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South America

Forty Years Ago Today: Pinochet’s Coup in Chile

by Roger Alford

PinochetI have been in Santiago, Chile for the past few days keynoting an international law conference at the Pontifical Catholic University of Chile. It’s an impressive law school in one of the most beautiful cities in South America.

I was fortunate to arrive on the eve of the fortieth anniversary of the defining moment in Chilean history: Augusto Pinochet’s coup d’état on September 11, 1973. Protests are planned throughout the country to memorialize the detained and disappeared. I’m not sure what the norm is in Santiago, but this week Pinochet was very much on the minds of Chileans, with television and newspapers filled with stories on the Pinochet era. An estimated 3,200 were murdered and 38,000 tortured during his reign. I spoke at length with students and professors about their reflections on Augusto Pinochet.

Pinochet’s reputation has plummeted in the past two decades. Almost everyone I spoke with said that the Pinochet extradition trial in the United Kingdom was the turning point. At the time he was arrested in London in October 1998, the country was divided, with as many defending as condemning him. But the international condemnation that ensued in 1999 altered pubic opinion in Chile. Now the vast majority of Chileans view Pinochet as a dictator, and he has precious little support among the the younger generation. Only with the older generation is there a significant minority that defends the Pinochet era.

I raise this because I think many outsiders view the Pinochet trial as an inconclusive failure. He was never extradited to Spain. Despite numerous attempts, he was never convicted at home or abroad for his human rights violations. But the legacy of the extradition trials in Britain and criminal investigations in Chile have left a lasting impact on Pinochet’s reputation. The law students I had the privilege to interview uniformly condemned the man. The names of his victims are memorialized around the country. He was never convicted, but he stands condemned by the Chilean public.

Is Colombia Going to Just Ignore the ICJ’s Ruling on Nicaragua?

by Julian Ku

Although the government of Colombia was far from pleased when the ICJ issued a judgment last November in a long-running territorial dispute with Nicaragua, it did not go so far as to say it would simply ignore the ruling.  But Colombia’s vice president Angelino Garzon seems to be hinting in recent comments that Colombia is prepared to do just that.

“The judgement of the Court of The Hague is unenforceable in our country. It cannot apply now, in five years or ten years time,” emphasized Vice President Angelino Garzon.

“The judges in The Hague instead of helping to resolve the differences between Colombia and Nicaragua, have only exacerbated them,” added Garzon.

I get the feeling there is more to this story than this quotation reflects, but it would not be shocking if Colombia simply walked away (it has already withdrawn from the ICJ’s jurisdiction under the Bogota Treaty).  Nicaragua is not in a position to force Colombia’s compliance.  Still, it would be strange for Colombia to ignore the ruling while it is supposedly preparing to ask the ICJ to reconsider its ruling.  Maybe VP Garzon is simply going off the reservation? Developing…

Sore Loser? Colombia’s Unpersuasive Accusations Against the Chinese ICJ Judge

by Julian Ku

ABC’s Univision reports on this op-ed by former Colombian foreign secretary and former vice justice minister, which seems to accuse shadowy Chinese business interests of influencing the recent ICJ decision in Nicaragua v. Colombia.  Here is the crux of the alleged wrongdoing (or at least shady conduct):

…in November 2012, the ICJ issued a ruling that certified that most of the contended area belonged to Colombia. Nicaragua however, was awarded an area of nearly 7,500 square kilometer.

Nicaragua needed part of the awarded area to be able to build the massive inter-oceanic canal the government is envisioning, according to Sanín and Ceballos. The canal is set to be built in 10 years at an estimated cost of nearly $30 billion.

The alleged problem is that one of the judges who delivered the ICJ’s decision is Xue Hanqin, a Chinese national who apparently knew the Nicaraguan ambassador to the court from a previous work position. The Colombians argue that Xue Hanqin probably knew about the canal and should have recused herself because her government had a major interest in the ruling’s outcome. Since she didn’t there are growing suspicions that she might have been working to advance China’s economic and geopolitical agenda.

