By Omar Alserdare
Ecuador just did something interesting. According to recent reporting in Global Arbitration Review, it’s asked its Constitutional Court to weigh in on whether a new investment treaty with the UAE can be ratified without a green light from the National Assembly.
Sounds technical? It is. But it’s also a big deal.
Because the Court’s answer will shape not only how Ecuador engages with investor–state arbitration, but also how far the executive can go in ratifying investment treaties without National Assembly approval. The central question here is whether this BIT, with its arbitration provisions, is the kind of treaty that the Constitution reserves for legislative scrutiny.
What’s different about this treaty?
The UAE-Ecuador BIT isn’t your standard investment treaty. It’s part of a newer wave that tries to strike a better balance:
• Only lawful investments are protected, and certain areas like subsidies and public procurement are off limits
• Fair and equitable treatment is defined by concrete examples (think: denial of justice, coercion) instead of vague fairness language
• No umbrella clause, so contract disputes can’t automatically be dragged into treaty arbitration
• Each state keeps its right to regulate in the public interest
Why this matters:
Ecuador’s Constitution (Article 422) bans treaties that “yield sovereign jurisdiction” to international arbitration for national contract or commercial disputes with private parties.
Ecuador’s pitch to the Court is straightforward: any arbitration under this treaty would be about international obligations (expropriation or discrimination allegations for instance), not contract disputes. If the Court buys that argument, it could make it easier for Ecuador to sign such investment treaties without legislative roadblocks.
Bottom line:
This is more than a procedural question. It’s a live experiment in whether constitutional red lines, modern treaty design, and arbitration practice can actually work together, or whether they’re bound to clash.
One to watch.
Republished with permission from the authors. Original Post here.