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Cablegate: Constitutional Court Ruling Keeps Airport Negotiations Alive

VZCZCXYZ0003
RR RUEHWEB

DE RUEHQT #0871/01 2802153
ZNY CCCCC ZZH
R 072153Z OCT 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0164
INFO RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA 0026
RUEHCV/AMEMBASSY CARACAS 0046
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ OCT LIMA 0051

C O N F I D E N T I A L QUITO 000871

SIPDIS
NOFORN
DEPARTMENT OF STATE PLEASE PASS TO OPIC AND EXIM BANK

E.O. 12958: DECL: 2019/10/07
TAGS: EAIR EFIN ECON PREL BR CA IDB OPIC EXIM
SUBJECT: Constitutional Court Ruling Keeps Airport Negotiations Alive

CLASSIFIED BY: chritton, DCM, DOS, Exec; REASON: 1.4(D)

1. (C) Summary: On October 5 the Ecuadorian Constitutional
Court released a ruling designed to "clarify" its July 23 decision
that threatened to scuttle the new Quito airport construction
project. While not as clear or expansive as hoped by the project
lenders, OPIC staffers told econoff on Oct 6 that the ruling
appeared sufficient to continue construction funding for the new
airport. Presuming Quito Mayor Augusto Barrera feels protected, the
ruling provides breathing room for negotiations to design new
protection for the project's lenders in line with Ecuadorian law
and allows the Quito municipality time to negotiate a new revenue
sharing agreement. The October 5 decision in Spanish, and an
unofficial translation, are below. End Summary.

2. (C) On October 5 the Ecuadorian Constitutional Court (CC)
released a decision, case number 0021-09-IA, on how to enforce its
July 23 ruling, case number 003-09-SIN-CC, which ruled that
airports and the fees derived from them are the property of the
central government. (Original in Spanish and unofficial
translation below.) The original decision (ref A) as well as
Ecuador's June 6 withdrawal from the World Bank's Convention on the
Settlement of Investment Disputes (ICSID), constituted a breach of
the airport concession contract according to Quiport, the private
consortium of three companies (Aecon of Canada, Andrade Gutierrez
of Brazil and Houston Airport Systems of the U.S.) and the Canadian
Commercial Corporation (CCC). The financial backers of the
project, the Overseas Private Investment Corporation (OPIC), the
U.S. Export-Import Bank (Ex-Im Bank), the Inter-American
Development Bank (IDB), and Export Development Canada (EDC), agreed
September 23 (ref B) to continue funding airport construction
through December, to allow time for negotiation of a new agreement
that will follow Ecuadorian law, protect the project's lenders, and
provide the opportunity to negotiate a new revenue sharing
agreement. This agreement was predicated on a CC ruling that
protected the lenders and gave Quito Mayor Augusto Barrera
authority to negotiate a new concession agreement.

3. (C) Econoff spoke with OPIC staffers on October 6 to
assess their reaction to the ruling. According to OPIC, the court
ruling appears sufficient to continue negotiations and to authorize
continued construction funding (ref B), although it was not as
clear as expected on the control of funds from airport operations.
According to OPIC, the other project lenders have mixed feelings on
the ruling, although they are currently prepared to move forward.
Presuming Mayor Barrera is satisfied, OPIC expects a delegation
made up of representatives from OPIC, Ex-Im, IDB, and EDC to visit
Quito October 14-16 to meet with Ecuadorian government officials
and urge them to begin direct negotiations.

4. Decision in Spanish and Unofficial Translation:

Corte Constitucional Tribunal Para el Periodo de TransiciC3n

Pleno de la Corte Constitucional para el perC-odo de transiciC3n:
Quito, 29 de septiembre de 2009 a las 4: 30. NC:mero de caso:
0021-09-IA. Ref. Sentencia: 003-09-SIN-CC, agrC)guese al proceso los
escritos presentados por el acC!pite Dr. Carlos PolC-t Faggioni,
Contralor General del Estado, mediante el cual requiere a la
Corte Constitucional un pronunciamiento respecto de la forma
adecuada de ejecutar la sentencia en los aspectos referidos en el
acC!pite I de su escrito; y, por el Ing. Fernando Guerrero LC3pez, en
representaciC3n de La DirecciC3n General de AviaciC3n Civil, mediante
el que solicita varias consultas al Pleno de la Corte
Constitucional, relacionadas de la sentencia mencionada. Al
respecto, esta Corte Constitucional considera:

PRIMERO.- De conformidad con lo dispuesto en el Art. 17 de las
Reglas de Procedimiento para el Ejercicio de las Competencias de la

Corte Constitucional, para el periodo de transiciC3n. "Las
sentencias de constitucionalidad tendrC!n e l efecto de cosa
juzgada material o formal, segC:n se a el caso, y serC!n de
obligatorio cumplimiento para todos las personas e instituciones".

