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Intra-Latin America Investor-State Dispute Settlement

Handbook of International Investment Law and Policy

Abstract

This chapter examines the main features of investor-state dispute settlement (ISDS) in Latin America, in the particular set of cases that have been brought by Latin American investors against host states from the region. Our goal is to determine if there is any regional specificity in these cases or if they rather comply with the trends found on investor-state arbitration in general. For that purpose, we have examined all ISDS cases that correspond to this group, including information on the claims and respondent states, their respective economic sectors, claimants and their home states, applicable international investment agreements (IIAs), breaches claimed and decisions awarded, as well as an analysis of the arbitral rules and arbitral tribunals, including their nationality, as well as the language of proceedings and decisions. We conclude that overall, intra-Latin America ISDS is largely underused, and when it is implemented, it mainly reflects the general trends of investment treaty making and dispute settlement found worldwide. We did not find relevant specificities that could be assumed to exist in arbitration involving countries of the same region, something that actually happens in regional investment treaty making.

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Notes

  1. 1.

    Titi C (2014) Investment arbitration in Latin America: the uncertain veracity of preconceived ideas. Arbitr Int 30:357–386, 358. For the purposes of this chapter we consider Latin America and the Caribbean as one single region.

  2. 2.

    Polanco Lazo R (2016) Two worlds apart: the changing features of international investment agreements in Latin America. In: Tanzi A, Asteriti A, Polanco Lazo R, Turrini P (eds) International investment law in Latin America/Derecho Internacional de las Inversiones en América Latina. Brill/Martinus Nijhoff, Leiden, pp 68–97, 69.

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    Fach Gómez K, Titi C (2016) International investment law and ISDS: mapping contemporary Latin America. J World Invest Trade 17:515–535, 517. https://doi.org/10.1163/22119000-12340002

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    Japan-El Salvador FCN, Art. III; Japan-Peru FCN, Art. III; Cuba-Japan FCN, Art. III; Dominican Republic-Germany FCN, Art. 7; Nicaragua-US FC, Arts. IV, IX, and VII

  5. 5.

    Nicaragua-US FC, Art. II

  6. 6.

    Japan-El Salvador FCN, Art. II; Japan-Peru FCN, Art. II; Cuba-Japan FCN, Art. III; Dominican Republic-Germany FCN, Art. 8

  7. 7.

    Dominican Republic-Germany FCN, Art. 15

  8. 8.

    Nicaragua-US FC, Art. XII

  9. 9.

    Japan-El Salvador FCN, Art. IV; Japan-Peru FCN, Art. IV; Cuba-Japan FCN, Art. IV; Dominican Republic-Germany FCN, Art. 6; Nicaragua-US FC, Art. VI

  10. 10.

    Dominican Republic-Germany FCN, Art. 4; Nicaragua-US FC, Art. III

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    International Centre for Settlement of Investment Disputes (ICSID) (1968) History of the ICSID convention. International Centre for Settlement of Investment Disputes, Washington, DC, p 606

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    Lowenfeld AF (2003) International economic law. Oxford University Press, Oxford, p 460

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  18. 18.

    Parra AR (2012) The History of ICSID. Oxford University Press, Oxford, p 95

  19. 19.

    The first Latin American States to ratify the ICSID Convention were El Salvador in 1984 and Ecuador in 1986. Hamilton JC (2009) Three decades of Latin American commercial arbitration. Int Litig Arbitr 30:1099–1119, 1100.

  20. 20.

    Guzman AT (1998) Why LDCs sign treaties that hurt them: Explaining the popularity of bilateral investment treaties. Va J Int Law 38:639–688, 643–644

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    Fach Gomez K (2011) Latin America and ICSID: David versus Goliath. Law and Business Review of the Americas 17:195–230, 196

  22. 22.

    Brazil signed 14 BITs between 1994 and 1999 but failed to ratify them. Barreiro Lemos L, Campello D (2015) The non-ratification of bilateral investment treaties in Brazil: a story of conflict in a land of cooperation. Rev Int Polit Econ 22:1055–1086.

