US Courts’ Evaluation of Foreign Judicial Corruption: Different Stages, Different Standards

Last August, a US appeals court may have finally brought to a close a case that the court described as “among the most extensively chronicled in the history of the American federal judiciary”: a lawsuit, initially filed in 1993, seeking damages for adverse environmental and health consequences of oil exploration and drilling by Texaco (later acquired by Chevron) in the Ecuadorian Amazon. Chevron and the plaintiffs each have their own version of the long, complicated, and contentious litigation. (For a concise, relatively balanced summary see here.) For present purposes, the essential facts are as follows: After eight years of US litigation, in 2001 Chevron persuaded a US court to send the case to Ecuador. In 2011, after an additional decade of litigation in Ecuador, the Ecuadorian courts ultimately found in favor of the plaintiffs, ordering Chevron to pay an $18.5 billion judgment (later reduced to $9 billion). Unfortunately for the plaintiffs, Chevron doesn’t have any assets in Ecuador, so the plaintiffs have been trying to enforce their judgment in a number of other jurisdictions, including the United States. In its August ruling, the US appeals court affirmed the district court’s 2014 holding that the Ecuadorian judgment could not be enforced in the United States because it was a product of fraud and corruption—including the shocking finding that plaintiff’s attorneys had bribed the judge with a promise of $500,000, and ghostwrote the multi-billion dollar judgment.

At first glance, there appears to be a contradiction, or at least a tension, between how the US courts treated allegations of judicial corruption in Ecuador at two different stages in the proceedings. After all, Chevron was able to successfully persuade a US court to send the case to Ecuador in 2001 because Chevron had successfully argued that Ecuador’s judiciary was sufficiently insulated from corruption to prevent injustice, yet in the most recent ruling, Chevron convinced the court not to enforce the judgment on the grounds of judicial corruption in an Ecuadorian court. But what might at first glance appear to be a contradictory set of rulings can be explained by the fact that US courts apply divergent standards when assessing judicial corruption at different stages of litigation. 

In 2001, when Chevron moved to transfer the case from the US courts to the Ecuadorian courts, the basis of its argument was that the Ecuadorian courts would provide the more suitable forum for adjudicating the case, in light of practical considerations such as access to witnesses and evidence. The technical legal term for Chevron’s objection to continuing to litigate in US courts is forum non conveniens (“inconvenient forum”). Defendants involved in international litigation often ask US courts to dismiss cases on forum non conveniens grounds; in such cases, the defendant usually must agree to submit itself to the foreign jurisdiction, and to convince the US court that the foreign court is an adequate forum for resolving the dispute fairly. In the Chevron litigation, the Ecuadorian plaintiffs argued that Ecuador’s courts could not provide an adequate forum because they were subject to corrupt influences. The district court judge rejected this claim, citing several sources of evidence: US State Department reports on the Ecuadorian judiciary, affidavits by Ecuadorian government officials submitted by Chevron, and opinions by other US courts. The district judge also noted that the intense public scrutiny of the case made “even the possibility that corruption or undue influence might be brought to bear if this litigation were pursued in Ecuador seem[] exceedingly remote.” Thus finding that the courts of Ecuador could “exercise… that modicum of independence and impartiality necessary to an adequate alternative forum,” the district court dismissed the case on forum non conveniens grounds, and this dismissal was affirmed on appeal.

In 2014, however, the US district court ruled that the Ecuadorian judgment could not be enforced because it was procured by fraud—and this decision was also affirmed on appeal. Was it inconsistent for the same district court that had such a high opinion of the Ecuadorian judiciary at the forum non conveniens stage in 2001 to nullify the plaintiff’s judgment produced by that judiciary at the enforcement stage? After all, Ecuador’s judicial system in 2010 posted the same ratings by the State Department as it did in 2001 when Chevron was arguing that Ecuadorian courts were fair and adequate.