SEGUNDO. - E l inciso tercero de l Art. 27 de la s Reglas de
Procedimiento antes mencionadas, dispone que en la providencia que
admite la demanda "...se ordenara publicar un extracto de la
demanda en el Registro Oficial, para que cualquier ciudadano
coadyuve con la demanda de inconstitucionalidad de las normas o las
defienda, remitiendo su opiniC3n a la Corte Constitucional, para lo
cual dispondrC! del mismo termino seC1alado en el inciso
anterior...". En el presente caso, y un a ve z revisado el
expediente, se constata que la DirecciC3n General de AviaciC3n Civil,

no ha comparece dentro del tC)rmino de 15 dC-as luego de haberse
publicado el extracto de la demanda en el R.O. No. 600 de jueves 28
de mayo de 2009, para que formule su opiniC3n dentro de este proceso
de control abstracto de constitucionalidad.

TERCERO.- El seC1or Contralor General del Estado, legitimado activo
en esta causa, solicita el pronunciamiento de esta Corte sobre los
siguientes aspectos: 1.- En quC) plazo o tiempo debe realizarse la
adecuaciC3n de los actos y contratos pC:blicos, al rC)gimen
constitucional vigente, expuesto en la sentencia, segC:n lo previsto
en el numeral 8 del acC!pite IV "DecisiC3n"; y, 2.-" L a disposiciC3n
contenida en la sentencia de "recibir y administrar" las tasas por
servicios aeroportuarios, impiden de algC:n modo a los Municipios,
emplear figuras previstas en la legislaciC3n ecuatoriana, tales como
fideicomisos de renegociaciC3n de los contratos o cualquier otra
acciC3n que permita evitar la parC!lisis del servicio." Con estos
antecedentes y con el objeto de conseguir un adecuado cumplimiento
de la Sentencia expedida por esta Corte, se establecen los
siguientes parC!metros para su ejecuciC3n:

a) En relaciC3n al requerimiento formulado por el seC1or Contralor
General del estado, seC1alado en el numeral 1 del considerando
tercero, se debe partir de la base de que durante la transiciC3n y
hasta la adecuaciC3n total de la s situaciones jurC-dicas existentes,
al nuevo ordenamiento constitucional y legal, el Municipio de quito
es el titular d e lo s fondos pC:blicos provenientes de las tasas
aeroportuarias; y, la adecuaciC3n de los actos y contratos pC:blicos
y privados a dicho rC)gimen constitucional vigente, debe sujetarse a
un proceso y calendario fijados por las autoridades competentes,
representantes legales y partes contractuales, segC:n el caso,
debiendo ajustarse tales proceso y calendario de adecuaciC3n, a las
normas y principios constitucionales, a la sentencia expedida en
esta causa y a las disposiciones que regulen el rC)gimen de
competencias, cuando tal normativa se encuentre promulgada;

b) En cuanto al requerimiento formulado por el seC1or Contralor
Genera l de l Estado, seC1alado en numeral 2 de l considerando
tercero, teniendo presente que tanto la naturaleza como la
titularidad de los recursos es pC:blica y sin perjuicio de las
facultades de control atribuidas por la ConstituciC3n, y la ley a la
ContralorC-a Ge n e r a l de l Es t a d o , efectivamente los
administradores de dichos fondos pC:blicos, pueden aplicar todas las
herramientas jurC-dico-financieras permitidas por el ordenamiento
jurC-dico ecuatoriano para garantizar el eficiente, eficaz y
adecuado cumplimiento de lo dispuesto en la sentencia, debiendo
entenderse que la correcta ejecuciC3n de las actividades d e
"recibir" y "administrar" dicho s fondos, implica todo un proceso
en el que intervienen diferentes participes (concesionario,
instituciones financieras pC:blicas o privadas, Municipios y
ContralorC-a General del Estado), en las respectivas fases de
recaudaciC3n, custodia, entrega, administraciC3n, disposiciC3n y
control de los recursos;

c) De conformidad con lo seC1alado en el considerando segundo, se
niega por improcedente lo solicitado por la DirecciC3n General de
AviaciC3n Civil. Este pronunciamiento lo hace esta Corte, sin
perjuicio de ejercer su atribuciC3n prevista en el Art. 436, numeral

10 de la ConstituciC3n de la RepC:blica.

