Ecuador has Terminated 16 Bilateral Investment Treaties
June 23, 2017: On May 16, 2017, President Correa of Ecuador terminated 16 Bilateral Investment Treaties (BITs). This action followed the recommendation of the Ecuadorian Commission that audited the country's Investment Protection Treaties, and found they were not in the national interest.
The Commission was set up in October 2013 and was comprised of Government officials, academics, lawyers and civil society groups, including investment law expert Muthucumaraswamy Sornarajah, and supported by the Transnational Institute (TNI).
Treaties were terminated with China, the Netherlands, Germany, the UK, France, Spain, Italy, Sweden, Switzerland, Canada, the United States, Argentina, Bolivia, Peru, Venezuela, and Chile.
The report found:
- The principal sources of Foreign Direct Investment flows into Ecuador are from Brazil, Mexico and Panama, none of which have a BIT with Ecuador
- Of the 7 largest foreign investors in Ecuador, only 23% come from a country which has a BIT signed with Ecuador
- BITs contradict and undermine the development objectives laid out in the country’s constitution
- The costs for Ecuador have been immense with investors disproportionately benefiting in cases against Ecuador
- Ecuador has faced 26 cases in international tribunals based on the BITs
- In the 15 cases where the tribunal has made judgements on jurisdiction, the investor has been favoured in 13 cases (87%) and the State only twice
- A total of $21.2 billion dollars has been demanded as compensation from Ecuador by corporations for supposed violation of investment protection agreements
- The total amount disbursed so far by the State has been $1.498 billion dollars, equivalent to 62% of health spending
- Of the cases that are currently open, the State runs the risk of having to disburse $US13.4 billion. This is equivalent to 52% of the General State Budget for 2017.
This development in Ecuador accelerates the international movement against ISDS (Investor-State Dispute Settlement) and in favour of an international investment system based on democratic rights, national sovereignty, labour and human rights and environmental sustainability.