Ecuadorian voters were right to keep the corporate courts out of the country

Apr 29, 2024 | 0 comments

By Ana Caistor Arendar

The people of Ecuador have given a resounding NO to the return of secretive, foreign corporate courts suing the Ecuadorian state for democratic decisions.

In a referendum held last week, Ecuador voted to keep its constitutional ban on using international arbitration and investor-state dispute settlement mechanisms (ISDS) to settle disputes between foreign corporations and the state.

An Ecuadorian soldier votes in the April 21 referendum.

This was the second time that the Ecuadorian people have voted No to ISDS and its international arbitration courts by means of a direct vote at the ballot box.

The first time was in the 2008 constitutional referendum when a new constitution, including article 422 banning ISDS, was submitted to a popular vote. Then came the task of exiting ISDS commitments which the government and legislators managed to do, taking 8 years to fully achieve, in the face of powerful lobby groups doing their utmost to uphold ISDS.

Ecuador first withdrew from ICSID (the ISDS court within the World Bank) and then terminated 24 bilateral investment treaties which contained ISDS provisions.

Ecuador has been on the receiving end of several costly compensation awards by ISDS tribunals in favour of investors. For example, in 2012, a tribunal ordered Ecuador to pay the US oil company Occidental over USD 1.5 billion, one of the largest amounts a state had ever been ordered to pay.

Remarkably, Ecuador’s right-wing government tried to overturn the constitutional prohibition and reintroduce these anti-democratic courts. Companies owned by Ecuadorians but registered abroad and large transnational corporations were eager to return to a system which allowed them to evade Ecuadorian laws—and dodge Ecuadorian tax liabilities.

But 63% of voters said No: a hard blow to the ISDS system, which will have important repercussions for the global struggle to dismantle the ISDS system. And reinforcing the importance of Honduras’ recent decision to withdraw from ICSID.

Congratulations to Ecuador, who voted No to the primacy of capital over human beings. And Yes to people, the environment, sovereignty, and democracy.
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Credit: Common Dreams

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