The story of the conflict between Chevron and residents of the Lago Agrio region of the Ecuadorian Amazon must be among the most extensively told in the history of the American federal judiciary. We and other courts have previously described in detail the parties’ underlying dispute, which concerns allegations that Chevron’s predecessor extensively polluted the Lago Agrio region of Ecuador and claims that Chevron is liable for the resulting damages...
From 1964 through 1992, Texaco and its subsidiary, Texaco Petroleum, or TexPet - with various partners, including the Ecuadorian government - engaged in oil extraction in the Lago Agrio region of the Ecuadorian Amazon. In 1992, Texaco withdrew from the extraction efforts... The next year, the [Lago Agrio Plaintiffs "LAPs"] filed suit in the Southern District of New York, alleging a variety of environmental, health, and other tort claims related to the extraction activities. The district court (Rakoff, J.) dismissed the plaintiffs’ claims on grounds of international comity and forum non conveniens, stating that the case had "everything to do with Ecuador, and nothing to do with the United States."
We initially disagreed with the district court, requiring that Texaco make "a commitment... to submit to the jurisdiction of the Ecuadorian courts" before a forum non conveniens dismissal was appropriate... After several more years of legal wrangling, Texaco accepted the condition established by this Court, but reserved, in its words, "its right to contest [the] validity [of an Ecuadorian judgment] only in the limited circumstances permitted by New York’s Recognition of Foreign Country Judgments Act."
In 1994, while the litigation was ongoing in the Southern District of New York, Texaco entered into a settlement with the Ecuadorian government and its government owned oil company, Petroecuador ("the GOE settlement"). Under the settlement, as Chevron has previously characterized it before this Court, "TexPet funded certain environmental remediation projects in exchange for... a release from liability for environmental impact falling outside the scope of that settlement.".... The settlement was finalized in 1998, after Chevron - which had acquired Texaco in 2001... - spent roughly $40 million on the remediation. Ecuador and Chevron continue to litigate the validity and effect of the settlement before a Bilateral Investment Treaty arbitration panel...
After the dismissal of the New York action, the LAPs initiated a lawsuit against Chevron in Ecuador, the GOE settlement notwithstanding. After seven years of litigation, on February 14, 2011, the trial court issued its decision, finding Chevron liable for $8,6 billion of damages, with a $8.6 billion punitive damages award to be added unless Chevron apologized within fourteen days of the opinion’s issuance. Chevron did not apologize; the pending judgment is thus for $17.2 billion.1
Chevron brought the present action in part under New York’s Uniform Foreign Country Money-Judgments Recognition Act ("the Recognition Act"), N.Y. C.P.L.R. §§5301-5309, which allows judgment-creditors to enforce foreign judgments in New York courts, subject to several exceptions. Chevron, a potential judgment-debtor, sought a global anti-enforcement injunction against the LAPs and Donziger prohibiting the latter from attempting to enforce an allegedly fraudulent judgment entered by an Ecuadorian court against Chevron.
On March 7, 2011, the Southern District of New York (Kaplan, J.) granted the global injunction, which the defendants-appellants now challenge. Chevron Corp v. Donziger, 768 F. Supp. 2d 581 (S.D.N.Y. 2011) ("Donziger"). In an earlier order, we vacated that injunction and stayed the district court’s proceedings pending the present opinion. Chevron Corp. v. Naranjo, No. 11-1150-cv(L), 2011 WL 4375022 (2d Cir. Sept. 19, 2011). We conclude that the district court erred in construing the Recognition Act to grant putative judgment-debtors a cause of action to challenge foreign judgments before enforcement of those judgments is sought. Judgment-debtors can challenge a foreign judgment’s validity under the Recognition Act only defensively, in response to an attempted enforcement - an effort that the defendants-appellees have not yet undertaken anywhere, and might never undertake in New York. Consistent with our earlier order, we therefore reverse the district court’s decision, vacate the injunction, and remand to the district court with instructions to dismiss Chevron’s declaratory judgment claim in its entirety.2
The [plaintiffs] hold a judgment from an Ecuadorian court. They may seek to enforce that judgment in any country in the world where Chevron has assets. There is no indication that they will select New York as one of the jurisdictions in which they will undertake enforcement efforts, and if they do, they will have to present their claim to a New York court which will then apply the standards of the Recognition Act before any adverse consequence may befall Chevron. It is unclear what is to be gained by provoking a decision about the effect in New York of a foreign judgment that may never be presented in New York. If such an advisory opinion were available, any losing party in litigation anywhere in the world with assets in New York could seek to litigate the validity of the foreign judgment in this jurisdiction.3
(i) Judgment in the amount of the Canadian equivalent of U.S, $18,256 billion "resulting from the final Judgment of the Appellate Division of the Provincial Court of Justice of Sucumbios of Ecuador of January 3,2012", together with "the Canadian equivalent of costs to be determined by the Ecuadorean Court";
(ii) A declaration that the shares of Chevron Canada Limited and Chevron Finance Canada Limited "are exigible to satisfy the Judgment of this Honourable Court";
(iii) "the appointment of an equitable Receiver over the shares and assets of Chevron Canada Limited and of Chevron Canada Finance Limited, which are wholly owned subsidiaries of Chevron Corporation"; and,
(iv) Costs and pre-judgment interest.
13. As a consequence of the Decision of the Supreme Court of Canada in Beals v. Saldanha and subsequent jurisprudence, Chevron is estopped from challenging any fact, finding or determination of law in the Ecuadorian Decisions on the merits. Further, Chevron is restricted from challenging the Ecuadorian Decisions on the basis of fraud unless it can demonstrate that the allegations are new, not the subject of prior adjudication and were not discoverable by the exercise of due diligence.
