CBC goes to court to get Chevron to unseal documents in $9.5B US environmental battle

CBC News has filed a motion to the Ontario Superior Court of Justice to force Chevron Corp. to unseal court records in a decades-long environmental battle with approximately 30,000 Indigenous Ecuadorian villagers.

An appeal hearing in Toronto on Tuesday will continue to hear arguments with significant implications and will raise the question of what responsibility Canadian corporations have for possible harm caused abroad by their corporate affiliates.

The case, first launched in 1993, has moved through three countries and many courts. The villagers initially alleged years of oil drilling contaminated their water and soil. An Ecuadorian court awarded them $18.2 billion after 18 years; that amount was later reduced to $9.5 billion.

But Chevron Corp. no longer has assets in Ecuador, so Indigenous groups have taken their fight to other countries including Brazil, Argentina, the United States and now Canada.

Phil Fontaine, a former national chief of the Assembly of First Nations, recently visited the Lago Agrio region of Ecuador and says what he saw there was "devastating." He hopes the court will be "open" and the Ecuadorian Indigenous people will finally feel "empowered by the decision."

Phil Fontaine, former head of the Assembly of First Nations, recently visited the affected region of Ecuador. He told CBC what he saw there was 'devastating.' (Karen Hinton/Submitted)

The plaintiffs argue Chevron Canada is a wholly owned subsidiary of Chevron Corporation.

Alan Lenczer, legal counsel for the plaintiffs, said they are entitled to the money. He told CBC News they will continue to argue that Chevron Canada is "owned" and "operated in every material respect" by their parent company.

Chevron is arguing that the case should not move forward because the judgment, originally handed down in Ecuador, was based on fraud and racketeering activities.

Chevron Corp. told CBC News they do not believe that the "fraudulent Ecuadorian judgment is enforceable in any court that observes the rule of law." Previously, lawyers have said "[w]e're going to fight this until Hell freezes over and then fight it out on the ice."

Lenczner says that the U.S. decision is "irrelevant" to what's going on in Canada and "if they want to undermine the Ecuadorian judgment here in Canada they've got to do it in Canada and they haven't done that yet."

Chevron, Canada and the CBC

Chevron is arguing that Chevron Canada is a distinct entity and not an asset of the parent company and is neither responsible for their debts nor liable to have its assets taken to satisfy such debts.

The battle made its way all the way up to the Supreme Court of Canada. In 2015 the court affirmed Ontario's jurisdiction over the claim and sent the case back to Ontario Superior Court.

In January of 2017, Ontario Superior Court Justice Glenn Hainey dismissed the plaintiff's motion on the basis that Chevron Corp. has no assets in Canada and the shares and assets of its indirect subsidiary, Chevron Canada, are not available to pay the judgment.

The case is in Canada in part because Chevron Corp. no longer has assets in Ecuador. Chevron's lawyers argue Chevron Canada is a separate entity from its parent company, while the plaintiffs argue it is a wholly owned subsidiary. (David Bell/CBC)

Many of the key documents to support Chevron's argument are sealed.

"Without access to the sealed materials, CBC/Radio-Canada's reporting on the matter will be restricted, and the public may be deprived of important, reliable and direct sources of information on the issues of public interest raised," the CBC affidavit states.

"The issues underlying the proceeding are matters of significant public interest and public importance, including Aboriginal rights in the face of environmental damage caused by private corporations, remediation of environmental damage, and the costs of remediation."

Fontaine said getting the documents unsealed is important because everyone is entitled to know how corporate interests like Chevron are behaving. He believes their negative behaviour is what is behind their "closed-book approach."

Amazon Watch, Steelworkers Humanity Fund and Friends of the Earth Canada have also filed a joint application to unseal documents stating that "preventing the public from accessing Chevron's filings violates the principle of open justice."

The CBC motion is scheduled to be heard on June 20, 2018.

25-year legal battle

The battle began in 1993 when Texaco, which was acquired by Chevron in 2001, was accused by Ecuadorian villagers of water and soil contamination caused by years oil-drilling activities.

The Ecuadorian Provincial Court awarded the villagers $18.2 billion US judgment in 2011. That amount was later reduced to $9.5 billion US in 2013.

The energy giant argued the judgment was obtained fraudulently including blackmailing the judge, fabricating evidence and ghostwriting the final ruling.  

The battle moved to the United States, where the federal Court of Appeals agreed with Chevron. The court ruled the judgment was the product of "egregious fraud" and racketeering activity, and unenforceable in the United States.

"Despite attempts by the plaintiff's attorneys and others to shift the discussion to unrelated topics, the question before the court remains whether Chevron Canada Limited can be held liable for a judgment against U.S.-based Chevron Corporation in Ecuador that a U.S. Federal Court has found was the product of corruption and fraud," Sean Comey, senior advisor for Chevron Corp. told CBC News.

"That finding has been unanimously affirmed by a U.S. Federal Court of Appeals and is now final."

Larger issues at play 

Regardless of the dispute of the Ecuadorian judgement, the plaintiffs and environmental supporters say a bigger issue is at stake.

"Chevron continues to try to hide everything it can from public scrutiny, but the truth is it can't
hide the evidence of what it did in Ecuador," said Paul Paz y Miño, associate director of environmental group Amazon Watch. "The public needs to see the truth behind Chevron's justice aversion and efforts of impunity abuse of justice."

Phil Fontaine, who plans to be at the proceedings in Toronto Tuesday with a large group of supporters, said if the courts rule in favour of the Ecuadorian indigenous interests, the settlement will enable the Indigenous community there to finally recapture some of what they lost -- jobs in agriculture. Those jobs are "essential for the future wellbeing of those Indigenous communities," he said.

Benjamin Zarnett, legal counsel representing Chevron Canada, told CBC News: "Chevron Canada is looking forward to making its submissions to the Court of Appeal supporting the decision of the Ontario Superior Court of Justice which dismissed this claim against Chevron Canada, against whom the Ecuadorian plaintiffs allege no wrongdoing."