My Spanish is even vaguer than my French, but, accepting the Univision description as accurate, than this seems like a weak attempt to discredit the ICJ decision.  To be sure, it is possible that Judge Xue knew the Nicaraguan ambassador from her time as a diplomat, and it is also quite likely that she knows about the Chinese government’s interest in a Nicaraguan canal.

But none of that seems to be close to enough to require a recusal or its equivalent.  To be sure, the ICJ’s practice on recusal is pretty lax, and could use some further development.  But even if you think that the Egyptian judge should have been recused from the Israeli Wall advisory opinion, at least the accusation there was about statements made, or views held, by the individual judge.  It was not a claim that he should recuse himself because the Egyptian government opposed the Wall.

But the Colombians are essentially saying that because the Chinese government would have favored the Nicaraguan case, and had a material interest in a favorable outcome, its judge should have recused herself.  That could not be the rule, since it would require recusals all the time.  Now, if they had evidence Judge Xue held shares in a Chinese company that was building the canal, that would be something.  But there is no such accusation, as far as I can tell. (Note: Colombia did not even request her recusal).

Is Judge Xue biased? I suppose she might have been. But she would not have been much more biased than any of the other judges on the ICJ.  With 15 judges, her bias could not have been all that important in the ICJ’s unanimous opinion anyway.

Ontario Court Dismisses Ecuadorian Enforcement Action Against Chevron

by Roger Alford

An Ontario court in Yaiguaje v. Chevron has dismissed the Ecuadorian plaintiffs’ efforts to enforce the Ecuadorian judgment against Chevron Canada. Essentially the dismissal rests on the doctrine of the separate legal identities of parent and subsidiary corporations.

Chevron has no assets in Canada, and the subsidiaries’ assets there cannot be attached to enforce a judgment against the parent company. This is not a particularly controversial proposition. Therefore the fight over the recognition and enforcement of the dubious $19 billion Ecuadorian judgment should be resolved elsewhere.

Here’s the key language (paras. 110-111):

By way of summary, Chevron does not possess any assets in this jurisdiction at this time. The evidence also disclosed that no realistic prospect exists that Chevron will bring any assets into this jurisdiction in the foreseeable future…. The plaintiffs’ contention that the assets of Chevron Canada ‘are’ the assets of Chevron has no basis in law or fact…. Accordingly, any recognition of the Ecuadorian Judgment by this Court would have no practical effect whatsoever in light of the absence of exigible assets of the judgment debtor in this jurisdiction.

…. Chevron is on record saying: ‘We will fight until hell freezes over and then fight it out on the ice.’ While Ontario enjoys a bountiful supply of ice for part of each year, Ontario is not the place for that fight. Far from it…. The evidence disclosed that there is nothing in Ontario to fight over…. In my view, the parties should take their fight elsewhere to some jurisdiction where ultimate recognition of the Ecuadorian judgment will have a practical effect.

Chevron’s press release responding to the ruling is here. The Ecuadorian plaintiffs’ press release is here.

Did the ICJ Really Call the Bolivian Application Against Chile “Impeccable”?

by Julian Ku

This report out of Prensa Latina in Havana suggests that the ICJ has expressed some sort of positive opinion on quality of Bolivia’s case against Chile.

In a press conference, [Bolivian Foreign Minister] Choquehuanca announced the International Court notified Chile on the start of the process and reasserted the Bolivian will of not affecting the bilateral relations with Chile. He also said the Court regarded the Bolivian demand as impeccable, and he expressed his trust in a favourable resolution for Bolivia.

(Emphasis added).  Now there are no doubt some translation issues here, and Prensa Latina is not exactly the most authoritative source.  But it does seem like the Bolivian Foreign Minister is suggesting that the ICJ, in its routine acceptance of an application by a member state, expressed some opinion about the nature and quality of Bolivia’s substantive case.  I am sure this is NOT the case, since the Court’s Registrar is only functioning in an administrative capacity here.  So if the Foreign Minister did in fact say what Prensa Latina reported, his statement is very misleading.  Hey, ICJ Press Office! I think you should issue a statement or something.

Bolivia’s Ridiculously Weak ICJ Case Against Chile

by Julian Ku

Last week, the government of Bolivia filed an application in the International Court of Justice against Chile arguing that Chile has breached its “obligation to negotiate in good faith and effectively with Bolivia in order to reach an agreement granting Bolivia a fully sovereign access to the Pacific Ocean.”

Is it just me, or is this the weakest case ever filed at the ICJ?   I am baffled as to how there could be compulsory jurisdiction under the Bogota Treaty, whose relevant provision reads:

“…the High Contracting Parties declare that they recognize, in relation to any other American State, the jurisdiction of the Court as compulsory ipso facto, without the necessity of any special agreement so long as the present Treaty is in force, in all disputes of a juridical nature that arise among them concerning: a) The interpretation of a treaty; b) Any question of international law; c) The existence of any fact which, if established, would constitute the breach of an international obligation; d) The nature or extent of the reparation to be made for the breach of an international obligation”.

According to Bolivia, the legal dispute exists because “Chile denies its obligation to enter into negotiations regarding Bolivia’s fully sovereign access to the Pacific Ocean.”  Ergo, there is a dispute over whether Chile has an international obligation to negotiate and whether it has breached this obligation that it denies having.

But this is circular.  Bolivia is the one claiming there is an obligation, and the mere fact that Chile denies the existence of the obligation can’t by itself create the basis for jurisdiction.  Bolivia needs to point to some source which imposes a legal obligation  on Chile an obligation to negotiate in good faith on this issue.  The following appears to be Bolivia’s best effort to find such an obligation:

17. The Bolivian note of 1 June 1950, invoking the different declarations and commitments formulated by Chile, proposed: “for the Governments of Bolivia and Chile to formally enter into a direct negotiation to satisfy Bolivia’s fundamental need for obtaining an own and sovereign access to the Pacific Ocean, thus resolving the problem of Bolivia’s confinement, on the basis of natural conveniences and the true interests of both countries”

18. The Chilean note in response, dated 20 June 1950, states that: “( … ) my Government ( … )it is willing to formally enter into a direct negotiation aiming at finding the formula which would make it possible to grant Bolivia an own and sovereign access to the Pacific Ocean and for Chile to obtain compensations that are not of a territorial nature and that effectively take into account its interests”

Apparently, those negotiations never worked out.  But there is an even more fundamental point. The 1950 Chilean note states that the government “is willing to formally enter into a direct negotiation”.  It doesn’t say that the Chilean government obligates itself to negotiate (whatever that would mean anyway).   The same non-obligatory language is true of a 1975 statement that Chile “would be prepared to negotiate with Bolivia the cession of a strip of land north of Arica up to the Linea de la Concordia” (emphasis added).  Even if there was a treaty provision that explicitly obligated the parties to negotiate in good faith, I would be skeptical.  But there isn’t even that.

Maybe I’m missing something, but this case looks like a sure loser on admissibility. It looks like it is going to be a major waste of time for the ICJ.  I admit I am not an expert on the relevant treaties here, or on this dispute, but if Bolivia’s application reflects its best arguments, then I can’t see how the ICJ could possibly allow this application to proceed.  How would they ever avoid future cases where one party asks another party to negotiate, and then complains when that party doesn’t agree to do so.  This should be a slam-dunk unanimous admissibility dismissal for the ICJ. I just hope they don’t need more than a year to figure this out. (If someone out there has a good defense of Bolivia’s case for jurisdiction, would love to hear about it.)

Does Ecuador Deserve Condemnation for Ignoring Arbitral Tribunal Orders and Treaty Obligations?

by Julian Ku

Neither the arbitral tribunal’s order demanding Ecuador act to stop enforcement of the $18 Billion judgment against Chevron, nor Ecuador’s continued brazen refusal to follow the order is really much a surprise. The Chevron-Ecuador Death Cage Match continues unabated and has gotten so out of control that almost nothing shocks me about this case anymore.  A former Ecuadorian judge swearing in US federal court that he was paid thousands of dollars by US plaintiffs attorneys to ghostwrite the underlying case against Chevron is just another weird detail in an already sordid story.

