Major Pollution Case Against Chevron Will Go On, Supreme Court of Canada Rules

Today the Supreme Court of Canada released its judgment on Chevron v. Yaiguaje (a group of Ecuadorian plaintiffs), dismissing Chevron’s appeal that Canada does not have jurisdiction to hear the case. This means that the case will go on for the Ecuadorian plaintiffs affected by pollution arising from oil extraction in the 1970s-1990s. Below, I explain the ruling and its context.

* Although I have published on Canadian law in the past I am a political scientist, not a lawyer. As such, this should be read as an educated lay explanation of the legal battle to-date. This article has been reposted from the Ethical Consumption in the News section of this website. It was originally posted on 4 September 2015.

TL;DR Version

Oil extraction resulted in pollution of Ecuador, affecting the health of many residents. They sued. Both sides first had a struggle to determine the court that has jurisdiction to hear the case. Chevron successfully argued for moving the case from the U.S. to Ecuador. Then, the two sides contested on whether damages were owed. An Ecuadorian court ruled in favor of the plaintiffs. Since then, the plaintiffs have struggled to get the payment that the Ecuadorian court said they were owed. To do so, they have sought enforcement in other countries where Chevron has assets. Today, Canada’s top court ruled that the case for enforcing the Ecuadorian ruling can be heard here. There are some other parts to this story that take place within supranational judicial bodies, but they are not directly related to today’s ruling and so I will leave them aside.

To explain this ruling, it is necessary to first provide some context on a legal battle that has been ongoing in various courts for over twenty years.


Ecuador granted a consortium of U.S. oil companies – including Texpet, a subsidiary of Texaco – a concession to undertake oil exploration in the Amazonian forest of Ecuador beginning in 1972.[1] Oil was discovered three years later, and extraction began. Texaco had the controlling interest in the consortium – although PetroEcuador (a government-owned oil company) gradually increased its stake in the consortium until it assumed operational control in 1990. When the consortium expired in 1992, it is alleged that it left behind open-air waste pits with crude and toxic sludge and dumped toxic wastewater into the rivers of that region, resulting in 18 billion gallons of contaminated water.[2] This has since produced a public health crisis in the region. 30 000 largely indigenous Ecuadorians have been trying to sue Chevron for damage done as a result.[3]

In 1993, Ecuadorian residents near the dumping sites filed a class-action lawsuit in a federal court in New York,[4] while a second lawsuit was filed in 1994 by Peruvian indigenous people claiming that the drilling waste that had been dumped had polluted a river that flowed into Peru.[5]

Chevron acquired Texaco in 2001,[6] so this became their problem. Chevron successfully argued that the U.S. was not the right place to try the case, and that it should be instead in Ecuadorian jurisdiction. In 2003, the plaintiffs filed the suit in Ecuador. Without editorializing too much, I will say that a lot of sketchy tactics on the part of both Chevron and Donziger, the plaintiff’s lawyer, ensued. For a fair-minded book on this subject, I strongly recommend Law of the Jungle. Eventually, an Ecuadorian provincial court awarded $19 billion USD in damages. This amount was revised on appeal to $9.5 billion.

That should end the issue, right? Wrong.


By awarding damages, the plaintiffs are ‘owed’ $9.5 billion from Chevron. However, Chevron has no assets in Ecuador that could be seized. As such, the plaintiffs are seeking to enforce the judgment (to get the money they are due) in three other countries: Canada, Argentina, and Brazil. In Argentina, Chevron’s assets were frozen in 2012, but the Argentinian Supreme Court lifted this freeze in 2013 – some proceedings are still ongoing there. I wasn’t able to find anything definitive on Brazil, so I assume the case is proceeding (slowly) there as well. A ruling by a U.S. district court prevents the plaintiffs from enforcing the Ecuadorian ruling in the U.S. (the judge was persuaded that the decision was the result of a corrupt process… complicating this issue is the fact that Ecuadorian courts are not known to be the most reliable).