As previous scholars have discussed, this seemingly asymmetric result is due to the application of two different standards that US courts apply, at different procedural stages, to allegations of foreign judicial corruption: a lenient, generalized, and plaintiff-focused approach at the forum non conveniens stage, and a rigorous, specific, and defendant-focused approach at the enforcement stage. In evaluating a forum non conveniens motion, judges are trying to determine whether a foreign court’s procedures and protections are “adequate” – a fairly deferential standard. At the enforcement stage, most courts are applying a specific state statute that establishes when you can or cannot recognize and enforce a foreign judgment. These statutes generally ask courts to gauge the merits and procedural soundness of an individual judgment with a much more cautious and probing examination than what is expected at the forum non conveniens stage. The difference in the scope of inquiry at each stage drives most of the resulting inconsistency: As the appeals court noted in its more recent ruling, its findings exclusively apply to evidence of corruption in this specific case, not to the Ecuadorian judiciary in general. There are good reasons why courts do this: gauging the adequacy of a venue ahead of time is predictive and imprecise and would require an enormous amount of resources to conduct accurately, while evaluating a particular judicial outcome after the fact turns on the specific evidence of what occurred in that particular case.

The differences between these two standards raise a number of questions as to how American courts assess corruption in foreign courts. These assessments can determine the outcomes of litigation and profoundly impact the ability of parties to obtain justice or prevent injustice. To what extent should US courts be making broad judgments about the weaknesses of foreign judiciaries at all? Should US courts be more cautious about dismissing cases for forum non conveniens? What tools can or should US courts use to judge the corruptibility of foreign courts at this preliminary stage? Does the evaluation of a foreign forum or judgment function as an anticorruption mechanism? Should American courts have more deference towards judgments issued by foreign judiciaries? I will continue to explore these and related issues in future posts.

14 thoughts on “US Courts’ Evaluation of Foreign Judicial Corruption: Different Stages, Different Standards

  1. Great post and a fascinating case. I gather the Ecuadorian plaintiffs are still seeking to enforce the judgment in Canada? Are the Canadian courts likely to defer to the US judgment?

    You note that corporate defendants often strive to convince courts to dismiss their cases on forum non conveniens (FNC) grounds. And you ask whether judges should be more cautious about whether or not to grant such dismissals. There are real concerns about both the US judiciary becoming the “backstop” for the world and about trying too many cases in the US that really ‘belong’ in another sovereign’s courts.

    But in answer to your question, I would argue YES- US judges should absolutely be more cautious about granting these FNC motions. Corporate defendants will often do whatever they can to get cases OUT of US courts, not just because of practical concerns such as where the evidence is, but because they know that US law will treat them more harshly than some other jurisdiction will. In a case such as the Ecuador one, where the corporation is US-based and derives all sorts of benefits from its corporate home, it should expect that it could end up in US courts. The calculus is no doubt different when the defendants are non-US-based corporations, but in situations like this one, the judges should be careful not to dismiss too easily, particularly when the subsequent delay means plaintiffs literally dying off.

  2. Thank you for the post. I’m curious, do you know what happened to this case in Ecuador? You mention that the defendant sought to prevent the judgment from being enforced in the U.S., but do they have any recourse in Ecuador? If there was a finding that the judgment was a product of bribery, I would hope that there is some sort of domestic review process to have the case retried with a new judge.

    • Thanks for your comment Nino! Although the plaintiffs have a valid judgment against Chevron in Ecuador, Chevron doesn’t have any assets in Ecuador. Because of that, the plaintiffs have been trying to enforce their judgment anywhere Chevron has any kind of assets (Argentina, Brazil, Canada, and the US). To answer your last question, strangely enough, whether the judgment was corrupt was not reviewed as the case wound its way up to Ecuador’s supreme court. In fact, one appellate level court stated that whether the judgment was fraudulently procured was out of their jurisdiction. I’d have to take a closer look to see exactly why this was the case, but it was beyond the scope of my post for this blog.

  3. Great post, Travis! In reading your post, you seem to unravel the seeming inconsistency with this case. I would be uncomfortable with a US court, at the forum non conveniens stage, pronouncing an entire judicial system inadequate or corrupt, but I think it makes sense that there can be another examination on the *specific* facts of a case to assess if the procedures there were legitimate. This approach has the benefit of respecting and being deferential to other countries’ systems in the abstract but allows a US court to intervene when something really is awry. Have there been instances where a US court did find that a court, in its entirety, was inadequate to even attempt to rule on a case? Was there any political fallout out from that? Do other countries have any similar procedural safeguards against corrupt practices in foreign courts?

    • Thank you for your comment Clara!

      To briefly answer your questions:
      1. Yes (India, for example)
      2. Great question. I couldn’t find any evidence/examples, but I bet there might be if a case was significant enough (i.e. Union Carbide or the Chevron-Ecuador litigation for that matter).
      3. Yes. Most common law countries have some form of forum non conveniens motion with that requires an alternative forum to be ‘adequate’. Check out my upcoming post on Forum Non Conveniens motions for a more complete answer.

