Oil giant Chevron needs no costs protection from ‘poor’ Ecuadorians, court told

TORONTO — Forcing a group of Ecuadorian villagers to come up with almost $1 million before they can pursue a claim against oil behemoth Chevron would deprive them of access to justice, Ontario’s top court heard Wednesday.

The notion that Chevron, which makes billions a year, needs to be protected from legal costs if the Indigenous Ecuadorians lose their fight is absurd, their lawyer said.

The villagers are asking the Canadian courts to make Chevron Canada pay a hard-fought US$9.5-billion award they won in Ecuador in 2013 over environmental devastation and the health problems caused. The Supreme Court has said the group’s case can be heard here.

However, an Ontario judge ruled Chevron Canada is a separate entity and can’t be held liable for the judgment against its parent. The Ecuadorians are appealing that ruling, but a judge has ordered them to first put up $943,000 to cover Chevron’s legal costs if they lose.

Alan Lenczner, who speaks for 37 of the 47 representative plaintiffs, told the Ontario Court of Appeal that the “prohibitive” costs order should be set aside so the appeal can proceed on its merits.

“How can it be just that these plaintiffs are denied an appeal?” Lenczner said. “An order for security for costs is an ultimate barrier preventing justice.”

In his submissions, Chevron Canada’s lawyer Benjamin Zarnett said the judge’s discretionary costs order was fair. The villagers led no evidence to show they don’t have the money to pay the costs, despite having had the opportunity to do so, he said.

Chevron won in the lower court and must now respond to an appeal and is therefore “entitled to a measure of protection” for its legal costs, Zarnett argued. In addition, he said, the judge found the Ecuadorians did not have a strong chance of winning on appeal.

“It is not a case that has a good chance of success,” Zarnett said.

Lenczner argued, however, that Chevron’s request for a security deposit was merely a tactic. He said the Ecuadorians had gone through an “epic struggle” to win their award in Ecuador.

That money, Lenczner said, would not go to the plaintiffs but instead would be put in trust and used to remediate the lands and water, and improve their health conditions.

“These people have nothing personally to gain other than good health,” he said.

Chevron, Lenczner said, with 1,500 subsidiaries and $225 billion annual revenues, does not need the $943,000 security deposit from Ecuadorians, whose average income is about $20 a day.

The villagers first sued in 1993 after Texaco, later bought by Chevron, polluted about 1,500 square kilometres of rain forest, fouling streams, drinking water and garden plots.

Both Ontario’s Court of Appeal and the Supreme Court have recognized the region in which the “poor and vulnerable” Ecuadorians live has suffered extensive environmental pollution that seriously disrupted their lives.

Lenczner noted the initial action was launched in the United States. However, Chevron successfully argued for the case to be heard in Ecuador.

The company insists the award in the case was obtained fraudulently, citing rulings in the U.S. it says supports that contention. However, the American decisions did not invalidate the Ecuadorian judgment, Lenczner told the Appeal Court panel.

The Canadian action, begun in 2012, aims to have Chevron Canada pay the US$9.5-billion award on the basis that it has a “significant” relationship with its parent. It cannot be the case that a company can hide behind a subsidiary to avoid its creditors, Lenczner said.

Rock legend Roger Waters, who spoke in favour of the Ecuadorians outside court on Tuesday, took in part of the proceedings Wednesday wearing a jacket with “Resist.” emblazoned on the back.

The Appeal Court reserved its decision on the security deposit.

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