Page 6 - ENGLISH MONTT GROUP, MAYO 2024

MONTT GROUP MAGAZINE - 2024 www.MONTTGROUP.cOM
LATINAMERICA
expLoSive inCreaSe in inveStMent arbitration
Unexpected rise in arbitrations in the region sUrprises governments and companies. some criticize the procedUre for considering it as a loss of sovereignty, democracy and interference with internal policies, bUt others believe that i t i s t h e o n l y wa y t o a t t r a c t foreign investment.
A few weeks ago, Ecuadorian voters rejected international arbitration by 65 percent, in a broad referendum called by the Government, which included 11 questions related mostly to security issues, except for two that were linked to the economy.
The decision of the Ecuadorian electorate did not surprise the business world, because that country is the fifth most demanded in the Region, with 29 arbitration claims, where half of them are related to the extractive sector, that is, hydrocarbons and mining. Of that amount, Ecuador lost two- thirds of the arbitration cases and in total, up to this point, it had to pay foreign investors US$42.9 billion, plus legal and arbitration costs, adding US$1.5 billion.
Thus, starting at the end of April, foreign investors will only be able to file lawsuits through the Ecuadorian national justice system, leaving that country definitively outside of what is called the Investor State Dispute Settlement, system, known as Isds, which is an instrument of public international law, that grants a foreign
investor the power to initiate a procedure against a Government of the country where it carries out its placements.
These provisions are included in many bilateral and free trade agreements, such as Chapter 11 of the North American Free Trade Agreement.
This type of arbitration is linked to the so-called International Center for Arbitration of Investment Disputes of the World Bank Group, Icsid, but it is also carried out by international arbitration tribunals that are governed by different standards or institutions, such as the London Court of Arbitration, International Chamber of Commerce, the Hong Kong International Arbitration Center or the United Nations Commission On International Trade Law Uncitral Arbitration Rules.
situation in Latin america
Ecuador is not the only country in the region to discard this system. Brazil, the main recipient of foreign investment in the sub-continent, lacks investment protection treaties. Bolivia, for its part, renegotiated or abandoned its investment agreements and withdrew from everything that includes the mechanism of this type of arbitration. Chile also tried it before entering the TPP-11.
The situation is such that 27.5 percent of the claims of the world , that reaches 1,190 cases, fall in countries of the Region, Central America and the Caribbean, where Venezuela, Mexico, Peru and Ecuador are the countries most demanded. Together they accumulate 211 legal actions and at the time were sued on 327 occasions. This represents almost two thirds of the
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