Recent Developments in Latin America Jeffery Commission ICC Canada International Arbitration Conference 7 November 2014
I. INVESTOR-STATE ARBITRATION 1
1. GEOGRAPHIC DISTRIBUTION OF NEW ICSID CASES REGISTERED IN FY2014 ICSID FY South America, Central America and the Caribbean 2014 14% 2013 28% 2012 26% 2011 31% 2010 49% Historically, in all cases registered by ICSID (as of 31 December 2013), 34% have involved parties from Latin America (South America, Central America and the Caribbean). Source: ICSID Annual Reports 2010 2014; The ICSID Caseload: Statistics (Issue 2014-1). 2
2. AWARDS RENDERED IN ICSID CASES IN FY2014 Awards declining jurisdiction: Highbury International AVV and Ramstein Trading Inc. v. Bolivarian Republic of Venezuela (Award, 26 September 2013); Nova Scotia Power Incorporated v. Bolivarian Republic of Venezuela (Award, 30 April 2014). Awards rejecting all of the investors claims: Renée Rose Levy de Levi v. Republic of Peru (Award, 26 February 2014). Awards upholding the investors claim in part or in full: Total S.A. v. The Argentine Republic (Award, 27 November 2013); TECO Guatemala Holdings, LLC v. Republic of Guatemala (Award, 19 December 2013); SAUR International v. Argentine Republic (Award, 22 May 2014). Awards rendered after FY2014: Gold Reserve Inc. v. Bolivarian Republic of Venezuela (Award, 22 September 2014); Venezuela Holdings B.V. and others v. Bolivarian Republic of Venezuela (Award, 9 October 2014). Source: ICSID Annual Report 2014. 3
3. MATTERS OF PROCEDURE IN ICSID CASES INVOLVING LATIN AMERICAN STATES: OVERVIEW The average duration of an ICSID arbitration is 3.4 years.* Phase 1: the average time from filing of the request to constitution of the tribunal is typically between 4 7 months. Phase 2: the average duration between the first session and the final hearing is approximately 2 years. Requests for Bifurcation Challenges to Arbitrators Requests for Reconsideration Phase 3: the average time from the end of the final hearing until issuance of an award is approximately 11 months. Annulment Applications * As of 10 September 2014, there were 289 concluded ICSID arbitrations, 172 of which resulted in final awards. The average duration of those 172 concluded ICSID arbitrations was 3.4 years from the registration of the request to final award (not including annulment proceedings, if any). Source: ICSID Annual Report 2014; Procedural Issues in International Investment Arbitration (Oxford University Press, 2015). 4
3. MATTERS OF PROCEDURE IN ICSID CASES INVOLVING LATIN AMERICAN STATES: BIFURCATION In the period from 2010 to 2014, there have been 51 decisions/orders rendered by ICSID Tribunals on requests for bifurcation in arbitration proceedings, 14 of which (27%) were requested by Latin American respondents (Venezuela 11; Argentina 2; Bolivia 1). The majority of cases were bifurcated (separate jurisdiction and merits phases), and in some cases trifurcated (separate jurisdiction, merits and damages phases), although very few of these decisions or orders are publicly available. A bifurcated (or trifurcated) procedure can significantly add to the duration of an ICSID arbitration: 56 days, on average, between the filing of the request for bifurcation (or trifurcation) and the decision on that request; and 12 16 months, on average, for each separate phase. Source: Procedural Issues in International Investment Arbitration (Oxford University Press, 2015). 5
3. MATTERS OF PROCEDURE IN ICSID CASES INVOLVING LATIN AMERICAN STATES: CHALLENGES 17 of the 19 proposals for disqualification (89%) in FY2014 involved a Latin American respondent (15 of the 17 challenges were advanced by Latin American respondents: Venezuela (9), Argentina (4), Ecuador (1), Chile (1)). Recent trends include: challenges to two or even three members of a panel; challenges to the same arbitrator repeatedly; challenges by a party to the arbitrator they appointed; and challenges proposed during a final hearing. A proposal for disqualification can add 99 days, on average, to an arbitration proceeding between the filing of the proposal and the decision on that proposal. Source: ICSID Annual Report 2014; Procedural Issues in International Investment Arbitration (Oxford University Press, 2015). 6
