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Guide to Regional Arbitration (volume 8 - 2020)

Whitelist / Institutions Worth a Closer Look - Latin America & the Caribbean

23 January 2020

Overview

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

For a start, there are lots of them: 165 around the region, according to one count (the ITA’s survey of Latin American arbitral institutions). Why so many? Some is faddism by governments. But there’s an element of necessity at work too. Domestic arbitration in parts of Latin America has become the de facto conflict-solving mechanism, replacing local courts that are either not trusted or too slow. This is most apparent in Peru, where the government itself has “sacked” the court system for those very reasons and made arbitration mandatory in all government contracts.

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

So a counterparty is pretty likely to suggest a Latin American provider. Should you resist? Arguably, no. Arbitrating on the ground in Latin America can be perfectly productive – particularly in Peru, Colombia, Chile, Brazil and Mexico.

There, 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 – are seldom seen in the international context. A vote at GAR Live New York in 2013 found that more than half of the audience believed Latin American seats posed a practical alternative to New York, Paris, Miami, Madrid and London in the eyes of local business.

Some enlightened international companies are wise to 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 from a client about a 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 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.

White List

  • Centre for Arbitration and Conciliation of the Chamber of Commerce of Bogotá (CAC-CCB)
  • Centre of Arbitration and Mediation of the Brazil-Canada Chamber of Commerce (CAM-CCBC)
  • Arbitration and Mediation Centre of the Santiago Chamber of Commerce (CAM Santiago)
  • Mediation and Arbitration Centre of the Mexico City National Chamber of Commerce (CANACO)
  • Chamber of Conciliation Mediation and Arbitration of São Paulo (CIESP/FIESP)

Worth a Closer Look

  • Mexico Arbitration Centre (CAM)
  • Lima Chamber of Commerce (LCC)

White List

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?

Simple. The CAC–CCB is a serious player, with a huge caseload.

How huge?

In 2016, it registered 349 new cases (the most recent year for which figures are available). And not all low-value: claim values range between US$20 million and US$200 million. It has come to dominate arbitration in Colombia.

Is arbitration popular in Colombia?

Yes. In many ways, it has replaced litigation. Which isn’t always a good thing.

How so?

People stopped using the court system because it was clunky and untrustworthy. And the court system duly bit back. Local judges, protective of their role, reduced the space allowed for arbitration by bending Colombia’s arbitration law, to the point where it became extremely arbitration-unfriendly. The result was something of a paradox. Colombia had more arbitration than anywhere else in Latin America, and also one of the worst arbitration laws.

Is that no longer the case?

No. It has enacted a new law and things are much better. There are separate chapters for domestic and international arbitration, to ensure that if the courts seek to intrude again, at least it won’t affect international cases. 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 judges will bite back if excluded too much. But the message seems to have got through. And rightly. Domestic and international arbitration are different creatures and don’t need the same degree of oversight. The early decisions under the international part of the act are all reportedly as exemplary.

So are any international cases taking place at the centre?

Very few (just two cases were registered in 2017 – the last year for which there are figures). But it’s still fair to say that the CAC-CCB is pretty international.

What makes it international?

Many of the local cases in fact have a foreign element; featuring, say, a subsidiary of an international business. The centre also runs a School of International Arbitration, which trains 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 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 expand that?

It wouldn’t hurt. The bulk of the arbitrators appointed are Colombian (with a few from the US and France).

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 63 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 (and was the recipient of 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 latest 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 that 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 CAM-CCBC?

There are indeed a lot – more than 80. CAM–CCBC stands out because it is experienced (it was founded in 1979) and has a following (98 new cases in 2017; 112 in 2016 – the last year for which figures are available). Since being founded it’s heard 981 cases – 50% of those in the past five years. It’s also been something of a pioneer. Plus, it is ambitious and wants an international name.

Is it not very international?

There have been issues on this score. But that’s true for all Brazilian institutions.