  23. 23.

    Both protocols never entered into force and have been currently repealed. Suñe N, Carvalho de Vasconcelos R (2013) Inversiones y Solución de Controversias en el MERCOSUR. Revista de la Secretaría del Tribunal Permanente de Revisión 1:195–220, 213.

  24. 24.

    Polanco Lazo R (2014) Is there a life for Latin American countries after denouncing the ICSID convention? Transnatl Disput Manag 11; Schreuer CH (2010) Denunciation of the ICSID convention and consent to arbitration. In: Waibel M, Kaushal A, Chung K-H, Balchin C (eds) The Backlash against investment arbitration: perceptions and reality. Wolters Kluwer Law & Business, Austin, pp 353–368; Vincentelli IA (2010) The uncertain future of ICSID in Latin America. Law Bus Rev Am 16:409–456; Waibel M, Kaushal A, Chung K-H, Balchin C (2010) The backlash against investment arbitration: perceptions and reality. Wolters Kluwer Law & Business, Austin; Tietje C, Nowrot K, Wackernagel C (2008) Once and Forever? The Legal Effects of a Denunciation of ICSID. Beiträge zum Transnationalen Wirtschaftsrecht, vol 74. Institut für Wirtschaftsrecht, Halle

  25. 25.

    Dominican Republic has 11 BITs in force and 2 FTAs in force with investor-State arbitration, both referring to ICSID Additional Facility Rules and UNCITRAL Arbitration Rules: the CAFTA–DR and the Free Trade Agreement between Central America and the Dominican Republic. CAFTA members are Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. Central America includes Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. UNCTAD (2019) International investment agreements navigator. In: Investment policy hub. http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu. Accessed 22 May 2019.

  26. 26.

    Polanco Lazo R (2016) Two worlds apart: the changing features of international investment agreements in Latin America. In: Tanzi A, Asteriti A, Polanco Lazo R, Turrini P (eds) International investment law in Latin America/Derecho Internacional de las Inversiones en América Latina. Brill/Martinus Nijhoff, Leiden, pp 68–97, 75

  27. 27.

    Belize signed the ICSID Convention on 19 December 1986 but has never ratified the Convention

  28. 28.

    From these countries, Cuba has the largest number of BITs in force: 39, with different countries of Latin America, Europe, Asia and Africa. UNCTAD (2019) International investment agreements navigator. In: Investment policy hub. http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu. Accessed 22 May 2019

  29. 29.

    Considering a total of 3689 signed IIAs, according to UNCTAD’s International Investment Agreements Navigator (Ibid.), or 3596 signed IIAs, according to the WTI’s Electronic Database of Investment Treaties (EDIT)

  30. 30.

    For this purpose we have followed the classification found in the UN World Economic Situation and Prospects report, United Nations (2019) World Economic Situation and Prospects. United Nations Publications, New York.

  31. 31.

    Lavranos N (2013) The New EU investment treaties: convergence towards the NAFTA model as the new plurilateral model BIT text? ID 2241455

  32. 32.

    In 1985 Ecuador and Uruguay had an exchange of letters on investment protection that has the same value has a BIT, but it is not formally a treaty.

  33. 33.

    Argentina-Chile BIT (1991), Arts. 1–5 and Art. 10

  34. 34.

    Polanco Lazo R (2016) Two worlds apart: the changing features of international investment agreements in Latin America. In: Tanzi A, Asteriti A, Polanco Lazo R, Turrini P (eds) International investment law in Latin America/Derecho Internacional de las Inversiones en América Latina. Brill/Martinus Nijhoff, Leiden, pp 68–97, 81–82

  35. 35.

    Argentina-Chile FTA (2017), Arts. 8.4, 8.7, 8.8, 8.12 (and Annex 8.12). Art. 8.32, and Art. 19.4

  36. 36.

