Canada's high court may fall prey to the Chevron Shakedown

After many rounds of good news in the saga of the Chevron Shakedown, where the energy leader won one victory after another in court over Steven Donziger and his eco-warrior allies in Ecuador, a disturbing headline crossed the transom this week. Though courts in the United States have found the pickpocket tactics of Ecuador to be entirely fraudulent and baseless, Canada’s highest court has curiously agreed to entertain the case in their country. (Financial Post)

Canadians are renowned for their humility, practicality, and restraint. Unfortunately, those traits were not on display late last month when the Supreme Court of Canada permitted a group of Ecuadorian villagers to try to enforce in Ontario a fraudulent $9.5 billion judgment issued by an Ecuadorian court against Chevron Corporation despite the fact that Chevron is an American company with no assets in Ontario and the dispute has no relationship to Canada. The Supreme Court’s overreach is a misguided and dangerous precedent that should not be followed elsewhere…

The Canadian Supreme Court, without addressing the dubious nature of the Ecuadorian judgment, allowed the enforcement action to proceed in Ontario despite the lack of any connection to Canada. The court held that whenever a creditor seeks to enforce a foreign country’s judgment in Canada, there is “no need to demonstrate a real and substantial connection between the dispute or the defendant and the enforcing forum” because the defendant already has been found liable abroad.

This is something of a mystery if the Canadians are approaching this from any objective basis. As noted in the Financial Post article, Chevron doesn’t even have an official corporate footprint in Canada. (They have a subsidiary there, but the case is being heard in Ontario where they have no assets at all.) What does Canada have to do with the dispute?

Further, the small justification they offer is that “the defendant already has been found liable abroad.” But if they are willing to accept input from a foreign court (in this case, the highly corrupt Ecuadorian court) then how do they justify turning around and ignoring the numerous findings in the courts of their democratic partner, the United States, where the original ruling was determined to be completely corrupt hogwash?

Chevron provided us with the following statement regarding the announcement:

“Today’s decision has no bearing on the legitimacy or enforceability of the fraudulent Ecuadorian judgment. Instead, the Supreme Court of Canada has simply decided that the Ontario trial court has jurisdiction to entertain further proceedings in the action, including examination of several legal reasons why the effort to bring this fraudulent judgment to Canada should be stopped early in those proceedings. The facts remain, as Chevron Corp. established in the United States, that the Ecuadorian judgment is the product of fraud and other misconduct, and is therefore illegitimate and unenforceable.”

I don’t want to go all conspiracy theory here, but I do have to wonder if there isn’t some Canadian politics poisoning the well in the background. The environmentalists in Canada control a lot of power and they regularly team up with the indigenous tribes on environmental issues. Even though this has zero impact on Canada’s own pristine wilderness there are probably some interests in those quarters who wouldn’t mind seeing a major American energy company take a bit of a black eye. On the other side of the balance sheet there is plenty of frustration among our northern neighbors over the way that Barack Obama has dragged his heels on Keystone XL and is now looking more and more like he will cancel the deal. Chevron has nothing to do with Keystone XL, of course, that being a TransCanada project, but hurt feelings can produce odd results.

We’ll keep an eye on this one and keep you up to date. This is a darned curious development all the way around.

As a reminder, you can check out all of our coverage of the Chevron Shakedown here.