Originially from: World Arbitration and Mediation Review (WAMR)

The Climate for Arbitration Gets Warmer;
Multilateral Agreements Smooth the Way
By Whitney Debevoise and Richard Hearne. Mr. Debevoise is a partner and
Ricardo Hearne is an associate in the Washington, D.C. office of Arnold &
Porter. Both specialize in international law. Reprinted with the permission of the
New York Law Journal, Copyright, 1993. The New York Law Publishing
Company.
Arbitration was long a disfavored method of dispute settlement in Latin
America, particularly for international disputes. Many forces are now converging,
however, to make arbitration much more widely available in the region, both for
investment and commercial cases.
There have been three general modes of dispute resolution in Latin America.
The most common involved litigation before the courts of the country of either of
the parties to a transaction. Second, parties have arbitrated their disputes,
frequently in a country with no connection to the parties or the transaction. Third,
parties have used other forms of dispute resolution, such as mediation,
conciliation, and diplomatic intervention.
Historically, there has been a strong hostility in Latin America to foreign
dispute resolution in general and to international arbitration in particular.
Countries in the region have traditionally applied the so-called Calvo Doctrine,
under which, in essence, a foreign investor must accept the exclusive jurisdiction
of the country in which he or she decides to invest, thereby excluding the
submission of many kinds of disputes to international arbitration.
Similarly, many Latin American countries refused to enforce agreements to
arbitrate future disputes, with the consequence that parties had to agree to submit
a particular dispute to arbitration after the dispute had arisen by means of a special
agreement known as a “compromise arbitral”
Moreover, the domestic laws of certain Latin American countries stated that if a
party intended to agree to arbitrate a dispute that would otherwise fall within the
jurisdiction of the national courts, it could do so only before a panel of arbitrators
consisting of citizens of that country.
Hostility to Arbitration Lessening
Significantly, the long-standing regional aversion, even hostility, to arbitration
has started to change.
Bar associations, law schools, and chambers of commerce are organizing and