THE AUTHOR:
Daniel Enrique Orozco Macías, Associate at Wordstone Dispute Resolution
On 10 September 2026, the Latin American Arbitration Practitioners EU (“LATAP EU”) organized its Fourth Annual Conference in Paris, bringing together practitioners to discuss developments affecting international arbitration in Latin America (“LATAM”).
One of the panels considered “The Impact of Global Geopolitical Shifts on International Arbitration in LATAM”. The discussion was moderated by Javier Echeverri, Independent Arbitrator and Counsel, and featured Claudio de Castro (Arias, Fábrega & Fábrega), Felipe Sperandio (Clyde & Co), Esperanza Barrón-Baratech (De Gaulle Fleurance), and Omar Puertas (Harvey).
Mr. Echeverri opened the discussion by observing that international arbitration ultimately rests on a legal order, even as the commercial environment in which it operates is increasingly shaped by sanctions, tariffs, armed conflicts, and geopolitical fragmentation.
Mr. Echeverri also reminded participants that the discussion would be held under the Chatham House Rule, creating something of an occupational hazard for the designated rapporteur, who was expected to report on the panel without prematurely ending his career or permanently damaging his reputation. Fortunately, the issue was resolved in a suitably consensual fashion through the speakers’ approval of this report prior to publication.
Against this background, the panel considered how geopolitical developments are affecting the structuring of investments, the drafting of arbitration agreements, the types of disputes reaching tribunals, and the conduct of arbitral proceedings themselves.
Geopolitical Risk and the Planning of Investments
Mr. de Castro approached the question from the perspective of Panama and the manner in which changes in international trade and geopolitical risk are affecting arbitration practice.
He identified three principal developments.
The first concerned investment protection. Mr. de Castro observed that investors are increasingly moving away from treating bilateral investment treaty protection as little more than a box to be checked during the structuring of an investment. Instead, greater attention is being paid to the dispute resolution mechanisms that will actually be available should difficulties arise.
This trend is particularly relevant in jurisdictions such as Panama, which have traditionally played an important role in corporate and investment structuring. Investors are increasingly considering dispute resolution architecture at the outset of the transaction, including both treaty protection and the arbitration clauses contained in the underlying contracts.
Mr. de Castro then turned to arbitration clauses and the choice of seat. He identified two related trends.
First, parties are increasingly considering local and regional arbitral institutions. Second, greater attention is being paid to the legal seat of the arbitration and, in particular, to the courts that would exercise supervisory jurisdiction over the proceedings and hear any eventual application to set aside the award.
The choice of seat, in that sense, is no longer approached simply as a procedural or logistical question. Parties are also assessing the broader legal and institutional environment surrounding the arbitration.
Mr. de Castro referred in this context to developments affecting the judiciary in Mexico, observing that changes to national judicial systems may themselves create opportunities for arbitration, as commercial parties seek alternative mechanisms for the resolution of disputes. In an environment of increased geopolitical and institutional uncertainty, the identity of the courts supervising an arbitration may therefore become an increasingly significant consideration for investors.
Finally, Mr. de Castro identified changes in the types of disputes entering the market.
He highlighted, in particular, disputes concerning crypto and digital assets and those involving technology and technology supply chains. The latter may arise, for instance, from difficulties in obtaining processors and other critical components at a time when demand from data centers is placing increasing pressure on supply.
Geopolitical change may therefore influence arbitration at both ends of the process: it affects how parties structure their dispute resolution arrangements before a dispute exists, while simultaneously creating new categories of disputes once commercial relationships begin to break down.
Sanctions, Supply Chains, and the Inability to Perform
Mr. Sperandio focused on geopolitical tensions that have already translated into commercial disputes.
He first referred to the sanctions imposed on Belarus in 2021 and their impact on the potash industry. Belarus was an important supplier of potash to international markets, including Latin America, and the designation of a major producer under sanctions had consequences for customers and supply chains in countries such as Brazil.
The commercial consequences soon became familiar to disputes practitioners. Sanctions and restrictions on trade led to difficulties in performance, including situations in which contractual parties invoked force majeure.
Mr. Sperandio then addressed the consequences of the Russian invasion of Ukraine and the unprecedented sanctions that followed. He referred to the impact on several industries, including steel, industrial plants, and fuel.
These developments illustrate how geopolitical measures may generate disputes even where the parties themselves have little direct involvement in the underlying political conflict. A supplier may suddenly lose access to the materials required for performance. Goods that were previously available may become subject to export restrictions. Established transport or payment channels may become unavailable.
The resulting dispute may therefore concern familiar legal concepts, such as force majeure, impossibility of performance, or contractual allocation of risk, even though the event giving rise to it is geopolitical in nature.
Mr. Sperandio also referred to tensions involving the United States, Israel, and Iran and the potential consequences of disruption affecting the Strait of Hormuz. Such developments may have immediate effects on commodity markets and international trade, while their eventual consequences for arbitration may only become visible later.
In that respect, Mr. Sperandio recalled the experience following the COVID-19 pandemic. There is often a delay of a few months between the disruptive event itself and the disputes that eventually reach lawyers and arbitral tribunals.
An additional feature of many of these disputes is the continued importance of English law in international trade and shipping. Mr. Sperandio noted that contracts may have no factual connection whatsoever with England while nevertheless providing for English law to govern the parties’ relationship.
