I’ve recently noted the decision of an Argentine court to refuse to enforce the Lago Agrio judgment, and the opinion of Brazilian judge Luis Felipe Salomão also opining that the judgment should not be enforced in Brazil. I’ve gotten my hands on English translations of both.
We can now quote some language from the Argentine decision that helps explain the court’s thinking:
The plaintiffs asserted that the defendant’s legal domicile was 6001 Bollinger Canyon Road, San Ramon, California, United States of America, and they chose this jurisdiction because of the alleged connection between the defendant “CHEVRON CORPORATION” and the companies that are domiciled in this jurisdiction [Chevron Argentina S.R.L. and some others]. … They allege that the defendant acknowledged that it owns 100% of “CHEVRON ARGENTINA S.R.L” … Therefore, the plaintiffs assert that the direct connection between the case and the local forum is clear, and this supports the formal opening of this jurisdiction.
However, as determined in the above-mentioned case, [Chevron Argentina S.R.L. and the others] were incorporated in Argentina and Denmark and, in turn, have their own legal personality and are distinct from their direct and indirect shareholders. In other words … they are legal persons distinct from the defendant in this case, “Chevron Corporation,” and, to have a foreign judgment recognized, the defendant, domiciled in Argentina, must always be personally summoned.
So we see that the Argentine court, though in different terms, reasoned pretty much as the Ontario court did. Chevron’s indirect subsidiaries are distinct legal persons not liable for Chevron’s debts, and their property is not Chevron’s property, even though Chevron indirectly owns them.
One point that the opinion doesn’t discuss but that I wonder about is whether Argentina recognizes the notion of quasi in rem jurisdiction. Suppose Chevron itself had assets of its own in Argentina, but was not domiciled there or, in our terms, subject to personal jurisdiction there. Could the LAPs enforce the judgment, at least to the extent of the assets? That question isn’t answered in this decision.
The Brazilian decision is not so much a decision as the opinion of one judge, which the court must decide whether or not to adopt. The judge, Justice Luis Felipe Salomão, again focused on the corporate separateness issues:
Eminent colleagues, it is clear that Chevron Corporation is not based in Brazil, that the indirect intention in this case is to redirect the enforcement to Chevron Brasil Petróleo Ltda., which is an indirect, seventh-degree subsidiary of hte defendant, and that seventh-degree is evident. As it is known, subsidiaries are legal entities with their own legal personality and assets. And because of that, as a rule, are not liable for claims made against other companies of the same economic group even if those are made against the controlling company. This is the doctrine, and those are the precedents of the Second Section, which I bring for your examination. … It is rather odd that the plaintiffs did not file the recognition in the United States, where Chevron is based and, therefor, the jurisdiction is clear, having chosen to go to countries that apparently have nothing to do with the Ecuadorian case, such as Canada and Argentina, as well as Brazil. Eminent colleagues, this is probably due to the fact that many discovery actions have been filed by Chevron in the U.S., the judgments of which confirm the existence of fraud in the Lago Agrio action. …
It’s interesting that all three courts that have considered recognition have refused it on essentially the same ground: you can’t seize the assets of indirect subsidiaries that were not party to the Ecuadoran case to satisfy a judgment against Chevron. Interestingly, these holdings are in both civil law and common law courts. I think the chance of ultimate success on this argument is highest in Canada because of what I take to be the greater flexibility of the common law. But I wonder whether, despite the passion with which LAP advocates state their views, the basic question isn’t simpler than they want it to be.