18. As a condition of obtaining the dismissal of the action in New York, Texaco promised not only to submit to the jurisdiction of the Ecuadorean Court, but also to satisfy the Judgment.
19. After the Judgment, Chevron has resiled from that position. Chevron now repudiates its undertaking to the New York Court to respect and pay the Judgment rendered in the jurisdiction of its own choosing and, through its general counsel, has stated that "[w]e’re going to fight this until Hell freezes over and then fight it out on the ice".
20. As a result of the allegations in [specified paragraphs] and the fact that the great majority of its assets are held in 73 subsidiaries... Chevron Canada is a necessary party to this action in order to achieve equity and fairness between parties and to yield a result that is not "too flagrantly opposed to justice..."
21. The plaintiffs do not allege any wrongdoing against Chevron Canada. The action is for collection of a judgment debt.
22. The plaintiffs seek the appointment of an equitable Receiver to seize the shares and assets of Chevron Canada, the entire beneficial ownership of which belongs to the Judgment-Debtor, Chevron.
23. Service out of Ontario is authorized by Rule 17.02(m) and (o) of the Rules of Civil Procedure.
(i) An order setting aside service ex juris of the Amended Statement of Claim against them; and,
(ii) A declaration that this Court has no jurisdiction to hear this action and an order dismissing, or permanently staying, this action.
Both moving parties made it clear in their notices of motion that they were not attorning to the jurisdiction of this court.
6. There is no real and substantial connection between Ontario and Chevron Corp., or Ontario and the foreign judgment of the Provincial Court of Sucumbios in Lago Agrio, Ecuador;
7. Service outside of Ontario is not authorized;
8. This Honourable Court lacks jurisdiction to hear this action, and cannot assume it.
In its factum Chevron stated that it brought its motion "solely to object to the jurisdiction of this Court, without consenting or attorning to such jurisdiction". In its notice of motion it relied upon Rule 17 of the Rules of Civil Procedure, as well as section 106 of the Courts of Justice Act.
A foreign judgment against a different, separate legal entity provides absolutely no basis for jurisdiction over Chevron Canada, which is not the judgment debtor. Here the absence of jurisdiction over Chevron Canada is all the more apparent given that there is no jurisdiction over the judgment debtor itself in this Honourable Court. Under the circumstances, given the subject matter of the action and the absence of a real and substantial connection, this Court has no jurisdiction over this action with respect to Chevron Canada.
In its notice of motion Chevron Canada invoked Rules 17.02, 17.04, 17.06 and 21.01 (3)(a) of the Rules of Civil Procedure, together with section 106 of the CJA.
(i) Chevron was incorporated in the State of Delaware, U.S.A. and has its head office in San Ramon, California;
(ii) Chevron does not itself engage in the exploring, producing, refining or marketing of petroleum products; those activities are carried on by its indirect subsidiaries;
(iii) Chevron is not currently, and never has been, registered to carry on business in Ontario or anywhere else in Canada;
(iv) With the exception of its interest in two Bermudian companies, all of Chevron’s assets are owned and located in the U.S.A.;
(v) Chevron does not own the shares of Chevron Canada;
(vi) Chevron Canada is an operating company which is a 7th level indirect subsidiary of Chevron;
(vii) Chevron files consolidated financial statements because it is required by the U.S. Securities and Exchange Commission to do so;
(viii) Chevron Canada was incorporated in 1966 under the Canada Corporations Act with its head office, at the time incorporation, in Ottawa, Ontario. In 1980 it was continued under the Canada Business Corporations Act with its registered head office in Vancouver, British Columbia. Then, in 2003 it amalgamated under the CBCA with its registered office in Calgary, Alberta;
(ix) As of August, 2012, Chevron Canada was registered extra-provincially in a number of provinces, but not in Ontario;
(x) Chevron Canada has never carried on business in Ecuador;
(xi) All of the shares of Chevron Canada are owned by Chevron Canada Capital Company; and,
(xii) Chevron and Chevron Canada have separate and independent boards of directors, and none of the Chevron directors or executive officers serve on the board or are involved in managing the operations of Chevron Canada.
56. Jurisdiction simpliciler is a basic threshold requirement that must exist before a court can adjudicate any dispute.
57. At common law, there are three ways a court can take jurisdiction over a defendant: (i) presence-based jurisdiction; (ii) consent-based jurisdiction; and, (iii) assumed jurisdiction.
58. Chevron Corp, is not present in this forum nor does it consent to the jurisdiction of this Court. Therefore, the issue is whether this Court can 'assume' jurisdiction. This Court can only assume jurisdiction where there is a "real and substantial" connection between the forum and the defendant and the subject matter of the action.
55. The issues on this Motion and the position of Chevron Corp, with respect to them are as follows:
(a) There is no reasonable basis in the pleadings themselves, or in any evidence before the Court, upon which to ignore the separate legal personalities of Chevron Corp. and its indirect Canadian subsidiary and thereby treat Chevron Corp. as having any business, assets or any connection with Ontario.
(b) Therefore, there is not the requisite "real and substantial" connection between Ontario and Chevron Corp. or the Plaintiffs' claim upon which this Honourable Court could assume jurisdiction over the action.
11. With no credible basis to pierce the corporate veil in this case, it is clear that Chevron Corp. has no business or assets in Ontario, nor for that matter anywhere in Canada. There is no other connection between Ontario and Chevron Corp. or the Plaintiffs' claim, let alone the real and substantial one required for this Court to exercise jurisdiction over either of them.
12. As most recently explained by the Supreme Court of Canada in Van Breda, the "real and substantial connection" test for the exercise of jurisdiction embodies the fundamental principles of order and fairness, efficiency and comity. It recognizes that any court's assumption of jurisdiction over a foreign defendant is subject to limits. While those limits will vary depending upon the circumstances, those principles clearly dictate that this Court must decline jurisdiction in the circumstances of this case.
13. It is a rare judgment creditor that seeks recognition and enforcement in a jurisdiction disconnected entirely from the parties and the subject matter of the dispute, and in which no exigible assets are now or are reasonably expected to ever be. Consequently, there is rarely a question about whether a court can assume jurisdiction of a recognition and enforcement action in such circumstances. This does not mean, however, that the threshold question of jurisdiction simpliciter need not be addressed before a court proceeds to adjudicate the substantive issues which may arise in an enforcement action, and which would clearly arise if this one were allowed to proceed.
14. Given the absence of any Chevron Corp. presence or assets in Ontario and the unique circumstances under which the Plaintiffs seek to invoke this Court’s jurisdiction, it would offend principles of order, fairness and justice, waste valuable judicial resources, and be an abuse of international comity for this Court to assume jurisdiction over the action. (emphasis added)
67. Where the foreign defendant challenging jurisdiction files affidavit evidence challenging allegations in the Statement of Claim that are essential to jurisdiction, the plaintiff must show that it has a "good arguable case" with respect to those allegations.
5. Chevron Canada submits that service of process on it outside Ontario, without leave, was not authorized under the Rules of Civil Procedure and should be set aside. Neither Rule 17.02(m) nor (o), relied on by the Plaintiffs in the ASOC for authority to effect service ex juris, applies here. Service should therefore be set aside under Rule 17.06(2)(a).
6. Secondly, Chevron Canada submits that this Court has no jurisdiction over it with respect to this action because the two-step test for assuming jurisdiction is not met. The first step of the test requires that the action fall within one of the categories that raise a rebuttable presumption of jurisdiction; there are no grounds here for any such presumption. The second step requires that, even where there are grounds for a presumption of jurisdiction, there must in fact be a "real and substantial connection" between the jurisdiction and the subject matter of the action. There is no such connection here. The action should accordingly be dismissed or permanently stayed.
7. The Plaintiffs have attempted to circumvent both elements of the jurisdictional test by alleging that Chevron Corp. beneficially owns the assets of Chevron Canada, urging that this Court should "pierce the corporate veil" and treat the foreign judgment against Chevron Corp. as somehow being also a judgment against its indirect subsidiary, Chevron Canada. Piercing the corporate veil requires the Plaintiffs to both allege and demonstrate that:
(a) Chevron Corp. exercises "complete domination or control" over Chevron Canada, and
(b) the corporate relationship between Chevron Corp. and Chevron Canada was established, or Chevron Canada is operated, solely for a fraudulent or improper purpose.
8. Not only have the Plaintiffs not made allegations that (if true) would meet the prerequisites necessary to pierce a corporate veil, but the uncontradicted evidence on this motion demonstrates that there is no actual basis to "pierce the corporate veil" in any event. Indeed, the Plaintiffs have pleaded facts that are inconsistent with the prerequisites for piercing the corporate veil. This attempt to establish jurisdiction over Chevron Canada is untenable.
5. The law and the principles applicable to the jurisdiction of a domestic court to recognize and enforce a foreign judgment are distinct and different from the law and principles applicable to the jurisdiction of a court in determining whether to try a cause of action at first instance.
6. The moving parties’ Facta use the wrong test. The real and substantial connection test needs only to be satisfied at the cause of action stage in the trial process. Once satisfied at that stage, the remaining requirement is that set out by the Supreme Court of Canada.
7. The moving parties’ Facta ignore this distinction. The first instance principles, real and substantial connection, personal jurisdiction, and attornment, have all been well satisfied in the Ecuadorean Court and in its trial process...Chevron attorned to the jurisdiction of the Ecuadorean Court and vigorously opposed the plaintiffs’ claims throughout an eight year trial.
8. The over-arching principles of respect by a domestic tribunal for the judgment of a foreign court are made imperative in the judgments of the Supreme Court of Canada in Mor guard v. De Savoy e and in Beals v. Saldanha. The only pre-condition to Ontario jurisdiction is that the foreign court, which rendered the judgment, had a real and substantial connection to the litigants or the subject matter of the dispute. Subject to limited defences, which are to be advanced in a Statement of Defence, there is no further impediment to jurisdiction...
9.... recognition and enforcement of a foreign judgment does not depend on the location of the judgment debtor’s assets. The Court is only concerned with whether the judgment being recognized is final in the foreign jurisdiction and whether there was jurisdiction over the defendant by reason of subject matter jurisdiction or attornment or proper service. Recognition of the Ecuadorean Final Judgment falls squarely within established precedent and principles.
11.... Rule 17.02(m) is premised on a foreign defendant and on a foreign judgment. Applying a real and substantial connection test to the Rule would undermine it.
