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Guide to Regional Arbitration (volume 5 - 2017)

White List: Latin America & the Caribbean

02 November 2016

With Latin America, it's not so much if one will be asked to accept a local arbitral provider as when – and then which one.

First, there are lots of local arbitration bodies: 165, according to one count (see the ITA's survey of Latin American arbitral institutions). Why is that? Some is faddism by governments. But there's an aspect of  necessity too. Domestic arbitration in Latin America, as in other parts of the world, has become the de facto conflict-solving mechanism instead of local courts, those being either too slow or not trusted. In Peru, most notably, the government has "sacked" the court system over exactly those concerns and arbitration is mandatory in all government contracts.

Second, Latin American businesses like to keep things in the region. The days of the Calvo Doctrine (which decreed everything about Latin America should be decided from within Latin America) may be long gone, but the sense of pride and regional exceptionalism that nurtured it remains.

So a counterparty is more than likely to suggest a Latin American provider. Should you resist it? Arguably, no. Arbitrating on the ground in Latin America can be perfectly productive – at least in more stable economies such as Peru, Colombia, Chile, Brazil and Mexico.

The more intrusive standards of control that can apply to domestic cases are largely walled off from the international part of the arbitration system, and guerrilla tactics such as amparos also don't seem to crop up in foreign cases. At the GAR Live New York conference in 2013, a panel of leading names from the above countries suggested that Latin American seats now pose a real alternative to New York, Paris, Miami, Madrid and London, in the eyes of their residents. A vote showed that 50 per cent of the conference's audience agreed with them.

Some enlightened businesses already seem to know this. Jonathan Hamilton from White & Case, who chaired that GAR Live session (and is editor of www.latinarbitrationlaw.com, a website on Latin American arbitration case law), recounts a call he received about new investment into Latin America. The investing company wanted help choosing between two Peruvian arbitral providers: the Lima Chamber of Commerce or the AmCham Peru.

"I said, ‘Wait, they're from so far away... They've never done business in Latin America, and they've narrowed it down to these two local arbitral institutions?' And my contact said, ‘Yes. They're already confident that Peru has a secure legal environment for arbitration, that the courts are reliable, and that these are the most cost-effective options for their needs.' At that moment I knew the world had already changed."

So for businesses like that one, and the less enlightened, the following is a pick of some of the best Latin American arbitral providers.

CENTRO DE ARBITRAJE Y CONCILIACIÓN DE LA CÁMARA DE COMERCIO DE BOGOTÁ (CENTRE FOR ARBITRATION AND CONCILIATION OF THE CHAMBER OF COMMERCE OF BOGOTÁ) (CAC–CCB)

Why's it on the white list?

For a whole host of reasons – but the main one is that the CAC–CCB is a real enterprise, with a huge caseload.

How huge?

In 2014, it handled 335 cases. And not all low-value either. Claim values range between US$20 million and US$200 million at the last count. The centre's by far the most popular now in Colombia.

Is arbitration popular in Colombia?

Arbitration has in many ways come to replace litigation in Colombia and the centre stands at the heart of it. It's almost been too successful at times.

How so?

The very thing that fuelled arbitration – the clunky and untrusted court system – bit back. Local judges, protective of their role, started to claw back some of the space allowed for arbitration by bending the arbitration law. The result was something of a paradox. Colombia had, at one point, one of the busiest Latin arbitration scenes and simultaneously one of the region's worst arbitration seats.

Is that no longer the case?

There's a new law and things are much better. It has distinct chapters for domestic and international arbitration. The international part is an almost-direct copy of the Model Law "with no Colombianisation", to quote leading local figure Eduardo Zuleta.

Is there a chance that when it comes to the law history will repeat itself?

There's always a possibility – just look at India for how the best-laid plans can go awry if judges feel so inclined. But the message seems to have got through. Domestic and international arbitration are different creatures and the standards should be kept apart. The early decisions under the international part of the act are all reportedly exemplary.

So are any international cases taking place at the centre?

Very few (four are currently under way). But there are other things that make the CAC–CCB international.

Such as?

Many local cases have a foreign element; for instance they feature the subsidiary of an international business. The centre also runs a School of International Arbitration, training lawyers from around the region in how international arbitration is conducted. It's also the ICC's representative in Colombia, and the only Latin American institution authorised to conduct ICSID hearings.

So it's internationally minded – if not actually that international.

Indeed – and it's getting more so by the day. Thanks to the school – and its alumni – it now has relationships with lawyers around the region. That will help it to expand its arbitrator list.

Does it need to?

Possibly. At the moment the bulk of the arbitrators appointed are Colombian (with a few from the US).

Who's responsible for that?

Mostly it's an expression of party preference. They have a free hand when it comes to their arbitrator. But the centre, when it appoints, does so from a list. So it's that list – at the moment around 30 names – that could be more international.

Still, that all sounds more than positive.

It should do. The centre has achieved a tremendous amount since its founding in 1983. And it's generous with its knowledge, teaching other providers around the region.

Who gets credit?

