BRAZIL. beyond. Commercial arbitration is thriving, but concerns remain. Commercial Dispute Resolution NOVEMBER-DECEMBER 2013

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1 65 EXPERT VIEW: SURVEYING LATIN AMERICA beyond BRAZIL With Latin America s historic distrust of international arbitration now largely removed, Steven Finizio and Victoria Narancio of WilmerHale survey the continent s arbitral laws and institutions L atin America has experienced continuous economic growth for over a decade. This growth has been accompanied by increased international commerce and foreign direct investment. At the same time, Many Latin American countries have overcome a traditional reluctance to embrace international arbitration (which can be traced to the so-called Calvo doctrine, which held that foreign parties should not be entitled to a higher degree of protection than local parties and therefore had to submit their claims to local courts) and have taken steps to modernise their legal frameworks for international arbitration. Brazil s embrace of international arbitration has received particular publicity, and it is making considerable efforts to promote international arbitration. Developments in Brazil are not the whole story in the region, however. Every country in Latin America is now a party to the New York Convention and the Panama Convention (which, like the New York Convention, requires enforcement of awards made in member states and also provides that the Inter-American Commercial Arbitration Commission Rules apply where parties have not specified rules). Many have also modernised their arbitration laws (more than 15 have adopted arbitration statutes based on the UNCITRAL Model Law), and others are reviewing theirs. Moreover, there has been a significant growth in the number of arbitral institutions and their activities, with a number of institutions recently revising their arbitration rules and beginning to see an increasingly international caseload. The story with regard to investment arbitration is more mixed. As of 2012, Latin American countries are parties to more than 400 bilateral investment treaties, as well a number of multilateral trade agreements, many of which provide for the arbitration of claims. Indeed, Latin American countries have faced a significant number of investment treaty claims. Venezuela, Bolivia and Ecuador have withdrawn from the ICSID Convention, and other countries have threatened not to comply with ICSID awards and to renegotiate BITs. Commercial arbitration is thriving, but concerns remain Despite the issues with investment treaty claims, international commercial arbitration in the region appears to be thriving. ICC cases involving Latin American parties rose to nearly 20% in In 2011, 247 ICC cases involved a Latin American party. Parties in the region are increasingly eager to seat arbitrations closer to

2 International arbitration 66 EXPERT VIEW: SURVEYING LATIN AMERICA home, and a number of jurisdictions are promoting themselves as arbitration-friendly. Mexico has historically been the most commonly used seat of arbitration in Latin America, and Chile has a growing reputation as an arbitral seat, while Colombia and Peru also have active arbitral institutions and their courts are increasingly perceived as being arbitration-friendly. However, many international parties continue to resist agreeing to arbitrate in Latin America when they can do so (often seeking agreement on a city in the US or Europe as the seat of arbitration) and are reluctant to agree to arbitrate under the rules of local arbitral institutions. They also remain concerned about enforcing arbitral awards in Latin American courts, with courts in some countries known for allowing parties to use writs of amparo (an extraordinary judicial remedy for protecting constitutional rights) to challenge arbitration awards. Moreover, enforcement of awards in even some of the most arbitration-friendly jurisdictions can be slow. There also can be uncertainty because a court may need to decide which of the overlapping conventions that apply to arbitrations in many Latin American countries apply to a particular case. In addition to the New York and Panama Conventions, other conventions may apply, including the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Montevideo Convention of 1979), the Convention on International Commercial Arbitration (1998) and the Olivos Protocol for Disputes Settlement (2002). As Latin American parties become more open to international arbitration, and begin to push for arbitrations seated in Latin America, it is important for parties facing the possibility of arbitrating in Latin America to understand the available options. We look beyond Brazil and summarise the status of international arbitration in a number of other key Latin American jurisdictions. Most countries in Latin America have rolled out their bienvenido mats for international arbitration Argentina Argentina is a the New York, Conventions, but does not have a modern arbitration law. Instead, arbitration proceedings are governed by Argentina s National Code of Civil and Commercial Procedure (NPC) and provincial procedural codes (which tend to be consistent with the NPC). Several proposals for a new arbitration law based on the UNCITRAL Model Law have been submitted to Argentina s Congress, but they have been deferred. The NPC provides a number of formal and substantive grounds to challenge arbitration agreements and awards for cases seated in Argentina, although Argentine courts have a somewhat better reputation for enforcing foreign awards in commercial cases under the provisions of the New York and Panama Conventions. Argentina has not complied with a number of awards against it

