In Ecuador, a Cabinet Shuffle y Nulidad

By April 5, 2010Energy, Trade

The State Department reports that Assistant Secretary of State for Western Hemisphere Affairs Arturo Valenzuela has begun a week-long trip to Ecuador, Colombia, and Peru. Well, at least he’s getting Ecuador done first.

On Saturday, leftist President Rafael Correa  shuffled his cabinet and named a new economics minister, Katiuska King. Same old anti-investment, anti-American policies, though. In a speech Saturday, Correa denounced last week’s decision by an international arbitration panel that awarded $700 million to Chevron for claims against Ecuador’s government for delaying rulings on commercial disputes.

From Reuters, “Ecuador pedirá nulidad fallo a favor de Chevron: presidente“:

“Vamos a buscar la nulidad de esa monstruosidad”, dijo Correa en su informe semanal de labores, que fue pregrabada por el feriado de Semana Santa, al referirse al fallo del tribunal arbitral.

And, “Buscará Ecuador anular fallo internacional favorable a Chevron por 700 MDD“:

Correa calificó a la sentencia como un ‘escándalo’ y añadió que hay ‘una persecución encarnizada contra el país’, cuyo objetivo a su juicio es ‘deslegitimar a la justicia ecuatoriana’ en relación con un proceso ambiental contra Chevron que se ventila en Ecuador.

Just to give a sense of the far-out rhetoric in its original. In English, “We are going to look to nullify this monstrosity.” And, Correa claims, there is a fierce prosecution against his country intended to delegitimize the Ecuadorian justice system before a ruling on Chevron.

Delegitimize the Ecuadorian justice system? Unfortunately, Ecuador’s managing that quite well itself. From the Department of State’s 2010 Investment Climate Statement on Ecuador eleased last month:

Systemic weakness in the judicial system and its susceptibility to political or economic pressures constitute important problems faced by U.S. companies investing in or trading with Ecuador. The Ecuadorian judicial system is hampered by processing delays, unpredictable judgments in civil and commercial cases, inconsistent rulings, and limited access to the courts. Criminal complaints and arrest warrants against foreign company officials have been used to pressure companies involved in commercial disputes. There have been cases in which foreign company officials have been prevented by the courts from leaving Ecuador due to pending claims against the company. Ecuadorians involved in business disputes can sometimes arrange for their opponents, including foreigners, to be jailed pending resolution of the dispute. Concerns have been raised in the media and by the private sector that Ecuadorian courts may be susceptible to outside pressure and are perceived as corrupt, ineffective, and protective of those in power. Neither Congressional oversight nor internal judicial branch mechanisms have shown a consistent capacity to effectively investigate and discipline allegedly corrupt judges.

The resource-starved judiciary continues to operate slowly and inefficiently. There are over 55,000 laws and regulations in force. Many of these are conflicting, which contributes to unpredictable and sometimes contradictory judicial decisions. Enforcement of contract rights, equal treatment under the law, IPR protection, and unpredictable regulatory regimes are major concerns for foreign investors.



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