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2016 Smit-Lowenfeld Prize awarded to article focused on Latin American investment arbitration

Brief Summary: ALVARO J. PERALTA, WHITE & CASE. The International Arbitration Club of New York (IACNY) has announced that Catharine Titi will receive the 2016 Smit-Lowenfeld Prize for best article in the field of international arbitration published in 2014. Her article, titled “Investment Arbitration in Latin America: The Uncertain Veracity of Preconceived Ideas,” was published in Arbitration International, Volume 30, Issue 2.

Ms. Titi’s article addresses the question of whether Latin American states live up to their reputation as hostile environments for investment arbitration. To fashion a broader perspective on the Latin American approach to investment arbitration, the article considers compliance and enforcement in relation to recent awards, negotiations for a regional arbitration center, and public interest issues. Ms. Titi informs the reader that there is no single Latin American approach, as the landscape continues to change.

Compliance and Enforcement

Following a summary of the historical context of Latin American investment arbitration, the article dives into a discussion on the status of compliance with arbitral awards in the region. Ms. Titi first points to enforcement issues arising from divergent interpretations of Articles 53 and 54 of the ICSID Convention on award enforcement, particularly by Argentina in the aftermath of the arbitral awards related to the 2001 financial crisis. She then highlights prevalent policy responses available to counter sovereign reluctance to enforce arbitral awards, including the suspension of trade benefits. These varying interpretations of enforcement mechanisms together with the consequent policy responses point to changing attitudes in Latin America respecting the role of arbitration as a means to settle investment disputes.

Regional Arbitration Center

Ms. Titi next discusses the proposed establishment of a regional Latin American arbitration center. The Union of South American Nations (UNASUR) was created in 2008 and consists of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela. UNASUR, while not yet fully implemented, is intended to serve as a counterweight to ICSID and would place emphasis on dispute resolution through mediation and encompass an appellate mechanism.

Public Interest Issues

Finally, Ms. Titi suggests taking into account public policy interests when fashioning a Latin American approach to investment arbitration. The author points to certain awards, issued in recent cases involving Bolivia and Argentina particularly, which involve the public interest. Going forward, the author asserts, a seminal issue for arbitrators will be drawing a line between “judging a State’s policies and judging the consequences of such policies for investors.”

In light of these varying factors, only briefly discussed here, Ms. Titi views the Latin American experience with investment arbitration as a complex and evolving phenomenon.

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