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Sunday, December 23, 2007

Ecuador withdraws from World Bank court for investment disputes

IHT, Dec 14, 2007

QUITO, Ecuador: Ecuador announced Thursday that it will no longer recognize a World Bank court set up to resolve investment disputes.

"The Republic of Ecuador will not allow itself to be subjected to the jurisdiction of the International Center for Settlement of Investment Disputes," a written statement from the Foreign Ministry said, noting it had informed the court of its decision in a letter last week.

Critics say the autonomous court is beholden to the World Bank and biased against developing countries. Bolivian President Evo Morales, a close ally of Ecuador's leftist leader Rafael Correa, announced plans to withdraw from the center in April.

Earlier this year, Ecuador's then-Foreign Minister Maria Fernanda Espinosa slammed the center, accusing it of ruling in favor of U.S. interests "98 percent of the time."

A spokesman for the center declined to comment on Ecuador's decision, but the court confirmed the nation's withdrawal in a statement posted on its Web site.

Ecuador's decision could exempt the country from future claims filed before the Washington-based court, but not from those that are already pending.

Those cases include an arbitration claim filed in May 2006 by Occidental Petroleum Corp., after Ecuador canceled the Los Angeles-based oil company's contract and sent troops to seize its assets.

Occidental has since asked the center to help it recover oil fields and is seeking damages of about US$1 billion (€684 million) — the amount it said it has invested in Ecuador operations since 1999.

Ecuador accuses Occidental of violating the terms of its operating agreement.

Quito-based financial analyst Ramiro Crespo called the government's decision to leave the court an "error."

"It increases the investment risk for the country," he told The Associated Press.

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