Latin America continues to experience rapid growth in the area of international arbitration. The “Compendium of Latin American Arbitration Law” reproduced in this issue provides a quick reference to the adoption of international treaties and domestic arbitration laws throughout the region.

As evidenced by the Compendium, at present, the ICSID Convention is in force in fourteen Latin American States. Additionally, sixteen Latin American States (as well as the United States) have ratified the Panama Convention, while the New York Convention has been ratified by nineteen Latin American States, including all states listed in the Compendium plus Cuba. Finally, as further demonstrated by the Compendium and discussed in this issue, Latin American States continue to overhaul their domestic arbitration laws, sometimes repeatedly.

Investment Arbitration

In the context of investment arbitration, the number of arbitrations filed against Latin American States before the International Centre for Settlement of Investment Disputes (“ICSID”) has grown since the filing of the first such case in 1996.1 Today, a full 55.2 percent of ICSID’s pending case docket (69 out of 125 cases) constitutes cases filed against a Latin American State. By contrast, only 29.1 percent of concluded ICSID arbitrations (46 out of 158 cases) were brought against a Latin American State, thus demonstrating the increased role of the region in international investment cases in recent years.

Among Latin American States, one country alone—Argentina—accounts for just over a quarter of all pending ICSID cases (34 out of 125 cases). Argentina further represents half of pending ICSID cases involving a Latin American State (34 out of 69 cases). When analyzed in the context of all registered ICSID arbitrations—both pending and concluded—Argentina has been named in over three times as many ICSID cases as any other Latin American State (a total of 49 cases, as opposed to 13 for Mexico which, although not a party to the ICSID Convention, participates in ICSID proceedings as a member of the North American Free Trade Agreement (“NAFTA”)).

The settlement rate of Latin American ICSID cases is comparable to that of ICSID arbitrations generally. For instance, according to figures available from ICSID, roughly 38 percent of all concluded ICSID arbitrations settled at some phase (60 out of 158 concluded arbitrations). Among Latin American ICSID cases, roughly 32.6 percent of cases settled (15 out of 46 concluded cases). These percentages do not include cases that were discontinued for other reasons.

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Latin America’s familiarity with investment arbitration extends beyond the party level, as the region is also home to many experienced arbitrators. In original ICSID proceedings involving a Latin American State, nearly a third of all arbitrators have themselves been Latin American (90 out of 292 arbitrators). In these same cases, however, nearly three quarters of Tribunal Presidents have been from outside Latin America (72 out of 98 Tribunal Presidents).

Commercial Arbitration

Private parties in Latin America have also embraced international commercial arbitration over the past 15 years. This trend is illustrated by statistics published annually by the International Chamber of Commerce (”ICC”)—a leading institution for international commercial arbitration.

Since 1996, 7.7 percent of parties to ICC arbitrations have been Latin American (1,335 out of 17,364 parties). Additionally, the percentage of Latin American parties involved in ICC arbitrations has grown by roughly a quarter between 1995 – 2001 (6.8 percent of all ICC parties) and 2002 – 2007 (8.4 percent of all ICC parties, with 2007 being the last year for which figures are available).

Strong growth can also be observed in individual Latin American countries. For this exercise, one need only examine the six countries which, since 1996, have accounted for over 80 percent of Latin American parties to ICC arbitrations—i.e., Argentina, Brazil, Chile, Mexico, Panama and Venezuela. Out of these six countries, all but two (Panama and Venezuela) have seen an increase in the number of parties to ICC arbitrations as between 1995 – 2001 and 2002 – 2007. Moreover, in three of these countries (Argentina, Brazil and Chile), the number of parties to ICC arbitrations has increased by between 75 percent and 145 percent over these same periods.

As further demonstrated by the figures below, Brazil and Mexico have seen particularly strong growth. In this respect, Mexico has produced more parties to ICC arbitrations than any other Latin American country (a total of 402 parties between 1996 – 2007). Brazil, meanwhile, has seen the highest growth rate in the region in terms of the number of parties to ICC arbitrations as between 1996 – 2001 and 2002 – 2007—i.e., 105 percent over these periods. Additionally, Brazil and Mexico produce some of the highest numbers of parties to proceedings before the International Centre for Dispute Resolution (“ICDR”) of the American Arbitration Association (“AAA”).

The predominance of parties from Brazil and Mexico in international commercial arbitration proceedings may be attributable to the fact that neither jurisdiction is a party to the ICSID Convention. Accordingly, aggrieved parties from both countries—as well as foreigners doing business in these jurisdictions—often resort to commercial arbitration to resolve their disputes. Nonetheless, Brazil and Mexico are both parties to the Panama and New York Conventions, with domestic courts that regularly recognize and enforce foreign arbitral awards.

As evident from the Compendium, Mexico ratified the Panama Convention in 1978. Mexico had ratified the New York Convention even earlier—in 1971—and was in fact the second Latin American State to adopt this agreement. Mexico passed its current arbitration law in 1993, which is largely based on the Model Law on International Commercial Arbitration drafted by the United Nations Commission on International Trade Law (the “UNCITRAL Model Law”). Moreover, Article 133 of Mexico’s Constitution provides that the Panama and New York Conventions constitute “the Supreme Law of the State,” placing them above Mexican federal law.

Unlike Mexico, Brazil did not ratify the Panama Convention until 1995, and the New York Convention until 2002. Brazil’s Arbitration Act dates from 1996, and allows Brazilian courts to refuse the recognition and enforcement of foreign arbitral awards on largely the same grounds contained in Articles IV(1) and V of the New York Convention. Brazil’s arbitration law was upheld by the Brazilian Supreme Court in 2001.