Tobar ZVS announces the adoption of Kira, the AI-driven document analysis software that is now part of Litera’s Workflow product family, as part of an ongoing commitment to move its product offering from traditional service delivery models into a radically new client experience model. Tobar ZVS is the first law firm in Ecuador to adopt Kira.
“We have already automated and digitalize many components of our legal products and client experience, including workflows, project management, contract drafting, data management, and collaboration tools, but were persuaded that AI not only brings about significant efficiencies but enables outcomes that would not be possible or practical to the human eye alone.” said Bernardo Tobar, Managing Partner at Tobar ZVS. “We implemented AI for English language documents in 2021 and after reading AI For Lawyers, which was co-authored by Kira’s co-founders, we decided to test Kira, which can be trained in Spanish and has the added advantage of integrating with our digital operations platform, and have been impressed with how Kira has allowed us to solve specific client needs in a way that wouldn’t be possible through conventional methods, making our Firm’s value proposition unique”, added Mr. Tobar.
Kira will be used as part of an ongoing commitment to deliver innovative and results-oriented legal solutions to clients who seek counsel on M&A, Data Protection and Privacy Assessments, Compliance, Real Estate matters, Contract and Clause Bank Management, as well as for market intelligence.
“Tobar ZVS’ commitment to Kira will help the firm execute on its vision of innovating integral solutions that add value to its clients. By integrating Kira into its transactional practice, Tobar ZVS will be able to devote more time towards covering critical angles of risk,” said Kennan Samman, Vice President of Global Product Sales at Litera. “We look forward to seeing what the firm accomplishes during its journey towards leveraging advanced tools in legal practice.”
Tobar ZVS’ service delivery approach and business model are underpinned by a cutting-edge digital platform, which integrates workflow automation, legal project management, contract automation, artificial intelligence, a robust document management system, AES-256 compliant, and banking grade information security features.
Litera has been at the forefront of legal technology for 25+ years. As a global leader in workflow, AI-powered due diligence review and analysis, collaboration, and data management solutions, Litera provides legal teams with streamlined technology for creating, analyzing, and managing their documents, deals, cases, and data. Litera’s solutions help law firms and corporate legal teams worldwide work more efficiently, accurately, and competitively to provide their clients with usable and actionable information. For more information about Litera, visit litera.com.
With the approval by the National Assembly of the denunciation of twelve foreign investment protection treaties, the government of Ecuador is on the verge of finalizing the process of termination of these treaties, including the Foreign Investment Protection Agreement entered into by Ecuador and Canada (“Canada-Ecuador FIPA”).
It must be noted that all investments and commitments to invest made by Canadian Investors prior to the termination of the Canada-Ecuador FIPA are protected for a period of fifteen years from the date of the termination. The termination of the Canada-Ecuador FIPA shall become effective one year after the Ecuadorian government notifies the Canadian government with termination of the Canada-Ecuador FIPA.
It is highly recommended that any and all investments and commitments to invest by a Canadian Investor be protected through an investment protection agreement entered into directly by the Investor with the government of Ecuador, in order to stipulate the treatment that shall be given to the investment, the rights of the investor and international arbitration.
On September 28, 2009, President Correa sent a request to the National Assembly of Ecuador (“NA”) to approve the denunciation of BITs entered into by Ecuador with certain major capital exporting countries, including Canada. The other countries affected by this request include Argentina, Chile, China, Finland, France, Germany, Netherlands, United Kingdom, United States, Switzerland, Sweden and Venezuela.
Following the National Assembly´s official notification that their approval of the treaty denunciation first required a Constitutional Court (“CC”) ruling, the President filed on January 6, 2010, a submission to the CC requesting a favorable ruling to initiate the denunciation process.
On November 4, 2010, a CC ruling was published on the Official Gazette approving the denunciation of the Canada-Ecuador FIPA because the CC considered that the provision of articles XIII and XIV were contrary to the Constitution of 2008.
On May 3, 2017, the NA approved the denunciation of 12 BITs, including the Canada- Ecuador FIPA. Following this approval, the Government of Ecuador is in a position to issue the termination notice any time. The termination of the Canada-Ecuador FIPA shall be effective one year after the notification is made.
The Canada-Ecuador FIPA expressly provides for the right of a Party to terminate the treaty by giving one-year advance notice. Once termination becomes effective, that is one year after the termination notice is delivered-–the Effective Termination Date-, all of the articles of the treaty (except for Article XVIII which sets out the termination provision) remain in full force and effect for a period of 15 years for “investments” or “commitments to invest” made prior to the Effective Termination Date. Investments or commitments to invest made after the Effective Termination Date will not be eligible for FIPA protection and will have to rely on domestic legislation for protection. Ecuadorian legislation provides for investment agreements, a form of protection discussed at the end of this newsletter.