Problems that foreign users encounter include poorly translated versions of the rules, monolingual staff (only 4% of cases at CAM–CCBC were conducted in a foreign language as of 2017) and a universal insistence on the use of approved arbitrator lists, which include the same handful of names at every institution. In 2016, only 14% of the cases counted as “international”. In 2018 that fell to 2%.

Sounds like reasons to avoid . . .

Au contraire. When working in their own language, several Brazilian providers are quite good. The CAM–CCBC, for example, which is one of those, has an ISO certification for its quality of service, as well as 30 years’ experience administrating cases. In its comfort zone, it very much knows what it’s doing.

Why would international parties ever go there?

Under the law, there is a certain enforcement upside – it is a lot quicker if you’ve been heard in Brazil. It’s also cheaper. Doing the work in Brazil avoids a substantial currency remittance tax (up to 30%) by not having to send any fees abroad.

The main downside is having to use an approved arbitrator list.

Do all Brazilian institutions use an approved list system?

Yes. The CAM–CCBC, however, uses a more diluted form.

What is this “diluted” form?

It means parties have full freedom on whom they appoint. He or she doesn’t have to be on the approved list. Ditto for the chair, with the caveat that in their case being on the list is “preferable”. In practice, this means the chair is always appointed from the list.

But it is a start, and better than you get at most other Brazilian providers. Helpfully, too, the CAM–CCBC has expanded its list – greatly – from the 30 or so usual Brazilian suspects of a few years ago to a more diverse list of 70 – including a few international names. Recognisable names 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 task force 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?

Rewriting the rules, bringing in some international luminaries and increasing the outreach programme.

What’s the status of those ideas?

Largely done! A new set of rules was released in January 2012. Meanwhile, the institution and former president, Frederico Straube, have hit the road in pursuit of international connections. They’ve even begun sending students to Vienna for the Vis Moot.

It has continued to ring the changes. It appointed a new board of directors in May 2015, which includes two international names: Yves Derains and Maurício Gomm Santos (who is of Brazilian extraction).

Does the CAM–CCBC “brand” mean anything with local judges? Will my award be more readily accepted if I go there?

There’s no evidence to suggest that. But nor is there for any other Brazilian institution.

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

Why are you white-listing a Chilean centre? Even in Latin America, Chile is pretty remote.

Yes, for those outside Latin America, Chile seems remote. Within the region it’s more manageable, and CAM Santiago can’t be ignored. It’s emerging as a real force.

How so?

Aside from Miami, it’s probably the most popular place to choose for Latin American disputes.

What’s led to that?

Chile is one of the best seats on the continent, especially regarded for its strict principles on governance and corruption. And, as an institution, CAM Santiago has one of the longest track records of any Latin American provider. Since starting in 1992, it has handled north of 1,600 cases.

How many cases does it get per year?

Around 150 to 170.

What sort of size?

Many are small, but it has regular items in the US$100 million range, usually infrastructure-related. About half its work is related to either construction or shareholder agreements. Those cases are never trivial.

What’s more, the government of Ecuador sends investor–state matters there.

Does it?

Absolutely. It’s now done so several times.

Who runs it?

Herman Chadwick Piñera is the president, having replaced Sergio Urrejola Mönckeberg. Macarena Leletier Velascom is executive director. She leads a staff of seven.

There’s also an oversight council of eight senior figures, none of whom can be appointed as arbitrators in any CAM Santiago case unless directly requested by the parties. It serves as the scrutiny body.

Is much of the work international?

About 10%, according to the most recent statistics. But that still equates to 15 to 17 cases a year. Parties from the US, Brazil, Ecuador, China, Switzerland, the British Virgin Islands, Mexico, Germany, India and Korea have recently been there.

And who appoints arbitrators?

The parties; although their hands are somewhat bound by the remuneration levels, which are below the international norm.

Are there any pitfalls for the unwary?

