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

I’ve been lucky to have visited Ireland a few times in the past several years. From the unbridled majesty of the Cliffs of Moer, to the emerald hills of Kilarney, to the bustling streets of Dublin, everything about Ireland is pastoral and progressive at the same time. 

Leave it to an international law geek like me to notice that even its judiciary reflects this unique mix.  While holding strong to its English common law heritage, I found that Ireland is willing to abolish entire legislative codes that fail to keep up with modern jurisprudence.

Ireland Arbitration Act of 2010

In keeping with its progressive mandate, Ireland recently passed a new arbitration act that removes the distinction between domestic and international arbitration and creates a Swiss-style one-stop shop for post-award court proceedings.

The 2010 legislation includes the entire text of the United Nations Convention on International Trade Law Model Law on International Commercial Arbitration (Model Law) and will be instantly recognizable to lawyers across the globe. The Arbitration Act of 2010 will apply the Model Law to all arbitrations in Ireland and do away with the historical distinction between domestic and international arbitration.

UNCITRAL Model Law

The UNCITRAL Model Law has been adopted by more than 50 countries and covers all stages of the arbitral process. While initially designed for international commercial arbitration in mind, other countries such as Germany, New Zealand and Kenya have extended it to domestic arbitrations. Ireland originally adopted the Model Law in the Arbitration (International Commercial) Act 1998, but only for international commercial arbitrations.

Key Revisions to Irish Arbitration Law

1.  No Distinction Between Domestic/International Arbitrations

There will be no difference between the legislative provisions relating to domestic arbitrations and international arbitrations. Irish practitioners will need to be familiar with the Model Law and this will be particularly useful when advising on contractual arbitration clauses, particularly those which have an international dimension.

2. Judicial Intervention Virtually Eliminated

The Arbitration Act of 2010 abolished the 'case stated' procedure. Arbitrators will no longer be able to refer to the courts a question of law arising in the course of the arbitration. The removal of the case stated procedure and significant reduction of the scope for judicial intervention will likely to lead to an increased focus on the choice of arbitrators and appointment mechanisms and requirements.

3. Limited Award Challenges

The only method of challenging an arbitral award will be under Article 34 of the Model Law. The grounds are extremely limited and the 2010 legislation will make it far more difficult to challenge an arbitral award than was the case under the previous legislation. The Model Law grounds of challenge have been interpreted narrowly in other jurisdictions, and the Irish Courts are likely to adopt a similar approach, in keeping with their approach to arbitration generally*.

4. Cost Allocation                     

The 2010 legislation allows the parties to agree on the allocation of costs either before or after the dispute has arisen (Section 21). The previous legislation provided that any such agreement on costs was only binding if it was reached after the dispute had arisen.

Effective Date June 2010

The 2010 legislation will apply to all arbitrations which commence after the legislation comes into operation. The 2010 legislation comes into operation in June 2010, 3 months from the enactment date.

Trend to Watch: Look for a Precipitous Increase in International Commercial Arbitrations Taking Place in Ireland in the Next Several Years 

    -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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