Chevron Corp. v. Yaiguaje

Chevron Corp. v. Yaiguaje
Collection
Supreme Court Judgments
Date
2015-09-04
Neutral citation
2015 SCC 42
Report
[2015] 3 SCR 69
Case number
35682
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Rothstein, Marshall; Cromwell, Thomas Albert; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément
On appeal from
Ontario
Notes
SCC Case Information: 35682
Decision Content
SUPREME COURT OF CANADA
Citation: Chevron Corp. v. Yaiguaje, 2015 SCC 42, [2015] 3 S.C.R. 69
Date: 20150904
Docket: 35682
Between:
Chevron Corporation and Chevron Canada Limited
Appellants
and
Daniel Carlos Lusitande Yaiguaje, Benancio Fredy Chimbo Grefa,
Miguel Mario Payaguaje Payaguaje, Teodoro Gonzalo Piaguaje Payaguaje,
Simon Lusitande Yaiguaje, Armando Wilmer Piaguaje Payaguaje,
Angel Justino Piaguaje Lucitante, Javier Piaguaje Payaguaje, Fermin Piaguaje,
Luis Agustin Payaguaje Piaguaje, Emilio Martin Lusitande Yaiguaje,
Reinaldo Lusitande Yaiguaje, Maria Victoria Aguinda Salazar,
Carlos Grefa Huatatoca, Catalina Antonia Aguinda Salazar,
Lidia Alexandria Aguinda Aguinda, Clide Ramiro Aguinda Aguinda,
Luis Armando Chimbo Yumbo, Beatriz Mercedes Grefa Tanguila,
Lucio Enrique Grefa Tanguila, Patricio Wilson Aguinda Aguinda,
Patricio Alberto Chimbo Yumbo, Segundo Angel Amanta Milan,
Francisco Matias Alvarado Yumbo, Olga Gloria Grefa Cerda,
Narcisa Aida Tanguila Narvaez, Bertha Antonia Yumbo Tanguila,
Gloria Lucrecia Tanguila Grefa, Francisco Victor Tanguila Grefa,
Rosa Teresa Chimbo Tanguila, Maria Clelia Reascos Revelo,
Heleodoro Pataron Guaraca, Celia Irene Viveros Cusangua,
Lorenzo Jose Alvarado Yumbo, Francisco Alvarado Yumbo,
Jose Gabriel Revelo Llore, Luisa Delia Tanguila Narvaez,
Jose Miguel Ipiales Chicaiza, Hugo Gerardo Camacho Naranjo,
Maria Magdalena Rodriguez Barcenes, Elias Roberto Piyahuaje Payahuaje,
Lourdes Beatriz Chimbo Tanguila, Octavio Ismael Cordova Huanca,
Maria Hortencia Viveros Cusangua, Guillermo Vincente Payaguaje Lusitante,
Alfredo Donaldo Payaguaje Payaguaje and Delfin Leonidas Payaguaje Payaguaje
Respondents
- and -
International Human Rights Program at the University of Toronto Faculty of Law, MiningWatch Canada, Canadian Centre for International Justice and
Justice and Corporate Accountability Project
Interveners
Coram: McLachlin C.J. and Abella, Rothstein, Cromwell, Karakatsanis, Wagner and Gascon JJ.
Reasons for Judgment:
(paras. 1 to 96)
Gascon J. (McLachlin C.J. and Abella, Rothstein, Cromwell, Karakatsanis and Wagner JJ. concurring)
Chevron Corp. v. Yaiguaje, 2015 SCC 42, [2015] 3 S.C.R. 69
Chevron Corporation and
Chevron Canada Limited Appellants
v.
