Accounting for Law
Commercial Litigation, Cross-Border

Judge halts Ecuadorian judgment from enforcement in Canada

By Jon-David Giacomelli

On May 1, in a thorough and carefully reasoned judgment, Justice Brown of the Ontario Superior Court of Justice ordered that the Ontario action to enforce an $18 billion judgment in favour of residents of Ecuador against Chevron Corporation and related subsidiaries be stayed. The stay is subject to the right of the plaintiffs to move to lift the stay on new evidence that Chevron possesses, or is likely to shortly possess assets in the jurisdiction. At the same time, Justice Brown dismissed the defendants’ motion to set aside the service of the Amended Statement of Claim.  The case is indexed as Yaiguaje v.Chevron Corporation 2013 ONSC 22527 (CanLII).

The history of the litigation

The history of the litigation leading up to the $18 billion judgment is long and involved. It began with allegations that Chevron’s predecessor(s) severely polluted the Lago Agrio region of Ecuador between 1964 and the early 1990’s. Litigation was then pursued in the Southern District of New York and before a Bilateral Investment Treaty arbitration panel, and ultimately, in a lawsuit against Chevron commenced in Ecuador which finally resulted in a judgment of $8.6 billion in damages and 8.6 billion in punitive damages. As Justice Brown noted in his decision, “The trial judgment was affirmed by decision of an intermediate court, the Appellate Division of the Provincial Court of Justice of Sucumbios, on January 3, 2012. The judgment remains under appeal in Ecuador but is considered a “final” judgment for the purposes of enforcement outside of the country.

The Canadian action

In 2012, the plaintiffs commenced an action in the Ontario Superior Court of Justice claiming, inter alia, the Canadian equivalent of $18.256 billion and various relief aimed at accessing the assets of Chevron Canada Limited and Chevron Canada Finance Limited, allegedly wholly owned subsidiaries of Chevron Corporation. The former two corporations were not defendants in the Ecuadorian proceedings.

The motion before Justice Brown where brought by the defendants for:

(i)  An order setting aside service ex juris of the Amended Statement of Claim against them;

(ii)  A declaration that the court has no jurisdiction to hear the action and to dismiss or permanently stay the action.

Neither defendant attorned to the jurisdiction of the Ontario Superior Court of Justice or filed a Statement of Defence.

Justice Brown’s decision

A short blog of this nature can not do justice to the detailed reasons set out by Brown J. In his reasons, Justice Brown delves into a meaningful analysis of the case law in Canada dealing with when courts (both foreign and domestic) will be seen to have adopted legitimate jurisdiction over disputes. He deals at some length with the highlights of the Morguard, Van Breda, Beals, and Pro Swing cases at the Supreme Court of Canada level before discussing the academic commentary on the issue of jurisdiction simpliciter and the recognition of foreign judgments under Ontario Statutes and the relevance of the law in the U.S. to the issues before the court.

The following is a brief summary of the court’s findings on the motions brought by the defendants:

Should the service ex-juris of the amended statement of claim be set aside?

On this issue, Justice Brown held that the service should not be set aside:

For several reasons, I am not persuaded by the defendants that, at common law, an Ontario court lacks the jurisdiction to entertain an action to recognize and enforce a final judgment of a foreign state absent a showing that the judgment debtor defendant has some real and substantial connection with Ontario either through its presence in the jurisdiction or the presence of its assets in the jurisdiction, which essentially was the legal position advocated by both defendants.

First, Morguard and Beals,

“…dealing with the recognition of foreign judgments contain no such suggestion…both decisions tied the demonstration of a real and substantial connection to what went on in the originating state, not the receiving state.”

Second, Van Breda didn’t alter the principles set down in Morguard and Beals.

