Law Times

LaW TIMeS • OCTOBeR 5, 2015 Page 3 www.lawtimesnews.com Chevron case ripples far afield Top court makes strong statement about enforcing foreign judgments BY JUDY VAN RHIJN For Law Times t's not often that the Supreme Court of Canada has an ardent following in Ecuador, but its decision last month on Chevron Corp.'s obligation to satisfy a judgment against its corporate parent for environ- mental damages will have ramifications there and in many other jurisdictions. While it heard arguments about possible fraud and corporate immunity, the Supreme Court confined its judgment to Ontario's jurisdiction to hear the case. The group of Ecuadoran villagers who won a $9.51-billion judg ment against Chevron have been at- tempting to enforce it in the United States, Brazil, Ar- gentina, and Canada. They filed their action in Canada against Chevron Corp. as well as Chevron Canada Ltd., a company that has approximately $15 billion in local as- sets but wasn't a party to the original proceedings. Michael Osborne, a commercial and competition lawyer at Aff leck Greene McMurtry LLP, believes the Supreme Court has made a very restrained decision in Chevron Corp. v. Yaiguaje. "People are making a big to- do about it, but I think it is notable for what it doesn't decide," he says. "We all know the allegations that the judge was bribed. I have read the affidavit that was the basis for the U.S. District Court finding of fraud. It is compelling evi- dence. If the affidavit is true, it is truly shocking what the plaintiffs did and a bar to enforcing the judgment. But all the Supreme Court decision is about is whether the court has jurisdiction to hear the claim. It confirms that there is a low bar to be able to enforce a foreign judgment debt." Brian Radnoff, a commercial litigator at Lerners LLP in Toronto, says the decision leaves no confusion on the jurisdictional issue. "The main question was answered by all three courts in exactly the same way, although the trial judge granted a stay on another issue. That is: Does the Ontario court need to have a real and substantial connection to the defendant or the ini- tial dispute when a plaintiff is attempt- ing to enforce a foreign judgment?" Radnoff notes one of the key issues in the case: the necessity to have such a connection when commencing an ac- tion in Ontario. "That is a constitutional principle that applies not just to foreign coun- tries but to foreign legal jurisdictions such as provinces. However, in relation to enforcement, the answer at every level of court and clearly from the Su- preme Court was that you don't have to. You are not determining the merits of a case. You are simply enforcing an order from a foreign court. The only jurisdictional question is: Did the for- eign court have a real and substantial connection to the dispute or the defendant? If that's the case, it can proceed." The Supreme Court made it clear that Chevron would be open to use any defences available to it at the hearing on the merits. "There are passages where the court seems to express a certain sympathy for Chevron but they de- clined to expressly find fraud," says Osborne. "If the bribery allegation is true, that would be a valid defence but this was the wrong stage to assert that de- fence. Similarly, on the issue of Chevron Canada and whether the court can pierce the corporate veil and deal with assets here, that issue was not decided. This deci- sion says if you plead it right, you will get through the jurisdictional door fairly easily but you will not neces- sarily win." When it comes to the merits, Osborne has his doubts about the claimants' likelihood of success. "My own view is that assets cannot be available from Chevron Canada because it is a separate corporate entity," he says. "It is ultimately owned by Chevron U.S. but seven lev- els down. You can't just sweep away the separate corporate personality. It should continue to mean something in the courts." Ultimately, the fact that Chevron Corp. has no assets in Canada made no difference to the court. "It is no issue that Chevron U.S. has no assets anywhere in Canada. That's the basis on which the trial judge stayed the action, that it was impracti- cal," says Radnoff. Osborne agrees. "The point the court makes is that from a jurisdic- tional point of view, that is neither here nor there. It's not a requirement. An asset might be expected to move to Canada and you want your judgment ready. There is a question that this de- cision could lead people to go to any jurisdiction in the world. A company could face a plethora of those claims. But the principle is that a judgment debtor should pay their debt and should not be able to escape it." Radnoff says that approach ref lects the practicality of modern business life. "This is a recognition of the fact that assets are easily moved around the world, particu- larly financial assets. Foreign creditors should not have to wait until assets move into the jurisdiction. They should have the opportunity to have their judgment recognized and be ready to scoop up assets when they are acquired in the jurisdiction. It will also prevent judg- ment debtors shifting assets to avoid execution." Osborne expects the decision will bring an end to ju- risdictional challenges on foreign judgments with more cases getting straight to the merits. "It is another strong statement that Canada will enforce judgments of foreign courts. Canada is not a place where you can hide assets." Radnoff agrees. "The practical effect is that you can have a judgment anywhere in the world against a foreign defendant. If you want to try and enforce it in Ontario, you can." LT NEWS I 'Canada is not a place where you can hide