Special report: Arbitration The Latin American Lawyer | Page 3

Special report: Arbitration
Rocky road
The popularity of arbitration
is soaring in Latin America
as foreign investors’ interest
in the region increases
– however, poor quality
procedures, high costs and
a lack of arbitration lawyers
threaten to thwart its
progress
The use of arbitration to settle
disputes is on the rise across
Latin America as the region’s
economies increasingly open
up to foreign direct investment.
Meanwhile, the more widespread
use of public tenders by the
region’s governments as a means
of fostering investment in key
sectors has also resulted in more
parties resorting to arbitration,
particularly in cases involving
private companies and state-
owned entities. However, there
are still doubts about the quality
of some arbitration procedures,
while clients also highlight
problems such as the associated
cost, the shortage of arbitration
lawyers and a tendency for some
parties to try and avoid going
to arbitration, even when it is
supposedly obligatory.
According to the International
Chamber of Commerce (ICC),
the number of arbitration cases
in Latin America increased
by around 8 per cent year-on-
year in 2017, and following
the establishment of a case
management team in São Paulo
last year, Brazil rose to seventh
place in case rankings worldwide,
with 51 cases compared with 36 in
2016. Latin America accounted for
15.8 per cent of the cases the ICC
managed in 2017.
8%
Increase in the number of
arbitration cases in Latin
America in 2017 according to
the International Chamber of
Commerce (ICC)
www.thelatinamericanlawyer.com
Faster and more trustworthy
Global law firms with offices in
the region are keen to promote
arbitration as the best dispute
resolution mechanism. “The
growth of arbitration is a constant
across Latin America in recent
years, with the number of cases
increasing each year, which
shows, independently of the
criticism of this kind of dispute
resolution, that arbitration is
consolidating in many countries
of the region, as it is without a
doubt the best mechanism for
resolving international disputes,”
Carlos de los Santos, Garrigues
says Carlos de los Santos, partner
and head of the arbitration and
litigation department at Garrigues
in Madrid. “Arbitration’s growth
and consolidation shows that, in
this globalised world, it is a more
effective, faster, trustworthy and
more neutral option for dispute
resolution compared to that
offered by local tribunals,” he
adds.
De los Santos says that the
growing number of infrastructure
and energy sector projects
worldwide, and particularly in
Latin America, will drive demand
for arbitration. “The intrinsic
complexity of such cases means
that, in many cases, differences
arise between the parties that
end up in arbitration, especially
in relation to infrastructure,” he
adds.
Client concerns
Construction and engineering
projects – in addition to energy
sector schemes – commonly
result in parties resorting to
arbitration, according to Katherine
González Arrocha, director for
the Americas for arbitration at
the ICC’s International Court of
Arbitration. According to ICC
statistics, 23 per cent of new cases
in 2017 were related to disputes
in the construction sector, with
the energy industry generating
the second highest amount of
cases (19 per cent). “Part of the
growth in arbitration cases is
fuelled by an increasing number
of lawyers promoting the virtues
of arbitration to their clients,” says
Gary Davidson, partner at Díaz
Reus & Targ in Miami. “Another
key factor is the continued
globalisation of the world’s
economies – corporate executives
in many countries prefer
arbitration instead of litigation,
December 2018 • THE LATIN AMERICAN LAWYER •
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