    Polanco Lazo R (2016) Two worlds apart: the changing features of international investment agreements in Latin America. In: Tanzi A, Asteriti A, Polanco Lazo R, Turrini P (eds) International investment law in Latin America/Derecho Internacional de las Inversiones en América Latina. Brill/Martinus Nijhoff, Leiden, pp 68–97, 84

  37. 37.

    International Institute for Sustainable Development (IISD) (2017) Ecuador denounces its remaining 16 BITs and publishes CAITISA audit report. In: Investment treaty news. https://www.iisd.org/itn/2017/06/12/ecuador-denounces-its-remaining-16-bits-and-publishes-caitisa-audit-report/. Accessed 3 June 2019

  38. 38.

    Coronel Ortega C (2017) Ecuador and ISDS – a rough journey and a possible new beginning. In: Investment claims. https://oxia.ouplaw.com/page/Ecuador-and-ISDS. Accessed 3 June 2019

  39. 39.

    Espinosa Velasco SX (2019) Ecuador and international investment law and policy: between constitutional sovereignty and state responsibility. Maastricht University, p 499

  40. 40.

    Jaramillo J (2018) New Model BIT proposed by Ecuador: is the cure worse than the disease? In: Kluwer arbitration blog. http://arbitrationblog.kluwerarbitration.com/2018/07/20/new-model-bit-proposed-ecuador-cure-worse-disease/. Accessed 3 June 2019

  41. 41.

    UNCTAD (2019) International investment agreements navigator. In: Investment policy hub. http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu. Accessed 22 May 2019

  42. 42.

    Ratton Sánchez-Badin M, Morosini F (2017) Navigating between resistance and conformity with the international investment regime. The Brazilian Agreements on Cooperation and Facilitation of Investments (ACFIs). In: Morosini F, Ratton Sánchez-Badin M (eds) Reconceptualizing international investment law from the Global South. Cambridge University Press, Cambridge, UK/New York, pp 218–250

  43. 43.

    Brazil-Chile FTA, Ch. 8 and Ch. 9

  44. 44.

    Gallegos Zúñiga J (2019) Algunos cambios que incorpora el T–MEC, en materia de inversiones extranjeras, en relación con lo previsto en el capítulo XI del TLCAN. Revista Arbitraje XII:167–179, 171–177

  45. 45.

    USMCA, Arts. 14.4.4 and 14.5.4

  46. 46.

    Valasek MJ et al (2018) Major changes for investor-state dispute settlement in new United States-Mexico-Canada Agreement. In: Norton Rose Fulbright. https://www.nortonrosefulbright.com:443/en/knowledge/publications/91d41adf/major-changes-for-investor-state-dispute-settlement-in-new-united-states-mexico-canada-agreement. Accessed 29 May 2019

  47. 47.

    USMCA, Annex 14-D, Art. 14.D.3

  48. 48.

    Labonté R, Crosbie E, Gleeson D, McNamara C (2019) USMCA (NAFTA 2.0): tightening the constraints on the right to regulate for public health. Glob Health 15:35, 10. https://doi.org/10.1186/s12992-019-0476-8

  49. 49.

    Valasek MJ et al (2018) Major changes for investor-state dispute settlement in new United States-Mexico-Canada Agreement. In: Norton Rose Fulbright. https://www.nortonrosefulbright.com:443/en/knowledge/publications/91d41adf/major-changes-for-investor-state-dispute-settlement-in-new-united-states-mexico-canada-agreement. Accessed 29 May 2019

  50. 50.

    International Centre for Settlement of Investment Disputes (ICSID) (2019) The ICSID caseload – statistic (Issue 2019-1). https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202019-1(English).pdf. Accessed 9 Feb 2019, p 11

  51. 51.

    UNCTAD (2019) Investment Dispute Settlement Navigator. https://investmentpolicyhubold.unctad.org/ISDS. Accessed 28 May 2019

  52. 52.

    Ibid.

  53. 53.

    For this purpose, we have considered the nationality that was claimed in each respective case and the applicable IIA to that dispute.

  54. 54.