Daniel Carlos Lusitande Yaiguaje, Benancio Fredy Chimbo Grefa,
Miguel Mario Payaguaje Payaguaje, Teodoro Gonzalo Piaguaje Payaguaje, Simon Lusitande Yaiguaje, Armando Wilmer Piaguaje Payaguaje,
Angel Justino Piaguaje Lucitante, Javier Piaguaje Payaguaje, Fermin Piaguaje, Luis Agustin Payaguaje Piaguaje, Emilio Martin Lusitande Yaiguaje,
Reinaldo Lusitande Yaiguaje, Maria Victoria Aguinda Salazar,
Carlos Grefa Huatatoca, Catalina Antonia Aguinda Salazar,
Lidia Alexandria Aguinda Aguinda, Clide Ramiro Aguinda Aguinda,
Luis Armando Chimbo Yumbo, Beatriz Mercedes Grefa Tanguila,
Lucio Enrique Grefa Tanguila, Patricio Wilson Aguinda Aguinda,
Patricio Alberto Chimbo Yumbo, Segundo Angel Amanta Milan,
Francisco Matias Alvarado Yumbo, Olga Gloria Grefa Cerda,
Narcisa Aida Tanguila Narvaez, Bertha Antonia Yumbo Tanguila,
Gloria Lucrecia Tanguila Grefa, Francisco Victor Tanguila Grefa,
Rosa Teresa Chimbo Tanguila, Maria Clelia Reascos Revelo,
Heleodoro Pataron Guaraca, Celia Irene Viveros Cusangua,
Lorenzo Jose Alvarado Yumbo, Francisco Alvarado Yumbo,
Jose Gabriel Revelo Llore, Luisa Delia Tanguila Narvaez,
Jose Miguel Ipiales Chicaiza, Hugo Gerardo Camacho Naranjo,
Maria Magdalena Rodriguez Barcenes, Elias Roberto Piyahuaje Payahuaje, Lourdes Beatriz Chimbo Tanguila, Octavio Ismael Cordova Huanca,
Maria Hortencia Viveros Cusangua, Guillermo Vincente Payaguaje Lusitante,
Alfredo Donaldo Payaguaje Payaguaje and
Delfin Leonidas Payaguaje Payaguaje Respondents
and
International Human Rights Program at the University of Toronto
Faculty of Law, MiningWatch Canada,
Canadian Centre for International Justice and
Justice and Corporate Accountability Project Interveners
Indexed as: Chevron Corp. v. Yaiguaje
2015 SCC 42
File No.: 35682.
2014: December 11; 2015: September 4.
Present: McLachlin C.J. and Abella, Rothstein, Cromwell, Karakatsanis, Wagner and Gascon JJ.
on appeal from the court of appeal for ontario
Private international law — Foreign judgments — Recognition — Enforcement — Foreign judgment creditor sought recognition and enforcement of foreign judgment in Ontario against U.S. foreign judgment debtor’s and Canadian seventh‑level indirect subsidiary — Foreign judgment debtor served ex juris at U.S. head office — Subsidiary served in juris at place of business in Ontario — Whether a real and substantial connection must exist between defendant or dispute and Ontario for jurisdiction to be established — Whether Ontario courts have jurisdiction over foreign judgment debtor’s subsidiary when subsidiary is a third party to the judgment for which recognition and enforcement is sought.
The oil‑rich Lago Agrio region of Ecuador has long attracted the exploration and extraction activities of global oil companies, including Texaco. As a result of those activities, the region is said to have suffered extensive environmental pollution that has disrupted the lives and jeopardized the futures of its residents. For over 20 years, the 47 respondents/plaintiffs, who represent approximately 30,000 indigenous Ecuadorian villagers, have been seeking legal accountability and financial and environmental reparation for harms they allegedly suffered due to Texaco’s former operations in the region. Texaco has since merged with Chevron, a U.S. corporation. The Appellate Division of the Provincial Court of Justice of Sucumbíos affirmed an Ecuadorian trial judge’s award of US$8.6 billion in environmental damages and US$8.6 billion in punitive damages against Chevron. Ecuador’s Court of Cassation upheld the judgment except on the issue of punitive damages. In the end, the total amount owed was reduced to US$9.51 billion.
Since the initial judgment, Chevron has fought the plaintiffs in the U.S. courts and has refused to acknowledge or pay the debt. As Chevron does not hold any Ecuadorian assets, the plaintiffs commenced an action for recognition and enforcement of the Ecuadorian judgment in the Ontario Superior Court of Justice. It served Chevron at its head office in California, and served Chevron Canada, a seventh‑level indirect subsidiary of Chevron, first at an extra‑provincially registered office in British Columbia, and then at its place of business in Ontario. Inter alia, the plaintiffs sought the Canadian equivalent of the award resulting from the judgment of the Appellate Division of the Provincial Court of Justice of Sucumbíos. Chevron and Chevron Canada each sought orders setting aside service ex juris of the amended statement of claim, declaring that the court had no jurisdiction to hear the action, and dismissing or permanently staying the action.
The motion judge ruled in the plaintiffs’ favour with respect to jurisdiction. However, he exercised the court’s power to stay the proceeding on its own initiative pursuant to s. 106 of the Ontario Courts of Justice Act. The Court of Appeal held this was not an appropriate case in which to impose a discretionary stay under s. 106. On the jurisdictional issue, it held that, as the foreign court had a real and substantial connection with the subject matter of the dispute or with the defendant, an Ontario court has jurisdiction to determine whether the foreign judgment should be recognized and enforced in Ontario against Chevron. With respect to Chevron Canada, in view of its bricks‑and‑mortar business in Ontario and its significant relationship with Chevron, the Court of Appeal found that an Ontario court has jurisdiction to adjudicate a recognition and enforcement action that also named it as a defendant.