Claimants who seek to have foreign judgments recognized or enforced in this country ask for the support and cooperation of Canadian courts. They thus face the initial burden of showing that the judgment is valid on its face and was issued by a court acting through fair process and with properly restrained jurisdiction based on a real and substantial connection to the action. The petitioner must convince the receiving court that the values of international comity require it to exercise its power in favour of enforcing the judgment. Once this burden has been met, the judgment is prima facie enforceable by a Canadian court. The common law has long recognized, however, that the defendant can still establish that the judgment should not be enforced by showing that one of a number of defences to recognition and enforcement applies. The defences relevant to this appeal are commonly grouped under the heading of "impeachment" defences, since all are based on the notion that the way the foreign judgment was obtained was in some way tainted or contrary to Canadian notions of justice. (Other potential defences, such as the foreign public law exception to enforceability in Canada, which might apply, for example, to a tax claim, are not implicated by the facts of this case.)5
[F]raud going to jurisdiction can always be raised before a domestic court to challenge the judgment. On the other hand, the merits of a foreign judgment can be challenged for fraud only where the allegations are new and not the subject of prior adjudication. Where material facts not previously discoverable arise that potentially challenge the evidence that was before the foreign court, the domestic court can decline recognition of the judgment.7
[T]he nominate defences should be looked at as examples of a single underlying principle governing the exercise of the receiving court's power to recognize and enforce a foreign judgment. The claimant must come before the Canadian court with clean hands, and the court will not accept a judgment whose enforcement would amount to an abuse of its process or bring the administration of justice in Canada into disrepute. Serious consideration should be given to the possibility of a residual category of judgments, beyond those addressed by the defences of public policy, fraud and natural justice, that should not be enforced because they, too, engage this principle - in short, because their enforcement would shock the conscience of Canadians.10
The majority in Beals did not accept that argument.
Three categories of issues - jurisdiction, forum non conveniens and the recognition of foreign judgments - are intertwined in this branch of the law. Thus, the framework established for the purpose of determining whether a court has jurisdiction may have an impact on the choice of law and on the recognition of judgments, and vice versa. Judicial decisions on choice of law and the recognition of judgments have played a central role in the evolution of the rules related to jurisdiction. None of the divisions of private international law can be safely analysed and applied in isolation from the others.11
LeBel J. immediately continued by stating;
This said, the central focus of these appeals is on jurisdiction and the appropriate forum.
Conflicts rules must fit within Canada’s constitutional structure. Given the nature of private international law, its application inevitably raises constitutional issues. This branch of the law is concerned with the jurisdiction of courts of the Canadian provinces, with whether that jurisdiction should be exercised, with what law should apply to a dispute, and with whether a court should recognize and enforce a judgment rendered by a court of another province or country,..The interplay between provincial jurisdiction and external legal situations takes place within a constitutional framework which limits the external reach of provincial laws and of a province’s courts. The Constitution assigns powers to the provinces. But these powers are subject to the restriction that they be exercised within the province in question...(citations omitted) and they must be exercised in a manner consistent with the territorial restrictions created by the Constitution...12
The real and substantial connection test arose out of decisions of this Court that were aimed at establishing broad and flexible principles to govern the exercise of provincial powers and the actions of a province's courts. It was focussed on two issues: (1) the risk of jurisdictional overreach by provinces and (2) the recognition of decisions rendered in other jurisdictions within the Canadian federation and in other countries.13
In its constitutional sense, it places limits on the reach of the jurisdiction of a province's courts and on the application of provincial laws to interprovincial or international situations. It also requires that all Canadian courts recognize and enforce decisions rendered by courts of the other Canadian provinces on the basis of a proper assumption of jurisdiction. But it does not establish the actual content of rules and principles of private international law, nor does it require that those rules and principles be uniform.14
In Morguard, the Court held that the courts of a province must recognize and enforce a judgment of a court of another province if a real and substantial connection exists between that court and the subject matter of the litigation. Another purpose of the test was to prevent improper assumptions of jurisdiction by the courts of a province. Thus, the test was designed to ensure that claims are not prosecuted in a jurisdiction that has little or no connection with either the transactions or the parties, and it requires that a judgment rendered by a court which has properly assumed jurisdiction in a given case be recognized and enforced...16 (emphasis added)
This case concerns the elaboration of the "real and substantial connection" test as an appropriate common law conflicts rule for the assumption of jurisdiction. I leave further elaboration of the content of the constitutional test for adjudicative jurisdiction for a case in which a conflicts rule is challenged on the basis of inconsistency with constitutionally imposed territorial limits...17
More specifically, he described the task of the Court as follows:
[T]his Court must craft more precisely the rules and principles governing the assumption of jurisdiction by the courts of a province over tort cases in which claimants sue in Ontario, but at least some of the events that gave rise to the claims occurred outside Canada or outside the province. I will also consider how jurisdiction should be exercised or declined under the doctrine of forum non conveniens...18
For my part, I much prefer the more complete formulation of the idea of comity adopted by the Supreme Court of the Unites States in Hilton v. Guyot, 159 U.S. 113 (1895), at pp. 163-64, in a passage cited by Estey J. in Spencer v. The Queen,  2 S.C.R. 278, at p. 283, as follows:
"Comity" in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws...
