SPECIALISTS IN INTERNATIONAL LAW ON LATIN AMERICA AND THE CARIBBEAN, S.C. www.sillac.com SILLAC WEB-SEMINAR SERIES PRESENTS WEB-SEMINAR 3 on Foreign Investment in Latin America and the Caribbean R. Leticia Cuevas lcuevas@sillac.com
This presentation covers: Commercial Arbitration National and International Covering public and private international law In Latin America and the Caribbean Some trade agreements that have been signed in Latin America and the Caribbean granting protection to foreign investment
Some trade agreements set aside a chapter for the settlement of disputes between the parties or in controversies between individudals and a State party Also covered here are regional local laws in Latin American/Caribbean jurisdictions Why?? While the number of regional free trade agreements (FTAs) has increased, there can be cases where there are no FTAs or agreements of promotion and protection of foreign investment (APPRIs); and Investors should be familiar with codes on arbitration at the regional level for the resolution of disputes.
I. Local jurisdiction In a 1994 comparative study on foreign investment by the Inter-American Development Bank (IADB), the study concluded that: countries tend to give foreign investors equal protections as is given to nationals bilateral trade agreements reciprocally protect foreign investment; foreign investors have a recourse to international arbitration by virtue of the APPRIs or FTAs elimination of the requirement to exhaust local remedies before resorting to the judicial protection
II. International jurisdiction In 1994, most IADB members had already joined or were about to join ICSID. Among other international commercial arbitration agreements mentioned are the NY Convention, UNCITRAL, NAFTA, and most recently, the TPP When the OPIC or MIGA are used, the investor has access to the settlement of disputes provided by these entities. MERCOSUR Member Countries are subject to protocols on ADR Andean Countries are subject to the ADR Administrative Procedures
III. Comments on international commercial arbitration in Latin America and its demand at the prospect of more foreign investment: Before the entry into force of Free Trade Agreements (FTAs) with the inclusion of Alternate Dispute Resolution (ADR) in the different FTAs and regional ones such as the MERCOSUR AND ANDEAN BLOCS, and CARICOM, there was concern about not having specific international commercial arbitration in civil commercial codes and procedures. The concern has been lessening with a series of FTAs, the sophistication of the structure of the MERCOSUR, and the increase in regional APPRIs, which have materialized. The Andean Community has its own mechanism to resolve commercial disputes http://www.comunidadandina.org/solcontroversias.aspx?fr=99
IV. Distinctions among the FTAs and their comparison with MERCOSUR Most types of trade agreements contain provisions to resolve disputes arising from business relationships: In MERCOSUR, Annex III of the Asuncion Treaty in 1991 contained provisional measures relating to the settlement of disputes. Subsequently, in an attempt to provide a more permanent measure, the Brasilia Protocol for the Settlement of Disputes and its regulations was introduced, but later replaced by the Olivos Protocol in 2004, which provided the long-sought permanent nature; In contrast to trade agreements like NAFTA and TPP, which contain provisions regulating disputes between the parties, and those of the individuals against any of the parties, in MERCOSUR, for example, concerning claims by individuals, these are processed under the protocol as a settlement of disputes between Member States.
Distinctions among the FTAs and their comparison with MERCOSUR Unlike MERCOSUR challenges, FTAs have provisions governing the resolution of disputes that arise between investors and signatories. For example, chapter N regulates the settlement of disputes between the parties within the FTA Canada- Chile, section II of chapter G on investment, however designated provisions that govern the resolution of disputes between a party and an investor of the other party. The TPP has this similarity. The MERCOSUR Olivos Protocol, which perfected the MERCOSUR ADR system in terms of permanency, is a dispute settlement system between member States; its Permanent Review Tribunal can hear and interpret a controversy when summoned by a member State involved in a controversy with any other member State.
V. Mechanisms for protection of foreign investment A. APPRIs are the acronym for Agreements for the Promotion and Reciprocal Protection of Foreign Investment Since the early nineties, some governments have been negotiating or have already signed APPRIs with countries outside the Region B. APPRIs are dynamic documents: To understand the dynamics of these instruments, we use the case of Mexico, which at the beginning of the IADB comparative study on foreign investment in 1994, Mexico responded that apart from free trade treaties signed up through that year, it had not held an APPRI with any other country By the end of 1999, Mexico had reported through its Commerce Secretariat (SECOFI, that it had signed and approved APPRIs with Spain (1995), Switzerland (1995), Argentina (1996), Union of Belgium and Luxembourg (1998), Germany (1998), Austria (1998), the Netherlands (1998). It also reported that it had signed APPRIs with Finland and France, and it was negotiating APPRIS with Cuba, United Kingdom, Italy, Sweden, and Uruguay.