The theory of the interim award is interesting.  Ecuador has a duty to preserve the status quo while the arbitral tribunal reviews the merits of Chevron’s claims against Ecuador.  But the plaintiffs in the Lago Agrio case are not parties to the arbitration and are free to continue to pursue enforcement.  I suppose the argument is Ecuador is facilitating the overseas enforcement actions by not suspending  the domestic Ecuadorian litigation. That does seem a problem, although what exactly could Ecuador do? Pass new legislation ordering its courts to stop the domestic litigation?

I may be missing something, I am not sure this award does Chevron much good.  It simply puts a little more leverage on Ecuador to do something to stop the enforcement actions against Chevron, or face responsibility for costs incurred by Chevron from the enforcement actions.  Fair enough, but if Ecuador feels the tribunal will ultimately rule for them anyway on the merits, then this award doesn’t really add a whole lot of pressure, nor does it give Chevron much additional leverage in foreign courts like Argentina or Canada where enforcement actions are proceeding.  The US litigation attempting to show fraud is more likely to bear fruit than this award in stopping those actions.

In other words, it is rational for Ecuador to drag its feet on obeying the arbitral tribunal’s various interim awards.  The only basis for condemning Ecuador is simple: it is flagrantly and openly violating its solemn treaty obligations.  But should it be condemned on those grounds alone?  Neither rational choice nor realist scholars would do so.  But what about the rest of you?

Don’t Cry for the World’s Greatest Sovereign Deadbeat

by Julian Ku

Argentina is, to put it bluntly, one of the world’s greatest sovereign deadbeats, defaulting on its sovereign bonds more than once as well as bearing the distinction of being the world’s number one respondent in ICSID arbitration claims (or at least close to number one).  Last week, the ongoing struggle between foreign creditors and Argentina found a new flashpoint as investors brought an action in Ghana to attach ARA Libertad, an Argentina government naval training ship that was on a goodwill tour of West Africa.

Argentina had defaulted on its sovereign bonds in 2002 and various investors who did not accept Argentina’s settlement of those debts (which involved a 70% “haircut”)  have been seeking to collect on those debts ever since, especially in litigation occurring in the U.S. and the U.K.  So far, however, investors have failed to collect much money, even though a U.S. court has granted summary judgment holding Argentina liable for more than $280 million (with lots of interest accruing).

The Ghana litigation is the latest round in this ongoing struggle to collect on this judgment. The commercial court in Accra has refused Argentina’s effort to lift an injunction preventing ARA Libertad from leaving Ghana, holding that Argentina’s bonds waived applicable sovereign immunity defenses. Indeed, most courts seem to have agreed that  Argentina has indeed waived its immunity defenses. Here is an excerpt of their waiver, as described in a recent U.S. Court of Appeals for the Second Circuit decision: (E.M. Ltd. V. Republic of Argentina (2d Cir. Aug. 20, 2012)

To the extent the Republic [of Argentina] or any of its revenues, assets or properties shall be entitled … to any immunity from suit, … from attachment prior to judgment, … from execution of a judgment or from any other legal or judicial process or remedy, … the Republic has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by the laws of such jurisdiction…

Of course, this waiver does not necessarily mean that all of Argentina’s assets can be seized or attached.  In U.S. litigation, courts have held that this waiver allows U.S. courts to attach Argentina state assets that are used for a commercial activity.  (NML Capital v. Argentina, 680 F.3d 254 (2d Cir. 2012)).  If such an approach is followed in Ghana, I am not sure whether the foreign investors would be able to prevail since they would have to prove that the ARA Libertad is being used for a commercial as opposed to a naval activity.

On the other hand, Ghana law could very well be more favorable to the creditors than U.S. law.  It certainly sounds like that is the case given this report of the arguments in the Ghana court. Perhaps sensing it has a losing legal argument, Argentina has begun a full-court diplomatic press on Ghana, even enlisting Chile to help out.

