After five years of obstructionism by Chevron in Canada, Judge Glenn Hainey of the Ontario Superior Court of Justice finally gave the green light for the rainforest communities to have a trial to target Chevron assets to pay the $12 billion tab needed to remediate their ancestral lands. The affected communities filed their enforcement action in Toronto in 2012 after winning a court battle the previous year in Ecuador that awarded them the damages.
Chevron refused to pay the judgment, selling off its assets in Ecuador and hiding behind narrow technical arguments. Chevron had accepted jurisdiction in Ecuador and later was found to have committed fraud in the trial by falsifying evidence, trying to hide contamination from the court, and engaging in a sham remediation.
Here are some of the important implications from the latest Canada decision:
Chevron has definitively lost its bid to avoid an enforcement trial in Canada. Chevron used every technical defense in the book to avoid the Canada enforcement trial. Even Canada's Supreme Court ruled against Chevron. Now it must face a terrifying day of reckoning over how its key witness, Alberto Guerra, has lied under oath and that his fundamental story about judicial bribery is false.
Chevron's U.S. lawyer Randy Mastro will face enormous risk. American lawyers Randy Mastro and Avi Weitzman of the U.S. law firm Gibson Dunn violated the law by arranging for Guerra to be paid $2 million for his false testimony in a farcical retaliation trial in the U.S. Mastro and his team coached Guerra for 53 consecutive days before he testified; Guerra later admitted lying on the stand. Gibson Dunn's obstruction of justice will be front and center in the Canada proceeding.
Look for Chevron's executives to try to settle before the trial: Chevron shareholders already are up in arms over management's mishandling of the Ecuador liability. Look for embattled CEO John Watson to order his lawyers to try to settle the case before Guerra is forced to take the stand and the company's entire narrative falls apart.
Chevron's strategy of perpetual delay just got shellacked. Trial judge Hainey tossed out two of the company's main defenses which already had been litigated and rejected by three layers of courts in Ecuador. The company will be kept on a short leash in Canada, undermining its strategy of delaying any judicial procedure that could hold it accountable on the merits.
Chevron is kidding itself if it thinks its Canadian subsidiary is immune from liability. The part of the Hainey decision that immunized Chevron's wholly-owned subsidiary from enforcement runs counter to logic, violates the spirit of a prior decision of the Canada Supreme Court, and is likely to be reversed on appeal. Ten separate Canadian appellate judges already have reversed a similar ruling when issued by a prior trial judge in 2013.
Karen Hinton, the spokesperson for the villagers, was forceful in her response to the latest development. She called it a "resounding victory for Ecuadorian indigenous groups and farmer communities who have struggled for more than two decades to clean up its toxic waste."
Hinton added:
The court sent Chevron a powerful message that it can no longer ride the legal merry-go-round and re-litigate the same discredited defenses in different courts as part of its strategy of delay...The villagers expect to proceed later this year with their seizure of Chevron's assets to force the company to respect multiple court judgments that found it guilty of dumping billions of gallons of toxic waste into the waterways of Ecuador, causing an outbreak of cancer and other harms afflicting thousands of people. Ultimately, we are confident that Canada's courts will hold Chevron fully accountable for its outrageous and criminal conduct in Ecuador.Carlos Guaman, an Ecuador community leader and the executive director of the coalition that brought the enforcement action, said he wanted to "thank" Canada's courts "for sending a strong message to Chevron that its outrageous strategy of blocking justice will soon end."