Recent Developments in Key Latin American Jurisdictions to Attract International Commercial Arbitration

By Burnett, Henry | American University Business Law Review, January 3, 2016 | Go to article overview

Recent Developments in Key Latin American Jurisdictions to Attract International Commercial Arbitration


Burnett, Henry, American University Business Law Review


Introduction

Although there is a long tradition of using arbitration to resolve commercial disputes in Latin America, in recent years, most Latin American jurisdictions have revised or amended their national arbitration laws to make their jurisdictions even friendlier toward and supportive of arbitration as a method of alternative dispute settlement. This trend suggests that Latin American jurisdictions are even more committed to using arbitration to resolve commercial disputes, especially given the backlog of cases being litigated in the national courts.

Second, it is insufficient to look at the arbitration laws as they are written in the books to assess whether a jurisdiction is supportive of arbitration. When advising a client about seating an arbitration, in a particular Latin American jurisdiction, one must assess the attitude of the judiciary to determine the level of respect given to the arbitral process and the degree of judicial involvement (or interference) with the arbitral process. In this regard, a review of recent case law reveals that there is generally healthy support on the part of national judiciaries toward arbitration.

Third, there is a proliferation and flourishing of arbitration institutions throughout Latin America. This may be regarded as a sign that the business and legal communities believe that arbitration will be used more frequently to resolve commercial disputes. However, it is insufficient to simply look at the number of arbitral institutions in a particular jurisdiction to assess its local arbitration culture. Rather, one must be more sophisticated in assessing the relevance and use of the various institutions, which can be accomplished by examining their institutional rules and practices; reviewing their caseloads, including the types of disputes they hear and examining the identities of the parties in those cases to determine whether the institution deals primarily with domestic, regional, or international disputes.

Fourth, the use of mediation is in its relative infancy compared to the use of arbitration as a mechanism for alternative dispute resolution. However, it is likely that, over the course of the twenty-first century, mediation will become a more popular form of alternative dispute resolution in Latin America. In part, this move toward mediation will be driven by costs, as international arbitration and litigation practices are becoming increasingly expensive. Accordingly, it is likely that parties will turn to mediation in an attempt to reach a compromise before continuing down the path of binding dispute settlement (whether before a court or an arbitral tribunal). In some cases, legislation in various jurisdictions (for example, Brazil) will require the parties to engage in good faith mediation in complex commercial cases before proceeding to litigation. Thus, it is likely that we will see more recourse to mediation in Latin America than has previously been witnessed.

II. Arbitration Laws in Latin America: Overhaul and FineTuning of Prior Legislation

Arbitration is by no means a new method of dispute resolution in Latin America. Indeed, the use of arbitration to resolve a wide range of disputes, both inter-state and private commercial disputes, dates back centuries in some Latin American jurisdictions. Nevertheless, it was not until the twentieth century that arbitration became codified in the national legislations of most Latin American jurisdictions as a viable mechanism to resolve commercial disputes. In particular, the market-oriented reforms witnessed in a number of Latin American jurisdictions in the last quarter of the twentieth century brought an increased focus on improving the use and availability of arbitration to resolve commercial disputes. During this period of reform, many Latin American jurisdictions signed and ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") and promulgated national arbitration laws that were based in large part on the UNCITRAL Model Law on International Commercial Arbitration of 1985. …

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