As Dickson J. in Zingre v. The Queen,  2 S.C.R. 392, at p. 400, citing Marshall C.J. in The Schooner Exchange v. M'Faddon, 11 U.S. (7 Cranch) 116 (1812), stated, "common interest impels sovereigns to mutual intercourse" between sovereign states. In a word, the rules of private international law are grounded in the need in modem times to facilitate the flow of wealth, skills and people across state lines in a fair and orderly manner...25
The private international law rule requiring substantial connection with the jurisdiction where the action took place is supported by the constitutional restriction of legislative power "in the province". As Guerin J. observed in Dupont v. Taronga Holdings Ltd. (1986), 49 D.L.R. (4th) 335 (Que. Sup. Ct.), at p. 339,..."In the case of service outside of the issuing province, service ex juris must measure up to constitutional rules." The restriction to the province would certainly require at least minimal contact with the province, and there is authority for the view that the contact required by the Constitution for the purposes of territoriality is the same as required by the rule of private international law between sister-provinces. That was the view taken by Guerin J. in Taronga where, at p. 340, he cites Professor Hogg, op. cit., at p. 278, as follows:
In Moran v. Pyle, Dickson J. emphasized that the "sole issue" was whether Saskatchewan's rules regarding jurisdiction based on service ex juris had been complied with. He did not consider whether there were constitutional limits on the jurisdiction which could be conferred by the Saskatchewan Legislature on the Saskatchewan courts. But the rule which he announced could serve satisfactorily as a statement of the constitutional limits of provincial-court jurisdiction over defendants outside the province, requiring as it does a substantial connection between the defendant and the forum province of a kind which makes it reasonable to infer that the defendant has voluntarily submitted himself to the risk of litigation in the courts of the forum province.
I must confess to finding this approach attractive, but as I noted earlier, the case was not argued in constitutional terms and it is unnecessary to pronounce definitively on the issue...26
Morguard established that the courts of one province or territory should recognize and enforce the judgments of another province or territory, if that court had properly exercised jurisdiction in the action, namely that it had a real and substantial connection with either the subject matter of the action or the defendant. A substantial connection with the subject matter of the action will satisfy the real and substantial connection test even in the absence of such a connection with the defendant to the action.28
There are conditions to be met before a domestic court will enforce a judgment from a foreign jurisdiction. The enforcing court, in this case Ontario, must determine whether the foreign court had a real and substantial connection to the action or the parties, at least to the level established in Morguard, supra, A real and substantial connection is the overriding factor in the determination of jurisdiction. The presence of more of the traditional indicia of jurisdiction (attornment, agreement to submit, residence and presence in the foreign jurisdiction) will serve to bolster the real and substantial connection to the action or parties. Although such a connection is an important factor, parties to an action continue to be free to select or accept the jurisdiction in which their dispute is to be resolved by attorning or agreeing to the jurisdiction of a foreign court.29
The obligation of a domestic court to recognize and enforce a foreign judgment cannot depend on the financial ability of the defendant to pay that judgment.30
Morguard thus strongly suggested that the recognition and enforcement of foreign-country judgments should be subject to a more liberal test informed by an updated understanding of international comity. It is equally clear from a reading of Morguard and its progeny that the considerations informing the application of the test to foreign-country judgments are not identical to those that shape conflict rules within Canada. As I observed in Spar, supra, at para. 51, "it is important to emphasize that Morguard and Hunt were decided in the context of interprovincial jurisdictional disputes... [and that] the specific findings of these decisions cannot easily be extended beyond this context". See also Hunt, supra, at p. 328. Although constitutional considerations and considerations of international comity both point towards a more liberal jurisdiction test, important differences remain between them.
One of those differences is that the rules that apply within the Canadian federation are "constitutional imperatives". Comity as between sovereign nations is not an obligation in the same sense, although it is more than a matter of mere discretion or preference...
The provinces, on the other hand, are constitutionally bound both to observe the limits on their own power to assert jurisdiction over defendants outside the province, and to recognize the properly assumed jurisdiction of courts in sister provinces; for them, this is "a matter of absolute obligation". This obligation reflects the unity In diversity that is characteristic of our federal state.32
There is an important difference between the inquiry conducted by a court assuming jurisdiction at the outset of the action and the test applied by a court asked to recognize and enforce a judgment at the end. In the former case, two steps are involved: the court must first determine that it has a basis for jurisdiction, and if it does it must go on to decide whether it should nevertheless decline to exercise that jurisdiction because another forum is clearly more appropriate for the hearing of the action. In the latter case of a receiving court, only the first step in this inquiry is relevant. Provided that the originating court had a reasonable basis for jurisdiction, the defendant had its chance to appear there and argue forum non conveniens, and cannot question the originating court's decision on that issue in the receiving court.33
The foreign judgment is evidence of a debt. All the enforcing court needs is proof that the judgment was rendered by a court of competent jurisdiction and that it is final, and proof of its amount. The enforcing court then lends its judicial assistance to the foreign litigant by allowing him or her to use its enforcement mechanisms.
As this Court confirmed in Beals v. Saldanha... absent evidence of fraud or of a violation of natural justice or of public policy, the enforcing court is not interested in the substantive or procedural law of the foreign jurisdiction in which the judgment sought to be enforced domestically was rendered.35
Later, in their judgment, the majority stated this general principle in a slightly different way:
Under the traditional rule, once the jurisdiction of the enforcing court is established, the petitioner must show that he or she meets the conditions for having the judgment recognized and enforced. In the case of an equitable order, it is at this stage that considerations specific to the particular nature of such orders should be contemplated....36 (emphasis added)
The Court did not expand on its reference to the establishment of the jurisdiction of the enforcing court.
