Latin American states form alliance to tackle investment treaties
Online Publication Date: 02 May 2013
American states form alliance to tackle investment treaties
in SUNS #7576 dated 30 April 2013
Ecuador, 23 Apr (Meena Raman) - South American governments have formed a new
alliance to fight back against the increasing lawsuits taken against them by
transnational companies under bilateral investment treaties.
alliance, known as "the Conference of Latin American States affected by
transnational interests", was established during a Ministerial-level
meeting held in Guayaquil, Ecuador, on 22 April.
meeting was chaired by Ecuador's Minister of Foreign Affairs and Trade, Mr.
Ricardo Patino, while a keynote address was given by Ecuador's Vice President
Jorge Glas Espinel.
told the meeting about cases brought against his country by two multinational
oil companies which resulted in unfair judgments by an international tribunal.
In one judgment made in favour of the US oil company Oxy (Occidental
Petroleum), Ecuador was asked to pay compensation of US$2.3 billion.
meeting ended with the adoption of a declaration by seven countries, of which
six were represented by Ministers. The countries are Ecuador, Bolivia, Cuba,
Nicaragua, Dominican Republic, St. Vincent and Grenadine and Venezuela.
from another five countries - Argentina, Guatemala, El Salvador, Honduras and
Mexico - also attended the meeting and they agreed to report on the meeting to
their governments. The representatives, mainly Ambassadors, were not able to
endorse the declaration as they did not have the mandate.
the declaration, the Ministers agreed to establish a permanent conference of
states affected by transnational interests to deal with challenges posed by
transnational companies, especially legal suits taken by them against
governments under the bilateral investment treaties.
conference will be guided by an executive committee which will coordinate
political and legal actions, send information on legal disputes and disseminate
information to the public. Ecuador, as the host country of the conference, will
be the initial coordinator of the committee.
declaration also supported the setting up of a regional arbitration centre to
settle investment disputes between corporations and States. This is aimed at
being an alternative to the International Centre for the Settlement of
Investment Disputes (ICSID), based at the World Bank in Washington DC, which
was viewed by the conference participants as being biased in favour of
conference also established an international observatory with several
functions. These include the tasks to analyse investment dispute cases, to
reform the present arbitration system, suggest alternative mechanisms for fair
mediation, coordinate between the judicial systems of Latin American States,
ensure the enforcement of domestic judicial decisions in investment disputes,
and advise governments in their negotiations on contracts with transnational
next meeting of the Conference of States is scheduled to be held in Caracas
within the next three months.
of the time of the meeting was taken up by the Ministers, senior officials from
state legal departments and Ambassadors of the countries present sharing their
experiences on problems arising from their bilateral investment treaties, and
especially about the legal cases taken against them by foreign investors.
were also made on the nature of investment treaties, the legal cases, and
problems about the arbitration system by experts from the South Centre, Public
Citizen, Transnational Institute, the Latin American Network on Debt and
Development, and from the Ecuadoran Superintendent on Competition, and the
Ecuadoran prosecutor's office.
participants expressed serious concerns about the biases of the arbitration
system and the conflicts of interest as a result of many arbitrators also being
lawyers for companies in other cases and some being members of the Board of
rationale for holding the meeting was explained in a background note prepared
by the hosts, the Foreign Ministry of Ecuador.
note said that in recent years arbitration proceedings and claims by European
and US multinational companies against a growing number of States of the South
have dramatically increased.
costly litigations, which to a greater extent have been settled favouring
private interests from the North, not only affect the fiscal capabilities of
the States and pose a serious challenge to their national jurisdiction -- and,
ultimately, the exercise of their very sovereignty -- but also, they alienate
citizens from their common and agreed-upon democratic set of rules. The scale
of this phenomenon could even compromise on-going development plans which are
in progress in Latin America and other regions of the globe," said the
added that this problem originated in the 1990s, the heyday of neoliberalism.
During this period, Bilateral Investment Treaties (BITs) were used profusely,
as well as other agreements, for the protection of foreign investments.
governments of the South submitted to these agreements in the expectation of
attracting great amounts of direct foreign investments and thus replacing their
severely diminished capacity to save, which was negatively impacted by
structural adjustment policies.
most negative consequences of such commitments become evident now, precisely
when a number of nations of the South are exploring new ways for development.
