Development, FDI and investment treaties Ecuador´s perspective and lessons learned
GENERAL PRINCIPLES Foreign investment may have harmful as well as beneficial impacts on society. States have a fundamental right to regulate on behalf of the public welfare. PUBLIC STATEMENT ON THE INTERNATIONAL INVESTMENT REGIME, AUGOST 2010
RECOMMENDATIONS 1. “Civil
society should continue to take steps to inform its constituents and society at large of the failures of and threats posed by the international investment regime and to oppose the application of that regime to governments that undertake legislative or general policy measures for legitimate purposes”. PUBLIC STATEMENT ON THE INTERNATIONAL INVESTMENT REGIME , August 30, 2010
2. “States
should review their investment treaties with a view to withdrawing from or renegotiating them in light of the concerns expressed; should take steps to replace or curtail the use of investment treaty arbitration; and should strengthen their domestic justice system for the benefit of all citizens and communities, including investors�. PUBLIC STATEMENT ON THE INTERNATIONAL INVESTMENT REGIME August 30, 2010
INVESTMENT TREATIES IN ECUADOR: FACTS
1990 – 2006. 26 Investment Treaties. 2008. New Constitution was approved. 2009. Ecuador was notified of a third arbitration
proceeding before the Permanent Court Arbitration at The Hague requested by Chevron.
of
2010. Constitutional Court declared 3 articles of the
Ecuador-USA BIT unconstitutional. 2013.
36 International arbitrages and CAITISA started to work.
INVESTMENT TREATIES
9 1 2 5
1. Germany 2. France 3. UK 4. Sweden 5. China D 6. Chile E 7. Holland 8. Venezuela N 9. Canada DO 10.US E U 11.Switzerland 12.Argentina NNN
OO UT C NE CY D EE DT ( P ( OB R E
26
1. 2. 3. 4. 5. 6. 7.
Cuba El Salvador Guatemala Honduras Nicaragua Paraguay Dominican Republic 8. Uruguay 9. Finland
1. 2. 3. 4. 5.
Italy Rumania Peru Bolivia Spain
ACTIVE CASES OF ARBITRATION
Oil Companies
3
Occidental Chevron Chevron6 Burlington Perenco Murphy III
3
16
Mining Companies Other
5 NOTIFICATIONS OF CONTROVERSY
TEXACO-CHEVRON CASE
Chevron allegations Ecuador breached the BIT with the United States. Declared that Ecuador - Petroecuador are exclusively responsible for the sentence in the judgment of Lago Agrio. Chevron has no responsibility for the environmental damage in the Amazon after its operation in Ecuador. ·Order and condemn Ecuador to hold unaccountable to Chevron - Texaco in relation to the trial of Lago Agrio. Compensation for moral damage.
Ecuador´s arguments Ecuador has not breached the BIT with the US. The dispute between Chevron - Texaco and the community in Lago Agrio is a trial in which the State is not a part. In the release agreements between Ecuador and Texaco does not exist any obligation by Ecuador to maintain indemnified, protected and that Ecuador has to defend Texaco against claims by third-parties.
ERRORS IN the partial award AND the interim award MADE BY THE TRIBUNAL
A. The treaty’s non-retroactivity provision.
ERRORS IN the partial award AND the interim award MADE BY THE TRIBUNAL B. The Tribunal granted an interim award
instructing the State, including its courts, to take “all necessary measures� to prevent the enforcement of the judgment issued by its courts in favor of the indigenous plaintiffs.
ERRORS IN the partial award AND the interim award MADE BY THE TRIBUNAL C. The tribunal more recently determined that the
1995 settlement agreement among the Republic, its state-owned oil company, and Chevron prohibits the plaintiffs from obtaining any remedy pursuant to a provision under the Ecuadorian Constitution guaranteeing the citizenry the right to a clean environment.
RECOMMENDATIONS Selecting arbitrators through a transparent process that
guarantees that they can only serve as jurors and not also act as legal representatives for companies who have cases before the arbitration system. Establishing an institutional mechanism within the arbitration
system that allows parties to effectively appeal awards, and Requiring that all local remedies be exhausted before entering the
arbitration system.
ď ľ International organizations should refrain from promoting investment treaties and should conduct research and make recommendations on the serious risks posed to governments by investment treaty arbitration; on preferred alternatives to investment treaty arbitration including private risk insurance and contractbased arbitration; and on strategies for states to pursue withdrawal from or renegotiation of their investment treaties. PUBLIC STATEMENT ON THE INTERNATIONAL INVESTMENT REGIME
CONCLUSION The international community, members large and small, must
change the ways that corporate social responsibility is measured. It must value human rights no less than it values profits. After all, the Amazon indigenous people started to fight for justice only a few months after Texaco finished its almost 25-year old operation…and they are still fighting while polluters and its lawyers seem to be celebrating.