The Government of Ecuador reported on Tuesday that the country has started a process to revoke an investment protection treaty with the USA due to legal deficiencies when facing claims by US oil companies.
This decision was adopted after the President of Ecuador, Rafael Correa, presented a bill to annul the treaty of the 27th of August 1993 which, according to national authorities, contains unconstitutional and articles which are damaging for the country.
“The courts to which this treaty obliges Ecuador to be subjected to, when resolving disputes with foreign companies, doesn’t take into account Ecuadorian law, but instead ‘especially’ values the concept of ‘investment’,” said Correa.
He also emphasised that this initiative would avoid US companies taking the country to international arbitration centres to claim compensation for damages in legal disputes without first resorting to national courts.
The Ecuadorian leader plans to take advantage of his parliamentary majority which he obtained in the elections on the 17th of February this year to annul the treaty and Deputies will debate the matter on the 14th of May.
Correa also announced that he will create a committee to review 23 similar investment protection treaties that Ecuador has signed and which could oblige the country to pay excessive compensation based on the decision of international arbitration courts, leading the country to bankruptcy.
Ecuador has revoked similar agreements with France, Germany, the United Kingdom and Sweden since September 2009.
