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Guide To Regional Arbitration (volume 4 - 2016)

Institutions Worth a Closer Look: Latin America & the Caribbean

03 November 2015

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

First, there are lots: 165, according to one count (see the ITA’s survey of Latin American arbitral institutions). Why so many? Part of it is faddism by governments. But another part is necessity. Domestic arbitration in Latin America, as in other parts of the world, has come to serve as the main problem-solving mechanism, local courts being either too slow or not trusted. See, for example, Peru, where the government has “sacked” the court system (arbitration is mandatory in all government contracts).

Second, Latin American business likes to keep things in the region. Gone is the era of the Calvo Doctrine (which decreed everything about Latin America should be decided from within Latin America), but a strong sense of pride and regional exceptionalism remains.

So the suggestion of a Latin American provider is very likely to come at some point: should you resist it? Arguably, no. Things are far from scary when arbitrating in Latin America – at least in more stable economies such as Peru, Colombia, Chile, Brazil and Mexico.

Standards of control used to police domestic cases have been largely walled off from the international part of the arbitration systems, and guerrilla tactics such as amparos also don’t seem to blight 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 we’re talking chunky work too. Claim values range between US$20 million and US$200 million at the last count.

Wow. Where does all that come from?

Local commerce. 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 drove it forwards – the court system – at a certain point began to impede it. Local judges started to claw back some of the space allowed for arbitration (out of rivalry, in some people’s telling). As a result, Colombia had, at one point, one of the busiest Latin arbitration scenes and simultaneously one of the region’s worst arbitration laws.

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; 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 (and recipient of a GAR special recognition award in 2013). But it’s not a one-man show. There’s also 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.

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?

It’s true that there are a lot: actually 80 or so. The CAM–CCBC stands out for being busy (37 new cases started in the first half of 2014 alone) and progressive.

Progressive?

Yes. It’s keen to build itself an international name.

Is it not very international then?

None of the Brazilian institutions are. Problems their foreign users face include poorly translated versions of rules, staff unable to work in English and a universal insistence on the use of approved arbitrator lists, which frankly tend to look pretty much the same from one institution to another.

That all sounds less than ideal.

Don’t get the wrong impression. When working in their own language, and for Brazilian parties, they’re not bad at all – the well-run ones at least. The CAM-CCBC, for example, has an ISO certification for its quality of service on top of 30 years’ experience of administrating cases.

There’s at least one other reason to use a local provider 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. There’s arguably an enforcement advantage to having a local (rather than international) award, but it’s a bit subtle to get into here. All it means is that local awards tend to be enforced faster.

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?

Pretty much, with one major exception. That said, the CAM–CCBC is one of the better ones on this score.

What’s the exception?

The CAM–CCBC has now ditched using a list for co-arbitrators. Parties have full freedom. The chair still needs to be on its list but helpfully, the list in question has expanded greatly – from around 30 of the usual Brazilian suspects, so to speak, to an aspirational 100 individuals, many of whom won’t be Brazilian. But these new people have to be vetted before inclusion and it takes a while.

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.

Are there any pitfalls?

Make sure you have a copy of the latest rules.

Centro de Arbitraje de México (mexico Arbitration Centre) (CAM)

When was it founded?

1997.

Why is it being white-listed?

It’s a strong and well-run organisation with well-drafted rules, based on the 1998 ICC Rules of Arbitration.

Where does that strength come from?

The team. Carolina Castellanos López, former secretary general, was a great leader for the centre. Her replacement is Myriam Rosales, formerly of the transparency board for contracting and public works. Added to this is the centre’s general council, which includes two former Supreme Court justices and several senior Mexican arbitration specialists.

Who are some of the people on the council?

Ulises Schmill Ordóñez and Carlos de Silva y Nava (both of whom have acted as former president of the Supreme Court); and Guillermo Aguilar-Álvarez (former chief legal counsel to Mexico during NAFTA negotiations), to name but three.

What does the council actually do?

Its role is similar to the ICC’s Court: affirming and removing arbitrators, scrutinising awards. If the dispute is under Mexican law, then the scrutiny function is doubly useful.

How so?

All those former judges mean it provides pretty good quality control – on the content of the law too, not just the arbitral process. It’s one reason that people like using it.

What are the other reasons?

For one, the fact that by local standards it is a highly professional and responsive organisation. And very affordable.

What’s its track record like?

