Originally from World Arbitration and Mediation Review

Commercial Arbitration in Mercosur: Recent Developments
by Welber Barral*
1. Introduction
In 1991, the presidents of Argentina, Brazil, Paraguay, and
Uruguay signed the Treaty of Asunción. The Treaty proposed the
creation, in four years, of the Southern Common Market (Mercosur),
which would imply the “free circulation of goods and factors of
production” and the “coordination of macroeconomic and trade policies.”
Since that signature, these ambitious endeavors could not be completed,
and the following years would demonstrate that those leaders did not
anticipate how difficult the task of harmonizing national trade laws could
become. Neither did they anticipate that the next decade would be marked
by cyclical economic and currency crisis in the region. Nevertheless,
Mercosur has reached, after fifteen years, an impressive legal framework
that sustains the increasing trade flows among the trading partners. The
initial ambitions were properly adjusted, and the subsequent treaties
affirmed the necessity of consolidating a customs union, before further
economic integration could be envisaged. Some trade disputes arose
among the State Parties, but they could be addressed to a dispute
mechanism system, initially organized in 1991 and later refined in 2002
with clearer procedural rules.
Mercosur’s relevance, however, cannot be understood if limited to
its trade statistics, or to the number of legal documents involved in its
functioning. Integration in the Southern Corner had enormous
significance to the reduction of ancient suspicions among those
neighbors. Furthermore, the signature of the Treaty of Asunción arrived—
not coincidently—with the end of military regimes and the
democratization of the region. In terms of economic policy, the project of
regional integration is concomitant to the opening of national economies
to international trade, phasing out decades of state intervention, and import
substitution.
As it reaches maturity, however, Mercosur faces the challenge of
defining a stable legal system that can bring predictability to regional trade
and investment while allowing its integration in the world economy. The
experience so far has encompassed the approval of rules (“decisions”) by
the Common Market Council, which were composed by high-level
representatives of each State Party. These “decisions” are subsequently