Constitutional Court Ruling Keeps Airport Negotiations Alive

C O N F I D E N T I A L QUITO 000871 SIPDIS NOFORN DEPARTMENT OF STATE PLEASE PASS TO OPIC AND EXIM BANK E.O. 12958: DECL: 2019/10/07 TAGS: EAIR EFIN ECON PREL BR CA IDB OPIC EXIM SUBJECT: Constitutional Court Ruling Keeps Airport Negotiations Alive CLASSIFIED BY: chritton, DCM, DOS, Exec; REASON: 1.4(D) ¶1. (C) Summary: On October 5 the Ecuadorian Constitutional Court released a ruling designed to "clarify" its July 23 decision that threatened to scuttle the new Quito airport construction project. While not as clear or expansive as hoped by the project lenders, OPIC staffers told econoff on Oct 6 that the ruling appeared sufficient to continue construction funding for the new airport. Presuming Quito Mayor Augusto Barrera feels protected, the ruling provides breathing room for negotiations to design new protection for the project's lenders in line with Ecuadorian law and allows the Quito municipality time to negotiate a new revenue sharing agreement. The October 5 decision in Spanish, and an unofficial translation, are below. End Summary. ¶2. (C) On October 5 the Ecuadorian Constitutional Court (CC) released a decision, case number 0021-09-IA, on how to enforce its July 23 ruling, case number 003-09-SIN-CC, which ruled that airports and the fees derived from them are the property of the central government. (Original in Spanish and unofficial translation below.) The original decision (ref A) as well as Ecuador's June 6 withdrawal from the World Bank's Convention on the Settlement of Investment Disputes (ICSID),constituted a breach of the airport concession contract according to Quiport, the private consortium of three companies (Aecon of Canada, Andrade Gutierrez of Brazil and Houston Airport Systems of the U.S.) and the Canadian Commercial Corporation (CCC). The financial backers of the project, the Overseas Private Investment Corporation (OPIC),the U.S. Export-Import Bank (Ex-Im Bank),the Inter-American Development Bank (IDB),and Export Development Canada (EDC),agreed September 23 (ref B) to continue funding airport construction through December, to allow time for negotiation of a new agreement that will follow Ecuadorian law, protect the project's lenders, and provide the opportunity to negotiate a new revenue sharing agreement. This agreement was predicated on a CC ruling that protected the lenders and gave Quito Mayor Augusto Barrera authority to negotiate a new concession agreement. ¶3. (C) Econoff spoke with OPIC staffers on October 6 to assess their reaction to the ruling. According to OPIC, the court ruling appears sufficient to continue negotiations and to authorize continued construction funding (ref B),although it was not as clear as expected on the control of funds from airport operations. According to OPIC, the other project lenders have mixed feelings on the ruling, although they are currently prepared to move forward. Presuming Mayor Barrera is satisfied, OPIC expects a delegation made up of representatives from OPIC, Ex-Im, IDB, and EDC to visit Quito October 14-16 to meet with Ecuadorian government officials and urge them to begin direct negotiations. ¶4. Decision in Spanish and Unofficial Translation: Corte Constitucional Tribunal Para el Periodo de TransiciC3n Pleno de la Corte Constitucional para el perC-odo de transiciC3n: Quito, 29 de septiembre de 2009 a las 4: 30. NC:mero de caso: 0021-09-IA. Ref. Sentencia: 003-09-SIN-CC, agrC)guese al proceso los escritos presentados por el acC!pite Dr. Carlos PolC-t Faggioni, Contralor General del Estado, mediante el cual requiere a la Corte Constitucional un pronunciamiento respecto de la forma adecuada de ejecutar la sentencia en los aspectos referidos en el acC!pite I de su escrito; y, por el Ing. Fernando Guerrero LC3pez, en representaciC3n de La DirecciC3n General de AviaciC3n Civil, mediante el que solicita varias consultas al Pleno de la Corte Constitucional, relacionadas de la sentencia mencionada. Al respecto, esta Corte Constitucional considera: PRIMERO.