The termination provisions can be found in Article XVIII(2) of the Canada-Ecuador FIPA, as follows:
“This Agreement shall remain in force unless either Contracting Party notifies the other Contracting Part in writing of its intention to terminate it. The termination of this Agreement shall become effective one year after notice of termination has been received by the other Contracting Party. In respect of investments or commitments to invest made prior to the date when the termination of this Agreement becomes effective, the provisions of Articles I to XVII inclusive of this Agreement shall remain in force for a period of fifteen years.”
In our view, based on the express wording found in the Canada-Ecuador FIPA, the interpretation rules found in the Vienna Convention on Law of Treaties, and relevant international law authorities and jurisprudence, Article XVIII(2) of the Canada-Ecuador FIPA will allow the Investor the right to assert claims under the treaty for a period of fifteen years following the termination of the treaty, so long as these claims arise out of “investments” or “commitments to invest” made prior to the date on which the termination of the treaty becomes effective-–the Effective Termination Date.
Furthermore, in our view the unconditional consent provided by Ecuador to the submission of a dispute to international arbitration in accordance with the provisions of this Article XIII of the Canada-Ecuador FIPA, will permit a Canadian investor who has made “investments” or “commitments to invest” within the requisite period, the right to invoke the arbitration mechanism for a period of fifteen years following the termination of the treaty, notwithstanding any statement or notice by Ecuador withdrawing such consent. In other words, the investor’s submission of a dispute to arbitration including the concurrent consent for arbitration, required from the investor, need not be provided in advance of the effective termination of the Canada- Ecuador FIPA (or prior to the date of the giving of notice by Ecuador to the Government of Canada, seeking to terminate the treaty).
In order to exercise its right to seek arbitration, the Investor would be able to initiate the proceeding pursuant to Article XIII at any time within the fifteen-year survival period, provided it meets the requirements for submitting the dispute to arbitration and providing its consent.
In order to have standing to bring a claim under the Canada-Ecuador FIPA, the investor (as defined in the Canada-Ecuador FIPA) has to have made an “investment” in the territory of the other party.
Therefore, for the Investor to make a claim under the Canada-Ecuador FIPA, it will have to prove that it has acquired ownership of assets in Ecuador (whether owned directly or indirectly), within the meaning of paragraph (g) of Article I of the treaty:
“investment” means any kind of asset owned or controlled either directly, or indirectly through an investor of a third State, by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the latter’s laws and, in particular, though not exclusively, includes:
but does not mean real estate or other property, tangible or intangible, not acquired in the expectation or used for the purpose of economic benefit or other business purposes.
Any change in the form of an investment does not affect its character as an investment.”
We are of the view that the mineral rights owned by an Investor are, in accordance with the laws of Ecuador, “assets” and in particular constitute “rights, conferred by law…including any rights to search for,…extract or exploit natural resources.”
Regarding the relationship between the investments made and a hypothetical claim for compensation, Article VIII of the Canada-Ecuador FIPA sets forth that, in the case of expropriations or measures of equivalent effect, “compensation shall be based on the genuine value of the investment or returns” immediately before the expropriation. The commonly accepted interpretation of this provision is that compensation should be determined with reference to the intrinsic value and reasonable expected returns from an investment, even if that value results in a higher figure than the amounts actually spent by the investor in order to acquire, obtain, secure or develop the asset, or to purchase the asset at a later date. By the same token, the investor would not be entitled to a compensation based on the values spent if the intrinsic value and reasonable expected returns determined a lesser figure.
The bringing of an arbitration proceeding under the Canada-Ecuador FIPA is based on the investor satisfying certain conditions, including providing notice of a claim by the investor “that a measure taken or not taken by the…Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach.”
Furthermore, before the dispute can be submitted to arbitration, the investor and the state claimed to have breached the treaty have to engage in a period of amicable settlement, for a period of no less than six months from the date on which the notice concerning the claim is delivered.
The investor, after delivering the notice in writing to the state, and after the passage of six months can then, at its election, submit the dispute to international arbitration only if:
As a result, Canadian investors seeking to bring a claim under the Canada-Ecuador FIPA have to submit the claim to arbitration under the Additional Facility Rules of ICSID, or to an international arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).
In making a claim under the Canada-Ecuador FIPA, and submitting the claim to arbitration to an ad hoc tribunal established under UNCITRAL rules, we can advise that consent will be required to be given only when the claim is submitted to arbitration. In other words, there is no immediate requirement for the Investor to provide in advance of the hypothetical submission of the dispute to international arbitration, the consent for the arbitration.
