A protracted fight over Amazon oilfield pollution reached Canada’s Supreme Court this month, with attorneys for oil giant Chevron seeking to block enforcement in Canada of a US$9.5 billion judgment that rainforest residents won against the company in Ecuador.

The dispute, aired in Canada’s high court on Dec. 11, pits the principle of limited liability between parent corporations and their subsidiaries against those of access to justice and the right to effective remedy. Lawyers for Chevron and Chevron Canada want the high court to find that Ontario’s Superior Court of Justice lacks jurisdiction to weigh a bid by the Ecuadorians, in seeking enforcement of the judgment, to seize assets from Chevron’s Canadian subsidiary. But the Ecuadorians’ attorneys contend that since Chevron has no presence in Ecuador, its assets elsewhere are fair game.

Chevron Canada attorney Benjamin Zarnett described his company as a “seventh-level indirect subsidiary” legally separate from Chevron. “There is no arguable case to treat its assets as available to meet the liability of Chevron Corp. under the Ecuadorian judgment…Even if it were correct that Ontario had jurisdiction, that’s not a connection to the legally separate and uninvolved Chevron Canada.”

Argued Chevron Corp. Counsel Clarke Hunter: “[T]here are no [Chevron Corp.] assets here and there never will be, and embarking on adjudication of the validity of this judgment [against Chevron] is an exercise in futility.”

“Piercing the corporate veil”

Alan Lenczner, counsel for the Ecuadorians, acknowledged for his part that Chevron Canada has no direct connection to Ecuador, but said the Ontario court has jurisdiction over Chevron Canada, which, in turn, is an asset of Chevron Corp. By “piercing the corporate veil,” Lenczner said at the hearing, its assets could be seized. He added that in any event, the question of whether Chevron Corp. has assets in Ontario ought to be looked at once the matter of jurisdiction is settled. “They may have assets in this province,” Lenczner said. “They may get assets in other provinces... I don’t think futility is an answer at this stage to this case. ”

Prompting the litigation here is an effort by Ecuadorian rainforest residents to enforce a damage award they won after prevailing against Chevron in a landmark pollution suit in 2011. The total award reached $19 billion, but was cut to $9.5 billion on appeal in 2013.

Chevron never produced oil in Ecuador, but became the defendant in the suit in 2001 after acquiring Texaco. Texaco’s Ecuadorian subsidiary, Texpet, was accused of causing extensive pollution in the Ecuadorian Amazon from 1963 to 1972.

Even before the Ecuadorian trial ended, Chevron challenged the proceedings in U.S. federal court, charging plaintiffs’ attorneys had sought to bribe court officials and had parts of the judgment ghostwritten. Last March, Chevron won a U.S. District Court verdict that the suit overseen by the lead plaintiffs’ attorney, Steven Donziger of New York, amounted to an extortion scheme.

Donziger has appealed the decision, drawing support in an amicus brief from 36 international legal scholars who criticize the ruling as a violation of “the international legal obligation of the United States not to intervene in the domestic and legal affairs of other states.” Since Chevron has no assets in Ecuador, attorneys for the Ecuadorians have worked to collect the $9.5 billion award through asset-seizure proceedings in Argentina, Brazil and Canada.

In 2011, the Ecuadorians began proceedings in Ontario but jurisdiction was initially denied. That ruling was overturned in Dec. 2013 on appeal to the Ontario Superior Court, prompting Chevron, in turn, to lodge an appeal with the Supreme Court of Canada.

Canadian litigation key

Donziger, who attended the hearing, said afterward that even if his clients win in Brazil, Chevron assets there would not come near the $9.5 billion owed. In Argentina, he says, the case has met with government interference, making the Canadian litigation key. “There are two actions to be taken here: first is the matter of jurisdiction,” Donziger said. “Once this is declared enforceable in Canada, we can start a second action [in the Ontario court] to seize assets. And even if the court argues we can’t get assets in Canada we could register that [first decision] and get assets from other countries.” The Ecuadorians are blocked from asset seizure in the United States.

The Justice and Corporate Accountability Project (JCAP), an intervener for the Ecuadorians comprising the University of Toronto Faculty of Law, MiningWatch Canada and the Canadian Centre for International Justice, also took part in the hearing. JCAP argued transnational corporations should be treated in a way that does not block access to justice or remedies.

The Canadian Bar Association had initially planned to intervene in support of Chevron, but reversed its decision to do so in October. The about-face came after Canadian media reported that the law firm that had prepared the factum for free and initiated the intervention does work for Chevron in Canada.