JURISDICTION: What happens when tragedy meets comity?

Kurt Johnson

On September 4th, 2015, the Supreme Court of Canada released its decision in the case of Chevron Corp. v. Yaiguaje, 2015 SCC 42. Anchoring its reasons in the principle of international comity and the notions of order and fairness upon which the doctrine is based, the Court paved the way for an eventual road to recovery and accountability in what has been an epic pursuit of justice spanning over 20 years.

The case has its origins in the oil-rich region of Lago Agrio in Ecuador. It is there that Texaco, Inc. (since merged with Chevron) engaged in exploration and extraction activities that, according to the Respondents , caused extensive environmental pollution and disruption of lives.

Following a failed attempt to pursue Texaco in its home jurisdiction in the United States, the Respondents eventually filed suit and obtained favourable judgment from the Ecuadorian courts. Appeals processes in Ecuador led to a final judgment from Ecuador’s Court of Cassation condemning Chevron to pay a reduced but nonetheless massive award of US $9.51 Billion.

As Chevron refused to acknowledge or pay the debt said to be owed by the Ecuadorian courts, and given that Chevron does not hold any assets in Ecuador, the Respondents turned to the Canadian courts for assistance in enforcing the judgment and obtaining their financial due. Chevron resisted the proceedings in Ontario, submitting that before proceeding with an action to recognize and enforce a foreign judgment, the Ontario court must first determine its own jurisdiction by applying the real and substantial connection test articulated in Van Breda. The courts below rejected Chevron’s submission, and so too did the Supreme Court.

Writing for a unanimous bench, Gascon J. clarified that the Supreme Court has never required there to be a real and substantial connection between the defendant or the action and the enforcing court for jurisdiction to exist in recognition and enforcement proceedings. This approach is based first on the crucial difference between an action in first instance and an action for recognition and enforcement. In the latter case, “the enforcing court’s role is not one of substance, but is instead one of facilitation. The court merely offers an enforcement mechanism to facilitate the collection of a debt within the jurisdiction. This entails that the enforcing court does not exercise jurisdiction in the same way as it does in actions at first instance.” (par. 44, internal references omitted)

Secondly, the Court appealed to the notion of comity which, according to Gascon J., “militates in favour of generous enforcement rules.” (par. 42). Commenting on the Supreme Court’s previous statements on comity, Gascon J. reasoned that:

[53] As this review of the Court’s statements on comity shows, the need to acknowledge and show respect for the legal acts of other states has consistently remained one of the principle’s core components.  Comity, in this regard, militates in favour of recognition and enforcement.  Legitimate judicial acts should be respected and enforced, not sidetracked or ignored.  The concepts of order and fairness in which comity is grounded are not affronted by rejecting Chevron’s proposed extension of the real and substantial connection test.  This is so for several reasons.

[54] First, in recognition and enforcement proceedings, order and fairness are protected by ensuring that a real and substantial connection existed between the foreign court and the underlying dispute.  If such a connection did not exist, or if the defendant was not present in or did not attorn to the foreign jurisdiction, the resulting judgment will not be recognized and enforced in Canada.  The judgment debtor is free to make this argument in the recognition and enforcement proceedings, and indeed will have already had the opportunity to contest the jurisdiction of the foreign court in the foreign proceedings.  Here, for instance, it is accepted that Chevron attorned to the jurisdiction of the Ecuadorian courts.  As Walker writes, “[t]he jurisdictional requirements of order and fairness considered in the context of direct jurisdiction operate to promote the international acceptance of the adjudication of a matter by a Canadian court”: p. 14-1 (emphasis in original).  There is no similar requirement of international acceptance in the context of the recognition and enforcement of a foreign judgment. 

[55] Second, no unfairness results to judgment debtors from having to defend against recognition and enforcement proceedings.  In essence, through their own behaviour and legal noncompliance, the debtors have made themselves the subject of outstanding obligations.  It is for this reason that they may be called upon to answer for their debts in various jurisdictions.  Of course, the principles of order and fairness are also protected by providing a foreign judgment debtor with the opportunity to convince the enforcing court that there is another reason why recognition and enforcement should not be granted: see Beals, at paras. 39 et seq.

Curiously, Gascon J. felt compelled to establish a clear, unambiguous rule to firmly set aside Chevron’s submissions on the jurisdiction issue. He did so in the following terms:

[69] Facilitating comity and reciprocity, two of the backbones of private international law, calls for assistance, not barriers.  Neither this Court’s jurisprudence nor the principles underlying recognition and enforcement actions requires imposing additional jurisdictional restrictions on the determination of whether a foreign judgment is binding and enforceable in Ontario.  The principle of comity does not require that Chevron’s submissions be adopted.  On the contrary, an unambiguous statement by this Court that a real and substantial connection is not necessary will have the benefit of providing a “fixed, clear and predictable” rule, which some say is necessary in this area: T. J. Monestier, “A ‘Real and Substantial’ Mess: The Law of Jurisdiction in Canada” (2007), 33 Queen’s L.J. 179, at p. 192.  Such a rule will clearly be consistent with the dictates of order and fairness; it will also allow parties “to predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect”, as LeBel J. in Van Breda insisted they should be able to do: para. 73.  Moreover, a clear rule will help to avert needless and wasteful jurisdictional inquiries that merely thwart the proceedings from their eventual resumption.  As some have noted, our courts “should exercise care in interpreting rules and developing legal principles so as not to encourage unnecessary motions”, since “[i]n many cases, the defendant’s challenge to service ex juris is just another dilatory tactic that provincial rules of civil procedure have sought to avoid”: G. D. Watson and F. Au, “Constitutional Limits on Service Ex Juris: Unanswered Questions from Morguard” (2000), 23 Adv. Q. 167, at p. 205.  To accept Chevron’s submissions would be to ignore this wise counsel.

While the Court was careful to acknowledge that the establishment of jurisdiction will not necessarily lead to the Respondents succeeding in having the Ecuadorian judgment recognized and enforced, it is nonetheless refreshing to see international comity paving the way towards justice, rather than obstructing it (consider, by way of contrast, Kazemi Estate v. Islamic Republic of Iran, 2014 SCC 62 at par. 2 & 37).