Held: The appeal should be dismissed.
Canadian courts, like many others, have adopted a generous and liberal approach to the recognition and enforcement of foreign judgments. To recognize and enforce such a judgment, the only prerequisite is that the foreign court had a real and substantial connection with the litigants or with the subject matter of the dispute, or that the traditional bases of jurisdiction were satisfied. There is no need to demonstrate a real and substantial connection between the dispute or the defendant and the enforcing forum. In actions to recognize and enforce foreign judgments within the limits of the province, it is the act of service on the basis of a foreign judgment that grants an Ontario court jurisdiction over the defendant. To conclude otherwise would undermine the important values of order and fairness that underlie all conflicts rules, and would be inconsistent with this Court’s statement that the doctrine of comity must be permitted to evolve concomitantly with international business relations, cross‑border transactions, and mobility.
This 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. 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, allowing parties to predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect and will help to avert needless and wasteful jurisdictional inquiries.
Two considerations of principle support the view that the real and substantial connection test should not be extended to an enforcing court in an action for recognition and enforcement. First, the crucial difference between an action at first instance and an action for recognition and enforcement is that, in the latter case, the only purpose of the action is to allow a pre‑existing obligation to be fulfilled. As the enforcing court is not creating a new substantive obligation, there can be no concern that the parties are situated elsewhere, or that the facts underlying the dispute are properly addressed in another court. The only important element is the foreign judgment and the legal obligation it has created. Furthermore, enforcement is limited to measures that can be taken only within the confines of the jurisdiction and in accordance with its rules, and the enforcing court’s judgment has no coercive force outside its jurisdiction. Similarly, enforcement is limited to seizable assets found within its territory. As a result, any potential constitutional concerns relating to conflict of laws simply do not arise in recognition and enforcement cases: since the obligation created by a foreign judgment is universal, each jurisdiction has an equal interest in the obligation resulting from the foreign judgment, and no concern about territorial overreach could emerge.
Beyond this, it must be remembered that the notion of comity has consistently been found to underlie Canadian recognition and enforcement law. The need to acknowledge and show respect for the legal action of other states has consistently remained one of comity’s core components, and militates in favour of recognition and enforcement. Legitimate judicial acts should be respected and enforced, not sidetracked or ignored. The goal of modern conflicts systems rests on the principle of comity, which calls for the promotion of order and fairness, an attitude of respect and deference to other states, and a degree of stability and predictability in order to facilitate reciprocity. This is true of all areas of private international law, including the recognition and enforcement of foreign judgments. 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. No unfairness results to judgment debtors from having to defend against recognition and enforcement proceedings — through their own behaviour and legal noncompliance, they have made themselves the subject of outstanding obligations, so they may be called upon to answer for their debts in various jurisdictions. They are also provided with the opportunity to convince the enforcing court that there is another reason why recognition and enforcement should not be granted. Requiring a defendant to be present or to have assets in the enforcing jurisdiction would only undermine order and fairness: presence will frequently be absent given the very nature of the proceeding at issue, and requiring assets in the enforcing jurisdiction when recognition and enforcement proceedings are instituted would risk depriving creditors of access to funds that might eventually enter the jurisdiction. In today’s globalized world and electronic age, to require that a judgment creditor wait until the foreign debtor is present or has assets in the province before a court can find that it has jurisdiction in recognition and enforcement proceedings would be to turn a blind eye to current economic reality.
Finding that there is no requirement of a real and substantial connection between the defendant or the action and the enforcing court in an action for recognition and enforcement is also supported by the choices made by the Ontario legislature, all other common law provinces and territories, Quebec, other international common law jurisdictions and most Canadian conflict of laws scholars.
In this case, jurisdiction is established with respect to Chevron. It attorned to the jurisdiction of the Ecuadorian courts, it was served ex juris at its head office, and the amended statement of claim alleged that it was a foreign debtor pursuant to a judgment of an Ecuadorian court. While this judgment has since been varied by a higher court, this occurred after the amended statement of claim had been filed; even if the total amount owed was reduced, the judgment remains largely intact. The plaintiffs have sufficiently pleaded the Ontario courts’ jurisdiction over Chevron.
The question of whether jurisdiction exists over Chevron Canada should begin and end with traditional, presence‑based jurisdiction. Where jurisdiction stems from the defendant’s presence in the jurisdiction, there is no need to consider whether a real and substantial connection exists. To establish traditional, presence‑based jurisdiction over an out‑of‑province corporate defendant, it must be shown that the defendant was carrying on business in the forum at the time of the action. This is a question of fact: the court must inquire into whether the company has some direct or indirect presence in the state asserting jurisdiction, accompanied by a degree of business activity which is sustained for a period of time. Here, the motion judge’s factual findings have not been contested. They are sufficient to establish presence‑based jurisdiction. Chevron Canada has a physical office in Ontario, where it was served. Its business activities at this office are sustained; it has representatives who provide services to customers in the province. Canadian courts have found that jurisdiction exists in such circumstances. The motion judge’s analysis was correct, and the Ontario Court of Appeal had no need to go beyond these considerations to find jurisdiction.
