Preventing Foreign-Judgment Country Hopping with a New Transnational Recognition and Enforcement Standard.

• Author: Euerette, Ryan

Table of Contents I. Introduction 738 II. An Overview of the Country-Hopping Problem 741 A. Aguinda v. Texaco and Its Fallout: A Case Study 1. Difficulties Litigating in a Defendant's 742 Domiciliary Jurisdiction 745 2. Litigation in Vulnerable Jurisdictions 746 3. Initial Recognition and Enforcement Issues 754 4. Worldwide Enforcement Attempts 757 B. A Still-Developing Situation: The Nicaraguan Fruit Farmer Sterilization Judgment 759 III. A Comparative Analysis of Existing Recognition and Enforcement Standards 761 A. Enforcement Standards in the United States 762 1. The Rule of Reciprocity 762 2. The Uniform Foreign-Country Money Judgments Recognition Act 765 3. The ALI Proposed Federal Statute on Recognition and Enforcement of Foreign Judgments 769 B. Judgment Recognition and Enforcement in Europe 770 1. European Union Regulations 44/2001 and 1215/2012 771 C. The Hague Conference on Private International Law's Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters of 2019 773 D. Judicial Review Standards: Clear and Convinc ing Evidence, Clear Error, and the Presumption of Regularity 774 IV. A New Transnational Standard for Foreign-Judgme nt Recognition and Enforcement 776 A. Mechanics of the Standard 776 B. Potential Feasibility Concerns and Solutions 778 V. Conclusion 783 I. INTRODUCTION

The current scheme of transnational judgment enforcement is rife with the potential for plaintiffs to obtain unmeritorious judgments from remote forums and then drag out the enforcement process in multiple other forums, leaving defendants in limbo for years. (1) A prominent example is a multiJMUion-dollar judgment that a group of plaintiffs received in Ecuador that they have tried and, in every instance, failed to earn recognition of and enforce against the Chevron Corporation in multiple international jurisdictions since 2011. (2) The ability of these plaintiffs to obtain repeated opportunities to recognize and enforce the judgment in different jurisdictions comes in large part from the disparate and disunified standards that presently govern transnational foreign judgment recognition and enforcement. (3)

Currently, there is no uniform transnational standard for courts to follow when considering these judgments, leaving multinational defendants exposed to the risk of ambitious plaintiffs' lawyers jurisdiction hopping to seek enforcement of questionable judgments. (4) This, in turn, can leave defendants in uncertainty over substantial amounts of damages and liability for years on end, with little to do but continue to contest the recognizability and enforceability of those judgments. (5) Consequently, affected plaintiffs in need of relief are left empty-handed as a result of the actions of their own attorneys. (6)

This type of situation is exemplified in a well-known case, which has been ongoing since the 1990s involving an Ecuadorian group of plaintiffs bringing environmental harm claims against the Chevron Corporation (formerly Texaco, Inc.). (7) The lawyers in the case sued Chevron in Ecuador and, through opportunistic actions and manipulation of the litigation process and Ecuadorian judicial system, received a multibillion-dollar damages judgment against Chevron after a prolonged litigation process. (8) The plaintiffs then returned to enforce the judgment against Texaco in the United States; however, Chevron argued it did not receive a fair trial in the foreign country, presenting evidence of the plaintiffs' wrongdoing. (9) The reviewing court agreed and enjoined the plaintiffs from attempting to enforce the judgment in the United States. (10) The plaintiffs have subsequently moved around different foreign countries where Chevron has assets to try to enforce the judgment by seizing and selling those assets, going to new locations upon each country's denial of enforcement. (11) In this case, known as Aguinda v. Texaco/Chevron, the plaintiffs' efforts to enforce the judgment around the world have been ongoing over the last two and a half decades and continue to this day. (12)

