On September 4, 2015, the Supreme Court of Canada issued its
decision in Chevron Corp v Yaiguaje, 2015 SCC 42. In a
unanimous decision, the Court dismissed Chevron's appeal,
holding that Canadian courts have jurisdiction to enforce a foreign
judgment whether or not the original dispute or the parties to it
had any connection to Canada. The decision will have
far-reaching implications for multi-nationals with subsidiaries in
Canada. In effect, the Supreme Court of Canada has ruled that
Canadian courts have jurisdiction to enforce valid judgments of
foreign courts, whether or not the underlying dispute or the
defendant relates to Canada.
In the case, the plaintiffs (a group of indigenous Ecuadorian
villagers) sought enforcement of a $9.51 billion judgment made
against Chevron Corp. by the Ecuadorian courts. The judgment sum
consisted of environmental and punitive damages relating to oil
extraction activities. The action was brought in Ontario against
Chevron Corp. and its indirect Canadian subsidiary, Chevron Canada
Limited (which has significant assets in Canada but which was not a
party to the Ecuadorian judgment).
Chevron Corp. brought a motion to set aside service and stay the
action for lack of jurisdiction, arguing that, following the
Supreme Court of Canada's decision in Club Resorts Ltd v Van Breda, 2012 SCC 17, a
'real and substantial connection' between the court in
which enforcement is sought (in this case the Ontario court) and
the parties or the subject matter of the original dispute is
required to establish jurisdiction. The Supreme Court of Canada
rejected this argument and confirmed that its decision in Van Breda
applies only to first instance cases and not to actions for
The decision made it clear that the sole requirement for the
Canadian court's jurisdiction in enforcement actions is that
the original foreign court had valid jurisdiction. The jurisdiction
of the Ontario court over Chevron Corp. derives from the existence
of the foreign judgment, not from any connection between Ontario
and the dispute. The judgment emphasized the generous and liberal
approach traditionally taken by Canadian courts to the recognizance
and enforcement of foreign judgments.
One aspect which remains unsettled is the effect of the
Court Jurisdiction and Proceedings Transfer Act (CJPTA),
which is in force in a number of provinces, notably British
Columbia, Nova Scotia and Saskatchewan. The CJPTA explicitly states
that a foreign judgment will create a rebuttable presumption of
jurisdiction for the enforcing court. The Supreme Court of Canada
recognised that the CJPTA, or a similar act, might change the
position. As Ontario had not enacted any such legislation, the
Court did not need to rule on the point. Therefore, there remains a
possibility of enforcement action in provinces in which a version
of the CJPTA is in force for a judgment debtor to mount a
The decision has undoubtedly increased litigation risk for
mining, commodities and other multi-national companies operating
through affiliated companies in foreign jurisdictions. Such
companies will need to be prepared for the risk of being held
liable in Canada for the actions of their subsidiaries or parent
companies in other jurisdictions. Any assets in Canada may
potentially be the target of enforcement actions and the companies
may face increased public scrutiny in Canada as a result of such
The ruling dealt only with jurisdiction, and the corporate
structure separating the two Chevron entities should ultimately
prevent enforcement. Other defences, such as forum non
conveniens, may still apply. However, the Supreme Court of
Canada's decision clearly eliminates jurisdiction arguments
with regard to enforcement of valid foreign judgments.
The decision is in keeping with a continuing trend in Canada
towards multi-nationals facing actions from foreign plaintiffs in
their home jurisdiction, which I
blogged about in December last year. Two cases which have not
yet proceeded to trial (Adolfo Garcia v. Tahoe Resources
Inc. and Araya v. Nevsun Resources Ltd.) concern
claims brought against a parent company for the activities of its
foreign subsidiary. Both cases will be important and will be
closely watched by commodities companies operating in multiple
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.
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