The establishment of jurisdiction does not mean that the plaintiffs will necessarily succeed in having the Ecuadorian judgment recognized and enforced. A finding of jurisdiction does nothing more than afford the plaintiffs the opportunity to seek recognition and enforcement of the Ecuadorian judgment. Once past the jurisdictional stage, Chevron and Chevron Canada can use the available procedural tools to try to dispose of the plaintiffs’ allegations. This possibility is foreign to and remote from the questions that must be resolved on this appeal. Further, the conclusion that the Ontario courts have jurisdiction in this case should not be understood to prejudice future arguments with respect to the distinct corporate personalities of Chevron and Chevron Canada or whether Chevron Canada’s shares or assets will be available to satisfy Chevron’s debt.
Cases Cited
Applied: Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; distinguished: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; referred to: Aguinda v. Texaco, Inc., 303 F.3d 470 (2002); Chevron Corp. v. Donziger, 768 F.Supp.2d 581 (2011); Chevron Corp. v. Naranjo, 667 F.3d 232 (2012); Chevron Corp. v. Donziger, 974 F.Supp.2d 362 (2014); Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, [2006] 2 S.C.R. 612; Hunt v. T&N plc, [1993] 4 S.C.R. 289; Hilton v. Guyot, 159 U.S. 113 (1895); Spencer v. The Queen, [1985] 2 S.C.R. 278; Tolofson v. Jensen, [1994] 3 S.C.R. 1022; BNP Paribas (Canada) v. Mécs (2002), 60 O.R. (3d) 205; Tasarruf Mevduati Sigorta Fonu v. Demirel, [2007] EWCA Civ 799, [2007] 1 W.L.R. 2508; Yukos Capital S.A.R.L. v. OAO Tomskneft VNK, [2014] IEHC 115; Lenchyshyn v. Pelko Electric, Inc., 723 N.Y.S.2d 285 (2001); Abu Dhabi Commercial Bank PJSC v. Saad Trading, Contracting and Financial Services Co., 986 N.Y.S.2d 454 (2014); Haaksman v. Diamond Offshore (Bermuda), Ltd., 260 S.W.3d 476 (2008); Pure Fishing, Inc. v. Silver Star Co., 202 F.Supp.2d 905 (2002); Electrolines, Inc. v. Prudential Assurance Co., 677 N.W.2d 874 (2004); Base Metal Trading, Ltd. v. OJSC “Novokuznetsky Aluminum Factory”, 283 F.3d 208 (2002), cert. denied, 537 U.S. 822 (2002); CSA8‑Garden Village LLC v. Dewar, 2013 ONSC 6229, 369 D.L.R. (4th) 125; Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; Salomon v. Salomon & Co., [1897] A.C. 22; Ontario v. Rothman’s Inc., 2013 ONCA 353, 115 O.R. (3d) 561; Muscutt v. Courcelles (2002), 60 O.R. (3d) 20; Wilson v. Hull (1995), 174 A.R. 81; Ingersoll Packing Co. v. New York Central and Hudson River R.R. Co. (1918), 42 O.L.R. 330; Adams v. Cape Industries Plc., [1990] 1 Ch. 433; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. (2003), 63 O.R. (3d) 431; Prince v. ACE Aviation Holdings Inc., 2013 ONSC 2906, 115 O.R. (3d) 721, aff’d 2014 ONCA 285, 120 O.R. (3d) 140; Abdula v. Canadian Solar Inc., 2011 ONSC 5105, 92 B.L.R. (4th) 324, aff’d 2012 ONCA 211, 110 O.R. (3d) 256; Charron v. Banque provinciale du Canada, [1936] O.W.N. 315; Patterson v. EM Technologies, Inc., 2013 ONSC 5849; BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560.
Statutes and Regulations Cited
Canada Business Corporations Act, R.S.C. 1985, c. C‑44 .
Civil Code of Québec, art. 3155.
Courts of Justice Act, R.S.O. 1990, c. C.43, s. 106.
International Commercial Arbitration Act, R.S.O. 1990, c. I.9, Sch., arts. 35(1), 36(1).
Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5.
Reciprocal Enforcement of Judgments (U.K.) Act, R.S.O. 1990, c. R.6.
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 16.02(1)(c), 17.02, 20, 21.