Dr. Patricio Pazmino Freire

PRESIDENTE

Unofficial Translation

CONSTITUTIONAL COURT

FOR THE TRANSITION PERIOD

CONSTITUTIONAL COURT FOR THE TRANSITION PERIOD IN PLENARY SESSION:
Quito, Metropolitan District, September 29, 2009, 4:30 p.m.
Whereas: In case 0021-09-IA, regarding ruling 003-09-SIN-CC, the
document submitted by Dr. Carlos PC3lit Faggioni, Comptroller
General of Ecuador, shall be included in the case file. Said
document requests a pronouncement from the Constitutional Court on
how to appropriately enforce the ruling, with respect to paragraph
1 thereof. Furthermore, the Court's opinion is requested concerning
various consultations on the ruling made to the Constitutional
Court by Engineer Fernando Guerrero LC3pez, in representation of the
General Civil Aviation Office.

In this regard, the Constitutional Court considered:

FIRST: Pursuant to Art. 17 of the Rules of Procedure for the
Exercise of Jurisdiction of the Constitutional Court during the
transition period, "Rulings on constitutionality shall bear the
effects of material or formal res judicata, as the case may be, and
shall be binding on all individuals and institutions."

SECOND: The third paragraph of Art. 27 of the Rules of Procedure,
mentioned above, stipulates that in the ruling accepting the claim
"...it shall be ordered that an extract of the claim be published
in the Official Gazette so that any citizen interested in the claim
on the unconstitutionality or defense of rules may also forward an
opinion to the Constitutional Court, and will be granted the same
term stated in the preceding paragraph..." In this case, and since
the case file was reviewed, it was verified that the General Civil
Aviation Office failed to appear within 15 days from the time of
publication of the extract of the claim in Official Gazette 600 of
Thursday, May 28, 2009, to form a opinion in this case regarding
the abstract oversight of constitutionality. THIRD: The Comptroller
General of Ecuador, who legally participates in this case, requests
that the Court issue an opinion on the following aspects:

1. What is the deadline for accommodating public and private acts
and contracts to the constitutional regime now in effect, as stated
in the ruling and forth in IV.8 of the "Decision"? And,

2. Does the stipulation contained in the ruling regarding the
"receipt and management" of the airport service fee prevent
Municipalities in any way whatsoever from employing the
institutions created by Ecuadorian legislation, such as
administration or security trusts for accommodating the contract
renegotiation process or other action for avoiding any suspension
in the service?" In light of the foregoing, and in order to achieve
the adequate compliance with the Ruling issued by this Court, the
following parameters are defined for enforcement:

a) With respect to the requirement made by the Comptroller General
of Ecuador, which is stated in number 1 of the third recital,
during the transition and up to the complete revision of existing
legal situations under the new constitutional and legal order, the
Municipality of Quito is the owner of public funds from airport
fees. Furthermore, for the accommodation of public and private acts
and contracts to said constitutional regime in effect, the process
and calendar established by the competent authorities, legal
representatives and contractual parties, as the case may be, shall
be followed. The process and calendar for such accommodation shall
be in line with the constitutional rules and principles, the ruling
issued in this case, and the rules on the jurisdiction regime once
such rules are enacted;

b) With respect to the requirements by the Comptroller General of
Ecuador, stated in point 2 of the third recital, in view that both
the nature and ownership of the resources are public and in
addition to the oversight powers attributed by the Constitution and
the Law of the Office of Comptroller General of Ecuador, the
managers of said public funds may in fact employ all
legal-financial tools permitted by Ecuadorian laws for ensuring the
efficient, efficacious and appropriate compliance with the ruling.
It shall be understood that the correct "receipt" and "management"
of said funds imply a complete process with different participants
(concessionaire, public or private financial institutions,
Municipalities and the Office of the Comptroller General of
Ecuador) for collecting, keeping custody of, delivering, managing,
disposing of and controlling said funds;

c) Based on the second recital, the request by the General Civil
Aviation Office is denied as it is devoid of justification; This
pronouncement is made by the Court, notwithstanding the Court's
right to assert the power established in Art. 436.10 of the
Constitution of Ecuador. To be notified and Fulfilled.

(signature)

Dr. Patricio PazmiC1o Freire

PRESIDENT
HODGES

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