THE AUTHOR:<\/strong> Latin American Arbitration Practitioners EU<\/strong> (LATAP EU<\/a>) is an association aimed at building a network of practitioners focused on international arbitration and with strong ties to, or experience in, Latin America and based in Europe. On September 2023, LATAP EU organized its first Annual Conference in Paris, France<\/a>, hosted by Mayer Brown<\/a>.<\/p>\n\n\n\n On 6 September 2023, the First Annual Conference of Latin American Arbitration Practitioners | EU (LATAP EU)<\/a> was held at Mayer Brown<\/a>\u2019s Paris office.<\/p>\n\n\n\n Liliana Veru Torres (Partner, Veru Torres & Partners, London), Pedro Saghy (Of Counsel, Dentons<\/a>, Paris), Nicol\u00e1s G\u00e1lvez Sol\u00eds (Counsel, ICC<\/a>, Paris), and Marie-Isabelle Delleur<\/a> (Counsel, Clifford Chance<\/a>, Paris), moderated by Jos\u00e9 Caicedo<\/a> (Partner, Mayer Brown<\/a>, Paris), discussed the \u201cEnforcement of Arbitral Awards<\/a> in Latin America\u201d.<\/p>\n\n\n\n Jos\u00e9 Caicedo<\/a> introduced the topic, noting that although there are conflicting notions about Latin America\u2019s friendliness (or otherwise) towards arbitration, the region boasts a 90% rate of arbitral award enforcement<\/a>. Mr. Caicedo<\/a> then proceeded to enquire the panelists as to their initial impressions on the topic, prompting Mr. G\u00e1lvez to agree that, in general, arbitral awards are enforced in Latin America. Yet, he cautioned against generalizing when considering the efficiency of the enforcement process across the region, as Latin America is a heterogeneous region with different degrees of sophistication in legal systems. Some States\u2019 constitutions, for instance, contain constitutional remedies that can affect enforcement, while some others, e.g.<\/em>, Guatemala<\/a>, can be unpredictable to a certain degree.<\/p>\n\n\n\n Nevertheless, Mr. G\u00e1lvez emphasized positive developments across the region, for example, in Mexico<\/a>, Colombia<\/a>, and Costa Rica<\/a>, which have taken steps to reduce obstacles to the enforcement of awards<\/a>. Moreover, Mr. G\u00e1lvez mentioned that according to the ICC<\/a> statistics, in 2022, there was an 18% increase in parties and a 17% increase in arbitrators originating in Latin America, which, in his opinion, shows the growing confidence in the region.<\/p>\n\n\n\n Mr. Saghy noted that he does not necessarily see a correlation between the increasing Latin American parties and arbitrators in ICC<\/a> proceedings and the effectiveness of recognition and enforcement of awards<\/a>, as the statistics could be attributable to a combination of factors such as increased investments in the region, the language of the proceeding, the convenience of seats, etc.<\/p>\n\n\n\n The speakers then discussed Mr. Caicedo<\/a>\u2019s question as to whether there are new trends in recognising and enforcing awards as a result of the \u201cPink Tide\u201d in the region (i.e.<\/em>, the trend of many Latin American States moving toward more economical or socially progressive policies). Ms. Veru Torres explained that the nationalist governments in some States have adopted policies that affect key investment sectors, moving away from the ’90s trend of privatizing public companies and promoting foreign investment. Ms. Veru Torres also explained that in some States, there is a perceived lack of independence of national judges and a clash with international conventions as a result of the attempts to delay or even evade enforcement through constitutional avenues. Accordingly, Ms. Veru Torres highlighted the importance of crafting a good enforcement strategy \u2018by design\u2019 from the initial stages of an arbitration, as opposed to waiting until the award is rendered.<\/p>\n\n\n\n Ms. Delleur<\/a> noted that, in her opinion, the need to craft the enforcement strategy from the outset of arbitration is not exclusive to arbitrations related to Latin America. Similarly, as regards the backlash against international arbitration in Latin America discussed by the other panelists, she mentioned that a similar trend had been seen in other regions, notably in Europe, with several countries withdrawing from the Energy Charter Treaty<\/a>, or, for instance, in the context of mediatised cases such as the Tapie case<\/a> in France.<\/p>\n\n\n\n Ms. Delleur<\/a> explained that recognition and enforcement are different concepts and that the concept of recognition is only relevant for commercial or non-ICSID awards. She explained that sanctions are likely to have an impact at both the recognition and the enforcement stage. At the recognition stage, although the New York Convention<\/a> does not foresee that sanctions are a ground for refusing recognition of an arbitral award, in most jurisdictions, the issue of sanctions violation will fall within the ambit of international public policy. This is straightforward when the jurisdiction where enforcement is sought is the jurisdiction having issued the relevant sanctions. If the relevant sanctions were issued by a foreign authority, then there may be an issue of whether the foreign sanctions are recognized\/applied by the jurisdiction where recognition or enforcement is sought as part of its relevant international public policy. This is likely to be considered through mechanisms similar to that of the application of foreign lois de police<\/em>. Once an award has been recognized, its enforcement may also raise issues of sanctions violation.