The new rules of international investment arbitration
Recent headlines may have highlighted
dissatisfaction by some Latin American
countries with certain investment arbitration
processes, but this does not mean the end of
arbitration in the region, insists Pedro J.
Martinez-Fraga, Miami-based coordinator of
Squire Sanders & Dempsey’s International
Dispute Resolution practice.
titulares en varios puntos
de Lationamérica,
cuestionando las normas
arbitrales sobre inversión
impuestas, el arbitraje
como principio de
resolución de disputas,
sigue siendo un
instrumento muy valorado,
afirma, Pedro J. Martinez-
Fraga, de Squire Sanders
& Dempsey’s
‘Certain Latin American countries may
have chosen, for example, to exit ICSID, but
they nonetheless remain keen to resolve
issues that derive from international and
bilateral investment treaties (BITs). The focus
now is on using the same general arbitration
framework but finding new ways of doing
so.’
Governments recognise the importance
of establishing effective and neutral dispute
resolution mechanisms if they are to
continue to attract foreign investment, he
says.
The continuing rise in importance of the
telecom and energy sectors, including areas
such as bioethanol and other renewable
schemes, is prompting new levels of
international investor interest. But this can
only be realised in the light of the proper
safeguards.
‘There is a belief at some levels that the
ICSID process may have, for example,
become too one-sided and countries now
want to have more input on the way
disputes are resolved. There is no doubt that
the appetite for arbitration remains healthy,
the rules may be different but the goals
remain the same.’
In any event, such developments are not
hindering the growth of arbitration
elsewhere in the region, notes Martinez-
Fraga. ‘The establishment of CAFTA – the
Central American Free Trade Area –
includes within its rules a strong
commitment to arbitration to resolve
investor and inter-state disputes. Its
members again recognise the need for an
independent adjudication mechanism,
which arbitration suits perfectly.’
Despite the headlines therefore, the real
story is the ability of arbitration to evolve
and to react to changing circumstances, he
believes. ‘We see a continuing ebb and flow
of investment across Latin America, the
emergence of new economic giants and
industries, and the major players in which
all recognise the importance of the process.
The challenge is to be able to see the bigger
picture.’
