Chevron, Fraud and Void Judgments

There was an interesting article last week in the Wall Street Journal concerning recent developments in the Checvron Ecuador litigation, and substantial changes to the plaintiffs’ litigation strategy that new counsel Patton Boggs has been implementing in the wake of revelations of possible fraudulent conduct by another lawyer involved with representing the plaintiffs. I don’t know much about the merits of the case, aside form what I have read in a couple of news stories, and am not really much more than casually interested in that aspect of the story. Nor do I have a view as to the truth of Chevron’s claims that the plaintiffs’ case relies on grossly fraudulent condict by one of its lawyers. What caught my eye in the Journal story was this short passage:

For the plaintiffs, defending the legitimacy of the Ecuadorian process is critical. Chevron has no assets in Ecuador, and the plaintiffs will have to try and enforce any ruling in a country where the oil company operates, most likely the U.S. If Chevron can prove that the Ecuadorian ruling was based on fraud, it will be harder for the plaintiffs to recover any money. (Emphasis addedd).

What interests me is that it appears that supposedly seasoned business journalists writing for the Wall Street Journal seem to completely misunderstand the significance of Chevron’s fraud offensive. If a hypothetical Ecuadorian judgment were shown to be based on fraud, it wouldn’t be “harder for the plaintiffs to recover any money ….” as the Journal story suggests. It would, rather, likely be impossible. It is a very old and longstanding precept of law – in Pennsylvania, at least and, I suspect, in pretty much every jurisdiction in the United States – that obligations that are based on fraud, including judgments, are not only not enforceable, but legally void. As a plaintiff holding a judgment based on fraud can’t collect any money on the judgment. That’s why, it seems to me, Chevron is pushing the fraud argument so hard, and why the issue is so significant. And it also seems to me that the Wall Street Journal’s reporters and editors ought to have known that.