Subsidiaries not liable for judgments against parents


Canadian subsidiaries can rest easier after the Ontario Superior Court ruled that Chevron Canada can’t be held financially liable for a judgment against its American parent company, says Toronto business lawyer Joel Berkovitz.

“This was a case about whether the assets of a subsidiary can be seized to satisfy a judgment against the parent company and the court here conclusively said, ‘No,’” says Berkovitz, a lawyer with Shibley Righton LLP.

In Yaiguaje v. Chevron Corporation, 2017 ONSC 135 (CanLII), the court ruled that Chevron Canada is a separate entity from the Chevron Corp. and, therefore, not responsible for any judgments against the parent company.

The Chevron case began in 1993, after roughly 30,000 Ecuadorian villagers alleged that Texaco, now owned by Chevron, dumped billions of litres of toxic oil-drilling byproducts into the environment. They alleged the toxins caused increased health problems, including more frequent cancer deaths and a higher rate of miscarriages.

In a 2011 decision, Ecuadorian courts ordered Chevron to pay the villagers US$9.5 billion. But Judge Lewis Kaplan of the United States District Court for the Southern District of New York found, following a seven-week trial, that there were extensive acts of fraud, bribery, forgery, intimidation and collusion in the Ecuadorian proceedings. Chevron has refused to pay the Ecuadorian judgment.

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