Canada: My Parent’s Keeper? Enforcement Action Allowed To Proceed Against Parent, Subsidiary Corporations

Last Updated: December 30 2013
Article by Erin Hoult and John Mather

The Ontario Court of Appeal recently addressed the Ontario courts' power to hear actions seeking recognition and enforcement of foreign judgments in Ontario. In the case of Yaiguaje v. Chevron Corporation (Yaiguaje), the Court of Appeal affirmed that a party seeking an order recognizing and enforcing a judgment of a non-Ontario court does not have to establish that the Ontario courts have jurisdiction over the judgment debtor or over the subject matter of the claim underlying the foreign judgment.

Of perhaps greater interest, the Court of Appeal specifically permitted the enforcement action in Yaiguaje to proceed against both the American corporation that was the subject of the foreign judgment in issue, but also against its indirect Canadian subsidiary – a party that played no role in the foreign proceedings.


The dispute underlying the Yaiguaje case has a long procedural history that has played out in the courts of the United States, Ecuador and now Canada. In brief, the plaintiffs in Yaiguaje are Ecuadorian residents who obtained a US$9.51-billion judgment through the Ecuadorian courts against Chevron Corporation, an American company, in respect of claims concerning environmental pollution. Chevron Corporation has not made payment on the Ecuadorian judgment and disputes its validity. The plaintiffs brought an action in Ontario seeking recognition and enforcement of the Ecuadorian judgment in Ontario against Chevron Corporation and its indirect, wholly owned subsidiary, Chevron Canada Limited (Chevron Canada). Chevron Canada had not been a party to the Ecuadorian proceeding and no judgment has been issued against it.

Chevron Corporation and Chevron Canada each brought motions seeking to dismiss or permanently stay the plaintiffs' Ontario enforcement action on the basis that the Ontario courts do not have jurisdiction to hear it. On those motions, the Superior Court found that the Ontario courts did have jurisdiction to hear the enforcement action. However, on his own initiative, the motion judge stayed the enforcement action indefinitely for two reasons: Chevron Corporation did not appear to have any assets in Ontario and the plaintiffs had "no hope of success" in their attempt to access Chevron Canada's assets to satisfy the judgment against its indirect parent corporation, given the corporate veil. The motion judge reasoned that the resources of the Ontario court should not be engaged to determine an enforcement action that was doomed to fail.

The plaintiffs appealed the stay of the action, while the Chevron defendants cross-appealed the motion judge's finding that the Ontario courts have jurisdiction over the enforcement action.


The Court of Appeal confirmed that the Ontario courts have jurisdiction to hear the enforcement action. In so doing, the Court of Appeal rejected Chevron Corporation's argument that there must be a "real and substantial connection" between Ontario and either the foreign judgment debtor or the subject matter of the action underlying a foreign judgment, for an Ontario court to entertain an action to enforce that foreign judgment.

At the root, the court in a recognition and enforcement action must determine one thing: should the foreign judgment in issue be enforceable in Ontario? The Court of Appeal confirmed that the determination of that issue is clearly within the jurisdiction of the Ontario courts.

More interestingly, the Court of Appeal overturned the stay of the enforcement action imposed by the motion judge. Thus, subject to any further appeal, the defendants must defend the enforcement action on its merits.

In permitting the enforcement action to continue, the Court of Appeal acknowledged that factors identified by the motion judge (such as that the courts of New York may be a preferred forum for the enforcement proceedings, and the absence of assets of Chevron Corporation in Ontario) "might ultimately derail" the plaintiffs' quest. However, the Court of Appeal held that it was premature to dismiss the enforcement action at a preliminary stage.

The Court of Appeal also made comments on the relationship between Chevron Corporation and Chevron Canada that may have implications in future cases concerning the corporate veil. In particular, in addressing the arguments raised by Chevron Canada, which was not a party to the Ecuadorian proceeding, the Court of Appeal first stated that the Ontario courts have jurisdiction over the Canadian company on the basis that it operates an office in Ontario. In addition, however, the Court of Appeal emphasized the connections between Chevron Corporation and Chevron Canada – referring to an "economically significant relationship" between them – and concluded that "an Ontario court has jurisdiction to adjudicate a recognition and enforcement action against Chevron Canada's indirect corporate parent that also names Chevron Canada as a defendant and seeks the seizure of the shares and assets of Chevron Canada to satisfy a judgment against the corporate parent." The Court of Appeal held that any concerns or issues relating to the distinct corporate personalities of the parent and indirect subsidiary should be addressed when the defendants defend the enforcement action on its merits.

Constraints on concerns of judicial economy?  

Yaiguaje indicates that there are differing views as to the appropriate scope for judicial control of the litigation process. In recent years, a number of decisions in Ontario's lower courts have imposed greater control on litigation processes in the hope of reducing strain on and delays in the court system, including several well-known decisions in other cases authored by the motion judge in Yaiguaje, such as George Weston Limited v. Domtar Inc. However, in Yaiguaje, the Court of Appeal found that the motion judge erred in issuing a stay of the enforcement action, especially on his own initiative, rejecting his determination that the enforcement action would represent a "waste of valuable judicial resources" given its chances of success. The Court of Appeal found that parties may bring litigation for "strategic reasons" even where "their chances of collection on the judgment are minimal." The Court of Appeal continued that it "is not the role of the court to weed out cases on this basis and it is a risky practice for a judge to second-guess counsel on strategy in the name of judicial economy." These comments indicate that the court's power to control its process is not without limits.


Subject to any further appeal, Yaiguaje demonstrates that motions challenging the jurisdiction of the Ontario courts to hear actions seeking enforcement of foreign judgments may have little chance of success. In future cases, defendants to an enforcement action in Ontario may prefer to defend the enforcement action on its merits and/or consider other preliminary motions rather than challenging the jurisdiction of the Ontario court.

More importantly, although the current decision is only the determination of a preliminary motion, the reasons of the Court of Appeal suggest that courts may be inclined to blur distinctions between corporate parents and subsidiaries in enforcement actions. That said, given the possibility of a further appeal in the case, the law cannot yet be taken as settled. Only time will tell how the enforcement issue will be resolved, making Yaiguaje a case to watch.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
30 Oct 2019, Other, Toronto, Canada

The materials on the Blakes Business Class website are provided for informational purposes only. Accessing this information does not create a lawyer-client relationship.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions