TORONTO (Reuters) - An Ontario appeals court ruled on Tuesday that a group of Ecuadoreans can seek enforcement in Canada of a $9.5 billion judgment against U.S. oil company Chevron Corp, overturning a lower court decision from earlier in the year.
In the latest turn of a two-decade conflict between Chevron and residents of Ecuador's Lago Agrio region in the Amazon jungle, a three-judge panel said the case should proceed, which means the Ecuadoreans can seek damages in Canada that were originally awarded to them in a South American court two years ago.
The decision overturns a May ruling by Ontario Superior Court Justice David Brown, who had granted Chevron a stay in the proceedings on the basis that the case had little hope of success and that Chevron Canada's assets were not directly owned by Chevron Corp.
"After all these years, the plaintiffs deserve to have the recognition and enforcement of the (Ecuadorean) judgment heard on the merits in an appropriate jurisdiction. At this juncture, Ontario is that jurisdiction," the panel wrote in a 29-page decision.
The plaintiffs have gone to Canada to target what they say are Chevron's $15 billion worth of assets in the country. The California-based company no longer has any assets in Ecuador.
The judges ordered Chevron and its Canadian subsidiary to pay C$100,000 ($94,300) in costs to the plaintiffs.
In a statement, Chevron said it was evaluating its next steps, including a possible appeal to the Supreme Court of Canada.
"If the plaintiffs truly believed in the validity of the (Ecuadorean) judgment, they should seek enforcement in the United States, where Chevron Corp resides," the company said.
"They are aware that in the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial to be tainted by fraud."
The Ecuadoreans claim that Texaco, which Chevron acquired in 2001, contaminated the Lago Agrio area from 1964 to 1992.
"The recognition by the Superior Court (of Canada) will continue and we expect in the coming months to begin taking actions against assets of the company, once the sentence is recognized," said Julio Prieto, a lawyer representing the plaintiffs, during a press conference in Quito.
The plaintiffs were awarded an $18 billion decision in an Ecuadorean court in February 2011, but Chevron has steadfastly refused to pay, saying the ruling was influenced by fraud and bribery. The size of the original judgment was reduced last month by Ecuador's Supreme Court.
The plaintiffs have since sought to persuade the Ontario court -- among other jurisdictions -- to collect the damages awarded to them by the South American court.
A related fraud case in New York wrapped up in November, though a decision from that proceeding is not expected right away.
The Supreme Court of Canada has ruled that the country's courts can recognize and enforce foreign judgments in cases where there is a "reasonable and substantial connection" between the cause of the action and the foreign court.
($1 = 1.0606 Canadian dollars)
Reporting by Cameron French; Additional reporting by Brian Ellsworth; Editing by Frank McGurty and Leslie Adler