Ecuadorian President Rafael Correa formalized Ecuador’s withdrawal on May 16, 2017 from bilateral investment treaties (BITs) concluded with 16 countries: Argentina, Bolivia, Canada, Chile, China, France, Germany, Italy, the Netherlands, Peru, Spain, Sweden, Switzerland, the United Kingdom, the United States and Venezuela.
Ecuador previously denounced nine BITs in 2008 (with Cuba, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Paraguay, Romania and Uruguay) and one in 2010 (with Finland). With the new denunciations, Ecuador has completed the process of withdrawal from all of its BITs. While the treaties with the Dominican Republic, Guatemala and Uruguay are no longer in force, all others are subject to survival clauses ranging from 5 to 20 years.
The recent denunciations follow the recommendation of CAITISA, an audit commission composed of government officials, academics, lawyers and civil society groups that examined Ecuador’s BITs between 2013 and 2015. CAITISA’s 668-page report (of which drafts were leaked in January 2016) was officially published and presented to President Correa on May 8, 2017.
For CAITISA President Cecilia Olivet, “the auditing process revealed that these treaties not only failed to attract additional investment or advance the country’s development plan, they also diverted millions of dollars of government money to fighting costly lawsuits.” She added: “We hope other governments will learn from Ecuador’s example and review their own investment agreements to find out if they are truly beneficial to their citizens.”
Several other developing countries—including Bolivia, India, Indonesia and South Africa—have terminated their BITs, or indicated their intention to renegotiate or terminate them, as part of a growing effort to reform and rebalance the international investment regime.