It’s not the busiest – it gets about 12 new cases a year. But that figure has been steady for the past 10 years. What’s more, no CAM arbitral award has ever been annulled by either a Mexican or a foreign court, or refused for enforcement.

And how big are the cases going there?

The largest has been about US$750 million. The average value, though, is about US$11 million.

What are the cases about?

The most commonly seen subjects are telecoms, franchising, construction, energy and IP, according to the most recent statistics.

Who uses it, aside from Mexicans?

12 per cent of CAM parties to date have been foreign. Recent users have hailed from US, Switzerland, Germany, Spain, Scotland and Guatemala.

What sort of person does CAM Mexico appoint as an arbitrator?

Mexican nationals for the most part, with the occasional US lawyer. It’s trying to expand its arbitrator pool.

Do parties control the appointment process?

Yes, although the appointee has to be approved by the general council. One obstacle is the fees, which are a little lower than top arbitrators may like. It may have to do something about that if it’s to realise its ambitions.

What are its ambitions?

Well, it’s aiming to become a bigger player, both regionally and domestically. With an eye on the domestic market it has entered an alliance with the Mexican Franchising Board to hear those cases. It’s also planning to roll out a mediation service soon, as well as a coaching programme.

How big is the staff?

It has five full-time lawyers running case work. Between them they speak English, Spanish and French.

Does it give back to its community?

Yes. As well as running regular training courses every year, CAM is the only arbitral institution in Latin America to hold its own moot. The moot has been going 13 years (modelled on the Vis Moot).

Is it non-profit?

Yes.

Arbitration and Mediation Centre of the Santiago Chamber of Commerce (CAM Santiago)

Why are you white-listing a Chilean centre? Surely it’s too far from anywhere to be useful?

Distance is relative. For anyone outside Latin America, Chile is not an obvious choice. But within the region, CAM Santiago is emerging as a real force.

Seriously?

Absolutely. The government of Ecuador has selected it several times now to hear investor disputes.

Isn’t that just because Ecuador won’t use ICSID?

Yes but don’t dismiss CAM Santiago on that basis. It sits in one of the best seats in the continent, with very strict principles when comes to governance standards and corruption. And it has a wealth of experience.

What’s “a wealth” in this context?

Since starting in 1992, it has handled north of 1,600 cases. Nowadays it gets 150 to 170 new cases a year.

Are they all small cases?

Far from it. Some of course are – 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, when things began to pick up.

What changed in 2000?

It joined forces 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.

At this point, it’s on about 11 new cases a year, with at least one of those likely to be international. But its backers hope the upwards trend will continue as various marketing efforts pay off.

What sort of things has it being doing?

It signed a cooperation agreement with the ICDR (with whom it’s also been partnering on a symposium for a few years). It also now runs a young arbitrators’ forum (in partnership with CAM Mexico, profiled above). Most significantly, it has close links with the Mexico City National Chamber of Commerce, whose membership should be a tremendous resource.

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 $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?

For being innovative, mainly.

What’s it done that’s so innovative?

Released new rules.

That doesn’t sound like much.

Maybe not – but in doing so, it in fact became 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. It’s just that there’s no longer an obligation to appoint from it. Even with the chair, it is merely preferable that the person is on the list.

The rules are also elegantly translated and clear on important points such as what happens in the event of a challenge to an arbitrator.

Why does that matter?

Both translation and vagueness are complaints that have been voiced about Brazilian arbitration centres in the past, along with gripes about staff not being able to work in English and maladministration.

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

That’s the idea. A few other providers have tried to expand their lists, adding more international names. As far as GAR is aware, this is the first major local provider to ditch it completely.

How, if the list still gets sent out?

Well, the list hasn’t actually been done away with –it’s actually been expanded. It now includes several members of the Brazilian arbitration bar’s younger generation. But the main point is, it’s more what you’d call a guideline.

Are the new rules in effect?

Yes, as of 1 August 2013.

How was FIESP doing before it changed the rules?

Not too badly. It benefits from being 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. Between 2007 and 2009 its caseload jumped from 12 to 43 matters. Now it’s at a respectable 35 or so cases a year; and with the new rules it hopes to increase that further.

Is that likely?

There’s every chance. At present, lots of work that could be handled by Brazilian providers goes abroad (to places such as the ICC). That’s a bit odd, because Brazilian providers are actually cheaper. FIESP will be hoping these changes tilt the balance and bring a portion of that work back.