A Question for Readers
I think there is little doubt where I stand on the merits of the Chevron litigation, so I am not going to get into the substance of the dispute here. But I have an honest question that I am hoping someone will answer. Let’s assume, for sake of argument, that Chevron is correct to argue that the $18 billion judgment was procured by fraud and corruption. Let’s also assume that the appellate decision is affirmed by the highest court in Ecuador. Under what legal theory does the Second Circuit have the authority to “stay enforcement” of the judgment outside of the United States? (It obviously could prevent the plaintiffs from recovering from Chevron inside the U.S.) The Second Circuit was skeptical that any such theory existed, as reported by Law.com:
Judge Lynch in particular questioned again and again the power of a defendant to use New York’s Uniform Foreign Country Money-Judgments Recognition Act offensively as the basis for enjoining other enforcement actions around the world—rather than waiting to seek the anti-suit injunction as a defense to an actual recognition action brought by the plaintiffs in New York. How would New York courts react, queried Lynch, if a Venezuelan court used Venezuelan law to enjoin a Russian judgment holder from going to New York to enforce it? Should or would New York courts respect it?
Mastro conceded that he knew of no precedent for a defendant to proactively get a foreign anti-suit injunction under New York’s Recognition Act, as Chevron seeks to do. However, Mastro argued that there is mountainous evidence that the Ecuadorian judgment was procured by fraud, and the act aims to prevent vexatious litigation. He also argued that the Ecuadorian case is unique because, when the Second Circuit dismissed Chevron’s predecessor Texaco from an earlier filing under forum non conveniens, the company expressly reserved its defenses under New York’s Recognition Act.
This is not my area of law by any stretch, so readers’ thoughts would be most appreciated.