Arbitration law

A detailed review of Ecuador its regulations for international arbitration can be read at the website of the Global Arbitration Review. Here we provide some highlights. The Arbitration and Mediation Law (AML) enacted in 1997 regulates international arbitration in Ecuador. The same set of laws covers domestic and international arbitrations, and the enforcement of foreign awards in Ecuador. The AML is largely in line with the UNCITRAL Model law, however, it has several variations like e.g. the conduct of the arbitral proceedings and the annulment grounds. In May 2015 the General Organic Procedural Code (COGEP) was enacted and became fully effective as of May 2016. This code provides a set of new parameters for the recognition (homologation) and enforcement of foreign arbitral awards, modifying those provided by the earlier AML. With regard to international arbitration, Ecuador adopted the main international instruments on this subject quite early but in recent years there is a strong political lobby to withdraw from several bilateral investment treaties (BITs) through which Ecuador agrees to international arbitration. In relation to protection of foreign investment in Ecuador and the trend of withdrawing from investment treaties, the international arbitration review states that:

“Actually, the Constitutional Court has issued a series of decisions declaring that the dispute settlement provision of BITs is unconstitutional. This is done as part of a major scheme to withdraw from those treaties because they are considered to be the illegitimate cession or waiver of sovereign powers; namely, the power of Ecuadorian courts to exercise their jurisdiction within the territory of Ecuador.”

The only BIT that has yet been denounced is the one with Finland; other treaties have not yet been denounced. The government is waiting for the Commission for the Citizens’ Integral Audit of Treaties on Reciprocal Protection of Investments and of the International Arbitral System on the Subject of Investments’ (CAITISA) report. The Global Arbitration Review explains that it is expected that based on the outcomes of the CAITISA report, Ecuador will reduce the influence of international arbitration mechanisms and while increasing the power of judges and courts in Ecuador. The continuous changes in Ecuador its rules and regulations, also related to international arbitration, make investments in Ecuador relatively risky.