Yaiguaje v Chevron Corps – Litigating against Goliath one appeal at a time

By: Amanda Montgomery

In October 2017, a group of Ecuadoran plaintiffs won a small, yet crucial, victory in a Toronto courtroom.  The Ontario Court of Appeal ruled that the plaintiffs are not required to post nearly $1 million to cover Chevron Corporation’s legal costs should they lose an upcoming appeal in their quest to enforce a $9.5 billion judgment against Chevron in Canada.  This decision removes a legal hurdle in the on-going litigation against Chevron for the contamination of their rainforest territory.  But the Court’s comments regarding justness and justice in the context of public interest litigation are more broadly significant, particularly in cases such as Yaiguaje where one of the litigants is considerably better resourced than the other.

Yaiguaje v Chevron Corps – A Brief History of Long Lawsuit

The Court directly referenced the complex and controversial history of this litigation, which has (so far) spanned 25 years and five countries.

The 47 plaintiffs, representing approximately 30,000 largely Indigenous people in Ecuador, originally filed their lawsuit in the United States in 1993, citing widespread and even intentional pollution of rivers and groundwater in an area of the Amazon three times the size of Manhattan.[1]  This contamination, a situation some describe as the “Chernobyl in the Amazon”, has reportedly resulted in serious health impacts for people in the region.

At Chevron’s insistence, the suit was later moved to Ecuador.  However, when Ecuador’s Supreme Court eventually ruled against Chevron, the company refused to pay the $9.5 billion award.  As Chevron no longer has assets in Ecuador, the plaintiffs are seeking to enforce the judgment in the United States, Argentina, Brazil and Canada.

Given the precedential potential of the judgment, Chevron has zealously defended itself against the allegations and subsequent decisions.  However, in addition to expected motions and appeals, the litigation has also included allegations by Chevron of bribery, fraud and even racketeering against Ecuadoran judges and the plaintiffs’ American lawyer.  Moreover, Chevron has purportedly spent approximately $2 billion on this vigorous defence.  This is the backdrop against which the Court of Appeal considered the plaintiffs’ appeal of the order granting security for costs.

Yaiguaje v Chevron Corps comes to Canada

The plaintiffs have sought enforcement of the Ecuadoran judgment in Canada since 2012.  The question of whether this judgment can be enforced in Ontario has already gone before the Supreme Court of Canada, which ruled in 2015 that such an action is within the jurisdiction of Ontario courts.

Before the Court of Appeal, the plaintiffs are appealing a 2017 Ontario Superior Court decision that the damage award cannot be enforced in Ontario. Chevron subsequently brought a successful motion for security of costs, which the plaintiffs also appealed.

The Ontario Court of Appeal weighs in…again

In its decision, the Ontario Court of Appeal unanimously quashed the $1 million order, finding that the motions judge failed to ensure the justness of the order.

In undertaking a “holistic analysis”, the Court warned, “[c]ourts must be vigilant to ensure an order designed to be protective in nature is not used as a litigation tactic to prevent a case from being heard on its merits” [23] and must consider the case as a whole to determine if the interests of justice are served by such an order.   The Court concluded that the order did not serve the interests of justice, considering that the plaintiffs will not benefit personally from the damage award.[2] Notably, while finding the case was novel, they concluded it is not necessarily without merit and should be heard.

The analysis also included pointed comments for Chevron.  The Court noted that such an immense corporation with vast resources hardly required protection from costs that would be “a miniscule fraction of their annual revenues” [26].  The Court also referenced Chevron’s dubious legal tactics and did not question the Supreme Court of Ecuador’s judgment against Chevron, a reminder to the company that a US court’s findings of fraud and bribery have not been recognized here.   But the Court saved its clearest rebuke for last:

The history of this litigation…makes clear that Chevron Corporation has and, it may be anticipated, will employ all available means to resist enforcement of the Ecuadorian judgment.  This, of course, is within its rights.  However, this reality makes it difficult to accept that the motion for security for costs was anything more than a measure intended to bring an end to the litigation.” [26]

Supporters of the Ecuadoran plaintiffs are buoyed by this decision, which enables the plaintiffs to continue with their appeal.  Viewed more broadly, the decision contains statements that, while directed at Chevron, could also be interpreted as a more general warning to deep-pocketed litigants that similar attempts to ‘out motion’ their public interest opponents will not be tolerated.

[1] The area was contaminated between 1964 and 1992 by Texaco, which later merged with Chevron Corporation.  While the first suits were filed against Texaco, Chevron assumed these lawsuits after the merger.

[2] The money will be deposited into a public trust and used for remedial projects in the affected region.

Amanda Montgomery is a second-year law student at Osgoode Hall Law School.