The effects of COVID-19 on international arbitration in Latin America

Latam - 
Mónica Van der Schraft y Cristóbal Sarralde, partner and principal associate at Garrigues Chile.

International arbitrations are not associated with any particular jurisdiction, and in Latin America and elsewhere, most arbitral institutions keep handling arbitral proceedings and enabling them to continue, despite COVID-19, by using available technology

As Carlos de los Santos discussed in the previous issue, the flexibility, versatility and efficiency of international arbitration has enabled it to emerge as the most appropriate dispute resolution mechanism in a situation of the type we are encountering, when compared with the temporarily halted, and potential subsequent collapse of, the state court systems.

Most international arbitral institutions were already sufficiently prepared to tackle a situation like the one we are facing. In fact, in recent years, terms like paperless, electronic filling, electronic bundles, etc. featured regularly in our daily work.

Now, certain recommendations have simply been implemented in further detail to ensure that the arbitration system is operating fully and comprehensively.

By way of example, on April 9 the ICC International Court of Arbitration, which administers numerous international arbitrations seated in Latin America, published guidance with good practices to ensure that arbitration proceedings will continue and that the services used by the arbitral tribunal and the parties are effective and efficient.

Latin American arbitration centers have replicated that initiative, by deferring, generally, to the decision of the parties and the arbitral tribunal the way to continue processes in progress, in addition to providing ways and means of filing new requests.

For example, the arbitration centers of the chambers of commerce of Bogotá (Circular 001) and Medellín (Circular N°82) allowed the arbitral tribunals or the parties to decide in relation to continuing the processes and to the deadlines involved. CAM Santiago issued a statement on the publication in Chile of Law No 21,226, containing an exception regime for judicial proceedings, with that arbitration center specifying that, although the law provides for suspension of the periods for production of evidence in arbitrations, CAM Santiago considers that this would be without prejudice to any agreements concluded by the parties with the tribunal arbitral, limited by respect for the safeguards of due process. The Lima Chamber of Commerce Arbitration Center ordered suspension of all applicable time periods, unless the parties and the respective arbitral tribunal decide to continue with the proceeding, and as long as it is continued remotely. Similarly, recommendations have been issued by other arbitration centers such as the Brazil-Canada Chamber of Commerce  Arbitration Center (AR 39/2020).

Additionally and in the context of state of emergency declarations, the various jurisdictions in Latin America have passed legislation affecting the proceedings conducted in those jurisdictions, which could potentially affect the course of international arbitration proceedings.

In fact, Argentina, Brazil and Ecuador passed general laws that are applicable to judicial proceedings. For example, the Supreme Court of Argentina decreed an extraordinary judicial public holiday starting on March 20, 2020 which has been successively renewed, and, at the moment, is set to last until April 26. In Brazil, Decision 313/2020 was passed by the National Council of Justice, setting out a regime that suspended both face-to-face work at the courts and all procedural time periods, at least until April 30, 2020. In Ecuador, the Council of the Judiciary suspended all activities of the judicial service while the state of emergency is in place.

Other Latin American countries have both passed general laws and specifically made them binding for arbitral tribunals. In this respect, Colombia's law and justice ministry passed Decree 491 2020, adopting measures relating to the suspension of time limits and the conduct of alternative dispute resolutions processes, in addition to specifying expressly that arbitration processes will continue through their stages unless a technical reason prevents them from continuing, and one of the parties has requested suspension; additionally, the Superior Council of the Judiciary in Colombia suspended, at least until April 26, any time periods that had not run. Moreover, Chile passed Law No 21,226, which both suspended face-to-face hearings and as a precaution suspended periods for production of evidence, in a provision that expressly included arbitration proceedings.

Although international arbitrations are not associated with any particular jurisdiction, there are matters that do depend on national jurisdictions and could be affected by measures decreed by those jurisdictions in relation to COVID-19. In fact, to comply with those provisions, any stages of arbitration proceedings that require face-to-face contact, such as hearings, must necessarily be suspended or carried out remotely using the available technology, provided it ensures compliance with due process rules. Additionally, there will probably be a delay to the settlement of appeals to set aside arbitral awards, and the same will happen when national jurisdictions are needed to recognize and enforce awards.

It would be advisable in any event for the measures taken by the authorities, in Latin America and elsewhere, not to interfere or hinder the great job that is being done by arbitral institutions for handling proceedings and enabling them to continue, by using available technology while ensuring that due process rules are observed. It is not simply a challenge but an obligation of the arbitral system, to continue providing a service in the general interests of international commerce so that it can continue operating, and head off an unprecedented collapse.