Will What Happened in Ecuador Stay in Ecuador? How the Existing International Due Process Analysis May Be Ineffective in Keeping Fraudulent Foreign Judgments Out of U.S. Courts
13 Richmond Journal of Global Law and Business 493, 2014
52 Pages Posted: 6 Dec 2014
Date Written: September 9, 2014
Recent evidence in the decades-old Chevron/Ecuador litigation suggests that the $18 billion dollar judgment rendered against Chevron by an Ecuadorian court may have been a product of conspiracy and fraud on an almost unprecedented scale. However, these allegations overshadow fundamental problems in the method by which U.S. courts determine whether judgments rendered in foreign jurisdictions may be enforced against defendants in the United States.
Under the current jurisprudential regime, courts that are faced with the question of whether a foreign judgment is enforceable in the United States follow what is termed the “international due process analysis.” In this analysis, the court must render a value judgment on the overall judicial process of the country handing down the original decree, and decide whether the country generally affords due process in judicial proceedings. If so, and if the U.S. court determines that the judicial system in the country of origin is fundamentally fair, the judgment will be upheld by U.S. courts. However, this analysis raises a potentially troublesome issue because under the guise of judicial efficiency, courts are free to focus only on the foreign court system as a whole and disregard the particular proceedings under which the judgment was rendered. In essence, this means that courts may completely ignore claims by defendants that they did not receive due process in foreign proceedings. Further, courts are afforded unbridled discretion to validate foreign judgments without considering credible extrinsic evidence regarding the political system of the country where the judgment originated. Perhaps even more troublesome is the fact that because U.S. courts are not required to examine particular proceedings, this analysis has the potential to increase fraudulent practices by foreign litigants in “fair judicial systems,” who anticipate that unscrupulous tactics will not affect enforceability of their judgments in the U.S.
The Chevron/Ecuador case concerns claims that Texaco, which Chevron acquired in 2001, polluted the Lago Agrio oilfield region of Ecuador by improperly dumping billions of gallons of contaminants in the area. After a court appointed expert reported widespread pollution in the region, an Ecuadorian Court ordered Chevron to pay $18 billion dollars in damages. When the plaintiffs sought to collect the judgment in the U.S., Chevron challenged the ruling by the Ecuadorian Court, eventually uncovering evidence that suggested the judgment was a product of a widespread pattern of fraud and conspiracy, including admissions of bribery by one of the presiding Ecuadorian judges.
Paradoxically, the existing international due process analysis suggests that a U.S. court determining whether to enforce the judgment should examine Ecuador’s court system as a whole, rather than looking into the particular proceedings under which the original judgment was rendered. This article examines the background and application of the international due process analysis, and suggests that rather than promoting judicial efficiency, the existing analysis actually increases the burden on U.S. courts determining the validity of a foreign judgment, and also may lead to judicial incursions foreign affairs, a territory normally reserved for the Executive and Legislative Branches.
Keywords: International Law, Extraterritorial Application, Foreign Law, Chevron, Ecuador, International Due Process
JEL Classification: K33, K22, K23, N56
Suggested Citation: Suggested Citation