28 April, 2017 Chile

Latin America becoming more attractive as arbitration seat

Dispute Resolution

Local arbitration centres are developing stronger institutional rules and are increasingly viewed as an attractive destination for an arbitration seat, contributing to a Latinisation of arbitration, heard delegates at the debut Latin Lawyer – GAR Live Arbitration Summit held in Miami on Thursday.Quoting Argentine author Luis Borges’ famous expression that “it only takes two facing mirrors to build a labyrinth,” conference co-chair Cristián Conejero Roos of Philippi Prietocarrizosa Ferrero DU & Uría (Chile) moderated an hour-long panel that explored arbitration in Latin America, and its relationship with Anglo-Saxon, common law elements of the practice.

Despite the fact that traditional arbitration institutions remain strong, with many businesses preferring traditional seats such as the International Chamber of Commerce (ICC), things are clearly shifting. “Our clients and the reality have both changed,” says Jonathan Hamilton, partner at White & Case LLP. “Mexico City and São Paulo both feature in the top 10 international seats, and the real Latinisation can be seen on a local level – for example in Peru. Foreign clients doing business in the country feel it’s a stable, pro-arbitration jurisdiction that provides them with a cost-effective way of getting a result.”

The increasing frequency of arbitration between Latin American countries has created a healthy culture of competition between institutions. Christian Leathley of Herbert Smith Freehills’ New York office feels this is down to a collective improvement and maintaining of standards. “Five to 10 years ago, Latin American institutions had some scary rules,” he says. “Now, with institutional rules becoming more solid, the region is more attractive to foreign companies as a destination for an arbitration seat,” he says.

International lawyers are increasingly navigating issues in Latin American seats of arbitration. This, combined with IBA rules and best practices used in the common law world, is having a positive effect on the evolution of arbitration in the region. “Local codes that are 100 years old wouldn’t support the kind of local arbitration required,” says Skadden, Arps, Slate, Meagher & Flom LLP attorney Marco Schnabl. “[Now] it’s working better than it was 10 years ago.”

The use of third party funding in disputes in Latin America has grown significantly in the last five years, due to the number of high-value cases taking place there. Marcelo Etchebarne, who heads up Argentine firm Cabanellas Etchebarne & Kelly’s New York office, explained that companies have developed strategies to select the investment claims they back financially. “They have essentially been sniffing out distressed assets, and what they are looking for is claims against governments that can be turned into a bond agreement,” he says.

Hedge funds with an appetite for returns on investments are increasingly looking for third-party funding opportunities in Latin America. But Etchebarne says their enthusiasm to fund cases can be dampened by delays: “Especially in Argentina, there is the ability to delay and stall – a party can ask many questions about the nature of funding and the company providing it, and effectively prevent a party from seeking access to justice,” he explains.

José Astigarraga of Reed Smith was the second co-chair of the conference, which took place in White & Case’s Miami office yesterday.

Latin Lawyer will continue to cover the event in upcoming briefings.

Source: Latin Lawyer

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