The defendants took exception to evidence of the plaintiffs belief that the defendants have assets in Ontario on the grounds that the plaintiffs affidavit is in contravention of Rule 39.01(4) which requires identification of the source of information and belief evidence. In my view, this is immaterial as the existence of assets of the judgment debtors in Ontario is irrelevant to the question of whether the court should grant recognition to the Quebec judgment. The plaintiff has the right to satisfy itself whether the defendants have or will have assets in Ontario and, if so, to seize them. If it is unsuccessfid in this regard, it simply will be in the same position as other judgment creditors.39
A foreign judgment is like a debt between the parties to it, in that it is not enforceable directly by execution, but it is capable of forming the basis for a local order for its enforcement. Since the order may be executed only against local assets, there is no basis for staying the proceedings on grounds that the forum is inappropriate or that the judgment debtor's principal assets are elsewhere.40
Because an action on the foreign judgment is a new legal proceeding, issues of jurisdiction, as discussed in Chapter 5 [Jurisdiction In Personam], must be considered at the outset. If the defendant is resident in the country in which recognition and enforcement is sought, it will be easy to establish jurisdiction. But in many cases the defendant will not be resident there: he or she will only have assets there, which the plaintiff is going after to enforce the judgment. Typically the presence of assets in a province is an insufficient basis for taking jurisdiction over a foreign defendant. But most provinces have made specific provision to allow for service ex juris in such cases. For example, in Ontario service outside the province can be made as of right where the claim is "on a judgment of a court outside Ontario". As explained in Chapter 5, the plaintiff would still need to show a real and substantial connection to the province in which the enforcement was sought. Under this test, the presence of assets may be insufficient to ground substantive proceedings but they should virtually always be sufficient to ground proceedings for recognition and enforcement. Once jurisdiction is established, the enforcement proceedings typically follow an accelerated procedure available for cases where facts are not in dispute, such as a motion for summary judgment,41
1. Where a judgment has been given by a court of one Contracting State, the judgment creditor may apply in accordance with Article VI to a court of the other Contracting State at any time within a period of six years after the date of the judgment (or, where there have been proceedings by way of appeal against the judgment, after the date of the last judgment given in those proceedings) to have the judgment registered, and on any such application the registering court shall, subject to such simple and rapid procedures as each Contracting State may prescribe and to the other provisions of this Convention, order the judgment to be registered.
1. Registration of a judgment shall be refused or set aside if: (a) the judgment has been satisfied; (b) the judgment is not enforceable in the territory of origin; (c) the original court is not regarded by the registering court as having jurisdiction; (d) the judgment was obtained by fraud; (e) enforcement of the judgment would be contrary to public policy in the territory of the registering court; (I) the judgment is a judgment of a country or territory other than the territory of origin which has been registered in the original court or has become enforceable in the territory of origin in the same manner as a judgment of that court; or (g) in the view of the registering court the judgment debtor either is entitled to immunity from the jurisdiction of that court or was entitled to immunity in the original court and did not submit to its jurisdiction,
2. The law of the registering court may provide that registration of a judgment may or shall be set aside if: (a) the judgment debtor, being the defendant in the original proceedings, either was not served with the process of the original court or did not receive notice of those proceedings in sufficient time to enable him to defend the proceedings and, in either case, did not appear; (b) another judgment has been given by a court having jurisdiction in the matter in dispute prior to the date of judgment in the original court; or (c) the judgment is not final or an appeal is pending or the judgment debtor is entitled to appeal or to apply for leave to appeal against the judgment in the territory of origin.
3. The practice and procedure governing registration (including notice to the judgment debtor and applications to set registration aside) shall, except as otherwise provided in tills Convention, be governed by the law of the registering court.
Rule 73.02 of the Rules of Civil Procedure specifies the form of the notice of application to register a U.K. judgment, together with the necessary supporting affidavit evidence.
35. (1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36.
We conclude, however, that a party seeking recognition in New York of a foreign money judgment (whether of a sister state or a foreign country) need not establish a basis for the exercise of personal jurisdiction over the judgment debtor by the New York courts. No such requirement can be found in the CPLR, and none inheres in the Due Process Clause of the United States Constitution from which jurisdictional basis requirements derive.51
The New York Court of Appeals went on to state:
Moreover, although defendants assert that they currently have no assets in New York, that assertion has no relation to their jurisdictional objection...In any event, plaintiffs sufficiently allege that defendants have assets in New York...Plaintiffs should be given the opportunity to enforce the Ontario judgment by levying against whatever assets of defendants may be owed to Pelonis by the New York corporation. Such assets and/or debts would have a New York situs, which is all that is required to subject them to levy or restraint here as a means of enforcing the domesticated Ontario judgment...Moreover, even if defendants do not presently have assets in New York, plaintiffs nevertheless should be granted recognition of the foreign country money judgment pursuant to CPLR article 53, and thereby should have the opportunity to pursue all such enforcement steps in futuro, whenever it might appear that defendants are maintaining assets in New York, including at any time during the initial life of the domesticated Ontario money judgment or any subsequent renewal period...52
We agree with the New York case and conclude even if a judgment debtor does not currently have property in Texas, a judgment creditor should be allowed the opportunity to obtain recognition of his foreign-money judgment and later pursue enforcement if or when the judgment debtor appears to be maintaining assets in Texas.53
We hold that where plaintiff failed to identify any property owned by defendants in Michigan, the trial court erred in holding that it was unnecessary for plaintiff to demonstrate that the Michigan court had personal jurisdiction over defendants in this common-law enforcement action.55
We have not found any authorities indicating that the foundational requirement of demonstrating a trial court's jurisdiction over a person or property is inapplicable in enforcement proceedings...56
Nor does this Act address the question of what constitutes a sufficient basis for jurisdiction with regard to an action under Section 6. Courts have split over the issue of whether the presence of assets of the debtor in a state is a sufficient basis for jurisdiction in light of footnote 36 of the U.S. Supreme Court decision in Shaffer v. Heitner, 433 U.S. 186,210 n. 36 (1977). This act takes no position on that issue.
17.02 A party to a proceeding may, without a court order, be served outside Ontario with an originating process or notice of a reference where the proceeding against the party consists of a claim or claims,
(m) on a judgment of a court outside Ontario...