Pitfall may not be the right word but CAM Santiago certainly has an unusual quirk. It publishes 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 so. They’re from 2006. But, as Chile is updating its arbitration law (the previous law dated from 1875) it’s expected that CAM will revise them soon. It’s pretty good at being on the front foot.

A bit of a go-getter, then?

Definitely. It views one of its jobs as promoting Chile as a seat – and does much to that end. It’s organised partnerships with the School of International Arbitration at Queen Mary, University of London; the Institute of Transnational Arbitration; and, most recently, CIArb. It even submits articles to GAR on Chilean case law, which is a simple thing, but no other local arbitral institution has ever thought to do so – and we’ve been around coming up for 12 years.

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 can trace its roots to 1874. Not all of its guises were successful, though. It took on its current legal identity in 2000, which is when it began to gain some momentum.

What changed in 2000?

A merger with Mexico’s Commission on Mediation and Arbitration, which comprised 20 local arbitration luminaries – including José María Abascal Zamora, Claus von Wobeser and Luis Enrique Graham, whose names will resonate with many readers.

The commission became the backstop for CANOCO’s work: the oversight role. (Von Wobeser has since left, and Roberto Rendón is the president.) The merger saw CANACO improve both its rules and case management.

What are the rules like now?

Pretty modern. They adhere to the UNCITRAL principles, with popular options such as emergency arbitrators, provisional measures and a superfast procedure for small claims.

Is it busy?

It depends when you mean. Despite its long life, CANACO has only administered about 100 arbitrations; but most of those have come in the past five years. It seems to be getting around 11 cases a year, of which at least one is international.

If Mexico were more popular as a seat, it might be doing rather well. Unfortunately, it’s not (too easy to get injunctions against arbitrators). But as an institution it is in good shape.

What are its strengths?

The calibre of the practitioners on the commission. A number of them are also close to the ICC, which affords a good understanding of common issues and case handling. It also has a cooperation agreement with the ICDR (with which it partners on an annual symposium), and good, well-liked staff.

On top of that, it is allied 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. The have full autonomy over appointment. CANACO itself maintains a list of about 100 names from which it will propose arbitrators (using the list system), when required.

Are there any pitfalls to beware of?

Watch out for the small claims procedure. It kicks in automatically if the sum is below a certain size and gives you merely a decision, rather than a reasoned award. But the threshold is really very low (claims of under US$45,000), so this is more of a hypothetical concern.

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

Why is it white-listed?

It’s another institution that, within Brazil, is a bit of a leader when it comes to things such as approved lists. It was the first to give parties full freedom over whom they appoint (though as with CAM-CCBC, it doesn’t quite work this way when it comes to the chair).

CIESP/FIESP is also one of the busier centres. In 2018, it registered 59 new cases (10 more than in 2017), bringing the total number of arbitration cases administered since inception to 580. to 521. (which one?)

What’s wrong with appointing from a list?

Lists are fine, as long as they have people the parties want; Brazilian lists tend not to if you’re an international party. They mainly feature a small pool of Brazilians.

What’s FIESP replaced it with?

Unfettered party autonomy. Under the current rules (released in 2013) the list is sent out but is no longer compulsory. Even with the chair, it is merely “preferable” that he or she is approved (in practice this means all chairs are on the list).

The rules are also elegantly translated for the most part. These changes gave FIESP something of an edge – for a while.

Only for a while?

Yes. Others soon followed suit. Meanwhile, some issues have surfaced in those 2013 rules.

What issues?

It turns out they are ambiguous when it comes to how consolidation and joinder of third parties should work. As a result, either the secretariat or a hastily assembled special tribunal has to intervene in certain cases.

The fee structure also doesn’t seem to be working that well. Anecdotally, several practitioners have declined to take up CIESP/FIESP appointments because the money wouldn’t compensate for the loss of future business caused by subsequent conflicts.

There’s also, as yet, no system of electronic filing. Everything needs to be done in hard copy to the secretariat, which is 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.

Worth a Closer Look

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

When was it founded?

1997.

