Canadian Lawyer

10 M A R C H 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m \ AT L A N T I C \ C E N T R A L \ P R A I R I E S \ W E S T REGIONAL WRAP-UP T he lawyers representing Ecuador- ian plaintiffs in a lawsuit against Chevron Corporation have applied for leave to appeal a judge's decision to dismiss an action against the company's Canadian subsidiary. The case, Yaiguaje v. Chevron Corpora- tion, made headlines recently after Ontar- io Superior Court Justice Glenn Hainey said the assets of Chevron Canada Limited could not be seized to pay out a foreign judgment against Chevron Corp., as the seven-level indi- rect subsidiary is not an asset of the parent company. The plaintiffs have now applied for leave to appeal the decision to the Ontario Court of Appeal. In their Notice of Appeal, the plain- tiffs disputed the judge's finding that the assets of the subsidiary are not assets of Chevron Corp. Alan Lenczner, of Lenczner Slaght Royce Smith Griffin LLP, is represent- ing the plaintiffs. He says the plaintiffs disagree with an assertion by Hainey that Chevron Canada Limited is "a separate legal person" and "not an asset of any other person including its own parent." In a years-long legal battle, Ecuadorian villagers successfully got a US$18-billion judgment against Texaco, which later merged with Chevron, claiming their region had suffered extensive environ- mental damage from pollution the com- pany had caused and failed to clean up. An Ecuadorian appeals court later upheld the decision in 2013, but it reduced the judgment to US$9.5 billion. After Chevron, which has no assets in Ecuador, refused to pay the judgment, the plaintiffs filed their action in Ontario. Chevron then challenged whether Ontario courts had jurisdiction to enforce the foreign judgement. The Supreme Court of Canada found in 2015 that the courts did have jurisdiction in the matter, but it stopped short of determin- ing whether Chevron Canada is an asset of Chevron Corp. The Canadian subsidiary then brought its summary judgment motion to have the action against it dismissed. The motion judge found that the assets of Chevron Canada could not be seized pursuant to the Execution Act to satisfy the Ecuadorian judgment, saying the act does not give the parent company any interest in the shares of the subsidiary and that it does not create any rights that override the principle of cor- porate separateness. Hainey also found that Chevron Can- ada's corporate veil should not be pierced, as the parent did not have complete con- trol over the subsidiary. In their Notice of Appeal, the plaintiffs argued Hainey erred in his interpretation of the Execution Act, saying the act is of wider reach than his interpretation. Lenczner says the judge also misappre- hended the Supreme Court BCE decision, in his determination that Chevron Canada is not an asset of Chevron Corp. Hainey cited a line from the decision that said, "While the corporation is ongoing, shares confer no right to its underlying assets," but Lenczner says this line was taken out of context and that the judge's conclusion was at odds with what the SCC said. The plaintiffs also argued that Hainey had erred by applying the principle of cor- porate separateness to a judgment debt of a parent company to "shield from execu- tion the assets of its wholly owned subsid- iary" and that the SCC has authorized the piercing of the corporate veil when failing to do so "would result in injustice." Corporate lawyers, however, have said that the confirmation of the principle of corporate separateness is important. Arlene O'Neill, of Gardiner Roberts LLP, says that allowing the corporate veil to be pierced in this case would have set a dangerous legal precedent. "I think corporations have to have comfort in their corporate structures," says O'Neill, who did not act in the case. "This is a case where you have a substantial busi- ness in Canada, completely operating on its own healthily, respecting its corporate structure, [with] its own board of direc- tors, real live assets and employees." A spokesman for Chevron Corpora- tion said the company is confident that any court that rules on the case will rule in its favour. "The Ontario court rightly found that Chevron Corp. and Chevron Canada Lim- ited are two separate and distinct entities," he said in an emailed statement. — ALEX ROBINSON ECUADORIAN PLAINTIFFS APPEAL DECISION AIMING TO SEIZE CHEVRON ASSETS IN ONT. Alan Lenczner is represent- ing the Ecuadorian plain- tiffs suing Chevron to pay out a foreign judgment. 2017 CANADIAN LAWYER LEGAL FEES SURVEY Survey closes March 27 Complete the survey at canadianlawyermag.com/surveys then check out the results in the June issue to see how your fees compare across multiple practice areas. Untitled-4 1 2017-02-09 2:57 PM

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