17 December 2007
Ecuador's actions are part of a wider dissatisfaction among some Central and South American countries with international investment law and particularly its dispute settlement regime.
Correction
Previously, we had indicated that Ecuador had pulled out of the ICSID. This is inaccurate. As noted in the International Law Reporter, Ecuador has "indicated that it would not consent to ICSID arbitration of disputes pertaining to investments in natural resources, such as oil, gas, and minerals."
Ecuador announced on December 4, 2007 that it will no longer recognize a World Bank court (the International Centre for the Settlement of Investment Disputes or ICSID), set up to resolve investment disputes. Ecuador's decision could exempt the country from future claims filed before the Washington-based court, but not from those that are already pending. Those cases include an arbitration claim filed in May 2006 by Occidental Petroleum Corp., after Ecuador canceled the Los Angeles-based oil company's contract and sent troops to seize its assets. Occidental has since asked the center to help it recover oil fields and is seeking damages of about US$1 billion (€684 million) — the amount it said it has invested in Ecuador operations since 1999.
Ecuador's decision followed Bolivia's announced withdrawal from the ICSID in May 2007. The Bolivian government decided that its interests were not likely to be served by this entity, as rulings in the past have almost always favored transnational corporations over countries. Despite efforts to dislodge themselves from the ICSID, the Bolivians are facing a new arbitration request from Euro Telecom, a subsidiary of Telecom Italia, which lodged a demand to challenge Bolivia's negotiated buy-back of the telecom company privatized in 1995.
Resources
- Ecuador's Notification Pursuant to Article 25(4) of the ICSID Convention, International Law Reporter, December 16, 2007 (International Law Reporter blog)
- Bolivia's Denunciation of the ICSID Convention, International Law Reporter, July 8, 2007 (International Law Reporter blog)
- Notificación conforme artículo 25(4) del Convenio, (World Bank website)
- ICSID Convention, Regulations, and Rules, (World Bank website)