Is Investment Arbitration In Crisis In Latin America?

Author:Ms Vanessa A. Giraud M.
Profession:Mezgravis & Asociados
 
FREE EXCERPT

Over the years Latin American countries have played an increasingly relevant role in the International Centre for Settlement of Investment Disputes (the "ICSID"), with the highest proportion - 27% - of all cases handled by the Centre. Despite the high percentage these same countries have been increasingly expressing their dislike about having to resolve their disputes through the ICSID, notwithstanding the fact that in certain Latin American countries this hostility has steadily diminished through the adoption of protective Arbitration Laws or the signing of Bilateral Investment Treaties (BITs).

The reason for this resentment is mainly because some of these governments associate the ICSID system with a common and adverse political orientation based on which they have evolved what is, in my view, an erroneous perception of the ICSID system. This unfortunate attitude has led certain countries to implement political measures such as the denunciation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention") by the Plurinational State of Bolivia, the Republic of Ecuador and the Bolivarian Republic of Venezuela. These denunciations have brought about a decline in the filing of new claims against Latin American States before the ICSID. For example, in 2013 Venezuela saw only one case brought against it, compared to nine cases filed in 2012. These statistics could lead us to think in terms of a revival of Calvo Doctrine among Latin American countries.

The reasons alleged for such measures by these countries are diverse, for instance, one of the reasons that the President of Bolivia, Evo Morales has particularly emphasized is that "out of 232 cases, 230 have been in favour of firms representing foreign investors". In fact, the same reason was subsequently given by Venezuelan Foreign Ministry's in a press-release where it stated that "ICSID has ruled 232 times in favor of transnational interests out of the 234 cases filed throughout its history".1

However, this opposition to the ICSID Convention among Latin American countries is not at all new, in fact their distaste goes back 50 years to the 1964 Annual Meeting of the World Bank in Tokyo, when the ICSID Convention was proposed before the Board of Governors of the World Bank, and the Chilean delegate stated that "...all Latin American States voted 'no' to the ICSID Convention. This was the first time in the Bank's history that a final resolution...

To continue reading

REQUEST YOUR FREE TRIAL