Lexpert Magazine

LEXPERT MAGAZINE | JULY 2019 19 ART OF THE CASE FEATURES chart their own course," Lowenstein said. It didn't hurt that the attorneys from Gib- son, Dunn & Crutcher LLP, Chevron's lead lawyers in the US, were team players too. "Remember that litigation is a blood sport in the U.S.," Sullivan says. "But the Gibson Dunn people were very good at picking up on our legal and cultural values, and they were patient with us, expressed confidence in us and listened to us." Confidence, to be sure, was not lacking in the defence team. "We felt very strongly that there was no legal basis for the case, especially insofar as it affected Chevron Canada, given that the company had no connection whatsoever to the Ecuador judgment, was an innocent party, and that a ruling against us on the corporate veil would have enormous impli- cations," Kauffman said In this case, however, the confidence didn't lead to that great spoiler, overconfidence. "Although our case was based on bed- rock principles of corporate separateness, we also wanted to assure the court that the equities of the case favoured Chevron," O'Sullivan said. As it turned out, things started out well enough for Chevron. In May 2013, Justice David Brown of the Ontario Superior Court (since appointed to the Court of Appeal) ruled that Ontario courts had jurisdiction to recognize the Ec- uadorean judgment and enforce the action. But he also ordered a stay, noting that there was no legal basis for piercing the corporate veil and leaving "nothing in Ontario to fight over". "Brown's exercise of discretion to order a stay could have saved the parties millions of dollars, because we wouldn't have had to go through all that followed just to achieve the same result," O'Sullivan said. Six months later, things continued to go in the right direction, if not perfectly satis- factorily, when the Ecuador National Court of Justice halved the damages to $9.5 billion. Too much of a good thing, perhaps de- fying the law of averages, which may have caught up to Chevron in December when the Court of Appeal agreed with Brown on jurisdiction but lied the stay. "No question that, despite our steadfastness on the ultimate result, things didn't always go smoothly from a jurisdictional perspective," Kauffman says. "e path to the end was longer than we might have hoped." But the next year was a good one. Chevron sought and ob- tained leave to appeal to the Supreme Court of Canada in April 2014, just weeks aer Judge Lewis Kaplan of the US Federal Court ruled that the Ecuadorean judgment could not be en- forced because it was "obtained by corrupt means", the product of fraud on the part of the plaintiffs' lawyers who, the court found, fabricated evidence, resorted to bribery and ghost-wrote court documents and judgments. "Kaplan's decision was seminal, because it was foundational to our argument that a decision procured through fraud and bribery should not be recognized in Canada," O'Sullivan said. e findings of fraud and corruption on the part of the plain- tiffs' legal team and the Ecuadorean government also went a long way to balancing the equities. And although arguing the equities was decidedly secondary to the defendants' strategy of focusing on "bedrock" legal principles, it both buoyed Chev- ron's legal team and gave the emotional tenor of the case a little more balance. Hunter saw the judgment as "vindicating and satisfying", and Lowenstein believed the decision "certainly made Lenczner's appeal to the sympathies of the court more difficult." Ultimately, however, it made no difference in the SCC. In September 2015, the court dismissed Chevron's appeal and con- firmed the jurisdiction of the Ontario courts. Although disappointed, Chevron's lawyers took heart from their perception that the SCC had vindicated their strategy. roughout, Lenczner had infused his corporate veil argu- ments with references to the "justice" of the Ecuadorean cause. "Our biggest challenge throughout was to counter the plain- tiffs' false environmental allegations, which had nothing to do with corporate separateness, without distracting from our pri- mary argument regarding the corporate veil," Lowenstein says. As it turned out, the SCC wasn't in the least bit distracted. Although both sides agreed that the record before the SCC was enough to make findings on the substantive issue, the court spe- cifically refused to do so. "e SCC's reasons made absolutely no finding on the mer- its and le it open for us to pursue summary judgment, which is what we did," Kauffman said. "So we directed our efforts to demonstrating that Chevron Canada was a separate legal entity that had committed no impropriety that would provide a basis to seize its assets." Lenczner and his team, who had le no stone unturned in at- tempting to demonstrate that Chevron Canada was ultimately bound by certain of Chevron Corporation's policies, sought and obtained further document production before the sum- mary judgment hearing.

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