Mechanisms for protection of foreign investment C. Local codes in the absence of APPRIs Absent an APPRI with a foreign investor country, a controversy is submitted to the national courts Foreign investors/representatives should be familiar with the regional laws governing arbitration To find whether arbitration is mandatory-- look to the arbitration clauses or the arbitral commitment data and sources. If there is no arbitration clause, parties can agree to submit it to arbitration In the absence of arbitration clause or agreement to submit their dispute to arbitration, the parties in Mexico have the recourse to file mercantile lawsuit as provided for in the Commerce Code, Book 5, or to the laws for local procedures.
Mechanisms for protection of foreign investment The Trans-Pacific Partnership (TPP) Agreement A multilateral trade agreement that can co-exist with other international trade agreements between the Parties, including WTO, bilateral, and regional agreements, in accordance with the TPP General Provisions Aside from its own Dispute Settlement under Chapter 28, the TPP contains ADR procedures in some of its chapters: - Investment under Chapter 9, which provides for neutral and transparent international arbitration of investment disputes According to IADB-INTAL, the TPP hinders the attempts of some MERCOSUR countries to influence the regulation of international investment. How?? The TPP has adopted the investor-state dispute settlement system (ISDS, for its acronym in English). A scheme, similar to APPRIs, which were signed by many countries in the 1990's and early 2000 Private investors can challenge States in international courts for the adoption of measures contrary to the commitments made in the agreements.
Mechanisms for protection of foreign investment Brazil APPRIs: While the members of MERCOSUR signed many APPRIs in Brazil, they were never official because they were never legislatively ratified Argentina and Venezuela APPRIs: Very questionable given the large number of complaints filed by foreign investors Brazil is promoting ACFIs the acronym for Agreements on Cooperation and Facilitation of Investments a new setup for bilateral agreements, which differ from the APPRIs in that: - As with the trade disputes, the ACFI, are brought by sovereign states - Grant more limited rights to foreign investors - Brazil proposing to endorse ACFIS within MERCOSUR - A possible more widespread acceptance of the Investor State Dispute Settlement (ISDS) in the TPP system and other mega agreements will reduce Brazil s ability to spread the ACFIs, which have been signed with several countries
VI. Argentina Local ADR Code/Law Law 22.434 - National Code of Civil and Commercial Procedure, March 16, 1981 - Treaty of Montevideo (from 1889 and 1940) litigation. - New York Convention 1958 - International Convention for Settlement of International Disputes (ICSID) 1965 - Panama Convention 1975 - MERCOSUR Las Leñas Protocol 1995 - MERCOSUR Agreement on Commercial International Arbitration: Bolivia & Chile
Bolivia Local ADR Code/Law: Law No. 1770- Bolivian Arbitration and Mediation Law - March 10, 1997 Signed Entered into force New York Convention 28 Apr. 1995 27 July 1995 [1] Panama Convention 2 Aug. 1983 29 Apr. 1999 [2] Montevideo Convention 2 Aug. 1983 7 Nov. 1998 [3] ICSID Convention 3 May 1991 Denounced
Brazil Local ADR Code/Law: Law No. 13,129/2015 - entered into force on July 27, 2015 Amends parts of the Brazilian Arbitration Law (Law No. 9,307/96) Arbitration can be used as dispute resolution for: - Property rights - Corporate disputes: Arbitration in bylaws, binding on all shareholder
Brazil Signed Entered into force Panama Convention Montevideo Convention Mercosur Las Leñas Protocol Civil, Labor, Commerce Administrative areas 30 Jan. 1975 27 Nov. 1995 [1] 8 May 1979 27 Dec. 1995 [2] 27 Jun. 1992 12 Nov. 1996
Brazil Signed Entered into force Mercosur Agreement on International Commercial Arbitration 8 Aug. 1998 4 May 2003 Protocol of Olivos for Dispute Resolution in Mercosur 18 Feb. 2002 10 Feb. 2004 New York Convention 7 Jun. 2002 5 Sept. 2002