This means that geopolitical developments occurring in one part of the world may ultimately give rise to disputes involving parties and assets in Latin America, with the legal consequences of those events determined under English contract law.
Geopolitical Change and the Conduct of Arbitration
Ms. Barrón-Baratech shifted the discussion from the circumstances giving rise to disputes to the effect that geopolitical developments may have on arbitral proceedings themselves.
She first considered the position of investment arbitration. In her view, the system has demonstrated a significant degree of resilience notwithstanding criticism of investor-State dispute settlement and changes in the policies of individual States.
Recent developments in Latin America illustrate this resilience. Although concerns had been raised regarding Colombia’s potential withdrawal from the ICSID system, such a departure now appears unlikely in light of recent political changes. This is consistent with a broader regional trend: Honduras, for example, rejoined ICSID in August 2026, signaling a continued commitment to the investment arbitration framework among States in the region.
At the same time, Ms. Barrón-Baratech observed that investment disputes frequently arise in connection with particular sectors and resources. Latin America’s significant reserves of minerals, including lithium, make the region particularly relevant in a world in which access to strategic resources is increasingly connected to questions of industrial policy and geopolitical competition.
However, she cautioned against attributing all such disputes directly to geopolitical change. Many measures giving rise to investment arbitration are driven by domestic environmental concerns and environmental protection policies rather than geopolitical considerations as such.
Ms. Barrón-Baratech also considered whether geopolitical shifts are likely to affect commercial arbitration.
Increased investment ordinarily brings increased commercial activity and, with it, an increased possibility of disputes. This may be particularly relevant in Latin America given the important role played by State-owned and public-sector entities in major economic activity and international arbitration.
The participation of sovereigns and public entities may also affect the selection of arbitrators. According to Ms. Barrón-Baratech, some States may take into account considerations that go beyond a candidate’s strict legal or technical qualifications. In cases involving public entities, questions of nationality, reputation, and wider perceptions surrounding the arbitrator may also become relevant.
Artificial Intelligence, Sovereignty, and Geography
Mr. Puertas approached the discussion from a different angle, considering the relationship between geopolitics and technology.
Mr. Puertas turned to artificial intelligence (“AI”) and geopolitics.
AI, he observed, is becoming an asset of critical commercial importance. Yet AI is not merely a digital product existing independently of the physical world. Its development and deployment depend upon access to minerals, processors, manufacturing capacity, cloud infrastructure and, highly specialized technology.
Mr. Puertas argued that sovereignty in this field is better understood as a question of control than of geography: every provider, local or foreign, sits on the same concentrated supply chain.
The contemporary AI infrastructure relies upon a highly concentrated supply chain. Advanced processors are designed and manufactured by a limited number of companies. Their production depends on specialized fabrication facilities and machinery located in a small number of jurisdictions. Large-scale AI deployment also depends on access to cloud infrastructure and increasingly substantial data-center capacity.
Who produces these components, where they are produced, and which jurisdictions are permitted to access them can therefore have direct commercial consequences.
Mr. Puertas referred to restrictions imposed by the United States on the export of advanced Nvidia chips as one example of how geopolitical policy may determine access to AI infrastructure. He also referred to the practical difficulties that companies may face when access to technology depends on questions such as nationality or location.
This concentration of technological capacity creates new risks for dispute resolution.
Restrictions on the export or use of processors may interfere with contractual performance. The expansion of data centers may increase demand for already scarce components. Changes in government policy may suddenly determine whether a commercial project can obtain the technology required for its implementation.
The point is especially important when considering AI in the arbitration context. Much of the current debate has focused on the use of AI by arbitration practitioners, including its use for research, document review, and hearing preparation. The panel highlighted a different dimension: AI and the infrastructure on which it depends may themselves increasingly become the subject matter of disputes.
For legal practices, Mr. Puertas suggested the practical response lies in contractual controls – over which models are used, where data is processed, and continuity if a provider becomes unavailable – rather than in the nationality of the provider.
In other words, the geopolitical significance of AI lies not only in what the technology can do, but also in who controls the resources and infrastructure required to use it.
Conclusion
The panel demonstrated that the relationship between geopolitics and international arbitration operates at several different levels.
Geopolitical developments may influence the way investments are structured and the manner in which parties draft arbitration agreements. Concerns regarding domestic courts may make the choice of arbitral seat more significant. Sanctions, tariffs, and armed conflicts may disrupt supply chains and generate disputes concerning contractual performance. The strategic importance of minerals, processors, and technological infrastructure may give rise to entirely new categories of cases.
Once a dispute has arisen, geopolitical considerations may continue to affect the arbitration itself, influencing matters ranging from payments and travel to the appointment of arbitrators.
Latin America occupies a particularly significant position in these developments. The region combines substantial natural resources with growing investment, important State participation in economic activity, and increasing exposure to global supply chains.
Perhaps the central takeaway from the discussion was therefore that geopolitics should not be understood as an external phenomenon that occasionally intrudes upon international arbitration. It increasingly forms part of the commercial environment in which arbitration operates.
As Mr. Echeverri observed at the outset, international arbitration rests upon a legal order. The disputes placed before arbitral tribunals, however, arise from a world in which the economic and geopolitical order is becoming considerably more complex.
