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South America

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.”

Chevron’s Buyers Remorse

by Kevin Jon Heller

I am not going to respond in depth to Professor Cassel’s recent post on Chevron’s responsibility for the “rainforest Chernobyl” caused by its predecessor’s dumping of million gallons of crude oil and billion gallons of toxic waste into the Ecuadorian rainforest.  The plaintiffs’ attorneys have prepared a lengthy and thoroughly footnoted reply to his open letter; interested readers can find it here. I do, however, want to mention a couple of things.

First, I want to apologize for describing Professor Cassel as an “advocate for Chevron,” which he considers an ad hominem attack.  I have to admit, I don’t understand what is ad hominem about the description; after all, Black’s Law Dictionary defines an advocate as “a person who assists, defends, pleads, or prosecutors for another.”  Personally, I don’t consider “advocate” to be an epithet; I regularly referred to myself as an advocate for Radovan Karadzic, and all of my work was pro bono.  But my goal was not to offend Professor Cassel.

Second, I want to thank Professor Cassel for acknowledging his relationship with Chevron in the body of his post on Opinio Juris.  As I said before, I do not think that we should disregard his opinions on the case simply because he received money from Chevron to write a brief on its behalf.  I was simply concerned that less-interested readers might not find Professor Cassel’s disclosure on their own, given that it came on page four of a letter to which he linked in the post.

Third, I also want to thank Professor Cassel for providing links to material supporting the majority of his claims.  Unlike his previous post, which did not contain any such links, readers can now look at the underlying material and judge for themselves which of us has the better of the argument.  I would note, though, that many of the links are to Chevron’s own materials and legal briefs, which is no different than what I did in my post — a practice that Professor Cassel found objectionable when I did it. I would also note that the “press statements by plaintiffs’ PR operatives” to which I linked each contained extensive links to the primary material relied upon by the plaintiffs, which allowed readers to judge the merits of the plaintiffs’ claims for themselves.

Finally, I think it’s important to remind readers that there is one reason, and one reason only, that this case was heard before an Ecuadorian court: because that is what Chevron wanted.  Indeed, the company filed numerous different affidavits in U.S. federal court attesting to the fairness of the Ecuadorian court system — a system in which Chevron had often won lawsuits.  Now that it has lost the case and suffered a large but eminently fair judgment against it, Chevron has suddenly discovered that the Ecuadorian court system is somehow hopelessly corrupt.  A clearer case of buyers remorse is difficult to imagine.  Unfortunately for Chevron, buyers remorse is not a legal defense.

Make no mistake: this is a case that pits David against Goliath.  Only now Goliath is claiming that he is actually smaller than David and that David stole the slingshot he used during the fight.

Chevron in Ecuador: Doug Cassel Responds to Kevin Jon Heller

by Doug Cassel

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

Heller’s reply misses the point of my post, Suing Chevron in Ecuador: Do the Ends Justify the Means? I did not ask whether Chevron is an “innocent victim.” I asked whether the ends pursued by plaintiffs’ lawyers (environmental remediation) justify their means (making covert payments to the court’s “independent” expert from their “secret account,” writing his report and then lying about it, meeting secretly with the judge in an abandoned warehouse, etc.).

I answered, “No.” Human rights lawyers cannot vindicate rights by trashing the rights to due process and fair trial. Doing so undermines our moral and professional credibility.

I hold that view as a career human rights lawyer, not (in Heller’s ad hominem) as an “advocate for Chevron.” My post linked to my longer open letter, which made explicit that I billed Chevron for representing it on an amicus brief, but not for the time entailed in writing the open letter.

Heller’s “other side of Chevron” consists of a series of erroneous, tendentious or unsupported accusations, based almost entirely on press statements by plaintiffs’ PR operatives. In the order he raises them: (more…)

The Other Side of Chevron

by Kevin Jon Heller

In his recent guest post, Doug Cassel attempts to portray Chevron as the innocent victim of illegal and unethical conduct by the lawyers for the plaintiffs harmed by its predecessor’s dumping of 16.8 million gallons of crude oil and 20 billion gallons of toxic waste into the Ecuadorian rainforest.  Cassel writes as an advocate for Chevron, so he can hardly be expected to discuss both sides of the story.  It is thus critically important to understand the reprehensible behavior that Chevron has engaged in from the earliest days of the litigation.  Here, in no particular order, are some highlights:

1. Chevron has repeatedly lied about the environmental damage caused by its dumping — damage just as repeatedly documented by its own internal audits.

2. Chevron fraudulently altered a report that they gave to their paid scientific consultants in order to hide the fact that they had engaged in dishonest sampling practices in the affected areas (deliberately sampling only areas predetermined to be clean).

3. Chevron has used a secret lab in the United States to hide dirty samples taken from the affected areas.

4. Chevron lawyers have been indicted in Ecuador for making false claims about Chevron’s fake “remediation” of affected sites — which included paying Ecuadorians to build houses on top of dirty sites so they could not be tested.

5. Chevron’s paid scientific consultants misrepresented epidemiological studies linking Chevron’s dumping of waste to health problem in the affected area.  (See this letter signed by 50 leading scientists from all over the world.)

6. Chevron has tried to bribe the Ecuadorian government into quashing the case.

7. Chevron threatened the presiding judge in the case with jail time if he did not rule in favor of the company.

8. Chevron tried to entrap a sitting judge into taking bribes, doctored videotapes that recorded the scheme, and then paid the individual involved a great deal of money to keep quiet.

9. Chevron attorneys have been sanctioned in U.S. courts for abusing the discovery process, including taking depositions in order to harass witnesses, and for filing vexatious lawsuits against lawyers for the plaintiffs and against filmmakers who have documented the damage Chevron has caused.

These examples could be multiplied indefinitely.  But I think they are enough to rebut Cassel’s attempts to portray Chevron as the innocent victim in the case.

Suing Chevron in Ecuador: Do the Ends Justify the Means?

by Doug Cassel

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

In an environmental suit brought by lawyers for some residents of the Amazon, an Ecuadorian court last year issued an $18.2 billion judgment against Chevron. Readers who follow the case only casually may have the impression that this is a classic case of David vs. Goliath, and that Ecuadorian courts gave Goliath his come-uppance.

That impression is understandable. The plaintiffs’ lawyers and associated NGO’s wield an impressive PR operation. The banner headline of their web site tells readers:

Over three decades of oil drilling in Ecuador’s Amazon, Chevron dumped billions of gallons of toxic waste into waterways relied on by local inhabitants. The result: A humanitarian and public health crisis affecting thousands, which Chevron refuses to put right.

There are at least five problems with that headline:

  • Chevron never drilled a drop of oil in Ecuador. Its only connection is its purchase in 2001 of a Texaco subsidiary, TexPet, whose oil operations ended a decade earlier;
  • The only company drilling – and spilling – oil since 1992 has been the Ecuadorian State company, which plaintiffs promised not to sue;
  • The $18.2 billion was awarded, not as damages for past harm to health, but mainly to fund environmental remediation. Yet plaintiffs’ experts admitted to their lawyers that contamination is “just at the pits and stations and nothing has spread anywhere at all;”
  • The oil pits and stations have been or are being remediated. Whatever work remains to be done could not remotely approach even $1 billion, let alone $18 billion; and
  • Chevron has repeatedly stated that it is open to constructive dialogue to resolve the legal controversy and to benefit Amazonian residents, but it is not open to judicial extortion.