This case involving Ecuador as reported by Perrone provides an excellent illustration of how this new stage of capitalism, called neoliberalism, actually functions to undermine the sovereignty of nations when they interfere with the transnational capitalist class's right to pursue profitable opportunities. In recent decades this transnational class has evolved under the hegemony of the US Empire and come from nations who have a modicum of "democratic" institutions. As ruling classes of the latter they intentionally designed these institutions to serve as a facade behind which they could exercise rule that would support their pursuit of profits and power. (For an excellent description of this in the US, read a section of a post by Stephan Gowans: scroll down to the subtitle to "Who Rules America", read from there to the subtitle "US Foreign Policy Goals in Syria".)
Having subdued and subverted any significant challenges to their power from workers within their nations, these transnational capitalists are now moving to eliminate national barriers that impede their quest for ever greater profits and power. Hence they are now constructing a new neoliberal regime (World Trade Organization, TPP, TPIP, etc) in an attempt to eliminate any interference in their pursuit of profits and power anywhere in the world.
However there are a few nations where regimes exist that espouse a very different view of development that is subordinate to other values. Perrone explains how a corporate case against Ecuador is an illustration of this.
The international investment regime, which consists of more than 3,000 treaties for the protection of foreign investment, has been fundamental in promoting this development model and in supervising states that tried to defy its orthodoxy. ...an initial purpose of investment arbitration was to lock-in a foreign investment-led development project. International arbitrators were in charge of preventing governments from changing their minds, and disappointing foreign investor expectations. Most of the criticisms against the international investment regime, however, are not based on these grounds. The main argument sustains that some investment arbitrators have gone too far, limiting regulation to curb negative externalities and market abuses —involving, for instance, plain-tobacco packaging. The increasing discussion about the right to regulate, in this way, has eclipsed a more profound debate about the role of the international investment regime in limiting alternative forms of development and policy experimentation.
This short essay aims to illustrate this more general debate by looking at the awards in the case Occidental Petroleum (Oxy) II v Ecuador, where the tribunal imposed one of the highest awards against a host state.