Introduction - Latin America

It is a fact that international arbitrations involving Latin American parties are on the rise. However, this does not necessarily mean that Latin American venues are increasingly gaining acceptance in the world.

Even though available reports suggest that the number of parties from Latin America and the Caribbean has grown significantly,¹ the number of international arbitrations seated in Latin America seems to have remained rather low.² Moreover, the 2010 International Arbitration Survey revealed that no Latin American venue is among the world’s favourite seats of arbitration and the ITA Inaugural Survey of Latin American Arbitral Institutions has shown that the vast majority of arbitrations administered by regional institutions are local arbitrations.³ The numbers speak for themselves.

Beyond these statistical results, the threshold issue seems to be whether Latin American venues may be a reliable option when choosing a seat of arbitration. In this vein, a qualitative analysis requires overcoming the traditional approach of considering Latin America as a single unit. States along the region - albeit ones that are mostly part of the civil law tradition - have different legal systems with different approaches to international arbitration. Once this diversity is acknowledged, it is possible to proceed with a legal analysis of the reliability of a defined venue. At least three core issues must be considered.

The first issue is the New York Convention. As a matter of fact, most Latin American states have ratified the Convention.⁴ Thus, the recognition of awards issued in arbitrations seated in the region will generally be subject to the treaty. But the Convention is not only relevant when a Latin American venue is being considered as a seat, but also if a prospective award may need to be enforced in the region. There are jurisdictions in which courts have had little experience with the application of the treaty (eg, Bolivia)⁵ or where the instrument has been interpreted inconsistently with its object and purpose (eg, Colombia before July 2011)⁶. In addition, attention should be drawn to the fact that exequatur proceedings may take years in various jurisdictions. Therefore, under certain circumstances (which should be analysed on a case-by-case basis), Latin American venues could be chosen just to avoid cumbersome local exequatur proceedings.

The second issue would be the arbitration law of the state where the venue is located. A number of Latin American states have adopted model law-based statutes for international arbitration.⁷ Some have followed an even more liberal approach than that of the model law.⁸ In other venues, however, international arbitration is subject to non-model law legislation.⁹ Several issues arise with these models. Extremely liberal models in countries with a relatively recent arbitration culture could generate, at least in non-locals, a similar suspicion than a law with a purely local approach. Dualist models may give rise to questions as to whether the local courts would strictly follow the provisions related to international arbitration or would fill lacunae with provisions of the local arbitration law. Even though legislation specifically governing international arbitration is often favourable to arbitration, such circumstance may have limited practical effects if less favourable provisions of domestic law are simultaneously applied by local courts. That is why certain jurisdictions have attempted to create a ‘self-contained’ international arbitration regime, by requiring the relevant provisions to be interpreted according to their international character and by establishing the inapplicability of other procedural provisions of local law (at least in certain matters).¹⁰

Last but not least, the third issue refers to local courts. Three points should be considered in this regard:

• The ways in which the courts approach the provisions set forth in international arbitration statutes and apply international conventions. Certain countries have a tradition of court decisions favourable to arbitration (Mexico); others seem to be following an entirely new path towards an arbitration-friendly interpretation of the law, at least as regards international arbitration (Chile, Colombia and Peru). Although it is impossible to predict how steady this approach will be, the new trend seems to get stronger every day.
• The approach of the courts to constitutional actions for the protection of fundamental rights. Even though such actions may be filed in a number of Latin American jurisdictions against decisions of arbitral tribunals or arbitration-related court decisions (eg, rulings on exequatur or annulment),¹¹ most of the publicly known cases correspond to local arbitrations where arbitrators are considered judges and part of the judicial system. Moreover, the reasons to give room to such actions differ substantially. While in some jurisdictions there may be a need to fill lacunae in the provisions (eg, because the grounds for annulment of awards are not sufficient to protect the right to present the case and be heard), in others the constitutional actions may be the result of a clear policy against arbitration.
• It should be noted, however, that the approach differs when it comes to international arbitration. Intervention of the courts in international arbitration on constitutional grounds could be considered the exception and not the rule in Latin America. For example, in a recent case, a local court dismissed an action for the protection of constitutional rights filed against a judicial decision enforcing an international arbitration agreement.¹²
• Judicial review. Many Latin American jurisdictions have adopted systems allowing a general constitutional control over statutory law. Thus, local constitutional courts may repeal or condition the applicability of arbitration-related norms. For example, in a decision dated 25 August 2004, the Chilean Constitutional Tribunal conditioned the constitutionality of certain provisions of the respective model law-based arbitration statute to the understanding that the constitutional powers allowing the Supreme Court of Justice to control all Chilean tribunals, as well as the constitutional actions in favour of those who may be affected by the application of the statute, remained unaffected.¹³