  4. Great article and issue worthy of global debate from both a property rights and human rights perspective!

    After having worked with the judiciaries in over 50 developing countries (yes I am old — ha!) I concluded that this doctrine is more important than I thought. I hate to say it but my view is that the vast majority of court systems in the developing world are easily corruptible. They have few resources, lack training and are ultimately controlled by their political masters. Many are systemically corrupt. These truisms are particularly problematic with regard to important cases involving large sums of money or sensitive political issues. I have also served as an expert on this issue in an important case involving the Peruvian judiciary. It pained me to write an affidavit on behalf of the company, after having worked in Peru with many judges, but I had to say that I thought it was highly unlikely that this European company could receive a fair trial there. I think most of the judges there would have agreed with my assessment — at least to themselves. Unfortunately, corruption within the judiciary is one of those issues most don’t like to think about or discuss in any country. But believe me it is a real issue in many, many countries. It needs to become a high priority issue for everyone if we are to ever globalize the rule of law.

  5. Pingback: US Courts’ Evaluation of Foreign Judicial Corruption | Anti Corruption Digest

  6. Dear friends, The very judicial functioning in different country status are different that is well-known and normal. But from this case-statement, we become known again about the judicial corruption in Ecuador as well as in US, which is caring an unofficial leading status in world chapter. The globalization has been concentrated this phenomenon more and more. Judicial functionaries of US are also enjoying it in individual as well as national level .
    We are build up in society made up of corruption and this is well protected in core judicial system by lobbing and bribing as a whole and globally.
    My heartiest request, please don’t consider any such events as isolated one and it can be resolved with fragmented anti-corruption attempts or so-called anti-corruption movements. Please try to go straight- two plus two equal to four.
    Any confusion of it means, it is corruption to divert you.
    In anti-corruption research and anti-corruption academic movement, it is the vital time to make a total view of fight against source of corruption, whatever may be. Only then everything will be clear and transparent. We will find out what should to do and not to do, in respect of corruption.

  7. Does/should the standard at the judgment enforcement stage change given that the party challenging the enforcement of the Ecuadorian judgment (Chevron) argued for the case to be litigated there (almost like a waiver, though not a strict bar on challenging the judgment, just a presumption against that challenge or something)? … Also, is there any country-by-country survey of how U.S. courts view foreign courts at the forum non conveniens stage, like a map showing the judiciaries that US courts trust and those they don’t?

    • Thomas, thank you for your comment. You make some great points.

      Responding to your first question, the plaintiff’s attorneys argued your very point in front of the Second Circuit. They felt that Chevron should be “estopped” from challenging the judgment because of their previous representations (“estopping” is a legal doctrine that ‘waives’ an argument because of some behavior by the party that would make it unfair to use that argument). I feel that there is some merit to this line of thought, but, the court (as noted above) understood these as Chevron making two different arguments: (1) This case belongs in Ecuador and we expect/anticipate a sufficiently fair trial (2) Oh no! This particular judge was corrupt and therefore this judgment should not be enforced. I’m not entirely convinced, but I do think the court in this case had a sufficient legal basis for their conclusion.

      As to your second question, I wish!! There is unfortunately not much research on this particular area of American civil procedure. That said, I will be publishing a related post that takes a closer look at forum non conveniens motions (with some US & Canada comparisons). I would love to hear your comments on that post when it goes up in the next few weeks.

  8. Pingback: Ecuador: US Courts’ Evaluation of Foreign Judicial Corruption | Anti Corruption Digest

  9. I understand your reasoning, but fundamentally there is a problem if a forum is deemed adequate for forum non convenes, but not for recognition.

    Additionally, contrary to your statement ‘the plaintiffs have been trying to enforce their judgement in a number of other jurisdictions, including the United States’, the LAPs have never tried to enforce their judgement in the US. This renders the RICO proceedings all the more bizarre, as Chevron have only really blocked enforcement in a jurisdiction where there has been no enforcement proceedings.

  10. Pingback: US Courts’ Evaluation of Foreign Judicial Corruption: Different Stages, Different Standards — GAB | The Global Anticorruption Blog | Transparencia, información pública, datos personales.

  11. Pingback: US Courts’ Evaluation of Foreign Judicial Corruption: Different Stages, Different Standards — GAB | The Global Anticorruption Blog | Legal Career Center

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