- De conformidad con lo dispuesto en el Art. 17 de las Reglas de Procedimiento para el Ejercicio de las Competencias de la Corte Constitucional, para el periodo de transiciC3n. "Las sentencias de constitucionalidad tendrC!n e l efecto de cosa juzgada material o formal, segC:n se a el caso, y serC!n de obligatorio cumplimiento para todos las personas e instituciones". SEGUNDO. - E l inciso tercero de l Art. 27 de la s Reglas de Procedimiento antes mencionadas, dispone que en la providencia que admite la demanda "...se ordenara publicar un extracto de la demanda en el Registro Oficial, para que cualquier ciudadano coadyuve con la demanda de inconstitucionalidad de las normas o las defienda, remitiendo su opiniC3n a la Corte Constitucional, para lo cual dispondrC! del mismo termino seC1alado en el inciso anterior...". En el presente caso, y un a ve z revisado el expediente, se constata que la DirecciC3n General de AviaciC3n Civil, no ha comparece dentro del tC)rmino de 15 dC-as luego de haberse publicado el extracto de la demanda en el R.O. No. 600 de jueves 28 de mayo de 2009, para que formule su opiniC3n dentro de este proceso de control abstracto de constitucionalidad. TERCERO.- El seC1or Contralor General del Estado, legitimado activo en esta causa, solicita el pronunciamiento de esta Corte sobre los siguientes aspectos: 1.- En quC) plazo o tiempo debe realizarse la adecuaciC3n de los actos y contratos pC:blicos, al rC)gimen constitucional vigente, expuesto en la sentencia, segC:n lo previsto en el numeral 8 del acC!pite IV "DecisiC3n"; y, 2.-" L a disposiciC3n contenida en la sentencia de "recibir y administrar" las tasas por servicios aeroportuarios, impiden de algC:n modo a los Municipios, emplear figuras previstas en la legislaciC3n ecuatoriana, tales como fideicomisos de renegociaciC3n de los contratos o cualquier otra acciC3n que permita evitar la parC!lisis del servicio." Con estos antecedentes y con el objeto de conseguir un adecuado cumplimiento de la Sentencia expedida por esta Corte, se establecen los siguientes parC!metros para su ejecuciC3n: a) En relaciC3n al requerimiento formulado por el seC1or Contralor General del estado, seC1alado en el numeral 1 del considerando tercero, se debe partir de la base de que durante la transiciC3n y hasta la adecuaciC3n total de la s situaciones jurC-dicas existentes, al nuevo ordenamiento constitucional y legal, el Municipio de quito es el titular d e lo s fondos pC:blicos provenientes de las tasas aeroportuarias; y, la adecuaciC3n de los actos y contratos pC:blicos y privados a dicho rC)gimen constitucional vigente, debe sujetarse a un proceso y calendario fijados por las autoridades competentes, representantes legales y partes contractuales, segC:n el caso, debiendo ajustarse tales proceso y calendario de adecuaciC3n, a las normas y principios constitucionales, a la sentencia expedida en esta causa y a las disposiciones que regulen el rC)gimen de competencias, cuando tal normativa se encuentre promulgada; b) En cuanto al requerimiento formulado por el seC1or Contralor Genera l de l Estado, seC1alado en numeral 2 de l considerando tercero, teniendo presente que tanto la naturaleza como la titularidad de los recursos es pC:blica y sin perjuicio de las facultades de control atribuidas por la ConstituciC3n, y la ley a la ContralorC-a Ge n e r a l de l Es t a d o , efectivamente los administradores de dichos fondos pC:blicos, pueden aplicar todas las herramientas jurC-dico-financieras permitidas por el ordenamiento jurC-dico ecuatoriano para garantizar el eficiente, eficaz y adecuado cumplimiento de lo dispuesto en la sentencia, debiendo entenderse que la correcta ejecuciC3n de las actividades d e "recibir" y "administrar" dicho s fondos, implica todo un proceso en el que intervienen diferentes participes (concesionario, instituciones financieras pC:blicas o privadas, Municipios y ContralorC-a General del Estado),en las respectivas fases de recaudaciC3n, custodia, entrega, administraciC3n, disposiciC3n y control de los recursos; c) De conformidad con lo seC1alado en el considerando segundo, se niega por improcedente lo solicitado por la DirecciC3n General de AviaciC3n Civil. Este pronunciamiento lo hace esta Corte, sin perjuicio de ejercer su atribuciC3n prevista en el Art. 436, numeral 10 de la ConstituciC3n de la RepC:blica. Dr. Patricio Pazmino Freire PRESIDENTE Unofficial Translation CONSTITUTIONAL COURT FOR THE TRANSITION PERIOD CONSTITUTIONAL COURT FOR THE TRANSITION PERIOD IN PLENARY SESSION: Quito, Metropolitan District, September 29, 2009, 4:30 p.m. Whereas: In case 0021-09-IA, regarding ruling 003-09-SIN-CC, the document submitted by Dr. Carlos PC3lit Faggioni, Comptroller General of Ecuador, shall be included in the case file. Said document requests