A lot should go to Rafael Bernal Gutiérrez, the centre's long-time director who recently stepped down (but not before getting a GAR special recognition award in 2013). He has been replaced by Mauricio González, a former judge of the Constitutional Court. But the centre has never been a one-man show. Its structure includes a "court" to hear arbitrator challenges (comprising two academics, two arbitration specialists, and two directors of the Chamber of Commerce) and a full-time legal staff. Bogotá's arbitration community is also highly supportive.

What's the lastest news?

The centre has a new set of rules designed for arbitrations involving non-Colombian parties. It's hoped those rules will help it to attract more regional cases, matters which at present might go to Santiago or Miami.

CENTRO DE ARBITRAGEM E MEDIAÇÃO DA CÂMARA DE COMÉRCIO BRASIL–CANADA (CENTRE OF ARBITRATION AND MEDIATION OF THE BRAZIL–CANADA CHAMBER OF COMMERCE) (CAM–CCBC)

Brazil has plenty of arbitral providers to choose from – why single out this one?

There are indeed a lot – more than 80. The CAM–CCBC stands out for being busy (37 new cases started in the first half of 2014 alone) and, by local standards, progressive. It would like to build an international name.

Is it not very international then?

None of the Brazilian institutions are. For international users, problems include poorly translated versions of the rules, monolingual staff and a universal insistence on the use of approved arbitrator lists, which include the same handful of names, no matter which institution you're at.

So they're no good then?

Au contraire. When working in their own language, and for Brazilian parties, some of the Brazilian providers are quite good. The CAM–CCBC for example, which is one of those, has an ISO certification for its quality of service on top of 30 years' experience of administrating cases.

So why would international parties want to go to a local provider in Brazil?

Under the law, there is a certain upside, in terms of time to enforcement (it's probably too subtle to go into in detail here). But there's a more prosaic reason too. If the work's going to be done in Brazil, you can avoid a substantial currency remittance tax (up to 30 per cent) by not having to send any fees abroad.

On the downside, using a local institution means you'll be tied to its approved arbitrator list.

Do all Brazilian institutions use an approved list system?

Yes, but for CAM–CCBC that's now in a diluted form.

What does that mean?

The CAM–CCBC has now ditched using a list for party-appointed arbitrators: parties have full freedom. The chair doesn't need to either, but the rules say that it is "preferable". In practice that means it's almost impossible to have a presiding arbitrator who isn't on the list. Helpfully, the list in question has expanded greatly, from around 30 of the usual Brazilian suspects, so to speak, to nearly 110 individuals – some of whom aren't Brazilian, and including some younger names. Notable new names at the centre include Bernardo Cremades, Donald Donovan, Jan Paulsson and Karl-Heinz Böckstiegel.

So is this part of internationalising itself?

Exactly. In 2010 the organisation formed a taskforce on how it could make itself more appealing for international and foreign-related work. Changing the list system was one of the taskforce's main recommendations.

What were the other ones?

It recommended rewriting the rules, bringing in some international luminaries and increasing the outreach programme.

What's the status of those ideas?

All done! New rules entered into effect in January 2012 and Eduardo Silva Romero (formerly of the ICC) and Donald Donovan (Debevoise & Plimpton) are now on the management board. Meanwhile the institution and its president Frederico Straube are hitting the road much more, putting on events with other organisations and even sending students to Vienna for the Vis Moot.

Does the CAM–CCBC have a "brand" with local judges? Will my award be more readily accepted if I go there?

There's no real evidence of that to date (or for any Brazilian institution). Developing the same sort of respect that the ICC has is arguably the next step.

Has the progress continued?

The institution continues to ring in the changes. In May 2015 a new board of directors was elected and with it a new president, vice presidents including Yves Derains and Maurício Gomm Santos and the secretary general – all of whom are recognised practitioners of arbitration in Brazil and abroad.

ARBITRATION AND MEDIATION CENTRE OF THE SANTIAGO CHAMBER OF COMMERCE (CAM SANTIAGO)

Why are you white-listing a Chilean centre? Isn't it too far away to be practical?

Distance is relative. True, for those outside Latin America, Chile is hard to get to. But within the region, it's more manageable, and CAM Santiago is emerging as a real force.

What's it achieved?

The government of Ecuador has selected it several times now to hear investor disputes, and aside from Miami it's probably the most popular place to choose for Latin American disputes.

What's led to that?

It helps that CAM Santiago sits in one of the best seats in the continent, with very strict principles when comes to governance standards and corruption. As an institution is has one of the longest track records: since starting in 1992, it has handled north of 1,600 cases. Nowadays it gets 150 to 170 new cases a year.

What sort of size?

A lot are smallish, but there are regular items in the US$100 million range, usually infrastructure-related. About half the cases arise either from construction work or shareholder agreements. So those tend to be about real money.

That's quite a lot of cases. How big is the secretariat?

It consists of a president, Carlos Eugenio Jorquiera, and an executive director, Macarena Leletier Velasco. There's also an oversight council comprising eight people who cannot be appointed as arbitrators in any CAM Santiago case unless directly requested by the parties – but that's more of a scrutiny body.

Is much of the work international?

It's about 10 per cent, according to recent statistics. But that still equates to 15–17 cases a year. Parties from the US, Brazil, Ecuador, China, Switzerland, the British Virgin Islands, Mexico, Germany, India and Korea have all been in cases there recently.