Why is it worth a closer look?

It’s a strong and well-run organisation with sensible rules derived from the 1998 ICC Rules of Arbitration.

Who should get the credit?

For many years it was run by the respected Carolina Castellanos López (still on its general council). The current president is Eduardo Magallón Gómez. Sylvia Sámano Beristain is the secretary general.

It also has an oversight council – “general council” - of illustrious names. At one point this included two former Supreme Court presidents, Ulises Schmill Ordóñez and Carlos de Silva Nava (deceased), and the late Guillermo Aguilar-Álvarez, the former chief legal counsel to Mexico during NAFTA negotiations. The international component of the council now comprises Bernardo Cremades and Nigel Blackaby.

What does the council do?

Its role is similar to the ICC’s Court: it affirms and removes arbitrators, and scrutinises awards. If the dispute is under Mexican law, then the scrutiny function is doubly useful, as it tends to ensure the award is compliant with mandatory Mexican law, which smooths enforcement.

What other things make it popular?

By local standards it is a highly professional and responsive organisation, if a bit on the small side. And it’s 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 11 years. What’s more, no CAM arbitral award has ever been annulled by either a Mexican or a foreign court, or refused on enforcement.

And how big are the cases going there?

The largest ever was US$750 million. Since 2012, though, the average value has been US$11 million.

What sorts of disputes go there?

All types. The most common categories in its reports have been telecoms, franchising, construction, energy and IP.

Who uses it, aside from Mexicans?

To date, 12% of CAM parties have been foreign. Recent users have hailed from the US, Switzerland, Germany, Spain, Scotland and Guatemala.

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

Mexican nationals for the most part, and occasionally a US lawyer. But it says it is trying to expand its arbitrator pool.

Do parties control the appointment process?

Yes, although the appointee has to be approved by the general council. As is often the case, their hands are a little tied by the fees, which make attracting top talent difficult.

Any negatives?

Concerns have been voiced about the size of its staff. Officially it has five full-time lawyers doing the case work, all multilingual; but there is talk that the actual number is a bit lower. The council occasionally seems to be less than expert on arbitral procedure.

Its bigger problem is that it’s in Mexico – which is declining in usefulness as a seat.

What’s wrong with Mexico as a seat?

Rising court interference. A number of arbitrators (usually sitting solo) have now had to suspend proceedings indefinitely after receiving “personal injunctions”. It doesn’t appear possible to ignore such orders without risking implications described as “severe”. As a result, lots of Mexican activity has moved to Miami.

Arbitrators have been fighting back – and a series of rulings from federal and constitutional courts have been helpful. But it remains a challenging seat – for now.

What’s the most popular institution in Mexico?

It’s still the ICC. Not always for the right reasons. Legend has it that many Mexican lawyers think when they put “ICC” in a contract, they’re automatically selecting a hearing in Paris, which, of course, isn’t the case.

Lima Chamber of Commerce’s Arbitration Centre

Why’s it worth a closer look?

It’s one of the busiest centres in Latin America, largely because of lack of confidence in the local court system.

How many cases does it hear per year?

It’s managed some 3,900 in 24 years.

That’s a lot – how come so many?

Peruvian society has fallen out of love with its own court system, over concerns with corruption and impossible delays. Curiously, the government itself led the way. Since the early 2000s, it has insisted that all of its commercial business goes to arbitration. So many of those cases end up at the Lima Chamber of Commerce.

How international is it?

Reasonably. As well as handling the odd international case, it organises a popular (and big) international conference in Lima each year, which brings its work to wider attention, and exposes it to what’s hot elsewhere. Partly as a result, it now has one of the better approved arbitrator lists if you’re looking for international talent.

In 2017, the centre released new rules that are more suited to international disputes.

So is it safe to use?

It should certainly be considered. It’s one of the busiest institutions in Latin America, with one of the most acceptable approved lists. As one source puts it, if the option of Lima comes up, don’t automatically dismiss it! It could be just what you need.