* Correa fears arbitration tribunals could bankrupt Ecuador
* World Bank's ICSID ordered Ecuador to pay $1.77 bln to
By Eduardo Garcia
QUITO, March 11 Ecuador's socialist president
Rafael Correa presented a bill on Monday asking lawmakers to
annul an investment protection treaty with the United States,
which would prevent U.S. companies from filing for arbitration
against the Andean country.
Correa, who won a sweeping re-election victory in
mid-February, said over the weekend that the OPEC-member country
could go bankrupt because arbitration tribunals always rule that
Ecuador should pay damages to foreign investors when there is a
"These (investment) treaties favor foreign investors over
human beings. Anyone can take us to an arbitration tribunal
without first going to a national court," he said on Saturday.
Since first taking office in 2007, Correa has alienated
investors by defaulting on $3.2 billion of debt, rewriting
contracts with oil companies to squeeze more revenue from them,
pushing through a new constitution that gave him more power and
making frequent outbursts against capitalism.
Days after his re-election victory, Correa said arbitration
tribunals were "pimps" whose main role was to protect foreign
The ruling party currently needs support from opposition
lawmakers to approve laws, but a new legislative assembly will
be inaugurated in mid-May in which Correa's party will have a
majority of seats.
Ecuador has signed 23 investment protection treaties, which
has allowed foreign companies to file 39 arbitration requests at
the World Bank's International Center for the Settlement of
Investment Disputes (ICSID), state-run media said on Monday.
The ICSID last year ordered Ecuador to pay $1.77 billion to
Occidental Petroleum Corp, the fourth largest U.S. oil
company, as compensation for taking over its assets in 2006.
Ecuador's withdrawal from the ICSID in 2009 does not make
the country exempt from the ruling because it was filed in 2006,
but the government has filed an appeal.
Ecuador has two other cases pending at the ICSID: one filed
by Burlington Resources, a subsidiary of U.S. energy
company ConocoPhillips, and another by French oil company
Perenco. The companies are seeking compensation related to
confiscation of assets by the Ecuadorean government in 2009.
Meanwhile, a panel acting under the Hague's Permanent Court
of Arbitration in February said Ecuador had not done enough to
prevent enforcement of a $19 billion ruling against Chevron
for polluting the Amazon.
Chevron said the tribunal could order Ecuador to pay the
An Ecuadorean court ruled in February 2011 that Chevron
should pay billions of dollars to plaintiffs living in the
region around Ecuador's Lago Agrio, who had sued the company
over pollution in the country's rain forest.
The second-largest U.S. oil company filed for arbitration in
2009, charging that Ecuador had breached a trade agreement with
the United States by not ensuring a fair trial.
But Ecuador's attorney general has long argued that the
tribunal has no jurisdiction because Quito's bilateral trade
agreement with Washington came into effect five years after
Chevron ended operations in Ecuador in 1992.