Ecuador’s Ambassador to the U.S., Ivonne Baki, today signed the Convention on settlement of investment disputes between states and nationals of other states (ICSID). This convention is a space for the resolution of investment conflicts at the international level. Thus, Ecuador seeks to re-enter after eleven years since the country left that, in 2010.
After signing, Ecuador becomes the 164th State to sign the Convention, but it has yet to be ratified by the National Assembly.
“We welcome Ecuador’s signing of the ICSID Convention. Today’s signing confirms the country’s commitment to strengthening its investment climate,” said Meg Kinnear, ICSID Secretary General.”
For his part, David Malpass, President of the World Bank Group and Chairman of the ICSID Board of Directors, stressed that “resolving complaints with foreign investors in an efficient and fair manner is critical to cultivating a competitive business environment.”
Ecuador originally signed the Convention and deposited the instrument of ratification on 15 January 1986. In accordance with article 68, the Convention entered into force for Ecuador on 14 February 1986. On July 6, 2009, the World Bank Group (WBG) received a written notification of denunciation of ecuador’s ICSID Convention. In accordance with Article 71 of the ICSID Convention, the denunciation entered into force on 7 January 2010, six months after receipt of the notification from Ecuador.
Ecuador’s argument for renouncing ICSID was based on a constitutional violation that provides for “not to conclude international treaties or instruments in which the State cedes sovereign jurisdiction to international arbitration bodies in contractual disputes.”
By the time of the complaint, Ecuador had already received a series of lawsuits against it from oil companies (Oxy, Burlington and Perenco) that felt affected by the change in rules to their contracts. The country has had to pay millions after losing its cases.
According to Jaime Carrea, executive secretary of the Fiscal Policy Observatory (OPF), ICSID is a World Bank agency and such arbitration offers legal certainty to investments. Therefore, he considers it positive that the country seeks to become part of ICSID again, since this gives it an image of respect for contracts which attracts investment. For Carrera, it is important that the country is put on an equal footing with other countries in the region and the world. (I)