Introduction I. Origins of the Chevron-Ecuador Litigation II. Relevant Law A. Recognition of Foreign (Money) Judgments in the United States B. Anti-Suit Injunctions C. The Declaratory Judgment Act D. Ripeness III. Problems Posed by the Chevron-Ecuador Litigation A. The Donziger Decision B. The Naranjo Decision C. Shell Oil D. Ripeness and Libel Tourism IV. Discussion A. Problems with the Naranjo Decision B. Problems with the Donziger Decision C. The Ripeness Analysis D. So, What is the Remedy? Conclusion: The Aftermath of Naranjo Oh, the places you'll go! There is fun to be done! There are points to be scored There are games to be won. And the magical things you can do with that ball will make you the winning-est winner of all. Fame! You'll be famous as famous can be. with the whole wide world watching you win on TV. ... You'll get mixed up, of course, as you already know. You'll get mixed up with many strange birds as you go. So be sure when you step. Step with care and great tact and remember that Life's a Great Balancing Act. Just never forget to be dexterous and deft. And never mix up your right foot with your left. (1) INTRODUCTION
International litigation is fraught with procedural issues, from choice of forum and choice of law to forum non conveniens, the Foreign Sovereign Immunities Act, anti-suit injunctions, and of course, recognition of foreign judgments. To further complicate things, as the Chevron-Ecuador story will demonstrate, as soon as one of those procedural issues crops up, the rest will inevitably follow.
Indeed, international litigation can become incredibly complicated and drawn out, at great cost to all parties--particularly when there are parallel proceedings. (2) The variety and utility of procedural devices available when a dispute spans multiple countries creates greater opportunity for abuse. If, for example, one forum will not enforce a judgment that a litigant has obtained in a different jurisdiction, that litigant (the judgment-creditor) could try to enforce that judgment in a different forum where the defendant (the judgment-debtor) may have assets. This practice forces the judgment-debtor to defend in multiple places. Likewise, defendants can use tools like forum non conveniens or parallel proceedings to drag out the litigation or force the plaintiff into a quick settlement. (3) The presence of multiple potential fora and complicated questions of choice of law or recognition of foreign judgments create great potential for litigants to be procedurally abusive--particularly when a potentially unfair judgment is involved and the plaintiff attempts to enforce it by any means possible.
The infamous Chevron-Ecuador litigation presents many of the procedural issues that arise in international disputes. During that litigation, a class of plaintiffs from the Lago Agrio region (the judgment-creditors) obtained a multi-billion dollar money judgment in the Republic of Ecuador (ROE) against Chevron (the judgment-debtor), and eventually attempted to enforce that judgment in fora around the world. (4) Chevron brought an action in the Southern District of New York against the judgment-creditor seeking, among other things, a preliminary injunction principally to bar enforcement of the judgment outside of the ROE. (5) Various common law tort and RICO claims created the gravamen of the lawsuit, providing the basis for jurisdiction over all the parties and, hence, the injunction. Judge Kaplan granted Chevron's request for a worldwide injunction against the judgment-creditors pursuant to the anti-suit injunction analysis articulated in China Trade & Development Corp. v. Choong Yong. (6) The Second Circuit reversed that judgment in Chevron Corp. v. Naranjo, concluding that China Trade's anti-suit injunction standard should not apply. (7) The Second Circuit instead asserted that the requested relief was an anti-enforcement injunction, and invoked New York's version of the 1962 Uniform Foreign Country Judgments Recognition Act (the Recognition Act). (8) The Second Circuit concluded that a judgment-debtor could not affirmatively bring an anti-enforcement action against a judgment-creditor when the judgment-creditor has not yet tried to collect on that judgment in the United States, despite declaring its intentions to do so in fora outside the United States (9)
In reaching its conclusion, the Second Circuit distinguished the facts in Naranjo from those in a similar case, Shell Oil Co. v. Franco. (10) In Shell Oil, the Central District of California issued a declaration of non-enforceability under the DJA and California's codification of the Recognition Act before the judgment-creditor had technically sought enforcement in California, (11) albeit because the judgment-creditor had named the wrong defendant in its prior enforcement action in California. (12) The judgment-debtors claimed that the relevant Nicaraguan judgment would be unenforceable under U.S. law because the Nicaraguan judicial system lacks impartial tribunals (13) and sufficient due process procedures, and the forum lacked personal jurisdiction--each of which is mandatory grounds for non-recognition under California's version of the Recognition Act. (14)
Although the court in Shell Oil only granted declaratory relief against enforcement within the United States, and did not attempt to prevent the judgment-creditors from enforcing the judgment in other countries, the decision is still informative; Shell Oil suggests that the Second Circuit may have understated its ability to issue declaratory relief against enforcement of the Ecuadorian judgment--at least within the United States.
