International Business Law Advisor : Miami International Business Lawyer & Attorney : Santiago Cueto Law Firm : Florida and Global Business Litigation

 Although the hearings began live-streaming yesterday, Simon Lester over at the International Economic Law and Policy Blog, has reported that the International Center for the Settlement of Investment Disputes (ICSID) is webcasting a hearing in the Pac Rim CAFTA-DR investment arbitration (via Luke Peterson):

A hearing on preliminary objections in the above case will be transmitted live via internet feed on Monday, May 31, 2010 and Tuesday, June 1, 2010, starting at 9:30 a.m. EST (U.S. Eastern Time) each day. The live streaming is being made available pursuant to Article 10.21.2 of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA).

Accessing the Live Stream

To access the live stream you will need Windows Media Player, which is available free for download here:
http://www.microsoft.com/windows/windowsmedia/download/AllDownloads.aspx

The stream will be transmitted in both English and Spanish, and will be available in high speed (256 kbps) and low speed (56 kbps) to accommodate different bandwidth capabilities.

For the hearing in English, click here: mms://wbmswebcast1.worldbank.org/live1

For the hearing in Spanish, click here: mms://wbmswebcast1.worldbank.org/live2

For those interested in following along, relevant documents are here: http://www.minec.gob.sv/index.php?option=com_phocadownload&view=category&id=26:otros-documentos&Itemid=63

As Lester commented, live-casting this type of hearing is a great development.  It will be interesting to see if other dispute resolution organizations will follow suit

     -Santiago

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South America Hosts Majority of ICSID Cases

The International Center for the Settlement of Investment Disputes (ICSID) recently released a report on its caseload statistics. The report includes lots of interesting data and illustrative charts. One chart I found particularly noteworthy was the geographic distribution of ICSID cases by state party.

South America leads the pack with 30%, followed by Eastern Europe and Central Asia (22%), Sub-Saharan Africa (16%), Middle East and North Africa (10%), South & East Asia and the Pacific (8%), Central America and the Caribbean (7%) and North America (6%). Again, the statistics confirm the widespread use of ICSID arbitration around the globe.

ICSID

Another interesting chart shows the basis of consent invoked to establish ICSID jurisdiction. Sixty-two percent of all cases came from Bilateral Investment Treaties, while twenty-two percent came from investment contracts. An additional eleven percent came from various multilateral treaties (Energy Charter 5%, NAFTA 4%, ASEAN 1%, DR-CAFTA 1%), and five percent came from the investment law of the host state.

As one commenter mentioned “the fact that ICSID cases are derived from so many different sources–domestic law, contracts, bilateral treaties, and multilateral treaties–underscores the vibrancy of ICSID investment arbitration.”

Finally, the frequency with which ICSID cases are pursued is also significant, with over half of all ICSID cases in its thirty-seven year history registered in the past six years.

These are promising statistics and show increased demand for ICSID arbitration.

Now if we can only get Brazil to ratify some BITs and the ICSID Convention...

Trend to Watch: Look for ICSID cases to Increase Further As Governments Step-Up Their Efforts to Attract Foreign Capital.

 -Santiago

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Brazil is on a roll.  Yesterday’s Financial Times included a special 10-page section devoted to Brazil. One of the articles, Olympic Accolade Sets Seal on Progress, written by Jonathan Wheatly, succinctly describes the “exuberant optimism” that has gripped the country since it was awarded the 2016 Olympic Games.  And the Wall Street Journal recently reported on the Brazilian stock exchange making spectacular gains in the article Brazilian Stock Scores Spectacular Gains on US GDP Growth.  This is following last month’s IPO of Banco Santander’s Brazilian unit, the world’s largest IPO so far this year, as reported in the New York Times article, Banco Santander's Brazil Unit Raises $8 Billion in I.P.O.

While these events are certain to fund rapid expansion in Brazil’s capital sector, the exuberance is tempered by a look at the long road ahead. Yet it is impossible not to be blinded by the bright future that seemed out of reach not long ago.  Antonio Quintella, country manager at Credit Suisse Sao Paulo put it succinctly:

Nothing is guaranteed. But it is reasonable to assume that [Brazil] won’t repeat the mistakes of the past…it is very difficult not to be bullish”

Brazil Should Ratify Bilateral Investment Agreements

Brazil has emerged from the global recession as the darling of international investors; this has created a wealth of investment opportunities.  However, it lags behind all other Latin American countries in one important respect: it has yet to ratify any bilateral investment agreements (BITs).  These agreements protect international investors when disputes arise in host countries. In light of Brazil’s recent good fortune, the time has come for Brazil to rethink its approach to BITs and implement measures to protect foreign investors.

Bilateral Invest Agreements Provide Important Safeguards

BITs obligate host countries to provide safeguards for foreign investment. If host governments fail to heed these safeguards, investors maybe awarded money damages. The following safeguards are among those afforded by BITs:

1. host countries are prohibited from expropriating foreign investment without compensation.
2. The agreements often include national treatment provisions, which require a government to treat foreign investors no less favorably than they treat domestic investors. They also often include most favored nation provisions, which extent the same protections afforded to foreign investors from one country to foreign investors from other countries.
3. foreign investors have the right to transfer funds into and out of the host country without delay.
4.  In addition to substantive protections, BITs provide powerful dispute resolution mechanisms. Under these mechanisms, Foreign investors may choose to resolve disputes in binding international arbitration such as in the International Center for Settlement of Investment Disputes (ICSID) and arbitral tribunals organized under the United Nations Commission of International Trade Law (UNCITRAL).

These agreements provide important safeguards against government mistreatment, mitigating some of the political risks associated with making investments in foreign countries.

Conclusion

Although Brazil’s reluctance to ratify BITs may help to protect it against claims by foreign investors, the recent surge in outbound Brazilian investment should cause Brazil to reconsider its position against international investment agreements. 

While Brazil is busy contemplating this proposition, there is a way investors can structure their investments to take advantage of BITs between other states. Stay tuned, and I’ll let you know how in a follow-up post.

Trend to Watch: A Surge in Investment Activity in Brazil Will Lead to the Adoption of International Investment Agreements

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