    Empresa Nacional de Electricidad S.A. v. Argentine Republic (ICSID Case No. ARB/99/4); Metalpar S.A. and Buen Aire S.A. v. Argentine Republic (ICSID Case No. ARB/03/5); Enersis, S.A. and others v. Argentine Republic (ICSID Case No. ARB/03/21); Compañía General de Electricidad S.A. and CGE Argentina S.A. v. Argentine Republic (ICSID Case No. ARB/05/2)

  55. 55.

    Industria Nacional de Alimentos, S.A. and Indalsa Perú, S.A. (formerly Empresas Lucchetti, S.A. and Lucchetti Perú, S.A.) v. Republic of Peru (ICSID Case No. ARB/03/4)

  56. 56.

    Quiborax S.A., Non-Metallic Minerals S.A. v. Plurinational State of Bolivia (ICSID Case No. ARB/06/2)

  57. 57.

    Flughafen Zürich A.G. and Gestión e Ingenería IDC S.A. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/10/19)

  58. 58.

    Polanco Lazo R (2017) The chilean experience in South-South investment and trade agreements. In: Morosini F, Ratton Sánchez-Badin M (eds) Reconceptualizing international investment law from the global South. Cambridge University Press, Cambridge, UK/New York, pp 95–145, 140–141

  59. 59.

    The other cases initiated by natural persons are: Carlos Ríos and Francisco Ríos v. Republic of Chile (ICSID Case No. ARB/17/16), initiated in 2017, under the 2006 Chile-Colombia FTA; Carlos Esteban Sastre v. United Mexican States initiated in 2017, under the 1996 Argentina-Mexico BIT, 2006 Mexico-Spain BIT and 1995 Mexico-Switzerland BIT; and Michael Anthony Lee-Chin v. Dominican Republic (ICSID Case No. UNCT/18/3), initiated in 2018 under the CARICOM – Dominican Republic FTA (1998)

  60. 60.

    UNCTAD (2019) Investment Dispute Settlement Navigator. https://investmentpolicyhubold.unctad.org/ISDS. Accessed 28 May 2019

  61. 61.

    Ibid.

  62. 62.

    UNCTAD (2017) Special update on investor–state dispute settlement: facts and figures. IIA issues note 3, p 6

  63. 63.

    UNCTAD (2019) Investment Dispute Settlement Navigator. https://investmentpolicyhubold.unctad.org/ISDS. Accessed 28 May 2019

  64. 64.

    At the moment of writing, in three cases there is no information about the constitution of the tribunal: Shanara Maritime International, S.A. and Marfield Ltd. Inc. v. United Mexican States (UNCITRAL), Carlos Esteban Sastre v. United Mexican States (UNCITRAL), and Dick Fernando Abanto Ishivata v. Bolivarian Republic of Venezuela (ICSID Case No. ARB(AF)/18/6). In one case, the appointment of the President is still pending: Inversiones Continental (Panamá), S.A. v. Republic of Honduras (ICSID Case No. ARB/18/40).

  65. 65.

    Brigitte Stern (five appointments), Rodrigo Oreamuno (four appointments), Juan Fernández-Armesto (three appointments), Horacio Grigera Naón (two appointments), L. Yves Fortier (two appointments), Marc Lalonde (two appointments), Bernardo Cremades (2 appointments), and Gabrielle Kaufmann-Kohler (two appointments)

  66. 66.

    Polanco Lazo R, Desilvestro V (2018) Does an Arbitrator’s background influence the outcome of an investor-state arbitration? Law Pract Int Courts Tribunals 17:18–48, 27. https://doi.org/10.1163/15718034-12341366

  67. 67.

    Langford M, Behn D, Lie RH (2017) The revolving door in international investment arbitration. J Int Econ Law 20:301–332, 310. https://doi.org/10.1093/jiel/jgx018

  68. 68.

    Olguín v. Paraguay (ICSID Case No. ARB/98/5) and Empresa Nacional de Electricidad S.A. v. Argentina

  69. 69.