An originating process served outside of Ontario without leave must disclose the facts which support the provision of Rule 17.02 relied upon in support of such service.57
In Muscutt, at para. 51, we adopted a statement from Janet Walker in G.D. Watson & L. Jeffrey, eds., Holmested and Watson: Ontario Civil Procedure (Carswell: Toronto, 2001), at p. 17-19, that the grounds outlined in rule 17.02 "provide a rough guide to the kinds of cases in which persons outside Ontario will be regarded as subject to the jurisdiction of the Ontario courts". In my view, there are now several reasons that justify elevating the weight to be given rule 17.02 by saying that, with the exception of subrules 17.02(h) ("damages sustained in Ontario") and (o) ("a necessary or proper party"), if a case falls within one of the connections listed in rule 17.02, a real and substantial connection for the purposes of assuming jurisdiction against the defendant shall be presumed to exist. As with CJPTA, s. 10, this presumption would not preclude a plaintiff from proving a real and substantial connection in other circumstances and does not preclude the defendant from demonstrating that, notwithstanding the fact that the case falls under rule 17.02, in the particular circumstances of the case, the real and substantial connection test is not met.58
The Court of Appeal did not discuss what, if any, distinctive consideration should be given to Rule 17.02(m) dealing with foreign judgments, which is not surprising given that the Van Breda case was concerned with the issue of whether an Ontario court could assume jurisdiction to conduct the initial adjudication on the merits of the particular claim.
At this stage, I will briefly discuss certain connections that the courts could use as presumptive connecting factors. Like the Court of Appeal, I will begin with a number of factors drawn from rule 17.02 of the Ontario Rules of Civil Procedure. These factors relate to situations in which service ex juris is allowed, and they were not adopted as conflicts rules. Nevertheless, they represent an expression of wisdom and experience drawn from the life of the law. Several of them are based on objective facts that may also indicate when courts can properly assume jurisdiction, They are generally consistent with the approach taken in the CJPTA and with the recommendations of the Law Commission of Ontario, although some of them are more detailed. They thus offer guidance for the development of this area of private international law.59
Indeed, of the four presumptive factors for assumed jurisdiction in tort cases identified by the Supreme Court of Canada in Van Breda, two were drawn from Rule 17.02: (i) the tort was committed in the province (Rule 17.02(g)); and (ii) a contract connected with the dispute was made in the province (Rule 17.02(f)(i)).60 Of course, the Supreme Court stated that the presumption of jurisdiction with respect to a factor is a rebuttable one, with it being open to the defendant to demonstrate that the presumptive factor does not point to any real relationship between the subject matter of the litigation and the forum, or only points to a weak relationship between them.61
(i) Where a defendant moves to set aside service ex juris on the ground that there is no real and substantial connection with Ontario, the question will be whether there is a good arguable case that the connection exists;
(ii) In determining whether a sufficient real and substantial connection exists, the court must follow the approach approved by the Supreme Court of Canada in Van Breda;
(iii) Issues relating to forum non conveniens arise only where the jurisdictional requirement of a real and substantial connection would be satisfied in respect of Ontario and another jurisdiction;
(iv) In ascertaining whether a real and substantial connection exists, the statement of claim will be the starting point of the analysis as it contains the material facts from which the cause of action arose. Any allegation of fact that is not put into issue by the defendant is presumed to be true for purposes of the motion. The plaintiff is under no obligation to call evidence for any allegation that has not been challenged by the defendant;
(v) However, where a pleading lacks sufficient particularity with respect to the required jurisdictional connections, the plaintiff bears the burden of supplementing the pleading with affidavit evidence establishing such a connection;
(vi) Also, if the foreign defendant files affidavit evidence challenging the allegations in the statement of claim that are essential to jurisdiction, the threshold for the plaintiff to meet is that it has a "good arguable case" on those allegations;
(vii) In considering whether a "good arguable case" is made that a real and substantial connection exists, the court does not try the merits according to the civil standard of proof for the purpose of resolving issues of fact that arise. A plaintiff need only show that a "good arguable case" for an assumption of jurisdiction is made out. A "good arguable case" has been compared to a "serious issue to be tried" or a "genuine issue" or "with some chance of success".62 The threshold test is a low one.63
The purpose of enforcing a foreign judgment within Ontario is to execute on assets of the judgment debtor that are within the province. When a judgment debtor of a foreign action comes into the province, if the person brings assets, it is only at that time that a judgment creditor will want to seek to enforce the foreign judgment here.67
Consequently, the abstract (albeit important) principle of private international law put in issue on these motions rarely sees the light of day because economic considerations regulate the selection of the recognition forum.
117. [B]ecause Chevron Corp, does not have assets here, and there is no reasonable prospect that it will do so in the future, there is no prospect for any recovery here. To allow the Plaintiffs' academic exercise to take place in the Ontario judicial system would, therefore, be an utter and unnecessary waste of valuable judicial resources...
Let me explain why I have reached my conclusion.
77. Chevron Corp. has no presence, business activity, or assets in Ontario or elsewhere in Canada. This has been the case for 86 years and there is no reasonable basis to believe that these arrangements will change.
While courts must subject to scrutiny assertions by judgment debtors that they do not intend to engage in certain future conduct regarding their assets, Chevron’s established history of not owning assets in Ontario points to a deliberate corporate policy to avoid such ownership in this jurisdiction. Accordingly, this is not the case of a judgment debtor who says one thing today to a court, but likely will do quite the opposite in the event court rules in its favour on the motion to stay. Chevron obviously has structured its corporate affairs, including its asset ownership, in a very deliberate way, and the evidence disclosed no reasonable or likely prospect of Chevron owing assets in Ontario in the near or mid-term.