That judgment was squarely focused on the issue of the ability of a Canadian court to assume jurisdiction in a tort claim where the accident occurred outside of Canada. While an Ontario court must not over-reach by assuming jurisdiction over the adjudication on the merits of events which bear a real and substantial connection to some other location, at the same time, as a matter of international comity, an Ontario court must exercise restraint when asked to decline recognizing the final judgment of a foreign state. That holds especially true where no dispute exists that the foreign state possessed a real and substantial connection with both the subject-matter of the litigation and, in the case of Chevron, the defendant, by virtue of it submitting to the jurisdiction of that court. I agree with the remarks of Pepall J (as she then was) in the BNP Paribas case that our “court should grant its assistance in enforcing an outstanding judgment, not raise barriers”

Third, the Court of Appeal and Supreme Court of Canada, in Van Breda,

…both placed significant jurisdictional weight on the grounds enumerated in Rule 17.02…Viewed in that light, Rule 17.02(m) grants an Ontario court jurisdiction over a non-resident defendant who is the judgment debtor “on a judgment of a court outside Ontario”.


…one can foresee circumstances where legitimate reasons would exist to seek the recognition and enforcement of a foreign judgment against a non-resident judgment debtor which, at the time of the recognition action, possessed no assets in Ontario. Often in enforcement proceedings, timing is everything…in some circumstances judgment debtors may not control the timing or location of the receipt of an asset due to them….Where a judgment creditor under a foreign judgment learns that its judgment debtor may come into possession of an asset in the foreseeable future, it might want the recognition of its foreign judgment in advance of that event so that it could invoke some of the enforcement mechanisms of the receiving jurisdiction…


Neither the Reciprocal Enforcement of Judgments (U.K.) Act, nor the International Commercial Arbitration Act, “…expressly requires, as a condition of registering a foreign judgment or arbitral award, that the defendant be located in Ontario or that it possess assets in Ontario. In my view, in an age of global commerce one should take care to ensure that Ontario’s common law does not end up taking a more restrictive approach to the recognition and enforcement of foreign judgments than found in its statutes concerning the recognition and enforcement of foreign arbitral awards."

 Should the action for enforcement be stayed under CJA s.106?

On this point, Justice Brown held that there should be a stay of the action, subject to the right to apply for a lifting of the stay if there is new evidence that defendant assets are or will enter the jurisdiction. The following is a summary of his reasoning in this regard:


…the evidence supports findings that (i) Chevron is not the owner of any assets in Ontario, (ii)  it has not owned any assets in Ontario in the past , and (iii)  it has no intention of owning any assets in Ontario in the future.


The evidence disclosed that Chevron does not conduct any business in Canada


Chevron Canada is a , “…7th generation indirectly-owned subsidiary….”

“…the plaintiffs’ bald pleading that Chevron beneficially owns the assets of Chevron Canada is inconsistent with the basic principles of Canadian Corporate law”

In short, Justice Brown’s detailed analysis of the law and the facts before the court did not justify a piercing of the corporate veil as against Chevron Canada as a result of any relationship with Chevron.

The importance of this case

This case is a significant one in that it examines a question which has not yet been dealt with expressly by the Supreme Court of Canada in the spate of conflict of laws cases beginning with the Morguard decision in 1990, that is: do the courts in Ontario lack jurisdiction over judgment recognition cases where the debtor is not resident in Canada and “…in the absence of a showing that the defendant has some real and substantial connection to Ontario or currently possesses assets in Ontario”?

Justice Brown has done a commendable job analyzing the case law and statutory backdrop. Only time will tell whether this case will get to the Ontario Court of Appeal or beyond.

Read Cambridge LLP Litigator Blog

Lawyer Directory
BridgePoint Financial Services (post to 5.31.19)Toronto Lawyers Association (post to 6.30.19)MKD International (post until Sept. 30/18)Feldstein Family Law (post until May 31/19)Greystones Health Steve Rastin (post until Jan. 31/19)Benson Percival Brown - Flat Box Ad Unit - 300x125Forensic Restitution (post until Feb. 28/19)