It is not a coincidence that the need to overcome the obsolete normative trade
schemes between the States of the South and the North becomes more urgent now,
at a time when most Latin American institutions have reoriented their priorities
towards attending the needs of their own peoples, instead of the impositions of
the foreign capital.
order to achieve this goal -- overcoming obsolete structures -- the countries
of the South must get together, where analysis and measures for common action
can be discussed and agreed upon. Consequently, these actions will orient the
construction of shared agendas in multilateral organisations, both at the
regional and the global level."
declaration issued at the conclusion of the meeting is as follows:
that the developing countries have valuable resources to be used in a
sustainable way for the development of our people; that the States hire and
make concessions to foreign companies, in a relationship which should be of
mutual benefit to investors and to our peoples;
recent events in various countries of Latin America, concerning disputes
between States and transnational corporations have shown that there are still
cases where the judgment violates international law and the sovereignty of the
States as well as its legal institutions, due to the economic power of certain
companies and deficiencies of the international systems of dispute settlement
on investment, facts that must be evaluated in depth by the States in intergovernmental
forums established for this purpose;
there are various ongoing processes of bilateral negotiations with
transnational corporations that require solidary assistance among the States of
the region to bring these processes to results that will benefit the people of
the South, We hereby agree:
To express solidarity with those Latin American countries that have been, or
are currently involved in litigations against transnational corporations in
To support the constitution and implementation of regional organisations for
settling investment disputes, to ensure fair and balanced rules when settling
disputes between corporations and States. Encourage UNASUR (the Union of South
American Nations) in the approval of a regional mechanism currently under
negotiation and promote the inclusion of other Latin American States in this
To create an International Observatory funded with contributions of the States
which, among other objectives, (i) periodically gives an account for the state
of international litigation on investments in both regional and global
instances, (ii) identifies procedures to monitor the performance of
international courts of arbitration, (iii) investigates, analyses and proposes
mechanisms to reform such instances [of] arbitration, (iv) studies, analyses
and supports the creation of alternative mechanisms of intermediation for the
fair, reasonable and definitive resolution of differences between the States
and transnational companies, (v) constitutes an encounter forum for experts in
international litigation on investments that work together with the countries
of the South, (vi) promotes the creation of mechanisms for coordination and
mutual consultation between the judicial systems of Latin American States, to
ensure the enforcement of domestic judicial decisions on disputes between
States and transnational corporations; (vii) creates a compendium of
legislation, policies, and trade and investment agreements, regarding
negotiation processes between States and corporations, to facilitate the
adoption of joint strategies by the States; (viii) studies, analyses and
provides the States with technical, legal and political advice to ensure the
effective translation of their interests into trade and investment contracts
with transnational corporations; (ix) establish dialogue mechanisms with social
is agreed that the Republic of Ecuador, the Dominican Republic and the
Bolivarian Republic of Venezuela, working together, shall produce a proposal to
create such (an) organization within a period not exceeding three months.
To propose the implementation of these agreements in global coordination spaces
of the Southern countries, such as the Group of 77 plus China, to seek global
agreements within multilateral organizations such as the United Nations, world
trade organizations and international financial organizations, with the purpose
of visualizing the advantages and profits of transnational corporations in
developing countries, their contribution to development, as well as potential
abuses committed in the context of their engagement with the States.
To establish the Executive Committee of the Ministerial Conference of Latin
American States Affected by Transnational Interests, whose role will be
designing and implementing mutually supportive actions in the political and
legal areas, among others, (i) conveying urgent and timely information on legal
disputes involving any of the signatory States, in the form of early alerts;
(ii) coordinating joint legal actions with international legal teams of experts
and professional lawyers; (iii) establishing permanent channels of
communication with social movements; (iv) designing communication strategies,
as a counterbalance to global campaigns undertaken by transnational companies,
for the dissemination of legal, technical and political aspects of the cases
exposed, as well as the motivations of States. Initially, Ecuador shall be
responsible for the coordination of this Committee.
Committee shall meet within a period not exceeding four weeks in the city of