The plaintiffs are hoping to enforce the judgment in Canada by seeking assets from a subsidiary of Chevron, Chevron Canada Ltd. Chevron Canada is a “seventh-level indirect subsidiary”, which means that there is a long chain between Chevron and Chevron Canada.[7] However, Chevron has 100% ownership of every company in this chain – it effectively controls Chevron Canada (but this might not matter for the purposes of the plaintiffs).[8]

The SCC issued a judgment on 4 September 2015 on whether Canadian courts can hear the case, based on an appeal by Chevron of an Ontario Court of Appeal ruling that allowed it to go ahead. The SCC dismissed Chevron’s appeal, which means that the case will go forward.


The Court dismissed Chevron’s appeal. It is worth noting three issues discussed in the SCC decision – on only two of which the SCC took a decision.

1. Issue: jurisdiction for a recognition and enforcement proceeding with respect to Chevron and the Ecuadorian judgment.

Held that: jurisdiction exists to hear this recognition and enforcement proceeding, because the foreign judgment is evidence of a debt (stated another way: jurisdiction to recognize and enforce a foreign judgment exists by virtue of the debtor being served on the basis of the outstanding debt resulting from the judgment, so long as the “foreign court from which the judgment originated properly assumed jurisdiction over the dispute.”)[9] It is not necessary to prove a real and substantial connection between the enforcing forum and either the judgment debtor (Chevron) or the dispute.

Reasoning: what has to be proven for recognition and enforcement proceedings to go forward is the connection between a foreign court and the original action on the merits. Chevron claimed to have no connection with the province, through assets or otherwise, but the SCC held that there is no preliminary need to prove a connection with Ontario. More broadly, the Court held that for enforcement and recognition cases to go forward there is no need to prove a real and substantial connection between the enforcing forum and either the judgment debtor or the dispute (this connection is necessary to establishing jurisdiction in other cases). As such, the SCC ruled that it is not necessary “that the foreign debtor contemporaneously possess assets in the enforcing forum”.[10]

To support this, the SCC noted that recognition and enforcement proceedings are different. “Canadian law recognizes that the purpose of an action to recognize and enforce a foreign judgment is to allow a pre-existing obligation to be fulfilled; that is, to ensure that a debt already owed by the defendant is paid.”[11] This means that:

  1. The enforcing court’s role is facilitation, not substance: “the purpose of an action for recognition and enforcement is not to evaluate the underlying claim that gave rise to the original dispute, but rather to assist in enforcing an already-adjudicated obligation.”[12] It follows that a real and substantial connection need not be proven and probably won’t exist.[13] As such, the Court rejected Chevron’s proposed extension of the real and substantial connection test for establishing jurisdiction. In enforcement and recognition proceedings, the Court held, the enforcing court simply lends its judicial assistance to the foreign litigant by allowing him or her to use its enforcement mechanisms.
  2. The enforcing court’s judgment has no coercive force outside its jurisdiction: the recognition and enforcement of a judgment is limited to measures (i.e. seizure, garnishment, or execution) that can be done within the enforcing court’s jurisdiction and in accordance with its rules. It only applies to local assets. “The recognition and enforcement of a judgment therefore has a limited impact”.[14]

A related concept underpinning the Court’s findings on jurisdiction is comity. Comity, broadly, means deference and respect due by other states to the actions of a state legitimately taken within its territory. Previous cases have established that comity underlies Canadian enforcement and recognition law.[15] Along with reciprocity, comity is a backbone of private international law.[16] The Court held that the “concepts of order and fairness on which comity is grounded are not affronted by rejecting Chevron’s proposed extension of the real and substantial connection test” because:

  1. Through requiring that the foreign court had jurisdiction in hearing the underlying dispute, order and fairness are protected in recognition and enforcement proceedings;
  2. No unfairness is done to judgment debtors by being asked to answer for their debts in various jurisdictions (although order and fairness are protected by “providing a foreign judgment debtor with the opportunity to convince the enforcing court that there is another reason why recognition and enforcement should not be granted”[17] – Chevron will have the opportunity to do this as the case proceeds); and
  3. It would undermine order and fairness to require that the defendant have a real and substantial connection with the enforcing court in the sense of being present or having assets there.[18] To underscore this point, the Court pointed to the realities of the age of electronic international banking, where funds can quickly leave a jurisdiction. Moreover, it is “the existence of clear, liberal and simple rules for the recognition and enforcement of foreign judgments that facilitates the flow of wealth, skills and people across borders in a fair and orderly manner”.[19] 

