Complex infrastructure projects in Latin America have high potential for disputes
Event Report
Complex infrastructure projects in Latin America have high potential for disputes
Not all risks are foreseen by investors , such as the impact of infrastructure projects on local indigenous communities – failure to address such issues can result in projects being cancelled
With highly complex infrastructure projects underway in Latin America , the potential for legal disputes is significant , especially in countries where there are bodies with little experience of such schemes , attendees at a recent event in Madrid organised by The Latin American Lawyer heard . Including well-constructed arbitration clauses in contracts helps to make investors more comfortable about financing such projects , participants in the event – which was organised with the support of advisory firm Accuracy and law firms BLP Abogados and Roca Junyent – were told .
Attendees heard there remains a high demand for new infrastructure in Latin America and consequently , there are projects of great complexity that have the potential to generate
Laura Cózar Accuracy and Marlen Estévez , Roca Junyent
conflicts . The probability of disputes is greater in countries where there is little or no experience of handling such complex projects or in markets with a lesser degree of “ institutional maturity ”.
For David Gutiérrez , a partner in Madrid at Central American law firm BLP , investors need to take time to go “ treaty shopping ” and choose a favourable jurisdiction , so that in case there is the need to file for arbitration or litigation , the case is handled by a capable , efficient and neutral entity and that the decision could eventually be enforced . Marlen Estévez , partner at Roca Junyent in the panel , agrees that determining the seat of arbitration should be a priority for clients putting together a reliable contract with a good arbitration clause . This would determine , she added , the applicable law to the selection or arbitrators , annulment or enforcement of the award .
More confidence in arbitrators Panellists quoted figures from the International Chamber of Commerce showing a 15 per cent increase in arbitration cases in Latin America in 2016 , the latest figures available . Some attendees claimed that this is a positive sign , which will make investors more comfortable doing business in the region knowing there is a possibility of recourse to arbitration in the event major projects lead to disputes . Some participants also argued that the figures demonstrate greater confidence in local courts and arbitrators . However , there were also warnings that circumstances differ country to country .
According to Estévez , checking the governing law of the contract is key to verify any legal mandatory requirements clients need to be aware of . Additionally , investors should be aware of the nature of the other party , whether it is a public or private entity , the authority with which it is acting and the waiver of its immunity . When contracting with the state , clients should also find out whether the state they are contracting with is a signatory of the New York Convention or not .
For Laura Cózar , a director at Accuracy also on the panel , having the right mindset is also critical to prevent controversies from escalating into long and costly processes . Cózar recommended clients approach any market with the straightforward attitude of swiftly resolving disputes in the context of the agreement .
Spanish investors were also advised to assess the situation in
Event : Milestones and myths of investment in Latin America – The success of foreign investment in an attractive and complex context
Location : Madrid
In collaboration with : Accuracy , BLP Abogados and Roca Junyent
David Gutiérrez , BLP Abogados
each country and conduct their business under the guidance of Spanish lawyers , a local law firm and other advisory firms that are able to navigate the intricacies of each market . As Cózar puts it , it is essential to identify good ´ travel companions ,´ i . e . local partners and suppliers , as well as advisors able to bridge the cultural gap .
Giving assurance to investors Attendees also heard that including “ well-crafted arbitration clauses ” in contracts will help to give more confidence to international investors , who face a wide range of potential risks when investing in Latin America . Some such risks are foreseen and planned for , however , there are others that are often overlooked initially , such as the potential impact of large projects on local indigenous communities as well as the response of such communities , which could slow down projects or even lead to them being cancelled . This is a key issue some international investors do not look at initially , said Cózar and Gutiérrez , adding that clients should always check all potential impact points of the proposed project .
Spain is not only the secondbiggest investor in Latin America after the US , but also the country that has filed the second-largest amount of lawsuits against nations in the region . Attendees remarked that this gives Spanish companies the advantage of having considerable experience of dealing with certain risks and conflicts in a number of Latin American countries .
www . thelatinamericanlawyer . com March 2018 • THE LATIN AMERICAN LAWYER • 9