These "country-hopping" cases, where a plaintiff moves from forum to forum seeking to enforce a sham judgment, are what this Note seeks to address. Part II delves into the details and background of Aguinda as a framework for the issue, as it is perhaps the most famous example of this type of case. Part III analyzes the development of foreign-judgment enforcement standards, details current standards across various jurisdictions, and assesses relevant scholarly approaches to the issue. Finally, Part IV will advocate for the adoption of a proposed convention from the Hague Conference on Private International Law, with the addition of two standards of review for countries who would ultimately be parties to the convention. These standards are: (1) an ex ante presumption in favor of competence for the court issuing the judgment with the burden of proving a defect in the proceedings leading to the judgment on the defendant, (13) which the first convention party court to review the foreign judgment would apply, and (2) an ex post clearly erroneous standard of review for a subsequent reviewing court following any Convention party court's denial of recognition or enforcement of a foreign judgment. (14) Applying these standards seeks to streamline the procedural process, deter any wrongdoing or manipulation of vulnerable judicial systems, and encourage both parties to monitor the proceedings while preserving a sense of international comity by giving the later reviewing courts enough leeway to make their own determinations.

2. AN OVERVIEW OF THE COUNTRY-HOPPING PROBLEM

   This Part will illustrate the circumstances that can lead to the country-hopping situation as outlined above. It will first assess the paradigmatic Aguinda case discussed above, where a group of plaintiffs from Ecuador won their case against the Chevron Corporation. (15) The case is likely the most thoroughly documented, lengthy, and complex of the kind this Note addresses. (16) As a result, it is an apt illustration of the type of situation this Note's proposed solution seeks to prevent, and a summary of it shall provide ample background to understand the extent of the country-hopping threat.

   This Part will then turn to a current case that is budding in the European Union. (17) This case involves claims of Nicaraguan males who became sterile after working around a pesticide and are suing many of the involved companies such as Dow Chemical, Shell Oil, and several major fruit producers for which the plaintiffs worked. (18) As Part II.B will demonstrate, the plaintiffs won a verdict in Nicaragua but were unable to enforce it in the United States for similar reasons to the Ecuadorian judgment from the Chevron case. (19) However, the plaintiffs have sought recognition and enforcement of the judgment in France, where the result of a trial on the matter is pending. (20) This Part will show that if the court finds for the plaintiffs, they could subsequently enforce the judgment against any of the defendants' assets in all European Union (EU) member countries, (21) opening up the possibility for massive liability for those defendants, but also creating the potential for country hopping to other EU countries if the plaintiffs do not prevail in France.

   1. Aguinda v. Texaco and Its Fallout: A Case Study

      In vulnerable judicial systems, plaintiffs' attorneys may be willing to use unscrupulous means to secure a favorable decision for their clients. (22) As mentioned above, this subpart will recount the major events--though not the full extent of the details--of the case in Ecuador involving Chevron and the subsequent worldwide litigation that has stemmed from it. It will present how the events originated and transpired to give a clear picture of how the problem developed along with illustrations of the broader issues that could arise under similar circumstances.

      A brief recounting of the background of the case is helpful for context. In 1964, Texaco made a deal with the ruling military faction in Ecuador that gave them control of 7.5 million acres of land in a region known as the Oriente, a jungle that lays to the east of the Andes Mountain range. (23) This land, which previous oil prospectors considered barren, turned out to have vast reserves of oil underneath it. (24) These reserves yielded a handsome level of production, which in turn made Ecuador a major player in the global oil market. (25)

      The riches of oil did not produce entirely positive effects for the Ecuadorians living near the Oriente, however. (26) To initially even begin exploring for oil, Texaco needed to subdue the local indigenous peoples, which it reportedly did in part by flying airplanes over areas it sought to claim full control over, even going so far as to drop sticks of dynamite from the planes to scare away the native communities. (27) Once the operations actually started, the community experienced widespread pollution. (28) This included pollution of waterways, deforestation, and haphazard spills on public roads. (29) The consequences of this pollution were devastating to the local population as signs of water contamination appeared: oil residue was visible in the water and on those objects in contact with the water, caught fish were uncharacteristically smelly, (30) children fell ill and some died after getting covered in oil, (31) and people experienced abnormal health complications. (32) These effects continued to harm the community for decades--exacerbated by PetroEcuador's continued oil operations--and even continue today. (33)

      Eventually, the Ecuadorian government chose not to extend Texaco's control over the oil drilling operation, and thus forced Texaco to relinquish its share of the oil fields and leave the country in 1992. (34) As a condition of its departure, Texaco entered into an agreement with the Ecuadorian government outlining the measures Texaco would have to...