3 67 in investment treaty cases, although it recently agreed to honour five investment treaty awards in favour of US parties. Even the best known arbitral institutions in Argentina the Tribunal de Arbitraje General de la Bolsa de Comercio de Buenos Aires and the Centro de Mediación y Arbitraje Comercial de la Cámara Argentina de Comercio (CEMARC) do not have significant experience with international disputes. In 2009, CEMARC adopted new arbitration rules, including an annex on pre-arbitral interim measures. Chile Chile is a signatory to Conventions, and in 2004 adopted an international arbitration statute (Law ) based on the UNCITRAL Model Law. Chilean courts have limited experience with international arbitrations, but have repeatedly confirmed the limited role of domestic courts in international arbitration proceedings and have a growing reputation for being very supportive of international arbitration. Chile s best known arbitral institution is the Centre for Arbitration and Mediation of the Santiago Chamber of Commerce (CAM Santiago), which was established in 1992 but only began administering international arbitrations in Approximately 10% of its cases have involved foreign parties, including from Brazil, Ecuador, China, Switzerland, Mexico and Germany. Colombia Colombia is a Conventions. It has recently taken steps to attract foreign investment, including introducing in 2012 a new international arbitration law (Law 1563) and it has begun to promote itself as an arbitral seat. Colombia s arbitration law governs domestic and international arbitration separately. The procedure applicable to domestic arbitration is based on Colombia s civil procedure regime for example, arbitrators must, at a minimum, meet the same standards required of a magistrate of a Superior Tribunal while Colombia s international arbitration law is based on the UNCITRAL Model Law. Colombian courts have little experience with international arbitrations; however, Colombia has a strong domestic arbitral tradition. Moreover, the new arbitration law provides that parties can waive the right to seek annulment of an award in the Colombian courts when neither party is a Colombian resident. There are a number of arbitral institutions in Colombia, including the Centro de Arbitraje y Conciliación Mercantiles, the Comité Colombiano de Arbitraje and the Centre of Arbitration and Conciliation of the Chamber of Commerce of Bogotá. These institutions have significant experience with domestic arbitration (the Bogotá centre handles nearly 300 cases per year) but are still developing international experience only a handful of the Bogotá centre s cases have been international. Indeed, the Bogotá centre s rules currently are not published in English. Costa Rica Costa Rica is a Conventions, and in 2011 adopted a new international arbitration law (Law 8.937) based on the UNCITRAL Model Law. Costa Rican courts have very limited experience with international arbitration, with no reported enforcement or recognition cases under the new

