Legal market overview
Ecuador has been riding a steady wave of economic growth since the global financial crisis in 2009, yet a 50% drop in oil export prices – petroleum resources account for at least 50% of the country's export earnings and roughly two-fifths of public sector revenue – are slowing down the heavily-oil-dependent nation. After eight years in power, left-leaning president Rafael Correa is set to further extend his period in office with the help of a constitutional-reform initiative that seeks to remove presidential term limits. Even though public debt has risen quite substantially, Finance Minister Fausto Herrera vowed to refrain from public spending cuts and so Ecuador has turned, once more, to China for loans, this time totalling $7.5 billion.
‘The Law for Labour Justice and Recognition of Work from Home’, an overhaul of the 1938 labour code, accounts for the most significant legislative change this year. The reform, which has already passed the National Assembly, establishes that all new labour contracts signed as of January 1, 2016 will be indefinite rather than fixed-term. It is hoped that the reform will help reduce public debt since it includes the removal of a government subsidy meant to cover almost half of state pensioners’ monthly payments. While the reform provoked conflict between Ecuador’s biggest trade union, United Workers’ Front, and the employers’ side, it has generated considerable advisory work for law firms and observers note the reform has increased the flexibility of a historically entrenched market, bringing a positive impact on the economy. Certainly Ecuador’s law firms are looking to bolster their labour departments in order to deal with an increased volume of work. Among other relevant legislative changes is the upcoming enactment of a single General Procedural Code, which will simplify and modernise contentious practice in Ecuador by replacing the numerous litigation codes with a single unified one, and also allowing virtual file access. Jaramillo Dávila Abogados acted as the main advisor to the government in the conceptualisation of the code, which has already been approved by the National Assembly.
Well-established firms Fabara Abogados, Bustamante & Bustamante and Pérez Bustamante & Ponce stand at the forefront of loan-agreements between foreign lenders and the Ecuadorian government. Bustamante & Bustamante, for example, provided initial advice to state-entity PetroEcuador on a $1bn loan from Noble Americas, with Fabara Abogados susbsequently acting as local counsel for the closure of the deal as well as provided relevant legal opinions; Pérez Bustamante & Ponce meanwhile, advised the Export-Import Bank of China on a $510m loan agreement to the Republic of Ecuador. The likes of Corral Rosales Carmigniani Pérez and Coronel & Pérez follow suit in key mid-market positions. Arguably the most significant market movement is the arrival of originally-Uruguayan firm Ferrere, which has added an Ecuadorian office to those in Uruguay, Bolivia and Paraguay; much of the firm comes from the division of the former Paz Horowitz Roablino Garcés into Paz Horowitz Abogados, on the one hand, and Ferrere, on the other – although it has also recruited individuals from other market leading firms. At the boutique-end of the spectrum, there are key players in each of the ‘transversal’-market sectors: Jaramillo Dávila Abogados in the labour sector; Bermeo & Bermeo Law Firm in intellectual property; and Tax & Legal Advisors in the fiscal arena.