This problem, particularly as posited by the court in Chevron Corp. v. Donziger, raises a number of preliminary questions. What kind of injunction was Chevron seeking, exactly? Was it an anti-enforcement injunction (as the Second Circuit calls it) that should be evaluated in light of the Uniform Foreign-Country Money Judgments Recognition Act? Was it an anti-suit injunction that should be addressed in relation to the existing circuit split on anti-suit injunctions? Preemptive declaratory non-enforcement suits have also been addressed in terms of ripeness, at least in the libel tourism context, (15) adding to the complexity of U.S. judgment recognition law. Hence, is a preemptive action like the preliminary injunction in Donziger simply unripe, and therefore inadmissible in federal court? Cases like Yahoo! Inc. v. La Lingue Contre le Racisme et l'Antisemitisme, for example, have looked at actions for a declaratory judgment of non-enforcement occurring before a judgment-creditor tries to enforce a foreign judgment in the United States in terms of ripeness. (16) Although dismissing the action for lack of ripeness does nothing to solve the underlying problem, perhaps it is a threshold inquiry that courts should adopt before proceeding to the merits of the case.
This Note addresses whether a U.S. court can provide a remedy to preclude aggressive, multi-national enforcement of foreign money judgments against a U.S. party. Assuming the foreign money judgment in question is unenforceable under U.S. judgment recognition law, if a judgment-creditor tries to enforce the judgment in the United States, the U.S. judgment-debtor can assert one of many defenses, depending on whether the relevant jurisdiction has codified the Recognition Act or the updated 2005 version (the 2005 Recognition Act). (17) The bigger problem, however, concerns whether U.S. courts can prevent a judgment-creditor from initiating enforcement actions all over the globe, forcing the judgment-debtor to defend in multiple jurisdictions--and possibly forcing the judgment-debtor to settle, if only to put an end to the aggressive enforcement tactics. This problem will be addressed in the context of the Chevron-Ecuador dispute.
Generally speaking, this Note's discussion has four layers of legal analysis: the Recognition Act--specifically, whether defenses to recognition may be used affirmatively to support injunctions; the relevance of the long-existent circuit split over how a court should decide whether to issue an anti-suit injunction; the reach of the DJA; and ripeness. This Note also focuses on each option's policy implications and impact on practitioners. It then discusses whether such an injunction is really the remedy that a judgment-debtor like Chevron seeks, or if there is another way a U.S. court can prevent abusive multi-fora litigation--either in the context of the Chevron-Ecuador litigation specifically, or international litigation in general. Indeed, aside from the lack of clarity regarding how a court should rule in an action like Donziger, if none of the arguments that Chevron made are viable, then the question becomes whether there is any remedy courts can provide to litigants in their circumstances. If so, then one might also ask exactly how, or if, they should provide that remedy at all. This Note therefore examines the procedural routes that Chevron attempted to take, whether any of them are viable, and if not, propose an alternative remedy.
Part I discusses the origins of the Chevron-Ecuador litigation, starting with the activity in Ecuador that led to Ecuadorian plaintiffs' initial class action lawsuit. Part I also briefly outlines the relevant Southern District of New York and Second Circuit holdings in this litigation.
Part II summarizes the relevant law in this area, including (1) the recognition of foreign-country judgments in the United States, particularly the Recognition Act; (2) the standards for granting anti-suit injunctions; (3) the factors courts balance in deciding whether to grant a declaratory judgment under the DJA; and (4) ripeness requirements in federal courts.
Part III outlines the decisions of the courts in Donziger and Naranjo in more detail, and summarizes the conflict between the district court and the Court of Appeals in the Chevron-Ecuador cases...