4 International arbitration 68 EXPERT VIEW: SURVEYING LATIN AMERICA arbitration law. In adopting the Model Law, Costa Rica did not adopt Article 5, which provides that a court should only intervene in an arbitration in the limited and specified circumstances identified in the law, and this creates some uncertainty as to how Costa Rican courts will see their role. Costa Rica has two arbitral institutions: the Centre for Conciliation and Arbitration of Costa Rica s Chamber of Commerce and the International Centre for Conciliation and Arbitration (American Chamber of Commerce). Neither has significant international experience. Dominican Republic The Dominican Republic is a the New York and Panama Conventions. It signed the ICSID Convention in 2000, but it has not ratified it. The Dominican Republic adopted a new arbitration law in 2008 (Law ) based on the UNCITRAL Model Law. There are only a small number of cases in which Dominican courts have been asked to enforce foreign arbitral awards, but the Dominican courts appear to have enforced the award in each of those cases. There is one arbitration centre in the Dominican Republic: the Centre for Alternative Dispute Resolution of the Chamber of Commerce and Production of Santo Domingo (CCPSD). Its rules were revised in 2009 and are based on the 1998 ICC Rules, but it does not have significant international experience. Mexico Mexico is a ICSID Conventions. It was the first Latin American country to adopt the UNCITRAL Model Law and has had a reputation as the first choice in the region as a seat of arbitration. According to ICC statistics, it has been one of the 20 most popular seats of arbitration over the last decade. Mexico s arbitration law is in its Commercial Code, which was amended in 2011 to include, inter alia, a specific summary procedure for setting aside or recognising and enforcing arbitral awards. Mexican courts have had more international arbitration experience than other courts in the region and are generally supportive of arbitration and enforcing arbitration agreements and awards. There are a number of international arbitration institutions in Mexico, including the Mexican Arbitration Centre (CAM), and the Arbitration and Mediation Commission of the Mexico City Chamber of Commerce (CANACO). CAM s rules are based on the 1998 ICC Rules and CANACO adopted new rules in 2009 based on the UNCITRAL Arbitration Rules. Panama Panama is a ICSID Conventions. Its arbitration law (Decreto Ley No. 5) is based on the UNCITRAL Model Law, although it has some notable differences (including, for example, in providing that unless otherwise agreed by the parties, arbitrations shall be ex aequo et bono). Panamanian courts have had little experience with international arbitration, but in 2004 the Panamanian Constitution was amended to recognise arbitration and expressly incorporated the principle of Kompetez-Kompetez (the Constitution specifically provides the arbitrators with the authority to decide on their jurisdiction). The main arbitration centre in Panama is the Centro de Conciliación y Arbitraje de la Cámara de Comercio e Industria de Panama. It was created in 1994, and administers both domestic and international arbitrations, but has not had a substantial international caseload. Peru Peru is a signatory to Conventions. In 2008, it enacted a new arbitration law (Legislative Decree No. 1071) based on the UNCITRAL Model Law, which governs both domestic and international arbitrations. Despite very limited experience, Peruvian courts have a reputation for generally being supportive of international arbitration, with a good record of recognising and enforcing foreign awards. There are a number of arbitral institutions in Peru, including the Center of Arbitration of the Lima Chamber of Commerce (LCC) and the American Chamber of Commerce of Peru (AmCham), which issued new arbitration rules in It appears that approximately a third of the cases administered by AmCham involve foreign parties. Uruguay Uruguay is a ICSID Conventions. Uruguay does not have a modern international arbitration law. Instead, arbitration proceedings are governed by the General Code of Procedure (CGP), which does not distinguish between domestic and international arbitrations and provides that foreign arbitral awards are enforceable pursuant to the same procedures and requirements applicable to the enforceability of foreign court judgments. Uruguayan courts have limited experience, but are generally supportive of international arbitrations, and have

5 69 a reputation for enforcing foreign awards in accordance with the New York Convention or other applicable conventions. There are on-going legislative efforts to modernise Uruguay s law, but these have been unsuccessful to date. Some other recent developments, such as the enactment in 2011 of Law No , which provides that all disputes arising from public-private associations must be resolved by arbitration, indicate that arbitration is becoming a more regular feature of dispute resolution in Uruguay. There is one arbitration institution in Uruguay, the Conciliation and Arbitration Centre of the Chamber of Commerce, which administers both domestic and international arbitrations, but it has not had a substantial international caseload. Venezuela Venezuela is a the New York and Panama Conventions, but has withdrawn from the ICSID Convention (its denunciation took effect in July 2012). Venezuela s Commercial Arbitration Act 1998 (Law 36430) is based on the UNCITRAL Model Law, although it includes some significant differences (e.g. the time to challenge an award is only five business days). During recent years, Venezuelan courts have had a reputation for not supporting international arbitration and have refused to enforce a number of awards, particularly in cases where the losing party is a Venezuelan governmental entity. The only noteworthy arbitral institution in Venezuela is the Arbitration Centre at the Caracas Chamber of Commerce (CACC). The CACC has recently amended its rules, which are based on the ICC Rules, but its rules are only published in Spanish. Most countries in Latin America have rolled out their bienvenido mats for international arbitration. Latin America s growing economy and its embrace of international arbitration mean that foreign parties increasingly face the possibility of arbitrating in the region, and must pay attention to how new arbitration laws are being implemented and the development of local arbitral institutions. It will take some time for any Latin American seat to gain the full confidence of foreign parties, and several countries will continue to lag behind, but Mexico and, increasingly, Chile are becoming established seats of arbitration, particularly for Spanish-speaking parties. A number of other countries, including Brazil, Colombia, Costa Rica and Peru, are taking steps to encourage international arbitration and could soon become attractive seats for regional and international parties. Foreign parties increasingly face the possibility of arbitrating in the region, and must pay attention to how new arbitration laws are being implemented and the development of local arbitral institutions About the authors Steven Finizio is a partner in WilmerHale s Litigation/ Controversy and Securities Departments, and a member of the International Arbitration Practice Group. Victoria Narancio is an associate in WilmerHale s Litigation/Controversy Department, and a member of the firm s International Arbitration Practice Group.