Originally from World Arbitration And Mediation Review (WAMR)

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SUMMARY: ARBITRATION OF

INTERNATIONAL OIL, GAS, AND ENERGY
DISPUTES IN LATIN AMERICA
By Alexia Brunet* and Juan Agustin Lentini+

Alexia Brunet and Juan Agustin Lentini assessed the rise of arbitration
in Latin America, its effect on Latin American States, and the current
attitude of Latin American States toward arbitration.

Throughout most of the 20th century, Latin America was a hostile
environment for foreign investment due to many nations’ adherence to the
Calvo Doctrine.1 Named after Carlos Calvo, a 19th century Argentine
diplomat, the Calvo Doctrine arose out of fear of armed intervention by
foreign States.2 The twin tenets of the doctrine are: first, sovereign States
have the right to be free of interference from other States; and second,
foreigners should not be afforded any rights or privileges that are not
afforded to nationals.3 Accordingly, foreigners have to seek redress for any
wrongs in the national courts.4 The Calvo Doctrine was embedded in
investment contracts in the form of a “Calvo Clause” that required disputes
with host States to be submitted to the host State’s domestic courts and
prohibited a foreign investor from seeking diplomatic protection.5

The 1980’s debt crisis in Latin America forced many States to
reconsider their hesitancy toward foreign investment.6 These States
experienced limited financing, increasing inflation, and economic
stagnation.7 Latin America began looking outward for capital, while
simultaneously making internal changes to support foreign investment.8
Among the changes made by some States were privatization of industries,