Identifier
Created
Classification
Origin
09QUITO579
2009-07-13 14:18:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Quito
Cable title:
ECUADOR WITHDRAWS FROM WORLD BANK'S ICSID
how-toVZCZCXYZ0004 RR RUEHWEB DE RUEHQT #0579 1941418 ZNR UUUUU ZZH R 131418Z JUL 09 FM AMEMBASSY QUITO TO RUEHC/SECSTATE WASHDC 0617 INFO RUEHBO/AMEMBASSY BOGOTA 8261 RUEHCV/AMEMBASSY CARACAS 3634 RUEHLP/AMEMBASSY LA PAZ JUL LIMA 3310 RUEHGL/AMCONSUL GUAYAQUIL 4477 RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS QUITO 000579
SENSITIVE
SIPDIS
REFTEL: QUITO 464
E.O. 12958: N/A
TAGS: ECON EFIN EC
SUBJECT: ECUADOR WITHDRAWS FROM WORLD BANK'S ICSID
UNCLAS QUITO 000579
SENSITIVE
SIPDIS
REFTEL: QUITO 464
E.O. 12958: N/A
TAGS: ECON EFIN EC
SUBJECT: ECUADOR WITHDRAWS FROM WORLD BANK'S ICSID
1. (U) Following President Correa's earlier statements that Ecuador
would withdraw from the World Bank's International Center for the
Settlement of Investment Disputes (ICSID)(reftel),on July 2 Correa
issued a decree declaring that the country was terminating its
agreement with ICSID. The decree denounces the ICSID convention
based on Article 422 of Ecuador's new constitution, which prohibits
the signing of international agreements in which Ecuador would have
to cede jurisdiction to international arbitration courts in
contractual or commercial matters. It is unclear whether the GOE
has submitted its notice to ICSID.
2. (U) According to Article 71 of ICSID's convention, "any
contracting state may denounce this convention by written notice to
the depositary of this convention. The denunciation shall take
effect six months after receipt of such notice." In other words,
investors would still be able to bring arbitration cases under ICSID
for six months following Ecuador's withdrawal. Ecuador is currently
facing more than $10 billion worth of arbitration demands before
ICSID, many of them from foreign energy companies. Correa has said
that the withdrawal from ICSID would not affect ongoing cases under
ICSID.
3. (SBU) ICSID is an arbitration option in many of Ecuador's
Bilateral Investment Treaties (BITs),but most provide for other
arbitral forums as well (as does the U.S.-Ecuador BIT). Local
analysts are concerned that Ecuador's withdrawal from ICSID will
discourage foreign investment in Ecuador. However, foreign
companies have not expressed significant concern about the move,
possibly because they already have arbitrations in process or are
satisfied with the other arbitration options available under their
BITs.
HODGES
SENSITIVE
SIPDIS
REFTEL: QUITO 464
E.O. 12958: N/A
TAGS: ECON EFIN EC
SUBJECT: ECUADOR WITHDRAWS FROM WORLD BANK'S ICSID
1. (U) Following President Correa's earlier statements that Ecuador
would withdraw from the World Bank's International Center for the
Settlement of Investment Disputes (ICSID)(reftel),on July 2 Correa
issued a decree declaring that the country was terminating its
agreement with ICSID. The decree denounces the ICSID convention
based on Article 422 of Ecuador's new constitution, which prohibits
the signing of international agreements in which Ecuador would have
to cede jurisdiction to international arbitration courts in
contractual or commercial matters. It is unclear whether the GOE
has submitted its notice to ICSID.
2. (U) According to Article 71 of ICSID's convention, "any
contracting state may denounce this convention by written notice to
the depositary of this convention. The denunciation shall take
effect six months after receipt of such notice." In other words,
investors would still be able to bring arbitration cases under ICSID
for six months following Ecuador's withdrawal. Ecuador is currently
facing more than $10 billion worth of arbitration demands before
ICSID, many of them from foreign energy companies. Correa has said
that the withdrawal from ICSID would not affect ongoing cases under
ICSID.
3. (SBU) ICSID is an arbitration option in many of Ecuador's
Bilateral Investment Treaties (BITs),but most provide for other
arbitral forums as well (as does the U.S.-Ecuador BIT). Local
analysts are concerned that Ecuador's withdrawal from ICSID will
discourage foreign investment in Ecuador. However, foreign
companies have not expressed significant concern about the move,
possibly because they already have arbitrations in process or are
satisfied with the other arbitration options available under their
BITs.
HODGES