Chile Local ADR Code/Law: - Law No. 19.971 - International Commercial Arbitration Law (UNCITRAL Model Law) - 29 Sept. 2004 (Sp.) - Code of Civil Procedure (Articles 242-251, 628-644) - 2000
Chile Signed Entered into force New York Convention 4 Sept. 1975 3 Dec. 1975 Panama Convention 30 Jan. 1975 17 May 1976 Montevideo Convention 8 May 1979 Not in force ICSID Convention 25 Jan. 1991 24 Oct. 1991
Latin American and Caribbean International & Local Codes Colombia Local ADR Code/Law: Law No 1563 of 2012 (Domestic and International Arbitration) Law No 315 of 1996 (International Arbitration) Law No 80, Art. 70-72 - October 28, 1993, (Arb. in State Contracts) Decree No. 2279 - October 7, 1989, amended by Law No. 23 of March 21 of 1991(Dom. Arb.) Decree 2651 - November 25, 1991 (Dom. Arb.) Law 446 - July 7, 1998 (Dom. Arb.) Decree 1818 - September 7, 1998 (Dom. Arb)
Latin American and Caribbean International & Local Codes Colombia Signed Entered into force New York Convention 25. Sep. 1979 24 Dec. 1979 Panama Convention 30. Jan. 1975 28 Jan. 1987 [1] Montevideo Convention 8 May 1979 10 Oct. 1981 [2] ICSID Convention 18 May 1993 14 Aug. 1997
Costa Rica Local Arbitration Code/Law Constitutional Article Law No 7727 Law on ADR and Promotion of Social Peace, December 9, 1997 Decree N o 27166-J Regulation for Chapter IV of Law on ADR and Promotion of Social Peace, October 27, 2004 Law No. 8937 on international commercial arbitration entered into force on May 25, 2011. This law only applies to international commercial arbitration, for which Costa Rica opted for a dualistic system, such as Chile and Colombia have done.
Costa Rica In addition to its national law on international arbitration, Costa Rica has adopted the following international arbitration conventions: Signed Entered into force New York Convention Jun. 10, 1958 Jan. 24, 1988 Panama Convention Jan. 30, 1975 Jan. 20, 1978 Montevideo Convention May 8, 1979 Not in force ICSID Convention Sept. 29, 1981 May 27, 1993
Dominican Republic Local Arbitration Code/Law New arbitration law enacted on December 19, 2008 and in force since December 30 2008 Signed Entered into force New York Convention N/A 10 Jul. 2002 Panama Convention 18 Apr. 1977 Not in force Montevideo Convention 8 May. 1979 Not in force ICSID Convention 20 Mar. 2000 Not in force
Ecuador Local Arbitration Code/Law Arbitration and Mediation Law (4 Sept. 1997) Organic Code for Production, Trade and Investment(29 Dec. 2010) 2008 Constitution Law of Ecuador (Articles 120, 190, 418, 422, 436, 438) 1998 Political Constitution of Ecuador (Article 191, 271)
Ecuador Signed Entered into force New York Convention 17 Dec. 1958 03 Apr. 1962 Panama Convention 30 Jan. 1975 22 Nov. 1991 Montevideo Convention 08 May 1979 01 July 1982 ICSID Convention 15 Jan. 1986 Not in force (denounced)
El Salvador Local Arbitration Code/Law Articles 23 and 146 of the Constitution Decree Law No. 914 - Meditation, Conciliation, and Arbitration Law - July 11, 2002 Articles 66, 67 and 1004 of the Commercial Code Article 56 of the Code of Civil Procedure
El Salvador Signed Entered into force New York Convention 10 Jun. 1958 27 May 1998 Panama Convention 30 Jan. 1975 10 Sept. 1980 [1] Montevideo Convention 11 Aug. 1980 Not in force ICSID Convention 9 Jun. 1982 5 Apr. 1984
Guatemala Local Arbitration Code/Law Law No. 67-95 - General Arbitration Law - 1995 Arbitration Law - 1995 Signed Entered into force New York Convention Panama Convention Montevideo Convention ICSID Convention N/A 19 Jun. 1984 30 Jan. 1975 19 Sept. 1986 [2] 8 May 1979 Not in force 9 Nov. 1995 20 Feb. 2003
Honduras Local Arbitration Code/Law Decreto 61 2000 - Ley de Conciliación y Arbitraje Signed Entered into force New York Convention 1 Jan. 2001 Panama Convention 30 Jan. 1975 22 Mar. 1979 Montevideo Convention 8 May 1979 Not in force ICSID Convention 28 May 1986 16 Mar. 1989
Jamaica Local Arbitration Code/Law The Arbitration Act, June 30, 1900, Last Amendment: 1969
Mexico Local Arbitration Code/Law Commercial Code - Title IV on Commercial Arbitration - 1993 Signed Entered into force New York Convention 14. Apr. 1971 13. July 1971 Panama Convention 27 Oct. 1977 26 Apr. 1978 [1] Montevideo Convention 2 Dec. 1986 12 July 1987 [2]