An essential component of a corporation is its capital stock, which is divided into fractional parts, the shares...While the corporation is on-going, shares confer no right to its underlying assets,
A share "is not an isolated piece of property... [but] a 'bundle' of interrelated rights and liabilities"...These rights include the right to a proportionate part of the assets of the corporation upon winding-up and the right to oversee the management of the corporation by its board of directors by way of votes at shareholder meetings.69
Accordingly, the plaintiffs’ bald pleading that Chevron beneficially owns the assets of Chevron Canada is inconsistent with the basic principles of Canadian corporate law.
(i) The separate legal personality of the corporation should not be lightly disregarded and a shareholder is liable for the wrongs of a corporation only in very limited circumstances;
(ii) As a general proposition, courts may look behind corporate structures (a) where a principal-agent relationship between two related corporations leads to liability despite separate legal personalities, (b) where it is necessary to do so to give effect to legislation, especially taxation statutes, or (c) where it can be shown that (1) the alter ego exercises complete control over the corporation or corporations whose separate legal identity is to be ignored and (2) the corporation or corporations whose separate legal identity is to be ignored are instruments of fraud or a mechanism to shield the alter ego from its liability for illegal activity;72
(iii) As put by the Court of Appeal in Gregorio v. Intrans-Corp., this latter circumstance, sometimes called the alter ego basis of piercing the corporate veil, "is applied to prevent conduct akin to fraud that would otherwise unjustly deprive claimants of their rights":73
a. Complete control requires more than ownership, but necessitates a demonstration that there is complete domination of the subsidiary corporation and the sub does not, in fact, function independently74 - or, as put in one case, a demonstration that the subsidiary is a "puppet" of the parent.75 A list of some of the criteria by which to assess the independence of the subsidiary was set out by the Court of Appeal in Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce;76 and,
b. The impropriety must be linked to the use of the corporate structure to avoid or conceal liability for that impropriety;77
(iv) The fact that a parent corporation operates a number of world-wide companies as an integrated economic unit does not mean that separate legal entities will be ignored absent some compelling reason for lifting the corporate veil.78 Ontario courts have not adopted the "group enterprise theory" of corporate liability,79 I adopt, as an accurate statement of the law prevailing in Ontario on this point, the following statements by the United Kingdom Court of Appeal in Adams v. Cape Industries Plc.:
There is no general principle that all companies in a group of companies are to be regarded as one. On the contrary, the fundamental principle is that "each company in a group of companies,., is a separate legal entity possessed of separate legal rights and liabilities..."
Our law...recognizes the creation of subsidiary companies, which though in one sense the creatures of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities.80
As a general rule a corporation is a legal entity distinct from its shareholders: Salomon v. Salomon & Co.  A.C. 22 (H.L.). The law on when a court may disregard this principle by "lifting the corporate veil" and regarding the company as a mere "agent" or "puppet" of its controlling shareholder or parent corporation follows no consistent principle. The best that can be said is that the "separate entities" principle is not enforced when it would yield a result "too flagrantly opposed to justice, convenience or the interests of the Revenue": L.C.B, Gower, Modern Company Law (4th ed. 1979) at p. 112. I have no doubt that theoretically the veil could be lifted in this case to do justice... But a number of factors lead me to think it would be unwise to do so.81
In my view, the argument advanced by Transamerica reads far too much into a dictum plainly not intended to constitute an in-depth analysis of an important area of the law or to reverse a legal principle which, for almost 100 years, has served as a cornerstone of corporate law.
It was conceded in argument that no case since Kosmopoulos has applied the preferred "just and equitable" test...
There are undoubtedly situations where justice requires that the corporate veil be lifted. The cases and authorities already cited indicate that it will be difficult to define precisely when the corporate veil is to be lifted, but that lack of a precise test does not mean that a court is free to act as it pleases on some loosely defined "just and equitable" standard.82
Subsequently the Court of Appeal, in referring to the "too flagrantly opposed to justice" phrase used in the Kosmopoulos case, stated:
But this does not mean that courts enjoy ‘carte blanche’ to lift the corporate veil absent fraudulent or improper conduct whenever it appears ‘just and equitable’ to do so.83
The Court of Appeal then adopted the analysis employed by Sharpe J. in the Transamerica case.
Chevron Canada is a fully capitalized corporation which funds its own day to day operations without financial contributions from Chevron Corp. or any other Chevron entity.
This corporate structure has been in place since 1966; it was not a recent creation designed to blunt the effect of the Ecuadorean Judgment. I do not regard the existence of a central review and approval process for large capital expenditures, especially of the magnitude found in the resource extraction industry, as signifying a complete domination by the parent of the indirect subsidiary such as to dissolve the separate legal identity of the subsidiary, especially when, as the evidence showed in this case, the indirect subsidiary carries on its own business operations, Put another way, the centralized strategic planning and allocation of large amounts of capital, by itself, does not undermine the separate legal entity of a company down the corporate chain which operates a tangible business managed by separate directors, officers and senior managers.
The plaintiffs do not allege any wrongdoing against Chevron Canada.
Even the most liberal reading of the Amended Statement of Claim does not disclose any pleading of material facts which would suggest or hint that the activities of Chevron Canada were or are in any way, shape or form carried on as instruments of fraud or as a mechanism or conduit to avoid or to conceal liability for an impropriety committed by Chevron. The Amended Statement of Claim contains no pleading of facts which links Chevron Canada in any way to the events which gave rise to the Ecuadorean Judgment or to events designed to shield Chevron from any liability under that Judgment.