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News Link • Bank of International Settlements

Ecuador Moves to Annul U.S.-Ecuador BIT, Denounces Investor-State System

 In 2009, Ecuador formally withdrew from the International Centre for Settlement of Investment Disputes (ICSID), an institution which facilitates foreign corporations' legal claims against sovereign governments' policies. On Monday, President Rafael Correa put forth a bill to request that Ecuadorian lawmakers annul Ecuador's Bilateral Investment Treaty (BIT) with the United States, declaring that such treaties “favor foreign investors over human beings.”

The U.S.-Ecuador BIT binds Ecuador to the controversial investor-state system, which uniquely empowers foreign investors to directly challenge a country’s environmental, health, and other public interest laws by claiming that they violate BIT-created investor privileges and threaten “expected future profits.” These cases skirt national court systems and are instead decided by private three-person tribunals composed of arbitrators who bill by the hour.

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