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The Republic of Ecuador has announced plans to withdraw from at least nine bilateral investment treaties, known as BITs.

BITs generally provide investors from one contracting state investing in the other contracting state with protection from expropriation and discrimination. BITs also provide that disputes with the host state concerning an investor's investment may be resolved by arbitration in a neutral forum, rather than in the courts of the host state.

Signaling that Ecuador plans to denounce treaties with El Salvador, Cuba, Dominican Republic, Guatemala, Honduras, Nicaragua, Paraguay, Romania, and Uruguay, External Trade Minister Maria Isabel Salvador stated that these treaties have not brought noticeable economic benefits to Ecuador.

This announcement follows Ecuador's recent notification to the International Centre for the Settlement of Investment Disputes (ICSID) that Ecuador will not consent to arbitration of non-renewable resources at the Washington-based facility.

The process of denouncing treaties, however, does not confer instant separation. Typically, BITs provide that their protections apply to existing investments for a further period. For example, the Ecuador-Paraguay treaty provides protections for a further 10 years after denunciation.

Although Ecuador's steps to date concern developing countries or transition economies, investors from the United States, Canada, and Western Europe will want to keep a careful eye on Ecuador's moves in connection with its BITs with those countries.