote that justice demands that public interest litigants are given their day in court.

Canada’s interpretation of corporate law makes companies virtually untouchable

In November, Ecojustice sought to intervene on behalf of Friends of the Earth Canada, in an Ontario Court of Appeal proceeding deciding whether the Ecuadorian court judgement could be enforced on Canadian soil.

The case itself raises novel and important questions of law, including whether to incrementally adapt Canadian corporate law to ensure polluters pay for environmental harms they inflict upon communities abroad.

Chevron, like many global multinationals, operates thousands of subsidiary companies across the world. These companies take advantage of corporate law and are able to shield themselves from tax and environmental liabilities with clever corporate structuring resulting in people like the Ecuadorian villagers or other members of the public left with the aftermath of environmental harms created in the name of profit.

Polluting the environment, violating human rights (for free)

Decisions on environmental harms are still being made based on pre-1900s UK law — law that has stagnated there thanks to years of legal arguments made in corporate self-interest. The Yaiguaje case is a ripe opportunity for Canadian courts to consider how communities seeking justice are harmed by multinational structuring. A progressive interpretation of Canadian law would make sure that the polluter pays principle applies to multinational enterprises.

Chevron Canada is showing that it will play all its cards to evade liability for the ruling against its now-dissolved sibling. If Canadian courts stay the course, corporate multinationals will continue to be permitted to avoid the consequences of the environmental harms and human rights abuses they commit abroad.

In the latest Yaiguaje decision, the Court advocated for a “holistic analysis” in deciding whether the Ecuadorian villagers should post security for costs. In the decision, the Court chose to see the big picture, avoiding an overly formal interpretation of the law.

Future opportunities might arise in Yaiguaje v. Chevron as it winds its way back up to the Supreme Court of Canada. There, the Court will be asked to look at the big picture again and to rebalance corporate law so that environmental damage and destruction cannot be avoided with a flick of the pen.

We hope that when that does happen, we’ll have a seat at the table.

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