If Ghanian law allows a waiver of attachment to extend to all sovereign property, then it seems only fair that this case should be allowed to proceed regardless of what Argentine or Chilean diplomats say. I realize that the foreign creditors here are “vulture” investors who purchased the bonds from the original bondholders at a steep discount, but I don’t think that excuses Argentina from its undoubted legal liability.  Even if the ARA Libertad is not properly the subject of attachment, I can’t understand why folks continue to excuse Argentina’s deadbeat behavior.  Argentina plainly has the money to pay the judgment (the just expropriated their largest oil company, after all), and it is obligated to do so as a result of its own commitments. So why cry for Argentina?

Enforcement of the Ecuadorian Judgment against Chevron in Ontario: The Ontario Law

by Stephen G.A. Pitel

[Stephen G.A. Pitel is Associate Professor at Western University, Faculty of Law]

On May 30, 2012, residents of Ecuador started an action in the Ontario Superior Court of Justice seeking to enforce a judgment in their favour of an Ecuadorian court against Chevron.  The amount of the judgment is a staggering $18 billion.  Chevron has announced that it will resist the enforcement litigation in Ontario.

Under Ontario’s common law, confirmed relatively recently by the Supreme Court of Canada in Beals v Saldanha, the test for whether a court will enforce a foreign judgment ordering the payment of money has three requirements.  First, the judgment must be final.  Second, the court granting the judgment must have had jurisdiction on a particular basis.  This is sometimes called jurisdiction in the international sense or jurisdictional competence.  Third, the judgment must be for a fixed sum of money and not a tax or penalty.  In general see Stephen G.A. Pitel & Nicholas S. Rafferty, Conflict of Laws at 159-73.

On the first requirement, a judgment is considered to be final even though there is time remaining within which to launch an appeal or an appeal has in fact been launched (as is the case here): Nouvion v Freeman (1889), 15 App Cas 1 (HL) at 10-11 and 13.  However, in such a situation it is relatively straightforward for the defendant in the enforcement proceedings to obtain a stay of the action on the basis that the court should await the results of the appeal.  It would seem likely that Chevron could have the Ontario proceedings stayed pending the results of the appeal in Ecuador.  Even if the enforcement proceedings are stayed, starting them can still have advantages to the plaintiff.  The stay does not stop the plaintiff attempting to obtain a Mareva injunction to freeze assets or other forms of interlocutory relief.
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Plaintiffs Seek to Enforce Ecuadorian Judgment Against Chevron in Canada

by Roger Alford

The shoe has finally dropped. Ever since the Invictus Memo was released to the public we knew that the Ecuadorian Plaintiffs were considering twenty-seven different countries to enforce the $18.2 Ecuadorian judgment against Chevron. With Chevron’s far-flung assets, it was plausible that the Plaintiffs would choose to enforce the judgment in countries with close ties to Ecuador and a questionable commitment to the rule of law. The good news is that the Plaintiffs have chosen, at least for now, a highly reputable forum–the Ontario Superior Court in Canada–for adjudicating the recognition and enforcement of the judgment. Here’s a key excerpt:

11. The Judgment of the [Ecuadorian] Appellate Division is a final Judgment in Ecuador and is exigible against the assets of Chevron in whatever jurisdiction any may be found, including Canada.

12. All the facts, findings and conclusions of law stated in the Judgments and Clarifications in Ecuador are res judicata as between the parties.

13. As a consequence of the Decision of the Supreme Court of Canada in Beals v. Saldanha and subsequent jurisprudence, Chevron is estopped from challenging any fact, finding or determination of law in the Ecuadorian Decisions on the merits. Further, Chevron is restricted from challenging the Ecuadorian Decisions on the basis of fraud unless it can demonstrate that the allegations are new, not the subject or prior adjudication and were not discoverable by the exercise of due diligence.