assets,' says Michael Osborne. consistently across the board," said Smith. "The single, enduring principle that under- pins each set of best practices is that every step in a proceeding must meaningfully move the case forward. We expect, going forward, that neither judges nor counsel will accept proceedings being rolled over to a future date without advancing the case in some meaningful way." Smith said a key development in the past year was the implementation of online filing in the Small Claims Court that will help lay the ground- work for improved access to the courts more generally. "Already, approximately one-third of all claims are being e-filed online," said Smith. "With this success, we can look to expand e-filing to other areas of the court." But challenges remain, she said, noting some courts continue to struggle because the facilities are inadequate to deal with the caseload. "Our patience has been tried mightily, but we continue to do everything possible to meet the liti- gants' needs," she said. "The shortage of criminal juried courtrooms in Brampton remains acute. Al- though critically needed, any permanent addition to the Brampton courthouse is still years away." Smith said that in the interim, juries chosen in Brampton are travelling to the courthouse in Kitch- ener, Ont. "To add to the pain, the Milton court- house, which was intended to accommodate some of the Brampton matters, is suffering from very seri- ous obstacles of its own while Orangeville, also des- ignated to accommodate the Brampton overf low, is still not available on a regular basis. We understand that jurors, witnesses, counsel, the accused, and their families must bear the toll of this extraordi- nary measure of transferring proceedings." Smith also cited the need to address security at a number of Ontario courts, "particularly where pri- vately owned commercial properties are leased for court space." "I'm heartened that during the past summer months, the Ministry [of the Attorney General] has been working diligently to deliver a suitable, secure, and permanent solution for the present deficiencies," she said. Chief Justice Lise Maisonneuve of the On- tario Court of Justice said her priorities for the next year include looking at ways to streamline processes to make the courts more efficient and timely while increasing access through modern- ization and technology. "This is a time of transition and transformation for our court. We have identified and we will con- tinue to identify innovation and modernization as hallmarks of our judicial leadership," she said. "We have long recognized that to be accountable to all Ontarians, our court must not only continue to provide fair and timely decision- making but we must also be committed to change." She said a number of recent efforts will help bring about that change, including the creation of the Ontario Court of Justice criminal modernization committee that will look at improving accessibility and implementing new technologies. "Electronic- scheduling tools for both our judges and justices of the peace are a signature step to make our court pro- cess more standardized and streamlined," she said. "The view is looking positive. These tools will al- low us to better assign our resources and thus more effectively manage the many proceedings. "Our approach of working collaboratively gives our court the ability to transform the challenges we face into opportunities. We will use those op- portunities to reinforce our commitment to meet- ing the needs of the litigants we serve." LT Brampton situation 'acute' Continued from page 1 both the funding and the fundraising." The result, he said, is a significant funding shortfall of about $150,000. "That shortfall is what we're projecting as a serious problem," he said, noting the program has already felt the im- pact. "In 2014, we had to reduce the number of meals because we were projecting a significant problem with funding." Marion Boyd, a past chairwoman of the board, says the To- ronto program is the only one that actively serves meals rather than purchasing food for other organizations to do so. That, along with donor fatigue, is why Toronto's program is struggling more than the others, she says. "But I find it very puzzling and difficult to understand why there's such a problem in Toronto," she adds. "The Ottawa, Lon- don, Windsor programs are not struggling the way Toronto is because they are not as open-ended, but I can't get my head and heart around why there is such a problem there." Hull said he hopes law society members and legal profession- als will stand behind the program they helped launch almost 20 years ago. "Assist with the program tangibly. Help us secure fi- nancial support," he said. "Your links to the legal community are what is going to save the program and is what is going to maintain it on a long-term basis. We were trying the conventional steps. We were reaching out to the law firms and looking at all the revenue streams we would normally do, but we need some help. Otherwise, without some significant effort on the part of the collective group, we're going to be looking at, operationally, real difficulties in the next two years for the Toronto program itself." In the meantime, a fundraising event for the program will take place on Nov. 10 at the Rivoli on Queen Street West in To- ronto. Hosted by Neuberger & Partners LLP, Hull & Hull, the Toronto Lawyers Association, and the foundation, there will be pool, a silent auction, and refreshments. More details are avail- able at lawyersfeedthehungry.ca/toronto.html. LT Continued from page 1 Meals reduced as funds run low

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