Without a doubt, Latin America has proven to be fertile land for the development of international arbitration. According to the ICC statistics for 2016,1 there was a 22% increase of Latin American parties in ICC arbitrations. Furthermore, Brazil ranked 5th and Mexico 7th in the number of parties’ nationality for the worldwide statistics involving all of the arbitrations administered by the ICC, being of the main users of ICC arbitration with respectively 123 and 105 parties.

The acceptance reflected in the ICC’s statistics has had a direct impact on the legislative developments across Latin America, especially in those countries where arbitration has played a more significant role in the local dispute resolution system.

In the case of Brazil, the Congress approved in 2015 a comprehensive set of amendments to its arbitration law,2 which was initially adopted in 1996. The amendments, which settled certain controversial issues of the original text of the law, broadened the scope of arbitral proceedings inter alia by expressly allowing (i) arbitral clauses in corporate by-laws, (ii) arbitration for public entities in disputes involving its disposable economic rights (‘direitos patrimoniais disponiveis’), and (iii) precautionary measures from state courts pending the constitution of the arbitral tribunal, by establishing arbitral communications (‘carta arbitral’), which allow arbitral tribunals to request the adoption of enforcement measures by state courts.

The recent modifications to the Brazilian Arbitration Act do not only reflect the integration and enhancement of arbitral proceedings (both foreign and domestic) in the Brazilian dispute resolution system, but also a sophistication of the arbitration process. In this vein, Argentina has also decided to take a significant step towards the enhancement of its arbitral proceedings through the creation of a joint Civil and Commercial Code3, which supersedes certain arbitration related dispositions of the Argentinian Code of Civil and Commercial Procedure, considered as ‘antiquated’4. Furthermore, in 2015 the Argentinian Ministry of Justice submitted a proposal to Congress in order to pass a new Commercial Arbitration Law based on the UNCITRAL Model Law5. It should be noted that the regional developments on alternative dispute resolution are not limited to arbitration, but also include other dispute resolution methods. For instance, Brazil has recently adopted a Mediation Act6, and Mexico is currently in the process of enacting a General Statute on Alternative Dispute Resolution Mechanisms, which will regulate mediation and conciliation.

In Brazil, the Superior Court of Justice rendered two decisions on the enforcement of foreign awards in Brazil. The EDF v. Endesa case7, raised, for the first time before the Brazilian judiciary, the question of enforcement of an award annulled at the seat of the arbitration. The Brazilian judiciary deferred to the annulment decision of the seat (in Argentina), and considered that the annulment decision extended its efficacy into Brazilian territory, therefore preventing an enforcement of an award which had already been annulled in the seat of the arbitration.

In the Abengoa v. Ometto decision8, the Brazilian Superior Court of Justice denied the recognition of an arbitral award rendered in the United States. The landmark decision involved a US $100 million award rendered by a tribunal whose chairman failed to disclose past work, amounting to US $6 million, provided by his law firm to the winning party of the arbitration9. Not only does this decision establish a high threshold for the enforcement of foreign awards in Brazil, but it also reinforces the independence and impartiality standards required for arbitrators, in particular within the current worldwide context of global law firms, which have multiple offices and hire hundreds or thousands of lawyers around the globe, some of whom may never have any contact with on another.

Case law has also played a fundamental role in the development of trends within the region primarily regarding enforcement actions, the definition of public policy, and the scope of review of state courts.

A recent decision rendered by the Mexican Supreme Court10, created a wide array of decisions involving the delimitation of public policy, and a possible consideration of manifest disregard of the law as a ground for annulment. While part of the Mexican arbitral forum applauded the decision because it rightly narrowed the concept of public policy within setting aside procedures, certain practitioners shared their concern on a reasoning which, by means of an obiter dictum, stated that the principle of promotion of arbitration shall prevail ‘unless it is outright unjust or incorrect’. The aforementioned reasoning started discussions on whether the Mexican Supreme Court opened the door to what could be considered a non-statutory manifest disregard of the law ground when seeking annulment of awards, or if the intent was merely to delimit the public policy concept and establish a minimum standard of motivation for Mexican arbitral awards, in order to prevent arbitrary decisions.

In Chile, in the context of an enforcement action where objections were raised on the grounds of public policy and due process, the Supreme Court held that enforcement proceedings should not lead to a de novo review of the merits of the case or the reassessment of evidence, thus limiting the scope of review and interpretation of state courts at this stage.11

This overview proves that arbitration is a live specimen, developing, growing and adapting. Latin America has provided a perfect example of an environment where a duly cared and exercised practice of the system has allowed it to flourish beyond more prominent economies of the world. Young arbitrators and practitioners shall play a decisive role in the consolidation of arbitration as a real efficient alternative to court systems in a region overwhelmed with judicial cases, and institutions such as ICC, are making sure the next generation is ready for such endeavor.

ICC Dispute Resolution Bulletin, 2017:2 and 2016:1 available at http://library.iccwbo.org/dr-bulletins.htm.

Law No. 9.307/96, available at http://www.planalto.gov.br/ccivil_03/leis/l9307.htm.

Law No. 26.994, available at http://www.uba.ar/archivos_secyt/image/Ley%2026994.pdf.

International Comparative Legal Guides, ‘Latin America Overview: A Long Road Travelled, a Long Road to the Journey’s End’, available at https://iclg.com/practice-areas/international-arbitration-/international-arbitration-2016/latin-america-overview-a-long-road-travelled-a-long-road-to-the-journeys-end.

The complete version of the International Commercial Arbitration Law draft is available at https://www.justicia2020.gob.ar/se-encuentra-disponible-anteproyecto-ley-arbitraje-comercial-internacional/.

Law No. 13.140, available at http://algimediacao.com.br/wp-content/uploads/2014/02/Brazilian-Mediation-Act-English-Version-APS-1-rev-PEM.pdf.

EDF International S/A v. Endesa LatinoAmérica S/A & YPF S/A, SEC No. 5.782/AR.

Abengoa v. Adriano Ommeto Agricola et al., SEC 9.412/US.

Baker&Mckenzie Global Arbitration News, April 20, 2017, available at https://globalarbitrationnews.com/20170420-brazilian-superior-court-denies-recognition-award-due-conflict-relating-arbitrators-law-firm/.

Suprema Corte de Justicia de la Nación, Primera Sala., May 18, 2017, Amparo Directo 71/2014, Min. Alfredo Gutiérrez Ortiz Mena.

Qisheng Resources Limited v. Minera Santa Fe, Case Identification Number 7854-2013.