<\/p>\n\n\n\n Ms. Delleur<\/a>, for instance, mentioned the Crystallex v. Venezuela<\/em> case where, even though the claimant succeeded in having the award recognized in the United States<\/a>, the claimant faced significant challenges for its enforcement in the same jurisdiction due to the US<\/a> sanctions against Venezuela<\/a>.<\/p>\n\n\n\n Ms. Delleur<\/a> further explained that, as far as ICSID<\/a> awards are concerned, their enforcement does not require prior recognition, which removes a big hurdle.<\/p>\n\n\n\n However, enforcement against States presents unique challenges as opposed to enforcement against private parties, such as the issue of immunity from enforcement. Since the ICSID Convention<\/a> does not address this issue, the State’s immunity from enforcement of an ICSID<\/a> award is subject to the domestic law of the place of enforcement (such as the US FSIA or the Sapin II Law in France) and to international conventions entered into by the country where enforcement is sought.<\/p>\n\n\n\n Ms. Delleur mentioned the cases Crystallex v. Venezuela<\/em> and OIEG v. Venezuela<\/em> as good examples of the different assessments of whether certain assets belonging to state-owned entities are subject to attachment in different jurisdictions. In each case, US and Dutch courts reached opposite conclusions as to whether assets belonging to PDVSA could be attached to enforce an award against Venezuela<\/a> since there is no Dutch equivalent of the US ‘alter ego’ doctrine.<\/p>\n\n\n\n Referring to cases involving economic sanctions, Mr. G\u00e1lvez noted that from an institutional point of view, there is a need to consider access to justice as paramount.<\/p>\n\n\n\n Subsequently, the discussion turned to the topic of the possibility of reaching a settlement agreement after an award is delivered. Mr. Saghy opined that settling the dispute could be a good strategy instead of going straight for enforcement in State courts. He explained that although the Latin American States generally remain open to negotiation, there is no \u2018clean and clear\u2019 answer, as it generally depends on how the settlement is executed. Specifically, he referred to three situations which may prevent the parties to arbitration from settling a dispute.<\/p>\n\n\n\n The first one is the so-called \u2018winner\u2019s syndrome\u2019, where the successful party approaches the negotiation with a victorious\u2019 attitude, and thus the settlement agreement is regarded as an offer to surrender. Second, is the so-called \u2018protagonist problem\u2019, where lawyers think they are the best individuals to lead negotiations, which often backfires since, in many cases, they are trained for adversarial processes but not necessarily a negotiation process. Finally, there are interpretation issues, as parties see arbitration differently: a private party\u2019s focus is on costs, celerity, and its shareholders, whereas States may be concerned with liability, elections, image, policy, etc.<\/p>\n\n\n\n Ms. Veru Torres explained that an essential component of a well-structured enforcement strategy is to designate who will lead an eventual negotiation and how this will be done. These arrangements have to be made a priori <\/em>to the dispute or shortly after it arises, thus avoiding making such strategic decisions at the later stages when \u2018litigation fatigue\u2019 has taken place.<\/p>\n\n\n\n Mr. G\u00e1lvez noted that from an institutional perspective, parties are more likely to reach a settlement in two stages: right after the terms of reference have been signed or after the hearing. He also referred to the recent obligation to disclose the participation of a third-party funder under Article 11(7) of the ICC 2021 Arbitration Rules<\/a> (which has also been the case with Rule 14 of the 2022 ICSID Arbitration Rules<\/a>, among other institutions) and noted that inconclusive statistics show that in cases that are funded by a third-party funder, the likelihood of a settlement is roughly 10% higher.<\/p>\n\n\n\n
Adrian Gonz\u00e1lez Vizcarra<\/strong>, Legal Advisor at the Embassy of Mexico in the Kingdom of Norway and LL.M. candidate at the University of Oslo<\/p>\n\n\n\n
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State of Affairs in Latin America Amid the New \u2018Pink Tide\u2019<\/strong><\/h2>\n\n\n\n
The Impact of Sanctions on the Recognition and Enforcement of Arbitral Awards <\/strong><\/h2>\n\n\n\n
Settlement Agreements as a Useful (and Often Misunderstood) Tool<\/strong><\/h2>\n\n\n\n