Nicaragua Local Arbitration Code/Law Law No. 540 - Ley de Mediación y Arbitraje - June 24, 2005 Signed Entered into force New York Convention 24 Sep. 2003 23 Dec. 2003 [1] Panama Convention 30 Jan. 1975 Not in force Montevideo Convention Not signed Not in force ICSID Convention 4 Feb. 1994 19 Apr. 1995 [2]
Panama Local Arbitration Code/Law Decree Law No. 5- General Regime of Conciliation, Arbitration, and Mediation - July 8, 1999, amended by Law No. 15 of May 22, 2006 Signed Entered into force New York Convention 10 Oct. 1984 8 Jan. 1985 [1] Panama Convention 30 Jan. 1975 17 Dec. 1975 [2] Montevideo Convention 8 May 1979 Not in force ICSID Convention 22 Nov. 1995 8 May 1996 [3]
Paraguay Local Arbitration Code/Law Law No. 1879/02 for Arbitration and Mediation (the Paraguay Arbitration Law) - 2002 Signed Entered into force New York Convention 8 Oct. 1997 6 Jan. 1998 Panama Convention 24 Nov. 1976 14 Jan. 1977 [1] Montevideo Convention 8 May 1979 5 July 1985 ICSID Convention 27 Jul. 1981 6 Feb. 1983
Peru Local Arbitration Code/Law Legislative Decree No. 1071- General Arbitration Law Sept. 1, 2008 Signed Entered into force New York Convention 7 Jul. 1988 5 Oct. 1988 Panama Convention 21 Apr. 1988 21 Jun. 1989 [2] Montevideo Convention 8 May 1979 14 Jun. 1980 [3] ICSID Convention 4 Sep. 1991 9 Sep. 1993
Uruguay Local Arbitration Code/Law Law No. 15.982- Code of General del Procedure - Title VIII Arbitral Process Signed Entered into force New York Convention 30 Mar. 1983 28 Jun. 1983 Panama Convention 30 Jan. 1975 25 May 1977 Montevideo Convention 8 May 1979 14 May 1980 ICSID Convention 28 May 1992 8 Sep. 2000
Venezuela Local Arbitration Code/Law Commercial Arbitration Act 7 Apr. 1998 Investors are subject to specific legal frameworks Signed Entered into force New York Convention 8 Feb. 1995 9 May 1995 Panama Convention 30 Jan. 1975 15 June 1985 Montevideo Convention 8 May 1979 30 Mar. 1985 ICSID Convention 18 Aug. 1993 Denounced
Venezuela Local Arbitration Code/Law Official Gazette of the Bolivarian Republic of Venezuela No. 6.152 special date 18 November 2014, was published the Decree N through 1.438 which dictates the decree with rank and force of law of foreign investment. This decree aims to establish the principles, policies and procedures governing the investor and foreign productive investment in goods and services in any of its categories.
Venezuela Local Arbitration Code/Law The Official Gazette of the Bolivarian Republic of Venezuela No. 6.152 special date 18 November 2014, published Decree No. through 1.438 which provides for a decree with rank and force of law on foreign investment. This decree aims to establish the principles, policies and procedures governing the investor and foreign productive investment in goods and services in any of its categories. The subjects for the application of the decree are: 1) foreign companies and its affiliates, subsidiaries or linked, governed or not by conventions and international treaties, as well as other forms of organization foreign economic and productive purposes, carrying out investments in the national territory; 2) large national companies, whose objectives and performance are subject to a strategic plan of two or more States, which ensure the prominence of popular power running investments of mutual interest through public companies, mixed, forms cooperatives and joint administration projects, strengthening solidarity between peoples and enhancing their productive development; (3) national private, public and mixed companies, and its affiliates, subsidiaries or related, governed or not by conventions and international treaties, and other organizations with economic and productive purposes, recipients of foreign investment, provided for in the legal system; (4) persons natural, domestic or foreign, domiciled abroad, carrying out foreign investment in the national territory; and (5) natural foreign persons resident in the country carrying out foreign investment..
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