I. Mass torts, global landscape, and the risk society

Several years ago, I was invited to give a presentation at a conference in The Hague about current developments regarding collective litigation in Latin America. The meeting, which was part of a series of international academic events to discuss the global spread of class actions and other forms of collective litigation, gathered a select group of scholars, practitioners, policy analysts, and other professionals from every continent. As in the previous editions of the same conference—held in Oxford, Sidney and Miami—, the general discussion was ambitiously centered on the short and long-term social, economic, and cultural impact of the transformations occurring in many national legal regimes regarding the rules and procedures devised to handle claims arising from large-scale accidents, environmental harms, exposure to toxic materials, defective products, and financial injuries.Footnote ¹ Although not explicitly labelled that way, a central concept of the conference topic was the regulation and control of risk by state organs, and the role of private actors in the ever-present tension between regulation and deregulation.

The panel in which I was participating was among the last in the program, and its scope was to provide a flyover of current regulatory developments across different regions of the world (mine was Latin America). We were also asked to consider integrating into our presentation, some of the discussions from earlier panels, on several specific topics such as third party litigation financing, the role of the mass media in the development of collective litigation, transnational coordination and case management issues, and recognition and enforcement of foreign judgments across jurisdictions. Given the broad scope of our session, the presentation offered us co-panelists a unique opportunity to take a step back from the granular analysis of court cases – so familiar to legal scholars – and take a broader and more holistic view of the convoluted relationship between the law in action and the law in the books with regard to collective litigation, and the role of regulation vis-à-vis the idea of a “risk society”.Footnote ²

Having taught and done research in the field for several years, I was familiar with the state of the relevant laws across different jurisdictions, the scholarly contributions, the practical hurdles faced by litigants and other stakeholders, and the policy debate surrounding the perceived need to regulate certain novel aspects not yet addressed by the official laws.Footnote ³ The actual cases dealing with the most critical aspects were growing in number and complexity, but scattered all over the region. The amount of empirical studies or any social science research dealing with such topics was slim at best. Since the late 1980s, when The World Bank and other multilateral agencies had begun pushing for institutional reforms and rule of law initiatives, Latin American countries embarked on ambitious judicial and institutional reform agendas filled with prescriptive content but light on needs assessments or empirical studies.Footnote ⁴ The overall recommendation was to overhaul the archaic Latin American official legal systems in order to make the beneficiary countries more attractive to foreign investors, which in turn would bring economic prosperity and long-term success.

Access to justice was a staple component in all the Latin American legal and judicial reform agendas. The premise was that the available legal remedies were not easily accessible to all citizens, due to a number of structural shortcomings, including the lack of adequate state-sponsored legal assistance, common delays and congestion in court dockets, and high costs of bringing or defending judicial claims, to name just some of the most salient reasons. The main focus of the reform proposals was the poor, disenfranchised or otherwise disadvantaged members of society. This approach was perfectly aligned with the trend in focusing on the strengthening of social rights.

Even though well intentioned, none of the proposed solutions were backed by sufficient data, nor did they take into account an important reality that had been looming around the region—and the rest of the world—for years: the inability of the legal system to respond to the risks stemming from large-scale accidents, environmental harms, exposure to toxic materials, defective products, and financial injuries. Mass torts did not only hurt the poor, but all the citizens. They also hurt the private sector, and even the state itself. Mass torts also posed important challenges regarding access to justice, but they were unfortunately left outside the scope of intervention of the reformists. The transnational impact of the activities that gave rise to many of these modern risks exacerbated this problem by imprinting a global dimension on it. Unfortunately, the legal and judicial reform advocates, and policy makers of the time were only focused on the national level of things, as if states were entirely autonomous islands with little or no connection with the rest of the world. Risk assessment was also off their radar, so to speak.

It was against this backdrop that I chose the topic for my presentation at the conference in The Hague. I wanted to take the opportunity to help shifting the conversation from the parochial analysis of isolated court cases and the formalistic discussion about the proper application of specific legal texts. Instead, my intention was to suggest that we paid more attention to the interconnected reality of modern life, and the social, economic and political impact of the increasingly complex legal phenomena triggered by the frequent occurrence of large-scale events. In my view, metaphorically speaking, people in my field had been mostly focusing on the leaves [individual cases] and the trees [national legal systems], while unjustly neglecting to look at the forest [the transnational dimension]. Instead of paying attention to the contrasting and often disparate coverage given by the formal national legal systems to specific situations, I wanted to turn the focus of my colleagues to the challenges stemming from large-scale events, and the similar hurdles faced by citizens across different countries, and the similar strategies employed by those involved, including the lawyers, judges, and others, to tackle such hurdles.

