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China worried about Ecuador move to end bilateral investment treaties

Dow Jones Newswires | October 16, 2013

China worried about Ecuador move to end bilateral investment treaties

By Mercedes Alvaro

QUITO, Ecuador—Ecuador’s decision to end bilateral investment treaties with all countries and take disputes to a new regional arbitration body has raised concerns among Chinese investors.

Ecuador has said it expects to pull out of all its bilateral investment-protection treaties with different countries and replace them with other "legal instruments."

Lawmakers have already approved ending several treaties, including those with France, Sweden, Germany, the U.K. and Northern Ireland.

Zhang Tao, political counselor with China’s embassy in Ecuador, said Wednesday that China expects the new legal instruments will give guarantees to investors.

In an interview during the sidelines of a legal forum, the official said that many Chinese companies are expecting to have legal guarantees that provide security to their companies.

"We are interested in several projects, but it is very important to have a legal instrument," she said. "Legal guarantees are required to facilitate Chinese investment in Ecuador."

Ecuador’s constitution prohibits the signing of international agreements in which Ecuador would have to cede jurisdiction to international arbitration courts in contractual or commercial matters between the state and individuals or corporations.

However, the constitution allows for disputes to be resolved between Latin American states and their nationals in regional arbitration courts. Ecuador has said it expects a tribunal will be set up within the Union of South American Nations, or Unasur.

China has become Ecuador’s main lender since 2008, when the Andean nation defaulted on $3.2 billion of global bonds. The government has said it will continue borrowing from China as needed.

According to official data that was compiled by Dow Jones Newswires, China has committed more than $11 billion in financing to Ecuador since 2009.

Write to Mercedes Alvaro at

 source: Dow Jones Newswires