Lago Agrio: A Good Week For Chevron

Chevron had a good week this week, on two fronts.

First, the Supreme Court of Canada has granted leave to appeal from the decision of the Ontario Court of Appeal, which had set aside a lower court’s stay of the Ecuadoran plaintiffs’ action seeking recognition and enforcement of the Ecuadoran judgment in Ontario.
The application was decided by Justices LeBel, Karakatsanis, and Wagner. I am reliably informed that Justice LeBel in particular has a real interest in private international law. Perhaps the case was too interesting for him to turn away! This is an important development, because Canada is the relevant country where Chevron would, I think, have the hardest time criticizing the quality of the judiciary in the event of an adverse decision. I don’t say that because I know anything about the courts of Brazil or Argentina, but because one of the subtexts of the case as a whole is an implicit criticism of Latin American justice. Or at least that’s how it seems to me when Chevron says, for example, that “any jurisdiction that respects the rule of law will find it illegitimate and unenforceable.”

Second, in the hubbub surounding Judge Kaplan’s RICO decision last month, I missed a magistrate judge’s report and recommendation concluding that the claim Patton Boggs had brought against Chevron seeking damages on account of the erroneous preliminary injunction that Judge Kaplan had entered early in the RICO case. (You can find my main post about the case here). To make matters worse for Patton Boggs, Judge Kaplan has also allowed Chevron’s motion for leave to amend its pleadings to assert counterclaims against Patton Boggs for fraud. Patton Boggs, probably seeing which way the winds were blowing, argued that the court lacked jurisdiction over the action—which it had brought—on the grounds that some of its partners live abroad and that that fact deprives the court of diversity jursidiction. Patton Boggs may actually be right about this in the end, but Judge Kaplan refused to rule definitively on the issue at such an early stage of the case. So Patton Boggs is facing the unhappy prospect of having lost a lawsuit that it brought but still having to defend against Chevron’s counterclaims.

This Post Has 3 Comments

  1. Doug Cassel

    Dear Ted,

    My criticisms, at least, have never been intended to slam Latin American justice as a whole. Some countries do very well: Uruguay’s judiciary, for instance, deservedly ranks very high by every measure I know of. However, the quality of justice can vary markedly from country to country in Latin America, and even within countries. Justice in the federal courts of Brazil, for example, is generally held in higher regard than that which is on offer, either in Brazilian state courts, or in some of Brazil’s neighbors.

    In that context, although I am not privy to the company’s thinking on the subject, I certainly would not interpret its reference to “any jurisdiction that respects the rule of law” to imply a wholesale condemnation of Latin American jurisprudence. That would be as untenable as it would be unfair.

    1. Ted Folkman

      I agree with you, Doug. But I think the idea of the “banana republic” is part of the appeal of Chevron’s case, just as the idea of the rapacious oil company is part of the appeal of the Ecuadorans’ case.

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