Tort Tuesday: Chevron fails to find safe harbour in Canada

Oil workers clean up a contaminated pool in Taracoa. REUTERS/Guillermo Granja

Foreign judgments will be enforceable in Canada if there is a real and substantial connection between the dispute and the Canadian jurisdiction.

The Supreme Court of Canada ruled unanimously last week in favour of a group of Ecuadorian villagers allowing them to seek the enforcement — in Ontario — of a $9.5-billion judgment against oil giant Chevron.

The large sum was meant to compensate for environmental damages the villagers suffered as a result of Chevron’s operations in Ecuador. The villagers could not collect any money from Chevron, because the company had no assets in Ecuador.

They also had a tough time going after Chevron’s assets in the U.S., because a New York judge ruled the Ecuadorian judgment was not valid and had been obtained through corrupt means. The villagers resorted to foreign jurisdictions where Chevron had subsidiaries such as Brazil and Canada to get the money.  

The Supreme Court has taken a liberal approach to enforcement of foreign judgments. The decision means Ecuadorian villagers can go after Chevron Canada, which is a subsidiary of the California-based parent.

This decision, however, does not answer whether subsidiaries will always be responsible for the parent company’s judgments. It also doesn’t mean Chevron Canada’s assets will automatically be used to pay for the judgment.

The SCC decision could set a precedent for judgment-enforcement cases, as it establishes that it doesn’t matter that the subsidiary’s assets are not directly owned by the parent. If a foreign court, such as one in Ontario, assumes jurisdiction properly, the judgment can be enforced here.

Disrupted service lands SkyGreece Airline into bankruptcy

SkyGreece Airline, a Toronto-based company, is planning to file a proposal for creditor protection under the Bankruptcy and Insolvency Act.

The airline started operating in 2014 and has one plane.

The filing of the proposal will stop a current administrative proceeding against SkyGreece. The passengers’ rights advocate, Gabor Lukacs, brought a claim against the airline before the Canadian Transportation Agency after a week of disrupted service in late August resulted in hundreds of stranded passengers.

Now Lukacs wonders how much of the paid fares will be reimbursed to stranded passengers under this creditor proposal.

Ernst & Young has been designated as the monitoring body over the proposal and will keep creditors and customers informed of any further progress.

B.C. dismisses certification of five class actions against major airlines

Things are not looking good for airline passengers in B.C. either.

The British Columbia Supreme Court has dismissed the certification of five consumer protection class actions against Air Canada, Lufthansa, Delta, United, and British Airways on the basis that passengers did not suffer any real damage or loss.

The decision says in order to seek damages the plaintiffs have to show that the actions of the airlines caused the loss for each class member. In other words, causation has to be proven for each class member not across the class as a whole.

The plaintiffs sued the airlines because a portion of the tickets’ dollar amount was classified as “taxes” payable to third parties, but the airlines actually kept this money and no third parties were involved.

The B.C. court ruled this does not create a real loss to the consumers because: “the consumer knew what the price was for the ticket before they made their final decision. If you didn’t want to pay X number of dollars for your airline ticket, you had the information you needed to make your decision.”

In other words, even if the airlines violated consumer protection laws by misrepresenting the pricing structure, there has to be some unfairness to the plaintiff. If they paid the money anyway, where is the real damage?

Note to airline consumers: you can’t bring a class action if you paid the money willingly.

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