Authors Cited
Black, Vaughan. “Enforcement of Judgments and Judicial Jurisdiction in Canada” (1989), 9 Oxford J. Legal Stud. 547.
Black, Vaughan, Stephen G. A. Pitel and Michael Sobkin. Statutory Jurisdiction: An Analysis of the Court Jurisdiction and Proceedings Transfer Act. Toronto: Carswell, 2012.
Blom, Joost. “New Ground Rules for Jurisdictional Disputes: The Van Breda Quartet” (2012), 53 Can. Bus. L.J. 1.
Brand, Ronald A. “Federal Judicial Center International Litigation Guide: Recognition and Enforcement of Foreign Judgments” (2013), 74 U. Pitt. L. Rev. 491.
Briggs, Adrian. The Conflict of Laws, 3rd ed. Oxford: Oxford University Press, 2013.
Castel, J.‑G. Introduction to Conflict of Laws, 4th ed. Markham, Ont.: Butterworths, 2002.
Dicey and Morris on the Conflict of Laws, vol. 1, 13th ed. Under the general editorship of Lawrence Collins. London: Sweet & Maxwell, 2000.
Monestier, Tanya J. “A ‘Real and Substantial’ Mess: The Law of Jurisdiction in Canada” (2007), 33 Queen’s L.J. 179.
Monestier, Tanya J. “Jurisdiction and the Enforcement of Foreign Judgments” (2013), 42 Advocates’ Q. 107.
Monestier, Tanya J. “(Still) a ‘Real and Substantial’ Mess: The Law of Jurisdiction in Canada” (2013), 36 Fordham Int’l L.J. 396.
Perell, Paul M., and John W. Morden. The Law of Civil Procedure in Ontario, 2nd ed. Markham, Ont.: LexisNexis, 2014.
Pitel, Stephen G. A., and Cheryl D. Dusten. “Lost in Transition: Answering the Questions Raised by the Supreme Court of Canada’s New Approach to Jurisdiction” (2006), 85 Can. Bar Rev. 61.
Pitel, Stephen G. A., and Nicholas S. Rafferty. Conflict of Laws. Toronto: Irwin Law, 2010.
Uniform Law Conference of Canada. Court Jurisdiction and Proceedings Transfer Act (online: http://www.ulcc.ca/en/uniform-acts-new-order/current-uniform-acts/
739-jurisdiction/civil-jurisdiction/1730-court-jurisdiction-proceedings-transfer-act).
Walker, Janet. Castel & Walker: Canadian Conflict of Laws, 6th ed. Markham, Ont.: LexisNexis, 2005 (loose‑leaf updated June 2015, release 50).
Watson, Garry D., and Frank Au. “Constitutional Limits on Service Ex Juris: Unanswered Questions from Morguard” (2000), 23 Advocates’ Q. 167.
APPEAL from a judgment of the Ontario Court of Appeal (MacPherson, Gillese and Hourigan JJ.A.), 2013 ONCA 758, 118 O.R. (3d) 1, 313 O.A.C. 285, 370 D.L.R. (4th) 132, 52 C.P.C. (7th) 229, 15 B.L.R. (5th) 285, [2013] O.J. No. 5719 (QL), 2013 CarswellOnt 17574 (WL Can.), setting aside a decision of Brown J., 2013 ONSC 2527, 361 D.L.R. (4th) 489, 15 B.L.R. (5th) 226, [2013] O.J. No. 1955 (QL), 2013 CarswellOnt 5729 (WL Can.). Appeal dismissed.
Clarke Hunter, Q.C., Anne Kirker, Q.C., and Robert Frank, for the appellant Chevron Corporation.
Benjamin Zarnett, Suzy Kauffman and Peter Kolla, for the appellant Chevron Canada Limited.
Alan J. Lenczner, Q.C., Brendan F. Morrison and Chris J. Hutchison, for the respondents.
Murray Klippenstein, Renu Mandhane and W. Cory Wanless, for the interveners the International Human Rights Program at the University of Toronto Faculty of Law, MiningWatch Canada and the Canadian Centre for International Justice.
A. Dimitri Lascaris and James Yap, for the intervener the Justice and Corporate Accountability Project.
The judgment of the Court was delivered by
Gascon J. —
I. Overview
[1] In a world in which businesses, assets, and people cross borders with ease, courts are increasingly called upon to recognize and enforce judgments from other jurisdictions. Sometimes, successful recognition and enforcement in another forum is the only means by which a foreign judgment creditor can obtain its due. Normally, a judgment creditor will choose to commence recognition and enforcement proceedings in a forum where the judgment debtor has assets. In this case, however, the Court is asked to determine whether the Ontario courts have jurisdiction to recognize and enforce an Ecuadorian judgment where the foreign judgment debtor, Chevron Corporation (“Chevron”), claims to have no connection with the province, whether through assets or otherwise. The Court is also asked to determine whether the Ontario courts have jurisdiction over a Canadian subsidiary of Chevron, Chevron Canada Limited (“Chevron Canada”), a stranger to the foreign judgment for which recognition and enforcement is being sought.