Significantly, the plaintiffs are trying to attach the assets of Chevron Canada Ltd and Chevron Canada Financial Ltd, two wholly-owned subsidiaries of Chevron. Given that Chevron itself has few assets in Canada, the choice is somewhat curious. We know from the Invictus Memo that the Plaintiffs are seeking a jurisdiction that is “flexible” on veil-piercing, including what they call the “rare” case of “reverse veil-peircing”, holding the subsidiary liable for the parent’s judgment debt. (see p. 23). I do not know whether Canada would fall into the category of a flexible jurisdiction on reverse veil piercing.

The other key question, of course, is how Canadian law treats fraud as a defense to the enforcement of foreign judgments. As reported here, according to one Canadian scholar, Canadian courts “tend to take a somewhat narrower view of what might constitute fraud than some courts would.” I would be curious if others in the know agree or disagree.

It would appear that the Plaintiffs are confident enough in the merits of their position to avoid the mistake of filing in a court of dubious distinction, but not sufficiently confident enough to subject themselves to the jurisdiction of U.S. courts and the resulting counterclaims that would inevitably follow. As Chevron put it in a statement today, “If the plaintiffs’ lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States – where Chevron Corporation resides. In the U.S., however, the plaintiffs’ lawyers would be confronted by the fact that seven federal courts have already made findings under the crime/fraud doctrine about this scheme.”

The Statement of Claim makes no mention of the investment arbitration, nor the injunction against Ecuador to take action to prevent enforcement proceedings anywhere in the world.

A copy of the Statement of Claim is available here.

Will Chavez Remove Venezuela from the Inter-American Commission?

by Doug Cassel

[Doug Cassel is Professor of Law at Notre Dame Law School]

Venezuelan President Hugo Chavez on April 30 directed his Council of State (a policy advisory body) to study Venezuela’s “withdrawal” from the Inter-American Commission on Human Rights.  He asked for their recommendation within days, not weeks.  This is the latest move in the Bolivarian Republic’s long record of denouncing the Commission and the Inter-American Court of Human Rights as tools of US imperialism, supposedly biased against socialist Venezuela.

But the real reason for Chavez’ pronouncement, say human rights groups – in my view correctly – is that the Commission and Court hold the Chavista regime accountable for its systematic violations of the independence of the judiciary (1, 2), and of freedom of the press, (3, 4), as well as other serious violations of human rights (5, 6).

Chavez’ call was promptly cheered by other high officials in Caracas.  It seems a foregone conclusion that the Council will recommend withdrawal.  Since Chavez has already declared that Venezuela should have withdrawn a long time ago, he is all but certain to heed such a recommendation.

Withdrawing from the Commission, however, is not so simple. (more…)

Doug Cassel’s Reply to Kevin Jon Heller: Who Bought What?

by Doug Cassel

[Doug Cassel is Professor of Law at Notre Dame Law School]

Kevin Jon Heller’s reply to my post on the fraudulent Ecuadorian judgment against Chevron is entitled, “Chevron’s Buyer’s Remorse.” Heller avers that there is “one reason, and one reason only, that this case was heard before an Ecuadorian court: because that is what Chevron wanted.”

Actually, that is what Texaco wanted. Texaco’s motion and affidavits were filed, and its forum non conveniens motion granted, before Chevron acquired Texaco in 2001. Litigating in the 1990’s, Texaco had no reason to foresee, years later, the arbitrary removal of 27 justices of Ecuador’s Supreme Court in 2004, the unwarranted removal of nine judges of the Constitutional Court in 2007, or President Correa’s declaration of a state of “judicial emergency” in 2011.

More important, Texaco prudently agreed only to be sued, not defrauded, in Ecuador. It reserved the right to contest the validity of any judgment (1) fraudulently obtained, (2) by courts lacking impartiality, or (3) in violation of due process of law. All three reservations apply to the judgment against Chevron.

Heller relies on a “lengthy and thoroughly footnoted” letter from plaintiffs’ attorneys. Length and footnotes do not guarantee accuracy. For the reasons stated in my (also lengthy and footnoted) reply, plaintiffs’ letter is inaccurate, not only on this point, but pervasively. I encourage interested readers to review both letters, and to decide for themselves whether the partially purloined stack of paper, purportedly penned by the Ecuadorian judge, deserves to be called a “judgment.”