    Polanco Lazo R, Desilvestro V (2018) Does an Arbitrator’s background influence the outcome of an investor-state arbitration? Law Pract Int Courts Tribunals 17:18–48, 27. https://doi.org/10.1163/15718034-12341366

  70. 70.

    Gambrinus, Corp. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/31)

  71. 71.

    Convial Callao S.A. and CCI – Compañía de Concesiones de Infraestructura S.A. v. Republic of Peru, ICSID Case No. ARB/10/2

  72. 72.

    Carlos Rios and Francisco Javier Rios v. Republic of Chile (ICSID Case No. ARB/17/16)

  73. 73.

    According to the information available at UNCTAD (2019) Investment Dispute Settlement Navigator. https://investmentpolicyhubold.unctad.org/ISDS. Accessed 28 May 2019

  74. 74.

    Ibid.

  75. 75.

    Polanco R (2019) The return of the home state to investor-state disputes: bringing back diplomatic protection? Cambridge University Press, Cambridge, UK/New York, pp 253–254

  76. 76.

    UNCTAD (2019) Investment Dispute Settlement Navigator. https://investmentpolicyhubold.unctad.org/ISDS. Accessed 28 May 2019

  77. 77.

    Transban Investments Corp. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/12/24)

  78. 78.

    Hepburn J (2017) Tomka-chaired tribunal declines jurisdiction over Transban claim – but majority diverges from Fabrica tribunal, and sees no problem with investor consent given after Venezuela’s ICSID denunciation notice. In: Investment arbitration reporter (IAReporter). https://www.iareporter.com/articles/tomka-chaired-tribunal-declines-jurisdiction-over-claim-filed-on-final-day-of-venezuelas-icsid-membership/. Accessed 6 June 2019

  79. 79.

    Gambrinus, Corp. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/31), Award 15 June 2015, paras 135 and 277

  80. 80.

    Tidewater Investment SRL and Tidewater Caribe, C.A. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/10/5), Decision on Jurisdiction, 8 February 2013, paras 8 and 198

  81. 81.

    Highbury International AVV and Ramstein Trading Inc. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/1), Award, 26 September 2013, paras 127 and 236

  82. 82.

    Polanco Lazo R, Desilvestro V (2018) Does an Arbitrator’s background influence the outcome of an investor-state arbitration? Law Pract Int Courts Tribunals 17:18–48, 27. https://doi.org/10.1163/15718034-12341366

  83. 83.

    Polanco Lazo R (2016) Beyond ICSID arbitration – the Centre for Settlement of Investment Disputes of UNASUR. In: Bjorklund AK (ed) Yearbook on international investment law and policy 2014–2015. Oxford University Press, New York, pp 375–404; Sarmiento MG (2016) The UNASUR Centre for the Settlement of Investment Disputes and Venezuela: Will Both Ever See the Light at the End of the Tunnel? J World Invest Trade 17:658–680. https://doi.org/10.1163/22119000-12340008

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Authors and Affiliations

  1. World Trade Institute – University of Bern, Bern, Switzerland

    Rodrigo Polanco Lazo & Anqi Wang

  2. Swiss Institute of Comparative Law, Lausanne, Switzerland

    Rodrigo Polanco Lazo

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  1. Rodrigo Polanco Lazo
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  2. Anqi Wang
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Correspondence to Rodrigo Polanco Lazo .

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Editors and Affiliations

  1. School of Law, City University of Hong Kong, Kowloon, Hong Kong

    Julien Chaisse

  2. School of Business and Law, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

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Lazo, R.P., Wang, A. (2019). Intra-Latin America Investor-State Dispute Settlement. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_44-1

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    Intra-Latin America Investor-State Dispute Settlement
    Published:
    05 May 2020

    DOI: https://doi.org/10.1007/978-981-13-5744-2_44-2

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    Intra-Latin America Investor-State Dispute Settlement
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    06 December 2019

    DOI: https://doi.org/10.1007/978-981-13-5744-2_44-1

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