[2] The courts below found that jurisdiction existed over Chevron. They held that the only connection that must be proven for recognition and enforcement to proceed is one between the foreign court and the original action on the merits; there is no preliminary need to prove a connection with Ontario for jurisdiction to exist in recognition and enforcement proceedings. They also found there to be an independent jurisdictional basis for proceeding against Chevron Canada due to the place of business it operates in the province, and at which it had been duly served.
[3] I agree with the outcomes reached by the courts below with respect to both Chevron and Chevron Canada and I would dismiss the appeal. In an action to recognize and enforce a foreign judgment where the foreign court validly assumed jurisdiction, there is no need to prove that a real and substantial connection exists between the enforcing forum and either the judgment debtor or the dispute. It makes little sense to compel such a connection when, owing to the nature of the action itself, it will frequently be lacking. Nor is it necessary, in order for the action to proceed, that the foreign debtor contemporaneously possess assets in the enforcing forum. Jurisdiction to recognize and enforce a foreign judgment within Ontario exists by virtue of the debtor being served on the basis of the outstanding debt resulting from the judgment. This is the case for Chevron. Jurisdiction also exists here with respect to Chevron Canada because it was validly served at a place of business it operates in the province. On the traditional jurisdictional grounds, this is sufficient to find jurisdiction.
II. Backgrounds and Facts
[4] The dispute underlying the appeal originated in the Lago Agrio region of Ecuador. The oil-rich area has long attracted the exploration and extraction activities of global oil companies, including Texaco, Inc. (“Texaco”). As a result of those activities, the region is said to have suffered extensive environmental pollution that has, in turn, disrupted the lives and jeopardized the futures of its residents. The 47 respondents (“plaintiffs”) represent approximately 30,000 indigenous Ecuadorian villagers. For over 20 years, they have been seeking legal accountability as well as financial and environmental reparation for harms they allegedly have suffered due to Texaco’s former operations in the region. Texaco has since merged with Chevron.
[5] In 1993, the plaintiffs filed suit against Texaco in the United States District Court for the Southern District of New York. In 2001, after lengthy interim proceedings, the District Court dismissed their suit on the grounds of international comity and forum non conveniens. The following year, the United States Court of Appeals for the Second Circuit upheld that judgment, relying in part on a commitment by Texaco to submit to the jurisdiction of the Ecuadorian courts should its motion to dismiss succeed: Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002).
[6] In 2003, the plaintiffs filed suit against Chevron in the Provincial Court of Justice of Sucumbíos. Several years of litigation ensued. In 2011, Judge Zambrano ruled in the plaintiffs’ favour, and ordered Chevron to pay US$8.6 billion in environmental damages, as well as US$8.6 billion in punitive damages that were to be awarded unless Chevron apologized within 14 days of the judgment. As Chevron did not apologize, the punitive damages award remained intact. In January 2012, the Appellate Division of the Provincial Court of Justice of Sucumbíos affirmed the trial judgment. In November 2013, Ecuador’s Court of Cassation upheld the Appellate Division’s judgment, except on the issue of punitive damages. In the end, the total amount owed was reduced to US$9.51 billion.
[7] Meanwhile, Chevron instituted further U.S. proceedings against the plaintiffs’ American lawyer, Steven Donziger, and two of his Ecuadorian clients, seeking equitable relief. Chevron alleged that Mr. Donziger and his team had corrupted the Ecuadorian proceedings by, among other things, ghost-writing the trial judgment and paying Judge Zambrano US$500,000 to release it as his own. In 2011, Judge Kaplan of the United States District Court for the Southern District of New York granted preliminary relief in the form of a global anti-enforcement injunction with respect to the Ecuadorian judgment: Chevron Corp. v. Donziger, 768 F.Supp.2d 581 (S.D.N.Y. 2011). The United States Court of Appeals for the Second Circuit overturned this injunction in 2012, stressing that “[t]he [plaintiffs] hold a judgment from an Ecuadorian court. They may seek to enforce that judgment in any country in the world where Chevron has assets”: Chevron Corp. v. Naranjo, 667 F.3d 232 (2d Cir. 2012), at pp. 245-46. In 2014, Judge Kaplan of the District Court held that the Ecuadorian judgment had resulted from fraud committed by Mr. Donziger and others on the Ecuadorian courts: Chevron Corp. v. Donziger, 974 F.Supp.2d 362 (S.D.N.Y. 2014). That decision and the underlying allegations of fraud are not before this Court.
