Canada: Court Terminates Pollution Enforcement Action As Against Canadian Subsidiary Of Chevron

Last Updated: February 13 2017
Article by Jack Coop

On January 20, 2017, the Ontario Superior Court of Justice released a summary judgment decision in the case of Yaiguaje v Chevron Corporation, terminating a civil claim by Ecuadorian plaintiffs against Chevron Canada Limited ("CCL"). That judgment has now been released to the public, and may be found here.1

The decision is an important one to environmental lawyers, particularly given the recent growth of interest by governments in encouraging corporate social responsibility by companies operating extractive industries on foreign soil.2


In 2013, the plaintiffs obtained an Ecuadorian judgment for US $9.5 Billion against the parent company, Chevron Corporation. The judgment arose out of alleged pollution caused by Chevron Corporation in Ecuador. When the Plaintiffs were unable to enforce their claim in Ecuador (insufficient assets) or the U.S. (claim dismissed as unenforceable in the U.S. and fraudulent), they attempted to do so in Canada, against CCL, a "seventh level indirect subsidiary" of the parent.3

An earlier motion by CCL to dismiss the action, as unenforceable in Canada, went all the way to the Supreme Court of Canada. The Supreme Court ruled the Ontario courts had jurisdiction to consider the Ecuadorian enforcement action, but made it clear that its ruling was without "prejudice [to] future arguments with respect to the distinct corporate personalities of Chevron [Corporation] and Chevron Canada".4

CCL promptly brought a motion for summary judgment to dismiss the action as against CCL, on the basis of the "distinct corporate personalities" of the parent and subsidiary. The parent company brought a companion motion seeking the same relief. For the purpose of this motion, the parties apparently assumed that there would be an enforceable US $9.5 Billion judgment against Chevron Corporation .5

Summary Judgment Decision

In granting judgment dismissing the action as against CCL, the court made the following important rulings:

  1. Corporate Separateness. The court accepted that, on all the evidence, the two corporations are separate legal entities, and declined to pierce the corporate veil to permit enforcement against the subsidiary. In fact, the court took the unusual step of repeating and adopting many of the findings of fact on this point by the original Superior Court decision that was appealed to the Supreme Court.6
  2. Execution Act. The court accepted the moving party's submissions that Ontario's Execution Act is an essentially procedural statute and does not empower the plaintiffs to execute their judgment against a subsidiary, since the parent company had no right or interest in the shares and assets of the subsidiary:7

    [37] The Execution Act, which is a procedural statute, does not create any rights in property but merely provides for the seizure and sale of property in which a judgment-debtor already has a right or interest. It does not establish a cause of action against Chevron Canada. Chevron Canada is not the judgment-debtor under the Ecuadorian judgment and, therefore, the Execution Act does not apply to it with respect to that judgment. The Execution Act does not give Chevron any right or interest, equitable or otherwise, in the shares or assets of Chevron Canada.


    [47] A plain reading of the Execution Act makes it clear that it does not create any substantive rights that override or supplant the long-established principle of corporate separateness.
  3. Corporate Veil. The court further declined to pierce the corporate veil and hold the subsidiary liable for the debt of the parent, on any of the grounds advanced by the plaintiffs. Specifically, it ruled that:8

    • The two companies "are separate legal entities with separate rights and obligations. . The principle of corporate separateness has been recognized and respected since the 1896 decision of the House of Lords in Salomon v. Salomon & Co";9
    • Shareholders are not liable for the obligations of the corporation, and the assets of a corporation (subsidiary) belong to the corporation, not the shareholders." As a result, Chevron [Corporation, the parent] does not have any legal or equitable interest in the assets of Chevron Canada as an indirect shareholder seven-times removed."10
    • Moreover, the claim by the plaintiffs "against Chevron Canada for its shares cannot succeed because its shares do not belong to Chevron Canada."11
    • The plaintiffs were not permitted to pierce the corporate veil based on "fraud or improper conduct" in creating the corporate entity of Chevron Canada, per the Transamerica line of cases, because "they cannot establish wrongdoing akin to fraud in the corporate structure between Chevron [Corporation] and Chevron Canada";12
    • In law, there is no "independent "just and equitable" exception to the principle of corporate separateness as the plaintiffs suggest. This is not a basis for piercing Chevron Canada's corporate veil in this case."13
    • There was no basis for finding Chevron Canada liable for debt of the parent "on a theory of enterprise group liability", per the Teti decision, since the two companies did not work in common as a single business entity, and Chevron Canada had no involvement in Ecuador;14
    • Finally, the court accepted the earlier analysis of the Superior Court that the corporate veil could not be pierced because the subsidiary was not a "puppet" of the parent:

      [73] The evidence does not establish that Chevron Canada is Chevron's "'puppet'". Rather, I find that Chevron and Chevron Canada have a typical parent/subsidiary relationship. Chevron does not exercise complete dominance or control over the affairs of Chevron Canada...

Motion by Plaintiffs to Strike Defence of Parent Corporation

The court's decision also dealt at length with a motion by the plaintiffs to strike out, pursuant to Rule 21, paragraphs in the Statement of Defence of Chevron Corporation, on the basis that it "plain and obvious" the pleaded defences could not succeed.15 It is beyond the scope of this article to address the court's many rulings on the plaintiffs' motion to strike. Suffice it to say, this motion was largely unsuccessful.

That such a motion was heard at all by the court underscores the fact that the summary judgment motions did end this action in its entirety. The action against Chevron Corporation lives on, with the plaintiffs apparently intent on obtaining a judgment against the parent company in Canada, regardless whether or not that judgment is enforceable against its subsidiary.


The decision of the Superior Court granting summary judgment against the plaintiffs in this environmental enforcement action is legally an important one, both from the perspective of fundamental principles of corporate law, as well as environmental corporate social responsibility.

Canada's extractive sector may be breathing a collective sigh of relief. However, the comfort this decision provides to Canadian subsidiaries may be short-lived. The plaintiffs have already served a notice of appeal and will ask the Ontario Court of Appeal to set aside many of the lower court rulings noted above. It is safe to say that we have not heard the end of the Chevron case.


[1] Yaiguaje v Chevron Corporation, 2017 ONSC 135 ("Decision").

[2] See, for example, Global Affairs Canada's "Enhanced Corporate Social Responsibility Strategy to Strengthen Canada's Extractive Sector Abroad", at:

[3] Decision, paras. 5-18.

[4] Ibid., paras. 19-20.

[5] A fact that will only be finally determined at the trial of this matter.

[6] Decision, paras. 26-30.

[7] Ibid., paras. 31-49.

[8] Ibid., paras. 50-73.

[9] Ibid., para. 58.

[10] Ibid., para. 60.

[11] Ibid., para. 61.

[12] Ibid., paras. 63-65.

[13] Ibid., paras. 66-68.

[14] Ibid., para. 70.

[15] Paras. 76-119.

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.

Jack Coop
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions