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In April 2013 Latin American countries responded to the piling lawsuits against their governments by large corporations. In a meeting in Guayaquil, Ecuador, seven states adopted a declaration deciding to take action in order to support each other through a mutual Executive Committee, among other things. The second meeting of this grouping is to be held in July.
5 July 2013 | South Centre, Third World Network
Latin American States Responding to Transnational Corporations' Lawsuits
A Ministerial Meeting of the Latin American States Affected by Transnational Interests took place in Guayaquil, Ecuador in April 2013. The meeting was held in the context of an increasing number of lawsuits being filed against Latin American governments by transnational corporations. Seven of the participating countries – Bolivia, Cuba, Ecuador, Nicaragua, Dominican Republic, St. Vincent and Grenadine, and Venezuela – signed a declaration launching joint action to tackle the challenges at hand.
The meeting was convened in the context of hundreds of investor-to-state cases having been filed in the recent years demanding millions or even billions of dollars from governments, reports Martin Khor in South Bulletin (July 5, 2013), the news bulletin of South Centre, an intergovernmental policy think tank of developing countries. According to Khor, the problem initiated in the bilateral investment treaties signed by developing countries since the 1990s in hopes of attracting foreign investment. These commitments have given transnational corporations a chance to sue governments for losses of future profits due to changes in government policies or in the bilateral treaties.
The participants of the April meeting also expressed concerns about the international arbitration systems being biased, reported South-North Development Monitor SUNS in its April 30, 2013 issue shared by the Third World Network. The declaration of the Ministerial Meeting states: “[T]here are still cases where the judgment violates international law and the sovereignty of the States as well as its legal institutions, due to the economic power of certain companies and deficiencies of the international systems of dispute settlement […]”. Martin Khor points out that only a few international arbitrators hear a majority of these cases while acting elsewhere as lawyers or board members of international companies.
To tackle these issues, the Ministerial Meeting decided to follow several courses of action. First, the declaration expresses solidarity for those countries in litigation against transnational corporations. Second, support is given for the constitution and implementation of regional organisms for settling investment disputes in order to ensure fairness. Third, the parties decided to create a state-funded ‘International Observatory’ which would have several tasks including reporting on the state of international litigation to monitoring the performance of international courts of arbitration as well as investigating and proposing reforms to them. Ecuador, Dominican Republic and Venezuela were put in charge of creating the Observatory.
The fourth point of the declaration concerns taking the agreements to the global stage, including G77 plus China, UN, world trade organizations and international finance organizations. As its last point, the declaration established an Executive Committee of the Ministerial Conference of Latin American States Affected by Transnational Interests. Under the initial responsibility of Ecuador the Committee will for example coordinate joint legal action, share information and communicate about the issues as counterbalance to global campaigns by transnational companies.
The next meeting of the Committee was originally planned to take place in four weeks after the first but has been delayed. Martin Khor reports that it will now be held in July 2013 in Caracas, Venezuela.
