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Chevron: High threshold for piercing corporate veil affirmed

Author(s): Jacqueline Code

Dec 13, 2019

The Ontario Court of Appeal’s decision in Chevron Corporation v Yaiguaje et al confirmed the very high test under Canadian law for disregarding the separate legal personality of a parent corporation and its direct or indirect subsidiaries, rejecting attempts to introduce into Canadian law either a general equitable test for piercing the corporate veil or a form of group enterprise liability. The Supreme Court of Canada’s determination not to hear an appeal from this decision effectively brought an end to a lengthy Canadian proceeding seeking to seize the assets of an indirect subsidiary to satisfy a judgment obtained (fraudulently) against its parent. This may be welcome news for defendants in other cases pending before the Canadian courts that seek to pierce the corporate veil to render one member of a corporate family accountable for acts of another. At a minimum, the plaintiffs in those cases may be driven to place greater reliance on alternative theories of liability.

Chevron Corp. v Yaiguaje et al

An almost seven-year long saga in the Canadian courts seeking recognition and enforcement of a US$9.5 billion judgment fraudulently obtained in the Ecuadorian Courts against Chevron Corporation came to an end in 2019. The plaintiffs – 47 residents of Ecuador – commenced an action in 2012...