Chevron takes environmental legal battle before Supreme Court

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Lawyers for a group of Ecuadorian villagers will ask the Supreme Court of Canada on Thursday to grant their clients access to Canadian courts to enforce a controversial $9.5-billion (U.S.) environmental judgment against Chevron Corp.

However, the international oil giant argues in its brief that its Canadian subsidiary had nothing to do with the underlying lawsuit, and that allowing the action to proceed would violate "a bedrock principle of Canadian corporate law."

That principle is known as the "corporate veil" and holds that subsidiaries are separate entities from their corporate parents and are not liable for actions of the parents. To cast doubt on that principle, Chevron argues, "would create widespread uncertainty and concern in the Canadian capital markets."

The oil company was sued by Ecuadorian indigenous people from the Lago Agrio region over a clean-up bill and damages from oil pollution in the region. Chevron – which now has no assets in Ecuador - refuses to pay it.

As a result, the Ecuadorians and their controversial lawyer Steve Donziger have sought to have it enforced in Canada, Brazil and Argentina. They have not pursued Chevron in the United States where a New York judge ruled in favor of Chevron's counter-suit that argued the judgement from the Ecuador courts was obtained fraudulently by corrupt means. That New York decision is now being appealed.

A year ago, the Ontario Court of Appeal overruled a lower court decision and concluded that Ontario is an "appropriate jurisdiction" to determine whether the Ecuadorian judgment should be enforced. Chevron is now looking for the country's top court to overturn the appeal court. It noted the parent company has no assets in Ontario, and Chevron Canada Ltd. has very little business in the province.

Lawyers for the Ecuadorians say Canada may represent the best chance for the Ecuadorians to get justice, and accuse Chevron of attempting to erect a new jurisdictional barrier to block their effort.

"If Canada is cut off, our clients will have virtually no place to turn to enforce the judgement," Mr. Donziger said in an interview. The case "has implications for human rights victims all over Canada and around the world who might want to avail themselves of the Canadian courts over human rights issues."

The New York-based lawyer was in Ottawa to attend the hearing. He declined to discuss the U.S. corruption case against him, except to refer to his appellate brief which argues Chevron trumped up allegations and mischaracterized evidence in order to demonize him and the Ecuadorian judicial system.