And who appoints arbitrators?

The parties (but bear in mind that the remuneration level is less than the international norm).

Are there any pitfalls for the unwary?

It's more of a quirk, really. CAM Santiago likes to publish awards (redacting the parties' names but not the arbitrator). Otherwise the main thing to watch out for is getting the right rules.

How modern are those rules?

Moderately. They entered into effect in 2006. But, as Chile is updating its arbitration law (the previous law dated from 1875) it's highly likely that CAM will revise them soon. It doesn't tend to just sit around.

Is it a bit of a go-getter, then?

It seems to be. It puts on lots of events and sees part of its role as to promote Chile as a seat – partnering with lots of foreign organisations (the School of International Arbitration at Queen Mary, University of London; the Institute of Transnational Arbitration; and, most recently, CIArb). It's even submitted articles to GAR on Chilean case law; no other local arbitral institution has ever thought to take that step.

CENTRO DE MEDIACIÓN Y ARBITRAJE DE LA CÁMARA NACIONAL DE COMERCIO DE LA CIUDAD DE MÉXICO (MEDIATION AND ARBITRATION CENTRE OF THE MEXICO CITY NATIONAL CHAMBER OF COMMERCE) (CANACO)

How long has it been doing arbitration?

Longer than almost anyone: CANACO's roots go back all the way to 1874. But it's had a number of different guises in that time (not all successful). It took on its current legal identity in 2000, which is when it began to gain some momentum.

What changed in 2000?

It merged with the Mexico's Commission on Mediation and Arbitration, which comprises 20 local arbitration luminaries – including José María Abascal Zamora, Claus von Wobeser and Luis Enrique Graham, whose names will ring out with many readers. The commission now backstops all of its work. Since joining forces, CANACO has improved its rules and case management.

What's are the rules like now?

They're pretty modern. They follow all the UNCITRAL principles, and have popular options such as emergency arbitrators, provisional measures and a super-fast procedure for small claims are all provided for.

So how's the new offering gone down? Is it busy?

Yes and no. Throughout its long life, CANACO has only administered about 100 arbitrations. But the bulk of those happened in the past five years. So things have only really sprung to life recently. It's now getting around 11 new cases a year, with at least one of those likely to be international. If Mexico were more popular as a seat, it would probably be getting more. Unfortunately, for now, owing to a spate of injunctions against arbitrators, it's not.

What are its strengths?

The calibre of the practitioners on the commission is seen as a huge plus. A number of them are also close to the ICC, which affords a good understanding of common issues and case handling. It has also signed a cooperation agreement with the ICDR (with whom it's also been partnering on a symposium for a few years) – and has a stable and well-liked staff.

Most significantly, it has close links with the Mexico City National Chamber of Commerce, which gives it a head start when it comes to marketing.

Do parties get to appoint the arbitrators?

If they want. There's full autonomy in the appointment process. CANACO itself maintains a list of about 100 names from which it will propose arbitrators (using the list system) if required to play an appointing role.

Are there any pitfalls to beware of?

The one thing to watch out for is the small claims procedure. It kicks in automatically and results in merely a decision, rather than a reasoned award. Then again, it only applies to very small cases (claims of under US$45,000), so it's not the biggest concern.

CÂMARA DE CONCILIAÇÃO, MEDIAÇÃO E ARBITRAGEM DE SÃO PAULO (CHAMBER OF CONCILIATION, MEDIATION AND ARBITRATION) (CIESP/FIESP)

Why is it white-listed?

Within Brazil, it's been something of a leader. It was the first big player to take the plunge and abandon the unpopular list system used by so many institutions in Brazil.

What's wrong with appointing from a list?

Lists are fine, if they include the people parties really want. Brazilian lists don't, if you're an international party. They mainly feature Brazilians, usually the same old faces.

What's FIESP replaced it with?

Unfettered party autonomy. Under FIESP's new rules (released in 2013) the list still gets sent out, but using it is no longer compulsory. Even with the chair, it is merely preferable that the person is on the list (although the practical effect of that is to ensure the chair usually is from the list). The rules are also elegantly translated for the most part.

So the new rules gave FIESP a bit of an edge locally?

They did for a while. Now others have followed suit, and meanwhile a few issues have been found in FIESP's rules.

What issues?

The rules could do with an update. It's been discovered that they're slightly unclear in a number of aspects, particularly on consolidation and joinder of third parties. This ambiguity then needs to either be solved by the secretariat or a hastily assembled special tribunal.

The fee structure could also do with some reform. It's thought that several practitioners have now declined to take up CIESP FIESP appointments because the money wouldn't be worth the knock-on loss caused by conflicts.

Users would also like to see a proper system for electronic filing of submissions; at the moment submissions need to be filed in hard copy to the secretariat, which seems a bit outdated.

Who runs it?

The centre is  part of a very serious organisation – the São Paulo Federation of Industries – and has an oversight board that includes many of Brazil's leading arbitration names (eg, Carlos Alberto Carmona, Luiz Olavo Baptista, Adriana Braghetta) and several former judges.