Furthermore, there is no requirement that there exist a contractual basis for the submission of the dispute to arbitration, as the terms of the Canada-Ecuador FIPA expressly provide that arbitration process can be invoked at the election of the investor by giving its consent at that time, based on the existence of the prior “unconditional consent [of Ecuador] to the submission of a dispute to international arbitration in accordance with the provisions of” the Canada-Ecuador FIPA.
There is ample authority for this conclusion, and it is well summarized in the following passages from an authoritative text on the subject matter:
“The greatest difference to commercial arbitrations is the source of the tribunal’s power. Commercial arbitrations require an arbitration agreement between the parties. By contrast, in investment disputes arbitration may also be possible without such an arbitration agreement in the ordinary sense. National legislation or treaties may give each party the right to initiate arbitration proceedings against each other. There may even be no contractual relationship between the parties at all which has led to labelling investment arbitration “arbitration without privity.”
Investment arbitrations are frequently based on provisions in national investment protection laws or international treaties by which the state agrees generally to arbitrate investment disputes. These provisions constitute an unilateral standing offer to the public to submit to arbitration with any party fulfilling the requirements. The offer is accepted by the investor when it initiates arbitration proceedings against the state. Until that time the investor is not bound to arbitrate and the state cannot initiate proceedings against the investor.
Disputes on jurisdiction are often not about interpreting a contract between the parties. Rather the tribunal will interpret the statutes, treaties and conventions, to see whether the dispute falls within the ambit of the state’s obligation to arbitrate in these instruments.
We can therefore advise that the making of a claim under the Canada-Ecuador FIPA, and submission of the claim to arbitration to an ad-hoc tribunal established under UNCITRAL rules, will require consent to be given by the Investor only when the claim is submitted to arbitration.
The internal approval process for the Ecuador-Canada BIT termination requested by the Government of Ecuador is soon to be concluded, only awaiting official notification by the Republic of Ecuador to the Canadian Government with the official termination notice of the Canada-Ecuador FIPA. Once this notification is made the Canada-Ecuador FIPA will be in force for the period of one additional year, ergo, the termination shall become effective one year after the notification is made.
The Canada-Ecuador FIPA recognize and respect the Investor’s right to assert arbitration claims under the treaty for a period of fifteen years following the termination of the treaty, so long as these claims arise out of “investments” or “commitments to invest” made prior to the date on which the termination of the treaty becomes effective. The arbitration claims shall have to be submitted under UNCITRAL rules, as at this point neither Canada nor Ecuador are ICSID members.
The mineral rights are, in accordance with the laws of Ecuador, “assets” and in particular constitute “rights, conferred by law…including any rights to search for,…extract or exploit natural resources”.
In making a claim under the Canada-Ecuador FIPA, and submitting the claim to arbitration to an ad hoc tribunal established under UNCITRAL rules, consent will be required to be given only when the investor claims are submitted to arbitration, as there is no immediate requirement to provide in advance of the submission of the dispute to international arbitration, the consent for the arbitration.
In order to mitigate the impact of the absence of an investment protection treaty between Ecuador a Canada, it is highly recommended that any investment made by an Investor be protected by an investment protection agreement entered into directly by the Investor with the Ecuadorian government in application of the Ecuador Production Code.
Ecuadorian domestic legislation expressly recognizes and allows for the government to enter into direct investment protection agreements (“IPA”) with national and foreign investors. The scope of the IPA´s is very ample under the law as it allows to contractually stipulate the treatment that the government shall give to the investment. The term of the IPA´s is for a period of fifteen years, extendable for an additional period of fifteen years (only in the case of public private partnerships the IPA term can be the same as the PPP contract).
Notwithstanding the aforementioned, the IPA´s entered into by the Ecuadorian government with investors since 2010 (date in which the law that regulates the IPA´s was published) have been mostly limited to grant the investor a tax stability during the IPA´s term. This limited scope of the IPA´s was justified for foreign investors as the investment was usually protected under an investment protection treaty between Ecuador and the state from which the investor was a national from.
In light of the termination of investment protection treaties between Ecuador and other States in the near future, the Ecuadorian government will be forced to expand the scope of the IPA´s, not only to grant tax stability for the investor, but also to include a detailed chapter on the investor rights and the dispute resolution process acceptable to investors. While general legal stability –as opposed to tax stability- remains largely untested under the IPA structure, we are of the opinion that domestic legislation provides enough support to develop this concept in the IPA context.
An opinion containing the details and particulars of the IPA´s under Ecuadorian domestic legislation will be addressed in our next publication.
By ZVS Tobar in Featured , NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , News and Bulletins
The Ecuadorian Hydrocarbons Minister, along with other authorities of this field, visited Houston the first days of October to promote new projects and investment opportunities in the oil & gas sector. These projects and investment opportunities are both in the upstream and downstream sectors.