The perfect candidate for my exercise/presentation was a cluster of cases, which I collectively label the Chevron-Ecuador legal saga.Footnote ⁵ The dispute arose out of a large-scale event: the environmental and other harms that stemmed from the oil exploitation activities conducted by certain multinational corporations (MNCs) and government entities in the Oriente region of the Ecuadorean Amazon throughout the 1970s and 1980s. The Hague was the perfect locale to talk about the Chevron-Ecuador saga because right around those days, a local court had been asked to rule on a request to enforce a legal decision made by an international arbitral tribunal on a related dispute between the parties.

At the time of my conference (2011), the Chevron-Ecuador dispute had already been around for almost two decades. It had been fought in multiple jurisdictions and involved more than a dozen different proceedings between the Chevron Corporation and its predecessor Texaco, the Republic of Ecuador, and groups of indigenous peoples from the Ecuadorean Amazon. The case that brought international attention to the dispute was the filing in 1993 of a class action lawsuit on behalf of a representative group of indigenous peoples from Ecuador against the Texaco Corporation in the federal courts of New York. Seven years later, the case was dismissed in favour of Ecuador, and gradually evolved into a complex web of judicial, international arbitration – both investor-state and commercial – and administrative proceedings held in Ecuador, the United States (where more than twenty individual courts and several administrative agencies have been involved to date), Canada, Brazil, Argentina, the Netherlands, and Gibraltar.

In monetary terms, at the centre of the dispute is a multi-billion dollar Ecuadorean court judgment entered against the Chevron Corporation in 2011, which the defendant has fought tirelessly – and so far, successfully – across several jurisdictions. The dispute has also generated hundreds of millions of US dollars in legal fees, and a significant expenditure of public funds, political capital, and other resources in all the jurisdictions involved. The Chevron-Ecuador dispute has reached international institutions such as the Inter American Commission of Human Rights, and the International Criminal Court, as well as diplomatic and political channels. Such an array of proceedings and other avenues have involved a diverse and numerous group of stakeholders across different jurisdictions including judges, lawyers, experts, government officials, indigenous peoples, ordinary citizens, corporations, human rights and environmental activists, political actors, and even celebrities. The media has also played an important role, and has also become part of the legal strategies employed by the parties, who have invested significant resources in sophisticated public relations campaigns, a comprehensive online presence, and even the production of a documentary film.

The Chevron-Ecuador saga is in some ways an outlier, a distorted and deformed bundle of legal disputes that encompass any imaginable worst-case scenario, including many ethical quandaries, legal manoeuvering, and an important dose of creative lawyering. In other ways, the Chevron-Ecuador dispute embodies a type of legal battle that has become increasingly common in our modern society: a small group of plaintiffs filing an action on behalf of a much larger group for the purported violation of the laws of plaintiff’s home state (and/or the laws of several states), against a foreign defendant in foreign courts, and also represented by counsel from a foreign nation. Another feature that has become increasingly common is the parties’ pursuit of multiple proceedings in tandem, and their attempt to seek the recognition and enforcement of the resulting judgments or decisions in more than one jurisdiction. In sum, disputes involving mass large-scale injuries or collective harms are becoming increasingly transnational – and therefore more complex – in nature, but not enough has been done to understand them.

On the other hand, the breath, scope and multilayered dimension of this dispute make it a useful pedagogical tool that can be used to explicate the contemporary challenges that arise in the field of transnational litigation, and also provoke interesting discussions about the effects of risky behaviour in society. A case such as the Chevron-Ecuador offers a unique opportunity to those interested in this field, to understand the lifecycle of a transnational, multi-party, multi-issue dispute, from start to end, and the intricacies that arise from the social, economic, and political contexts in which it takes place. In fact, it was precisely the panel discussion in which I participated in The Hague what persuaded me to shift the focus of my semester-long Complex Litigation course from the traditional analysis of many different cases, to include primarily materials from the Chevron-Ecuador saga and track this dispute from beginning to current times. The course has become incredibly popular among my students.

