Ecuadorian President Rafael Correa said on Saturday he has “no confidence” in the World Bank arbitration branch that is hearing US oil company Occidental’s lawsuit against Ecuador.
Ecuador “handed over its sovereignty” when it signed international accords binding it to the bank’s International Center for Settlement of Investment Disputes (ICSID), Correa said during his weekly radio address.
The ICSID is an autonomous court established to resolve investment disputes.
PHOTO: AP
Los Angeles-based Occidental Petroleum Corp is seeking US$1 billion in damages from Ecuador, alleging its property was confiscated illegally when the Andean nation canceled its operating contract in May 2006.
Occidental, whose production represented about 20 percent of Ecuador’s total output, also is seeking to recover the oil fields.
Ecuador accuses the company of illegally selling 40 percent of its concession to EnCana Corp of Canada without Energy Ministry authorization.
Correa withdrew Ecuador from the Washington-based court in December, but the country is still on the hook for cases pending at the time — including Occidental’s claim.
In a separate case before the court, Ecuador recently reached a settlement with Occidental to return US$100 million in taxes. The company had originally said it was due a US$171 million refund, and Ecuador’s energy minister called the agreement a victory.
On Saturday, Correa assured Ecuadorians that the country will win its pending dispute with Occidental at the court.
He also praised a recent decision by the tribunal to grant Ecuador an extra month to prepare its defense, until June 16.
But still, he said accords giving the court authority over foreign investment disputes are “just another one of the things that Latin America has to change.”
Correa and other critics accuse the court of being beholden to US interests. Bolivian President Evo Morales, a close ally, announced plans to withdraw from the center last year.
Correa suggested that Latin American governments ban all “extra-regional” arbitration to leave space for organizations like the Inter-American Development Bank (IADB) to operate.
He called the IADB — which has extended some US$3 billion in long-term credit to Ecuador for social programs — an “important collaborator.”
Correa took office last January promising to force foreign oil companies to share more of the oil they produce with the state and to cut ties with the World Bank and IMF.
Four months later he kicked the World Bank’s local representative out of the country.
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