[8] Since the initial judgment, Chevron has refused to acknowledge or pay the debt that the trial court said it owed, and it does not hold any Ecuadorian assets. Faced with this situation, the plaintiffs have turned to the Canadian courts for assistance in enforcing the Ecuadorian judgment, and obtaining their financial due. On May 30, 2012, after the Appellate Division’s decision but prior to the release of the 2013 judgment of the Court of Cassation, they commenced an action for recognition and enforcement of the Ecuadorian judgment against Chevron, Chevron Canada and Chevron Canada Finance Limited in the Ontario Superior Court of Justice. The action against the latter has since been discontinued.
[9] Chevron, a U.S. corporation incorporated in Delaware, was served at its head office in San Ramon, California. Chevron Canada, a Canadian corporation governed by the Canada Business Corporations Act, R.S.C. 1985, c. C-44 , with its head office in Alberta, is a seventh-level indirect subsidiary of Chevron, which has 100 percent ownership of every company in the chain between itself and Chevron Canada. The plaintiffs initially served Chevron Canada with their amended statement of claim at an extra-provincially registered office in British Columbia. Later, they served the company at a place of business it operates in Mississauga, Ontario.
[10] In serving Chevron in San Ramon, the plaintiffs relied upon rule 17.02(m) of Ontario’s Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”), which provides that service may be effected outside of Ontario without leave where the proceeding consists of a claim “on a judgment of a court outside Ontario”. In serving Chevron Canada at its Mississauga office, the plaintiffs relied upon rule 16.02(1)(c), which requires that personal service be made on a corporation “by leaving a copy of the document . . . with a person at any place of business of the corporation who appears to be in control or management of the place of business”.
[11] In their amended statement of claim, the plaintiffs sought: (a) the Canadian equivalent of the award of US$18,256,718,000 resulting from the 2012 judgment of the Appellate Division of the Provincial Court of Justice of Sucumbíos; (b) the Canadian equivalent of costs to be determined by the Ecuadorian court; (c) a declaration that the shares of Chevron Canada are available to satisfy the judgment of the Ontario court; (d) the appointment of an equitable receiver over the shares and assets of Chevron Canada; (e) prejudgment interest from January 3, 2012; and (f) all costs of the proceedings on a substantial indemnity basis, plus all applicable taxes. In response, the appellants each brought a motion in which they sought substantially the same relief: (1) an order setting aside service ex juris of the amended statement of claim; and (2) an order declaring that the court had no jurisdiction to hear the action, and dismissing or permanently staying it.
III. Judicial History
A. Ontario Superior Court of Justice (Commercial List) (Brown J.), 2013 ONSC 2527, 361 D.L.R. (4th) 489
(1) Order Setting Aside Service Ex Juris
[12] The motion judge was asked to determine the prerequisites for establishing that an Ontario court has jurisdiction in an action to recognize and enforce a foreign judgment. Chevron contended that the “real and substantial connection” test for establishing jurisdiction articulated by this Court in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, applies not only to the question whether a court can assume jurisdiction over a dispute in order to decide its merits, but also to whether an enforcing court has jurisdiction in an action to recognize and enforce a foreign judgment. The plaintiffs replied that the “real and substantial connection” test for jurisdiction does not apply to the enforcing court. Rather, in an action for recognition and enforcement, it need only be established that the foreign court had a real and substantial connection with the dispute’s parties or with its subject matter. The motion judge ruled in the plaintiffs’ favour, dismissing Chevron’s motion. He offered five reasons for his conclusion.
[13] First, in his view, this Court’s leading cases on recognition and enforcement ― Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, and Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416 ― contain no suggestion that a real and substantial connection between the foreign judgment debtor and Ontario is needed. Second, he found that there is nothing in Van Breda to suggest that it altered the principles laid down in Morguard and Beals. Third, requiring that rule 17.02(m) be read “within the (un-stated) context of the Ontario court otherwise enjoying some real and substantial connection to the defendant would render the sub-rule meaningless” because the Ontario court will, of course, have no connection with the subject matter of the judgment, given that “it is a foreign judgment which by its very nature has no connection with Ontario”: para. 80. Nor will there be an in personam connection between the defendant and Ontario, as “the sub-rule specifically contemplates that a non-Ontario resident will be the defendant in the action”: ibid. Fourth, the judge held that there may be legitimate reasons (for instance, the practical reality that assets can exit a jurisdiction quickly) for seeking the recognition and enforcement of a foreign judgment against a non-resident debtor who has no assets in Ontario. To insist that the debtor have assets in the jurisdiction before a judgment creditor can seek recognition and enforcement could harm the creditor’s ability to recover the debt. Fifth, the motion judge considered two analogous Ontario statutes ― the Reciprocal Enforcement of Judgments (U.K.) Act, R.S.O. 1990, c. R.6, and the International Commercial Arbitration Act, R.S.O. 1990, c. I.9 ― and found that neither of these legislative schemes establishes a requirement that the defendant be located or possess assets in Ontario before a creditor can register a foreign judgment or arbitral award. In “an age of global commerce”, he added, it would be misguided to have a more restrictive common law approach than a statutory one: para. 82.