The irony is that, albeit these types of cases are significant and newsworthy for the stakeholders, national legislators and policy makers seem to have paid little attention to the potential regulatory implications stemming from them. Proper regulatory action in such situations could help anticipate, mitigate, and control the risks associated with the illegal conduct that gave rise to the dispute in the first place. Such is precisely the intended role of risk regulation as applied to mass torts and large-scale harmful events. Unsurprisingly, the most aggressive efforts to implement and devise policies and to regulate or deregulate potentially harmful conduct seem to come from the parties themselves, or from interest groups and other advocates and lobbyists. Aside from tackling the specific issues at hand by mounting their legal offences or defences, an increasingly sophisticated generation of transnational disputants appears to have become engaged – with varying degrees of success – in efforts to advocate and lobby for political and regulatory action. To return to the same metaphor used earlier, the parties to mass torts and related cases are increasingly looking at the forest, and not just at the leaves. National legislators and policy makers, on the other hand, are – unfortunately – not necessarily looking anywhere, thus missing out on a precious opportunity.

As it currently stands, the reality of mass torts and large-scale harms presents two important distortions that could be mitigated through an adequate risk regulatory strategy. In the remaining paragraphs of this essay, I turn to describe such distortions and offer a brief suggestion as to how the risk regulation approach may be able to help.

II. Protecting rights in the age of globalization: still an uneven playing field

MNCs and other key players in the transnational arena tend to know the global playing field very well, at least in relation to their particular industry. The profitability, viability, and even the existence of these actors not only depend on their management, the quality of their products and services, and their financial capacity; they also depend on the social, economic, and political environment in which they operate. The legal landscape, including the regulatory framework applicable to their activities, their relationship with government and other agencies, legal actors, and other authorities, also plays a very important role. As a result of this reality, MNCs tend to devote important resources to the hiring of lawyers, lobbyists and other consultants, to help them understand and navigate the legal obstacles that arise, and protect or assert their rights and defend their interests when necessary. Often, corporate players also become involved in policy making or as promoters of legislative initiatives that they deem necessary in order to “level” the playing field, or simply to tilt the balance in their favour.

It is because of their breadth, sophistication, global presence, financial and political power that most modern MNCs and similar entities are able to compare themselves to sovereign states. Alongside their incredible power and influence, MNCs are also positioned to create higher risks and more likely to inflicting harm through their activities than most other actors. As a result, some national courts have begun to debate whether MNCs can be held accountable for violations of international law on a similar footing to the states. A string of cases involving alleged human rights violations committed with the direct participation or the acquiescence of certain MNCs is at the core of this debate. Despite these challenges, it is also important to acknowledge that multinational corporate actors are also among the main promoters of development, economic growth, and equality. In some countries where the state has failed to perform its role, corporate actors have become the only conduits of stability and success. From healthcare, social welfare, education, communications and infrastructure, to the promotion of culture, corporate actors are responsible many positive developments.

Notwithstanding these positive traits, the transnational playing field remains uneven. The benefits brought by the participation of private actors in many aspects of social life are sometimes offset by the lack of accountability and poor monitoring on part of the states and other regulators. In order to undertake a more effective oversight, governments have to be able to recognize and assess the risks associated with the operations of corporate and other transnational actors, and exercise their regulatory power to establish clear and effective rules.Footnote ⁶ This is one dimension where risk regulation research might be able to contribute greatly.

III. Transnational regulatory shopping, litigation and risk regulation

A second distortion that arises in response to the uneven playing field owed to the presence of powerful and sophisticated corporate actors on one hand, and poorly equipped and archaic legal systems on the other, is the strategic manoeuvering of the available legal tools, and the migration of disputes from the least favourable to the most convenient jurisdiction depending on the interests of the parties, in other words forum shopping. The national legal systems have literally become individual products in a global marketplace: sophisticated legal actors travel from one to the other in order to maximize their strategies and obtain benefits. One example, drawn from the Chevron-Ecuador dispute, is the strategic choice made by the plaintiffs to file lawsuit in the courts of New York where the defendant corporation had its place of business, instead of the courts of Lago Agrio in Ecuador where the allegedly harmful conduct took place. Something similar occurs with the establishment of corporate structures in the so-called tax havens, or the setup of factories and other facilities in countries with labour and employment legislation favourable to the interests of the corporation, and often to the disadvantage of their workers.

The abuse of these and other regulatory benefits is what has prompted certain jurisdictions to enact blocking statutes and similar legislation in order to foreclose or at least reduce the strategic behaviour of certain powerful actors. Similarly to the case of the uneven playing field mentioned earlier, an adequate assessment of the risks created by the behaviour of actors who engage in forum shopping and similar strategies, and the resulting regulatory framework may prove beneficial. The risk regulation field has a big role to play in helping our world become a better and more egalitarian place, and states, policymakers and other actors should take advantage of it.