It is widely known that Chevron has acted as a serial forum shopper when it comes to trying to evade its liability for creating an environmental disaster in Ecuador's Amazon. But Chevron's game of corporate subterfuge and litigation abuse seems to be unraveling before our very eyes, spelling huge new risks for company shareholders.
In short, CEO John Watson's billion-dollar campaign to buy impunity for Chevron's human rights abuses in Ecuador is flaming out. Watson himself is at risk of being whipsawed by his own short-sightedness.
Canada's Supreme Court ruled in early September that thousands of Ecuadorian rainforest villagers have the legal right to try to seize company assets in that country to force it to pay for its court-mandated clean-up in Ecuador. This is serious: for the first time in two decades, the villagers have a direct path to a full recovery of their $9.5 billion judgment. (Chevron has an estimated $15 billion of assets in Canada, including a refinery, offshore oil field, and office buildings.)
Ecuador's Supreme Court already ruled in 2013 that Chevron must pay up. But Watson had sold off company assets in the country as the evidence mounted against it during the trial there. Watson's posture of evasion has not only infuriated shareholders and alienated environmental and human rights groups, but has unjustly forced the impoverished villagers to chase down company assets elsewhere.
In finding that the villagers had jurisdiction over Chevron in Canada, Canada's Supreme Court dealt a severe blow to Watson's strategy. In a unanimous decision, the court said this in reference to Chevron and other debtors who try to evade paying foreign court judgments:
Through their own behaviour and legal non-compliance, they have made themselves the subject of outstanding obligations, so they must be called upon to answer for their debts in various jurisdictions... The need to acknowledge and show respect for the legal action of other states has consistently remained one of comity's core components, and militates in favor of recognition and enforcement.Murray Klippenstein, a Canadian lawyer who represented several human rights groups in the country who support the Ecuadorian villagers, praised the decision in a legal publication. He said,
Chevron some time ago declared a total war, scorched earth legal strategy against this claim by the Ecuadorian villagers, and in this proceeding in Canada, Chevron was seeking to import into the law of international reciprocal enforcement of judgments an entirely novel test... in its decision the Supreme Court methodically and meticulously analyzed, and rejected, that attempt, based on existing legal principles -- and rightly so.While Chevron forum shops, thousands of vulnerable people in Ecuador have suffered from cancer and other grievous health impacts such as spontaneous miscarriages due to the company's failure to remediate its contamination. Thousands have either perished or face a real risk of death in the coming years. (For background on Chevron's cancer problem in Ecuador as documented by several independent scientific studies, see here.)
Chevron blocked the original case from being heard in U.S. courts (where it was filed in 1993) and insisted the litigation take place in Ecuador. Once in Ecuador, Chevron sold off its assets in the country and tried to get the matter dismissed on jurisdictional grounds even though it had promised U.S. courts it would accept jurisdiction there.
When those arguments didn't work, Chevron lawyer Ricardo Reis Veiga corruptly "persuaded" the country's Attorney General to call the trial judge to insist that the case be tossed. (The judge refused the entirely inappropriate request; Reis Veiga still works for Chevron.)
After years of trying to delay and sabotage the proceedings in Ecuador -- Chevron lawyers even threatened judges with jail time and filed thousands of frivolous motions -- the courts ruled against the company based on more than 100 technical evidentiary reports and the company's own internal environmental audits. But despite its earlier promises, Chevron then refused to pay and said it would fight the matter "until hell freezes over and then fight it out on the ice."
In Canada, Chevron tried to block the case from proceeding by claiming its assets were held by a wholly-owned subsidiary. In Argentina, where another enforcement action was filed, Watson flew down to meet with the country's President. He then invested billions in a new gas field in exchange for an entirely corrupt dismissal of the enforcement action there on "technical" grounds.
Back in the United States, Chevron --without as much as an evidentiary hearing -- convinced a rogue trial judge to enter an illegal order purporting to block the villagers from even attempting to enforce their judgment anywhere in the world. The trial judge was reversed unanimously on appeal and mocked by international law scholars around the world.
Chevron will face major hurdles in Canada when it tries to allege it was the victim of "fraud" by the very people it poisoned in Ecuador. Its evidence in this regard was rejected unanimously by Ecuador's Supreme Court and has been debunked even more since.
It turns out that Chevron's evidence that the decision in Ecuador was "ghostwritten" by lawyers from the villagers comes from a discredited witness paid $2 million by the company. Whistleblower videos disclosed this year prove Chevron technicians tried to hide evidence of oil contamination at its former well sites in Ecuador as part of an elaborate (and unsuccessful) scheme to defraud the courts during the trial there.
Chevron's litigation tricks have forestalled justice for far too long. Something tells us the respected courts of Canada understand that point very well.