3. MATTERS OF PROCEDURE IN ICSID CASES INVOLVING LATIN AMERICAN STATES: RECONSIDERATION In FY2014, two Latin American respondents (Venezuela and Ecuador) filed requests for reconsideration of Tribunal decisions. There is no legal or procedural basis in the ICSID Convention or ICSID Arbitration Rules for reconsideration of a merits or jurisdictional decision as opposed to an award. A request for reconsideration can add several weeks, if not months, to an ICSID arbitration proceeding. Source: ICSID Annual Report 2014; Procedural Issues in International Investment Arbitration (Oxford University Press, 2015). 7
3. MATTERS OF PROCEDURE IN ICSID CASES INVOLVING LATIN AMERICAN STATES: ANNULMENT Six of the ten applications for annulment filed in FY2014 involved a Latin American respondent, including one case in which both the claimant and respondent filed separate applications. Latin American arbitrators have been increasingly selected for ad hoc committee appointments in multiple proceedings from 2010 2014: Eduardo Zuleta (5), Rodrigo Oreamuno (5), Álvaro Castellanos- Howell (3), Eduardo Silva Romero (3), Claus von Wobeser (2). An application for annulment can add 16 months, on average, to an arbitration proceeding between the registration of the application and conclusion. Source: ICSID Annual Report 2014; Procedural Issues in International Investment Arbitration (Oxford University Press, 2015). 8
II. INTERNATIONAL COMMERCIAL ARBITRATION 9
1. LATEST STATISTICS ON INTERNATIONAL ARBITRATION INVOLVING LATIN AMERICA International Chamber of Commerce (ICC) In 2013, the Secretariat registered 767 new cases, involving a total of 2,120 parties. 215 of those parties were from Latin America (10.14%), the majority of which were from Brazil (91), Mexico (47), Argentina (19), Colombia (17), and Panama (11). In 2013, a total of 1,329 arbitrator appointments and confirmations were made, 131 of which were from Latin American countries (9.85%): Brazil (51), Mexico (31), Argentina (18), and Colombia (17). São Paulo featured amongst the top ten cities selected for ICC arbitrations in 2013 (12 cases). Source: ICC Bulletin, Volume 25, Number 1, 2014. 10
2. RISE OF REGIONAL AND LOCAL ARBITRAL INSTITUTIONS IN LATIN AMERICA Recent Institute for Transnational Arbitration (ITA) survey identified 165 local and regional arbitral institutions throughout Latin America. Some of the leading Latin American arbitral institutions include: Colombia Centro de Arbitraje y Conciliación de la Cámara de Comercio de Bogotá (CACCB); Brazil Centro de Arbitragem e Mediação da Câmara de Comércio Brasil-Canadá (CCBC); Mexico Centro de Arbitraje de México (CAM); and Chile Centro de Arbitraje y Mediación de la Cámara de Comercio de Santiago (CAM Santiago). Recent Developments in the past year include: Cooperation Agreement between the Permanent Court of Arbitration and Centro de Arbitraje y Conciliación de la Cámara de Comercio de Bogotá (12 May 2014) (institutional arrangement already in place with ICSID). Cooperation Agreement between the Centro de Arbitragem e Mediação da Câmara de Comércio Brasil-Canadá and the PCA (15 September 2014). Source: ITA Survey of Latin American Arbitral Institutions (2011); Institutions Worth A Closer Look: Latin America and the Caribbean, Global Arbitration Review (7 October 2014). 11
3. DEVELOPMENTS TO WATCH IN LATIN AMERICA Mexican energy reform: private companies will be allowed to participate in the Mexican upstream sector by entering into exploration and extraction contracts, which provide for arbitration under the terms of the Mexican Commercial Code and international treaties to which Mexico is party. Fast-growing trade and investment by China and Japan in Latin America: many investment contracts contemplate arbitration, such as the China National Petroleum Corporation and PDVSA agreements, which provide for arbitration under the Singapore International Arbitration Centre (SIAC) Rules. Source: China-Latin America Finance Database (2013); What you need to know about Mexico s energy reform, Freshfields briefing (6 October 2014). 12