Canada: The Second Opinion: Canadian Subsidiaries Beware? The Ontario Court Of Appeal Addresses The Enforcement Of Foreign Judgments Against Related Entities

The Ontario Court of Appeal's decision Yaiguaje v. Chevron Corporation, 2013 ONCA 758, has important implications for both foreign corporations and their Canadian subsidiaries. The decision clarifies the test by which Ontario courts will enforce foreign judgments, and allows enforcement actions to proceed in Ontario where the only hope of recovery is from the Canadian subsidiary of the foreign corporation.

The case stems from a long-running legal battle between Chevron US, one of the world's largest companies, and the indigenous peoples of the Sucumbíos and Orellana provinces in Ecuador. The Ecuadorians sued Chevron US in Ecuador in 2011, alleging that between 1972 and 1990, Texaco (which Chevron US acquired in 2001) engaged in commercial activities that caused significant environmental damage to the indigenous peoples' lands, waterways, and way of life. Chevron US was found liable for $18 billion, an amount later reduced on appeal to $9.1 billion. Chevron refused to pay the award, contending that the judgment was obtained through fraud, bribery, and other illegal means. Since Chevron US no longer has assets in Ecuador, and since US courts have been sympathetic to Chevron's allegations of fraud against the Ecuadorian court, the Ecuadorians sought to have the judgment recognized and enforced in Ontario against Chevron Canada, a wholly-owned subsidiary of Chevron which had no involvement in the initial judgment.

The motion judge acknowledged that Ontario has jurisdiction to recognize and enforce the judgment, but exercised his discretion to stay the enforcement action as Chevron US has no assets in Canada, Chevron Canada is a separate legal entity from Chevron US, and there was therefore no practical reason to continue with the enforcement action. It would be preferable, the motion judge found, for the Ecuadorians to pursue their enforcement action against Chevron in the US.

The Court of Appeal agreed that Ontario has jurisdiction over the enforcement action, but disagreed that the action should be stayed. With respect to the first issue, the Court clarified that the test for enforcing foreign judgments remains the one articulated by the Supreme Court of Canada in Beals v. Saldanha, 2003 SCC 72. To recognize and enforce a foreign judgment in Ontario, an Ontario court must be satisfied that the foreign court had a real and substantial connection to the initial claim. Ontario courts are not required to also demonstrate that there is a real and substantial connection between Ontario and the legal dispute in the foreign country. Jurisdictional ties to Ontario are only required when determining if the Ontario court should hear an action of first instance, not an enforcement action.

Having recognized the judgment against Chevron US, the Court of Appeal then assumed jurisdiction over Chevron Canada, which carries on business in Ontario. This was necessary for the plaintiffs because Chevron US does not directly own any assets in Canada; the assets all belong to Chevron Canada. Although jurisdiction over Chevron Canada was easily established by virtue of physical presence in Ontario, the Court of Appeal went further and found that Chevron Canada's "economically significant relationship" with Chevron US was an additional reason to take jurisdiction over Chevron Canada. It appears then, that the Court of Appeal's decision to assume jurisdiction over Chevron Canada was partly based on piercing the corporate veil between the foreign judgment debtor and its Canadian subsidiary.

Having assumed jurisdiction over Chevron US and Chevron Canada, the Court held that that the parties should have a hearing on the merits to determine whether the foreign judgment should be enforced against Chevron Canada, and refused to stay the enforcement action under s. 106 of the Courts of Justice Act. The Court noted that since both Chevron US and Chevron Canada wanted to contest jurisdiction, neither attorned to the jurisdiction of the Ontario court. Having refused to attorn, they could not then raise a substantive defence and ask the court to stay the action.

The decision in Yaiguaje v. Chevron Corporation has several implications for Canadian and foreign corporations. First, it clarifies that Ontario courts will assume jurisdiction over a foreign judgment if there is a real and substantial connection between the foreign country and the legal dispute, regardless of the strength of the connection between Ontario and the legal dispute. Second, it suggests that Ontario courts may assume jurisdiction over a corporate entity that has ties to Ontario and an "economically significant relationship" with another corporate entity over which it has jurisdiction. This aspect of the decision is of particular concern for Canadian subsidiaries of multi-national corporations involved in activities that can lead to significant liability, such as resource extraction in foreign countries. Third, corporate defendants that are affiliates of foreign, judgment debtor corporations will now have to re-think the strategy of refusing challenging the jurisdiction of Ontario courts. Depending on the nature of the dispute, it may be useful to forgo jurisdictional challenges and raise substantive defences at the outset to overcome enforcement attempts.

The decision in Yaiguaje is also reminiscent of the recent decision of the Ontario Superior Court of Justice in Choc v. Hudbay Minerals Inc., 2013 ONSC 1414, which signals a greater preparedness of Ontario courts to implicate related entities in wrongdoing abroad.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.