Positive news for investors seeking upstream projects, a sector that has been left almost exclusively to public investment, is the return to a participation sharing agreement, leaving behind the failed and most controversial service contract agreement that set a tariff per produced barrel of oil.
With the return to the participation sharing agreement under which the investor directly participates from the oilfield production, the Ecuadorian government sends a clear signal to the private investors seeking to improve oil production and stimulate the exploration of the South East of the Ecuadorian Amazon region.
These are the 4 investment projects in the agenda of the Ecuadorian government:
1. Intracampos Bid Round
The so-‐called “Intracampos” fields are composed by 8 blocks that include 13 fields, located in the Northeastern Ecuadorian Amazon region and are amongst oilfields in production. The total amount of proven reserves of the Intracampos oilfields is 157.3 MM bls of oil (907.5 MM bls of OOIP).
For the development of the Intracampos oilfields, the Ecuadorian government is expecting an approximate investment of USD 1.2 billion.
The Intracampos bidding round will probably be launched by the end of November or first days of December 2017.
2. South East Blocks
The South East of the Ecuadorian Amazon Region continues to be unexplored. Notwithstanding, it is an area that holds high expectations as there have been found 2 oil bearing reservoirs in Block 80 and the discovery in Block 64 of Peru (Situche Central) that is located in the border between Ecuador and Peru.
After the failed South East bidding round of 2013, under a service contract model by which the investor was paid with a tariff per produced barrel, this time the Government has made it clear that this new bid will be held under a participation sharing agreement, a model where investors are given an incentive as they can take advantage of any upside during the life of the contract.
This bidding is expected to be launched by the Ecuadorian government the first half of 2018.
3. Pacific Refinery
This was the flagship project of former President Rafael Correa´s administration, but it didn’t manage to attract investors due to the high amount of investment and unclear business model proposed.
This project’s justification is the limited refinery capacity of the country that is still unable to meet the internal fuel demand and, in turn, forces the government to make imports.
The Ecuadorian government has announced that this project requires an investment of USD 8.2 billion, almost half the sum announced by the prior government. Now the government expects private investment for the development of this project as it has stated that it would not compromise public funds.
The business model proposed for the development of this project has two options: (1) the payment by the Ecuadorian State of a tariff per refined barrel, which involves a BOT project; or, (2) the Ecuadorian State would sell the oil to the refiner at international price, and the Ecuadorian State would commit to buy the refined oil products from the refiner at international price.
Unlike the proposal by the former Government to refine oil imported from Venezuela, the current proposal is to refine the oil produced from the called ITT (Ishpingo-‐Tambococha-‐Tiputini) Blocks located in the Ecuadorian Amazon Region. Currently, the Tiputini oilfield produces 50,000 bpd, and the Government expects to increase its production to 100,000 bpd. The Ishpingo and Tambococha oilfields are expected to be developed in the short term.
The processing capacity of the Pacific Refinery has been proposed on 300,000 barrels per day.
4. Monteverde Maritime Project
The maritime terminal of Monteverde is an infrastructure in which the Government has already invested close to USD 600 million. The proposal is to find either a strategic partner to invest approximately USD 300 million for the development of a Regional Hub Storage and Distribution Center, or a private investor to buy this project to directly develop it.
This project finds attractive the fact that the Pacific Coast has a storage deficit for liquid products (fuel, chemicals) that, in turn, becomes an opportunity for the development of a Regional Hub Storage and Distribution Center. Moreover, taking into account the strategic position of Ecuador in the Pacific and the existence of infrastructure that needs to be improved and maximized.
The business model for this project has been left open to the investor needs, and can be developed under a concession model, a contract for the use of the infrastructure, a joint venture, or any other business model proposed by the investor.
By Tobar Bernardo in CORPORATE, M&A , Featured , News and Bulletins
|Tim Shannon, Chief Business Development of TERRALEX, visited Ecuador and directed a workshop on this law firm´s network, which exclusive member in Ecuador is TOBAR ZVS SPINGARN, about all the benefits and advantages.|
By ZVS Tobar in Featured , News and Bulletins
Tobar ZVS had the pleasure of contributing to the latest edition of the Project Finance Guide 2021 with Chambers & Partners Global Practice Guides.
In this guide practitioners from 19 jurisdictions provide the latest legal information on public-private partnership (PPP) transactions, guarantees and security, judgments of foreign courts, foreign investment, structuring and documentation considerations, bankruptcy and insolvency, insurances, tax, and project and financing agreements.
Tobar ZVS contributed with the Ecuador commentary written by our team Bernardo Tobar, Cesar Zumarraga, Alvaro Sevilla and Juan Fernando Larrea.
PDF: Chambers Project finance ECUADOR
By ZVS Tobar in CORPORATE AND M&A , Featured , News and Bulletins