Canadian Subsidiaries Beware? The Ontario Court of Appeal Addresses the Enforcement of Foreign Judgments Against Related Entities

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The following Canadian Appeals Monitor blog post by Hovsep Afarian and Anu Koshal may be of interest to readers of this blog:

Canadian Subsidiaries Beware? The Ontario Court of Appeal Addresses the Enforcement of Foreign Judgments Against Related Entities

The Ontario Court of Appeal’s decision Yaiguaje v. Chevron Corporation, 2013 ONCA 758, has important implications for both foreign mining corporations and their Canadian subsidiaries.  The decision clarifies the test by which Ontario courts will enforce foreign judgments, and allows enforcement actions to proceed in Ontario where the only hope of recovery is from the Canadian subsidiary of the foreign corporation.

The case stems from a long-running legal battle between Chevron US, one of the world’s largest companies, and the indigenous peoples of the Sucumbíos and Orellana provinces in Ecuador.  The Ecuadorians sued Chevron US in Ecuador in 2011, alleging that between 1972 and 1990, Texaco (which Chevron US acquired in 2001) engaged in commercial activities that caused significant environmental damage to the indigenous peoples’ lands, waterways, and way of life.  Chevron US was found liable for $18 billion, an amount later reduced on appeal to $9.1 billion.  Chevron refused to pay the award, contending that the judgment was obtained through fraud, bribery, and other illegal means.  Since Chevron US no longer has assets in Ecuador, and since US courts have been sympathetic to Chevron’s allegations of fraud against the Ecuadorian court, the Ecuadorians sought to have the judgment recognized and enforced in Ontario against Chevron Canada, a wholly-owned subsidiary of Chevron US which had no involvement in the initial judgment. Read more

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