Ecuador and international investment law and policy: Between constitutional sovereignty and state responsibility
PhD student: Mr S.X. Espinosa Velasco
Promotor: Prof P.L.H. van den Bossche
Duration: 1/9/2012 - 1/9/2016
PhD defence: Maastricht, 29/3/2019
The discussion and approval of the Ecuadorian Constitution of 2008, was impregnated by the notion that the former constitutional order, in force since 1998, was constructed to favor private interests, being the resignation of sovereignty to international entities without democratic legitimacy, one of the most significant evidences of the subordination of the State to corporate powers. This conception, strengthened by the massive incidence of investment disputes at that time, underpinned the incorporation of constitutional clauses, which specifically attempt to limit the rights of the investor and the authority of international arbitral tribunals. It is not unusual in Ecuadorian republican history, that after severe political crisis, the panacea to restore the order and balance of powers rests on the celebration of Constituent Assemblies and the correlative instauration of new constitutional regimes. Since 1830, the approbation of twenty Constitutions portrays the turbulent alternation of powers of the different groups that have ruled the country. The growing extension of the constitutional texts reflects the national dogma that only a constitutional provision alone is able to incorporate social interests, political conceptions and delimitating States international relations. Apparently this rooted national practice has put little attention on the limitations and implications of these transformations within the international context. Today the difficult position of Ecuador as one of the main respondents of international investment disputes has focused attention on the conformity of bilateral investment treaties (hereinafter \"BITs\") with the Constitution of 2008. In any case, the critical position of the ruling government with regard to the permanence of BITs has had effects before the approval of the Constitution of 2008, period in which 9 from the 26 BITs in force were denounced. Later, on July 2nd 2009, the President signed the decree that denounced the Convention on the Settlement of Investment Disputes between States and National of Other States, by reference to Article 422 of the brand new Constitution. In light of this constitutional regime, President Correa also activated the revisited constitutional process of denunciation of the rest of 17 BITs still in force by requesting the Constitutional Court to rule about their conformity to the Constitution. Accordingly, between 2010 and 2014 the Constitutional Court issued the correspondent rulings, which recommend the denunciation of BITs by the National Assembly. The referred constitutional process determines that after the approval of the National Assembly, the President has to notify the denunciation of the treaties to the correspondent States. In light of the national legal regime, the said constitutional rulings compel the authorities involved in the process of denouncing of treaties to bring the international obligations of the State into conformity with the Constitution. However, under the Vienna Convention of the Law of Treaties, a State may not invoke its internal legislation to disregard international obligations. This complex relationship between international and national law raises several concerns in terms of the States responsibility at both levels and, especially, with regard to inter-State and State-investor commitments. The Ecuadorian case portrays a growing discontent with the current state of international investment law, shared with other countries like India, Australia and Indonesia. It also depicts the turbulent coexistence between international and domestic law, expressed in the practical limitations derived from the exercise of sovereign powers. Within the international context, the interlinked public and private interests weaken the notion of absolute sovereignty. In short, the State is both compelled by a network of international and domestic obligations. The frequent change of constitutional frameworks in Ecuador could imply that the adaptation of international obligations to these regimes constitutes the violation of international obligations adopted under different Constitutions. For instance, the adaptation of the legal provisions under which hydrocarbon exploitation contracts were signed to the Constitution of 2008, have provoked several investment disputes. In conclusion, this research analyzes the relationship between international public law and domestic law, when a State is obliged to adjust its international obligations to a new constitutional regime. It also assesses the conflicts that a State may face due to the continuation of previous international commitments that may contradict the Constitution, as well as the States responsibility both at the international and national level derived therefrom.