Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

Chevron Suffers Major Legal Setback As Canada Court Denies New Attempt to Block Ecuador Enforcement Action

Appeals Court: Indigenous Groups Should Not Have to Pay Legal Fees of Huge American Oil Company

Amazon Defense Coalition

Amazon Defense Coalition
Contact: Karen Hinton at +1.703.798.3109

Toronto, Canada – Oil major Chevron suffered a major legal setback today in the Ecuador pollution case when a three-judge appellate panel in Canada denied the company's attempt to force impoverished indigenous and farmer communities to pay its exorbitant legal fees in what was a clear attempt to kill off the historic litigation before it could be resolved.

The decision, by the Court of Appeal for Ontario, allows the indigenous groups to continue with their five-year effort to try to seize Chevron assets in Canada to pay for an environmental remediation of their ancestral lands based on a $9.5 billion judgment won in Ecuador's courts in 2011. Chevron had insisted the underlying trial take place in Ecuador and had accepted jurisdiction there, but when it lost the case it refused to pay the judgment.

In quickly vacating a September order from a motions judge to grant a Chevron request to impose roughly $1 million in costs on the indigenous and farmer groups to pay the company's legal fees, the three-judge panel issued a ruling that said "it is difficult to accept that the motion for security for costs was anything more than a measure [by Chevron] intended to bring an end to the litigation."

Canadian rules, the panel wrote, require the judge "to take a step back and consider the justness of the order sought in all the circumstances of the case." The panel found that the judge, however, "failed to undertake this part of that analysis."

"The appellants [Ecuadorian indigenous groups] are seeking to enforce a judgment in which they have no direct economic interest. Funds collected on that judgment will be paid into a trust and net funds are to be used for environmental rehabilitation or health care purposes. This is public interest litigation."

"Chevron Corp and Chevron Canada have annual gross revenues in the billions of dollars. It is difficult to believe that either of these two corporations, which form part of a global conglomerate with approximately 1,500 subsidiaries, require protection for costs awards that amount or could amount to a miniscule fraction of their revenues," the panel added.

The panel also wrote that "there can be no doubt that the environmental devastation to the appellants' lands has severely hampered their ability to earn a livelihood. If we accept the findings that underlie the Ecuadorian judgment – findings that have not been undermined in our courts – Texaco has contributed to the appellants' misfortune."

Chevron had sought the costs order to block the enforcement action after company officials in 2009 promised the rainforest communities a "lifetime of litigation" if they persisted in pursuing their case, which originally was filed in 1993 in the United States, said Patricio Salazar, the lead Ecuadorian lawyer for the plaintiffs. "This decision by the Ontario Court of Appeal is critically important," Salazar said. "Twenty-four years obviously is too long for any litigation, but especially one involving severe harm to indigenous groups as a result of environmental pollution.

"Chevron's entire strategy is based on obstruction and delay," Salazar added. "Canadian courts need to put an end to this abuse of the civil justice system. It is unfortunate that this Chevron maneuver to impose a form of court tax on the people it poisoned got as far as it did."

The Ecuador judgment against Chevron was based on 105 technical evidentiary reports and affirmed unanimously by two appellate courts in Ecuador, including by the country's highest court in 2013. Because Chevron refused to pay and sold off its assets in the country, the indigenous groups are trying to enforce their judgment against company assets in Canada.

Canada's Supreme Court already ruled against Chevron in 2015 when the company tried to block the enforcement action on different grounds, claiming at the time that Canada's courts had no jurisdiction over the claims. The Supreme Court denied Chevron's motion unanimously.

Following that setback, Chevron tried to impose the costs order as a different tactic to block the case. The company also has tried to prevent its wholly-owned Canadian subsidiary from being sued in Canada, essentially seeking impunity for the one entity that holds the parent company's assets in the country. The latter issue is still under litigation.

The earlier decision granting the Chevron motion for costs had been harshly criticized by aboriginal and environmental leaders in Canada, including National Chief Phil Fontaine and Greenpeace Co-founder and author Rex Weyler and Canadian national indigenous leader Ed John. All three visited the affected indigenous communities in September to meet with local leaders and to witness the environmental devastation in an area where Chevron operated from 1964 to 1992 under the Texaco brand.

Also backing the Ecuadorians in Canada was legendary British rocker Roger Waters, who attended the court argument in Toronto while touring the country with his band. At a sold-out concert at the Rogers Arena in Vancouver last Saturday, Waters spoke out forcefully in favor of a new alliance between Canadian and Ecuadorian indigenous leaders to hold Chevron accountable for its pollution in the rainforest.

"Canada's judges need to keep the courthouse open for impoverished groups as well as the rich and powerful," said Fontaine, who three times was elected National Chief of the Assembly of First Nations of Canada, which represents roughly 640 nationalities. "I would like to think the days of aboriginal groups being denied access to the courts in Canada are long since over."

Weyler said that in 50 years of environmental work he had never before seen a corporation treat its victims with the level of "hostility and disrespect" Chevron has shown to the Ecuadorians.

The underlying judgment against Chevron stems from findings in Ecuador that the company systematically dumped billions of gallons of toxic waste into the rainforest, poisoning rivers and streams and causing an epidemic of cancer. Five indigenous groups (Cofan, Secoya, Siona, Kichwa and Huaorani) have seen their cultures decimated as a result, while cancer rates have skyrocketed according too several independent health studies.

"We are thrilled Canadian courts denied this naked attempt by Chevron to block justice to the affected peoples of Ecuador," said Luis Yanza, a Goldman Prize winner who represents the Frente de Defensa de la Amazonia, the non-profit group in Ecuador that spearheaded the case.

"We urge Canadian courts to move the case forward as quickly as possible so any outstanding issues can be resolved," he added. "We are suffering and there is no time to waste."

Representing the affected peoples of Ecuador were Alan Lenczner of Lenczner Slaght in Toronto and Peter Grant of Grant Huberman in Vancouver. Lenczner is considered one of the top commercial litigators in Canada, while Grant is considered one of the country's leading aboriginal rights specialists.