Ecuador’s 2017 Termination of Treaties: How Not to Exit the International Investment Regime

Abstract

On 16 May 2017, Ecuador terminated all of the 16 Ecuadorian Bilateral Investment Treaties (BITs) still remaining in force. This decision was the end of a longer process that aimed to disengage the South American state from the international investment regime, a process begun nearly a decade earlier, with the drafting of a new constitution in 2008, one that contained an article prohibiting the state from giving consent to investment arbitration. The article argues that it was not the 2017 decision itself, but the different erratic legal steps, including the poor drafting of the constitutional provision, the confusing reasons given for a series of constitutional judgements, the timing involved in re-evaluating the constitutional decision so many years later, and in general the lack of a pre-established course of action during this process that led to Ecuador’s poor performance in terms of its FDI policy. In this light, the article further claims that an analysis of the Ecuadorian experience can contribute to a better understanding of how the constitutional sphere can best interact with international investment law, potentially by applying specific principles of investment rather than prohibitions on constitutional texts.