Ecuador scraps ‘corporate court’ investment treaties

26 May 2017 - 11:30am

At the same time that the European Commission faces a huge internal blow to its corporate trade deal agenda, the global fightback against corporate courts has taken another huge step forward.

Ecuador has decided to terminate all its bilateral investment treaties due to its recognition of the immense dangers posed by corporate courts.

In recent years, there has been a wave of opposition to ISDS corporate courts spreading across Southern countries including India, South Africa, Indonesia and Bolivia.

And the timing couldn’t be better: the European Commission is currently trying to institutionalise ISDS into the ‘Multilateral Investment Court’, a proposal which may never become a reality if the Commission can’t gain a critical mass of support from countries around the world. (For an analysis of the Court proposal, see this from the Seattle to Brussels Network.)

Ecuador reached its decision after establishing an international audit commission to examine the benefits and costs of Ecuador’s investment treaties.

In short, it found that the deals offer no benefits but significant costs (much like research the UK government commissioned – and then buried - into ISDS impacts on the UK under TTIP), they fail to boost investment and undermine constitutional commitments centred on development objectives.

In 25 cases, Ecuador has been ordered to pay out $1.5 billion to business, with another $13.4 billion (or half the country’s annual budget) on the table in open ISDS cases.

As Cecilia Olivet of the Transnational Institute, who chaired the audit commission, said: “Ecuador is not alone in denouncing these unjust investment agreements. It is joining a wave of countries around the world calling for a new international legal framework for investment which prioritises public interest over corporate profits.”

(You can listen to an interview with Cecilia about the Ecuador audit commission’s work here or access its full report (in Spanish) here.)

The experience of Ecuador is a pattern that has been repeated across Latin America, one of the prime regional targets for ISDS profiteers, often mining or energy companies.

In a corporate court case against El Salvador, mining company Oceana Gold demanded, at one point, $300 million – twice the amount the country receives in development assistance – after failing to gain a mining permit due to a lack of environmental permissions, not holding land rights for the project, and failing to submit a final feasibility study.

El Salvador spent millions on its defence, prompting the president of the Association for the Development of El Salvador to say: “This is a law suit that should never have been allowed. The millions of dollars that El Salvador has spent in legal costs could have been used to strengthen badly needed social programmes in our country.” 

Such experiences prompted the country to become the first in the world to impose a blanket ban on all metal mining.

With the global fightback against ISDS corporate courts growing daily, activists and campaigners in the UK can play a critical role in ensuring that corporations are held accountable to the rule of law. Stay tuned for upcoming campaign opportunities, and read our co-published ISDS report here.

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