The Chevron-Ecuador Case: Three Dimensions of Complexity in Transnational Dispute Resolution

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INTRODUCTION

The Chevron/Ecuador case is in many ways unique. Nevertheless, it illustrates a general trend toward greater inter-state, inter-systemic, and doctrinal complexity in transnational dispute resolution.

INTER-STATE COMPLEXITY

Inter-state complexity is complexity that arises when a dispute has connections to more than one state. The Chevron/Ecuador case has connections to both the United States and Ecuador, and these connections have created difficult issues regarding the proper forum, the proper law, and the domestic effect of foreign judgments. These issues are nothing new. But transnational litigation is becoming increasingly multipolar in ways that are likely to make these issues more frequent and complex than ever. (1)

For example, the plaintiffs in the Chevron/Ecuador case originally filed their suit in a U.S. court, but the court dismissed the suit in favor of Ecuador on forum non conveniens grounds. The plaintiffs refiled the suit in an Ecuadorian court, which heard the merits of the case and ultimately issued a multi-billion dollar judgment against Chevron.

This aspect of the Chevron/Ecuador case illustrates what seems to be a broader trend: while U.S. courts are decreasingly open to transnational claims, other countries' courts are increasingly open to them. Data collected by the Administrative Office of the U.S. Courts suggest that since at least the mid-1990s, the number of transnational contract and tort claims filed in U.S. federal courts has been declining. (2) Fewer transnational contract claims suggests that parties are negotiating fewer ex ante forum selection clauses selecting U.S. courts, and fewer transnational tort claims suggests that the world's tort plaintiffs are not as likely to forum-shop into the United States as they supposedly once were. Doctrinally, several trends might partly explain or reinforce this decline. Personal jurisdiction over non-U.S, defendants is increasingly restrictive, as the Supreme Court's recent decisions in Goodyear v. Brown and McIntyre v. Nicastro suggest. U.S. judges aggressively use the forum non conveniens doctrine to dismiss transnational suits. The Court's recent decision in Morrison v. National Australia Bank Ltd. indicates less willingness to apply plaintiff-favoring U.S. law extraterritorially. And the Court's decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal further reduce plaintiffs' incentives to forum-shop into U.S. courts by making it harder for them to survive the pleadings stage of litigation and gain access to a leading attraction of the U.S. legal system: permissive discovery.

Meanwhile, practitioners report that courts outside the United States are playing an increasingly assertive role in transnational dispute resolution. According to one senior transnational litigator, "actions in foreign courts are a source of increasing risk to U.S. corporations that operate abroad." (3) Others observe a growing number of countries recognizing aggregate litigation and relaxing prohibitions on contingency fee arrangements and punitive damages, making these countries' courts increasingly attractive to plaintiffs. (4)

U.S. proceedings regarding the enforceability of the Ecuadorian judgment against Chevron illustrate another aspect of the new multipolarity that may increase inter-state complexity: it appears that more foreign judgments are being brought to the United States, forcing U.S. judges and lawyers to confront a growing number of complicated issues involving foreign legal systems. Transnational litigation experts have noted the growth of foreign judgment enforcement actions in U.S. courts (5) and, although data are sparse, one empirical analysis suggests enforcement actions may indeed be on the rise. (6)

INTER-SYSTEMIC COMPLEXITY

The Chevron/Ecuador case implicates not only the domestic legal systems of Ecuador and the United States, but also the international investor-state arbitration system and a regional human rights system. …