Sunday, December 16, 2007

Ecuador's Notification Pursuant to Article 25(4) of the ICSID Convention

On December 4, 2007, the Secretary-General of ICSID received a notification under Article 25(4) of the ICSID Convention from the Republic of Ecuador. Article 25(4) of the Convention provides that a "Contracting State may, at the time of ratification, acceptance or approval of this Convention or at any time thereafter, notify the Centre of the class or classes of disputes which it would or would not consider submitting to the jurisdiction of the Centre." Ecuador's notification indicated that it would not consent to ICSID arbitration of disputes pertaining to investments in natural resources, such as oil, gas, and minerals. Ecuador had recently enacted a royalty tax on hydrocarbon investments, and it clearly envisages challenges to that law. Ecuador's actions are part of a wider dissatisfaction among some Central and South American countries with international investment law and particularly its dispute settlement regime. Bolivia, for instance, withdrew from the ICSID Convention earlier this year, and Venezuela and Nicaragua have also indicated that they may do the same. Ecuador has threatened to revise certain bilateral investment treaties as well.