In sum, several countries in the region are moving towards being a friendly venue for international arbitration. But it requires time, and only time will tell if the present trend is steady. But someone would ask: What about now? Is now the time for Latin American venues? If a general answer is expected, I would be able to say, as Mark Twain once did: ‘I was gratified to be able to answer promptly and I did. I said I didn’t know.’¹⁴ If the underlying question is whether I would recommend a Latin American venue, my answer would depend both on the venue and on the specific case at issue. Indeed, no answer would be both general and accurate.

Notes

1. ICC Statistical Report, ICC Dispute Resolution Library, 2009, pp5-6.
2. This assertion is based on the information provided in the ICC Statistical Report, ICC Dispute Resolution Library, 2009, p13.
3. Queen Mary, University of London, 2010 International Arbitration Survey: Choices in International Arbitration, 2010, pp17-20; ITA, The Inaugural Survey of Latin American Arbitral Institutions, 2011, p12.
4. UNCITRAL, Convention on the Recognition and Enforcement of Foreign Arbitral Awards - Status [online] www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html.
5. In this regard, a recent report states: ‘[t]o date, the Supreme Court of Justice’s jurisprudence contains no ruling concerning the official recognition of an arbitral award issued outside Bolivia’s borders, and as such there is no indication how the Bolivian courts would interpret the international and local laws on enforcement’. Andrés Moreno, The Recognition and Enforcement of Foreign Arbitral Awards: The Bolivian Perspective, The Arbitration Review of the Americas 2012, pp30-33.
6. Since its decision in Semar v Sunward Overseas (20 November 1992), the Colombian Supreme Court of Justice had applied the grounds for denying recognition and enforcement listed in the New York Convention as additional to those set forth by the Code of Civil Procedure (articles 693 to 694). On 27 July 2011, when considering a request not to grant exequatur to a foreign ICDR award on several grounds set by the Code of Civil Procedure, the Court determined that recognition could only be denied in the cases exhaustively listed in article V of the treaty.
7. See, for example, Law No. 19.971, 29 September 2004 (Chile); Law 1563, 12 July 2012 (Colombia).
8. See, for example, Legislative Decree 1071, 28 June 2008 (Peru).
9. See, for example, National Code of Civil and Commercial Procedure (Argentina), 1969.
10. For example, under the new Colombian Statute of International Arbitration, the Code of Civil Procedure is inapplicable to the recognition of foreign arbitral awards: Law 1563, 12 July 2012 (Colombia), article 114.
11. The relationship between constitutional law and arbitration in Latin America is a far-reaching question beyond the scope of this brief presentation.
12. Supreme Court of Justice of Colombia, Compañía de Representaciones Médicas SA CTP Médica SA v Civil Chamber of the Superior Tribunal of Bogotá, 13 July 2011.
13. Constitutional Tribunal of Chile, File No. 420, 25 August 2004, sections 6, 16 & 17.
14. Mark Twain, Life on the Mississippi (1883), Harper & Brothers Publishers, 1917, p49.