Chevron, Ecuadoreans to clash in Toronto court

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The world's highest-profile environmental legal battle, which pits U.S. energy giant Chevron Corp. against a group of Ecuadorean villagers over decades of oil pollution in the Amazon, is set to make its Canadian courtroom debut this week.

The tangled and undeniably bitter 19-year court fight resulted in a staggering $18.3-billion (U.S.) judgment from an Ecuadorean court against Chevron last year. Ecuador recently increased the award to $19-billion.

But the oil company refuses to pay, and accuses the plaintiffs's lawyers, in a U.S. lawsuit, of using fraud and bribery to obtain the ruling. The plaintiffs make similar allegations of dirty tricks against Chevron – and both sides deny all the allegations against them.

The sprawling case will come before an Ontario Superior Court judge on Thursday, after the Ecuadorean plaintiffs sought out Canada as the first place in the world where they would try to enforce their judgment and get their hands on Chevron's assets.

The case has dogged one of the world's largest companies ever since it acquired Texaco, which operated in the Lago Agrio region of Ecuador in the 1970s and 1980s, in 2001. Texaco's oil operations left what the plaintiffs call an environmental disaster in the Amazon jungle, but Chevron contends that Texaco paid its required cleanup costs when it left the country in the 1990s.

Since filing their Ontario case in May, the plaintiffs have also made similar attempts to collect on the massive judgment in Brazil and Argentina. A lawyer for the plaintiffs in Buenos Aires announced last month they had been successful in freezing Chevron's assets there – a move the company characteristically slammed as an attempt to "launder" a "fraudulent" judgment.

For their Canadian fight, the plaintiffs have hired Bay Street litigator Alan Lenczner, who is trying to convince a judge to recognize the Ecuadorean ruling and force Chevron to hand over the $12-billion in assets the plaintiffs say its Canadian subsidiaries are sitting on.

What will likely be just the first round of the Ontario court battle this week is over a motion from Chevron Corp., based in San Ramon, Calif., and its Canadian subsidiaries to have the case tossed outright.

Chevron argues the plaintiffs cannot seize those Canadian assets, because, it says, its Canadian affiliates are independent, indirect subsidiaries, separated by several layers of corporate ownership from their corporate parent, with no connection to Ecuador. The company's lawyers have also submitted lists of what they allege are factual errors in Mr. Lenczner's court filing.

Mr. Lenczner argues in his written submissions that Chevron does direct its Canadian and other subsidiaries around the world, controlling the cash that flows out of them: "These facts make it plain that the assets of Chevron Canada are Chevron Corp.'s assets to do with it as it pleases."