[14] The motion judge also found that jurisdiction existed over Chevron Canada, which had initially contended that because it was not a judgment debtor, there was no basis upon which to serve it ex juris in British Columbia. The judge observed, however, that the situation had changed since Chevron Canada had brought its motion: the plaintiffs had served the corporation at a “bricks and mortar” office it operates in Mississauga, Ontario (para. 87). This constituted a “place of business” within the meaning of rule 16.02(1)(c), and service at that location was sufficient to establish jurisdiction.
(2) Order of a Stay Under Section 106 of the Courts of Justice Act
[15] In spite of these conclusions, the motion judge found that this was an appropriate case in which to exercise the court’s power to stay a proceeding “on its own initiative” pursuant to s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43. He so held for several reasons. First, Chevron does not own, has never owned, and has no intention of owning assets in Ontario. Second, Chevron conducts no business in Ontario. Third, there is no basis for asserting that Chevron Canada’s assets are Chevron’s assets for the purposes of satisfying the Ecuadorian judgment. Chevron does not own Chevron Canada’s shares. Nor is there a legal basis for piercing Chevron Canada’s corporate veil. In the judge’s view, even though “[i]mportant considerations of international comity accompany any request for the recognition of a judgment rendered by a foreign court . . . [t]he evidence [in this case] disclosed that there is nothing in Ontario to fight over”, and thus no reason to allow the claim to proceed any further: para. 111.
B. Ontario Court of Appeal (MacPherson, Gillese and Hourigan JJ.A.), 2013 ONCA 758, 118 O.R. (3d) 1
[16] The plaintiffs appealed the stay entered by the motion judge. Chevron and Chevron Canada cross-appealed his conclusion that the Ontario courts have jurisdiction.
(1) Entering of the Stay
[17] To maintain consistency with their jurisdictional challenge, Chevron and Chevron Canada made no submissions before the Ontario Court of Appeal in support of the stay that had been granted. They made no submissions on this point before this Court either. This issue is therefore not before us.
[18] In this regard, I would simply note that the Court of Appeal rejected the view that this was an appropriate case in which to impose a discretionary stay under s. 106 of the Courts of Justice Act. MacPherson J.A., writing for the court, emphasized that Chevron and Chevron Canada ― both “sophisticated parties with excellent legal representation” ― had decided not to attorn to the jurisdiction of the Ontario courts: para. 45. They referenced s. 106 in their submissions only insofar as it potentially supported a stay on the basis of lack of jurisdiction, not on the basis on which it had ultimately been granted. The stay was entirely the initiative of the motion judge. According to the Court of Appeal, a s. 106 stay should only be granted in rare circumstances, and the bar to granting it should be raised even higher when it is not requested by the parties. In fact, the s. 106 stay in this case constituted a “disguised, unrequested and premature Rule 20 and/or Rule 21 motion”: para. 57. In MacPherson J.A.’s view, the motion judge had effectively imported a forum non conveniens motion into his reasoning on the stay, even though no such motion had been before him. The issues that the motion judge had addressed deserved to be fully canvassed on the basis of a complete record and full legal argument.
[19] I note as well that the Court of Appeal found that although the motion judge’s analysis with respect to jurisdiction relied on the notion of comity, he underplayed comity’s importance in the reasons he gave in support of the stay. The Court of Appeal disagreed that allowing the case to be heard on the merits would constitute a mere “academic exercise”: para. 70. In its view, in light of Chevron’s considerable efforts to stall proceedings up to that point, the plaintiffs “[did] not deserve to have their entire case fail on the basis of an argument against their position that was not even made, and to which they did not have an opportunity to respond”: ibid. It found that while the plaintiffs may not ultimately succeed on the merits, or in collecting from the judgment debtor, this was not relevant to a determination of whether to grant a discretionary stay at this stage of the proceedings. For the Court of Appeal, “[t]his case crie[d] out for assistance, not unsolicited and premature barriers”: para. 72.
(2) Jurisdiction to Determine Whether the Ecuadorian Judgment Should Be Recognized and Enforced
[20] On the jurisdictional issue, the Court of Appeal agreed with the motion judge’s analysis. It found this Court’s judgment in Beals to be “cr