The Court found that jurisdiction exists; however, it emphasized that this does not necessarily follow that it will or should be exercised. This merely means that “the alleged debt merits the assistance and attention of the Ontario courts.”[20] As the case progresses, Chevron can still argue a number of things, notably that recognition and enforcement shouldn’t be accepted because the original decision was fraudulent (Chevron will certainly be arguing this).

2. Issue: jurisdiction with respect to Chevron Canada. 

Held that: jurisdiction exists.

Reasoning: Chevron Canada was validly served at a place of business it operates in the province.

There are three grounds for asserting jurisdiction for an out-of-province defendant (Chevron Canada is headquartered in Alberta): assumed jurisdiction and the two “traditional” grounds – presence-based jurisdiction and consent-based jurisdiction. The Court was satisfied that the requirement of presence-based jurisdiction were met, as Chevron Canada operates a business establishment in Mississauga, at which it was served.

3. Not at-issue: a stay that had been issued by the lower court but was overturned on appeal at the Ontario Court of Appeal.

The lower court had imposed a discretionary stay of proceedings under s.106 of the Courts of Justice Act, but this was overturned by the Ontario Court of Appeals and was not under consideration by the SCC. Stays are rulings by courts that halt further legal process in a trial. The takeaway here is that the Ontario Court of Appeal overturned the stay, ruling that the case should proceed, and that the SCC did not change this decision.


 On the basis of the two issues above, and without ruling on the third issue, the SCC dismissed Chevron’s appeal. As such, the case will go on and will centre on at least two key issues:

  1. Whether the Ecuadorian ruling should be respected, in light of claims about fraud throughout; and
  2. Whether (and I am not using proper legal vernacular here) Chevron Canada can be claimed as an asset of Chevron, for the purposes of getting the plaintiffs what they are owed.


[1]Mark Robinson, Marketing Big Oil: Brand Lessons from the World’s Largest Companies (New York: Palgrave Macmillan, 2014).

[2] Oil Daily, “Chevron Ecuador Case Drags On” (December 18, 2007) Oil Daily.

[3] Energy Economist, “Chevron’s Ecuador Case Drags On” (November 1, 2005) Energy Economist; Oil Daily supra note 1;

[4] Steven Donziger, “Chevron’s “Amazon Chernobyl” in Ecuador: the Real Irrefutable Truths About the Company’s Toxic Dumping and Fraud” (27 May 2015) Huffington Post Green. Steven Donziger is the lawyer for the Ecuadorian plaintiffs.

[5]Robinson supra note 69 at p.72.

[6]Robinson supra note 69.

[7] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 9.

[8] Ibid.

[9] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 34.

[10] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 3.

[11] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 43.

[12] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 44.

[13] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 45. “there can be no concern that the parties are located elsewhere, or that the facts underlying the dispute are properly addressed in another court, factors that might serve to undermine the existence of a real and substantial connection with the forum in first instance adjudication.  The defendant will, of course, not have a significant connection with the forum, otherwise an independent jurisdictional basis would already exist for proceeding against him or her.  Moreover, the facts underlying the original judgment are irrelevant, except insofar as they relate to potential defences to enforcement.  The only important element is the foreign judgment itself, and the legal obligation it has created.  Simply put, the logic for mandating a connection with the enforcing jurisdiction finds no place.”

[14] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 46.

[15] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 51. The Court relied on Morguard to draw this conclusion.

[16] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 69.

[17] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 55.

[18] The Court noted that other common law jurisdictions are split on this conclusion. See Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 56-65.

[19] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 68.

[20] Supreme Court of Canada. (4 September 2015). Chevron Corp. v. Yaiguaje, at para 77.