Issues of piercing corporate veil remain after OCA decision


Joel Berkovitz Head ShotThe “long and twisting saga” that pits South American villagers against a global oil giant took another turn recently in a Canadian courtroom, Toronto business lawyer Joel Berkovitz tells The Lawyer’s Daily.

“At its core,” explains Berkovitz, a lawyer with Shibley Righton LLP, “this case is about attempts to enforce a US$9.5 billion judgment in Canada which was obtained in Ecuador against the U.S. company … A New York court declined to enforce this judgment in the United States, finding that the Ecuadorian judgment was obtained by fraud.”

In a previous post with, Berkovitz said the case began in 1993, after roughly 30,000 Ecuadorian villagers alleged that an oil company 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 the company to pay the villagers US$9.5 billion. Since the company didn’t have assets in Ecuador, the plaintiffs looked elsewhere to collect on the judgment. They tried in the U.S., but the judge found there had been extensive acts of fraud, bribery, forgery, intimidation and collusion in the Ecuadorian proceedings. 

The plaintiffs then sought to seize the shares of the company’s Canadian subsidiary — a seventh-level subsidiary of the American company — by piercing the Canadian company’s “corporate veil so that its shares and assets would be available to satisfy the judgment against its parent,” writes Berkovitz.

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