a pronouncement from the Constitutional Court on how to appropriately enforce the ruling, with respect to paragraph 1 thereof. Furthermore, the Court's opinion is requested concerning various consultations on the ruling made to the Constitutional Court by Engineer Fernando Guerrero LC3pez, in representation of the General Civil Aviation Office. In this regard, the Constitutional Court considered: FIRST: Pursuant to Art. 17 of the Rules of Procedure for the Exercise of Jurisdiction of the Constitutional Court during the transition period, "Rulings on constitutionality shall bear the effects of material or formal res judicata, as the case may be, and shall be binding on all individuals and institutions." SECOND: The third paragraph of Art. 27 of the Rules of Procedure, mentioned above, stipulates that in the ruling accepting the claim "...it shall be ordered that an extract of the claim be published in the Official Gazette so that any citizen interested in the claim on the unconstitutionality or defense of rules may also forward an opinion to the Constitutional Court, and will be granted the same term stated in the preceding paragraph..." In this case, and since the case file was reviewed, it was verified that the General Civil Aviation Office failed to appear within 15 days from the time of publication of the extract of the claim in Official Gazette 600 of Thursday, May 28, 2009, to form a opinion in this case regarding the abstract oversight of constitutionality. THIRD: The Comptroller General of Ecuador, who legally participates in this case, requests that the Court issue an opinion on the following aspects: ¶1. What is the deadline for accommodating public and private acts and contracts to the constitutional regime now in effect, as stated in the ruling and forth in IV.8 of the "Decision"? And, ¶2. Does the stipulation contained in the ruling regarding the "receipt and management" of the airport service fee prevent Municipalities in any way whatsoever from employing the institutions created by Ecuadorian legislation, such as administration or security trusts for accommodating the contract renegotiation process or other action for avoiding any suspension in the service?" In light of the foregoing, and in order to achieve the adequate compliance with the Ruling issued by this Court, the following parameters are defined for enforcement: a) With respect to the requirement made by the Comptroller General of Ecuador, which is stated in number 1 of the third recital, during the transition and up to the complete revision of existing legal situations under the new constitutional and legal order, the Municipality of Quito is the owner of public funds from airport fees. Furthermore, for the accommodation of public and private acts and contracts to said constitutional regime in effect, the process and calendar established by the competent authorities, legal representatives and contractual parties, as the case may be, shall be followed. The process and calendar for such accommodation shall be in line with the constitutional rules and principles, the ruling issued in this case, and the rules on the jurisdiction regime once such rules are enacted; b) With respect to the requirements by the Comptroller General of Ecuador, stated in point 2 of the third recital, in view that both the nature and ownership of the resources are public and in addition to the oversight powers attributed by the Constitution and the Law of the Office of Comptroller General of Ecuador, the managers of said public funds may in fact employ all legal-financial tools permitted by Ecuadorian laws for ensuring the efficient, efficacious and appropriate compliance with the ruling. It shall be understood that the correct "receipt" and "management" of said funds imply a complete process with different participants (concessionaire, public or private financial institutions, Municipalities and the Office of the Comptroller General of Ecuador) for collecting, keeping custody of, delivering, managing, disposing of and controlling said funds; c) Based on the second recital, the request by the General Civil Aviation Office is denied as it is devoid of justification; This pronouncement is made by the Court, notwithstanding the Court's right to assert the power established in Art. 436.10 of the Constitution of Ecuador. To be notified and Fulfilled. (signature) Dr. Patricio PazmiC1o Freire PRESIDENT HODGES