Ontario Court Of Appeal Sets Aside Security For Costs Order In Yaiguaje v. Chevron Case

In a decision released on October 31, 2017, a three judge panel of the Ontario Court of Appeal overturned a September 21, 2017 decision by the Court of Appeal motions judge that required the Ecuadorian plaintiffs in this case to post $942,951 as security for costs as a condition of proceeding with their appeals to the Court of Appeal.

In a LinkedIn blog posted in early October, I queried whether such a significant security for costs award would spell the end of this enforcement action in Canada against Chevron. Apparently not.

As with all decisions in the continuing Yaiguaje v. Chevron saga, the current one is important to environmental lawyers, particularly given the recent growth of interest by governments in encouraging corporate social responsibility by companies operating extractive industries on foreign soil1.

BACKGROUND

The appellants are residents of Ecuador who hold an Ecuadorian judgment of US$9.5 billion against Chevron Corporation obtained in 2011, relating to pollution of the Ecuadorian rainforest by Chevron's predecessor, Texaco. The plaintiffs attempted to enforce their judgment in the U.S., but were unsuccessful. As a result, they began this enforcement action in Ontario, against both Chevron Corporation and Chevron Canada Limited (collectively, "Chevron").

In 2013, on motion by Chevron challenging the jurisdiction of the Superior Court of Justice to recognize and enforce the Ecuadorian judgment, and in the alternative seeking a stay of the action, the Ontario Superior Court of Justice stayed the action2. This decision was appealed all the way to the Supreme Court of Canada. Without prejudging the merits of the action, the Supreme Court ruled that jurisdiction to commence the action existed, and it should not be stayed3.

Chevron filed statements of defence in the main action, and in 2016 brought a motion for summary judgment, asking the Ontario Superior Court to terminate the action as against Chevron Canada Limited on the basis of that corporation's separate corporate personality from its parent, Chevron Corporation. In a decision released January 20, 2017, Hainey J. granted the motion and terminated the action against Chevron Canada4. We reported on the Hainey J. decision here.

The plaintiffs appealed the summary judgment decision to the Ontario Court of Appeal. In the appeal proceeding, Chevron brought a motion before a single judge of the Court of Appeal for an order for security for costs for the entire proceedings, including the appeal. In a decision released September 21, 2017, Epstein J. granted the motion and required the Ecuadorian plaintiffs to post $942,951 as security for costs5. In essence, the judge accepted that the requirements of Ontario's security for costs rules had been met6, the plaintiffs being ordinarily resident outside the jurisdiction, and further that the plaintiffs failed to establish that they were...