The Uncertain Future of ICSID in Latin America
66 Pages Posted: 23 Feb 2009
Date Written: February 20, 2009
The purpose of this article is to research the historical interaction of the International Centre for Settlement of Investment Disputes (ICSID) and Latin America, in an effort to suggest that the recent ICSID-unfriendly measures taken by some Latin American countries might not be an aberrational phenomenon in the region. Section One of this paper is devoted to exploring the roots of Latin American's initial rejection and subsequent acceptance of the ICSID as an effective protection for foreign investors. The first part of this section provides a brief summary of the Centre's functioning and jurisdictional requirements, with special emphasis on the doctrinal issue of consent and the Bilateral Investment Treaties (BIT), as a form of expressing consent in advance. Section Two of this paper analyzes the general growing hostility against ICSID in the region. The first part of this section describes different announcements against ICSID made by representatives of several Latin American countries and provides a brief description of the reasoning of this criticism. The second part analyzes the recent events of Bolivia, Ecuador, and Venezuela. For instance, in 2007 Bolivia became the first country ever to denounce the Washington Convention, thus formally withdrawing from ICSID. Ecuador excluded an entire set of claims from the Centre's jurisdiction; and, the Venezuelan Supreme Court recently issued an opinion limiting the reach of the country's consent to submit to the Centre's jurisdiction. The analysis in this Section is performed in light of the particularized historical position of each of these countries towards FDI in the last decades, and the legal implications of the recent hostile ICSID arbitration measures taken. An effort is made to try to highlight the different opinions of respectable practitioners in regard to the consequences of such measures. Finally, the conclusions of the paper suggest that the system of protection of FDI in Latin America may be on the eve of a drastic change. If, moved by the engine of ideology, the rest of Latin America follows the example of Bolivia (the most radical of the ICSID-hostile countries) and denounces the Washington Convention, instead creating a new forum to resolve FDI disputes, at the regional level (as was recently proposed), the future of ICSID in Latin American becomes uncertain.
Keywords: Foreign Direct Investment, Latin America, International Centre for Settlement of Investment Disputes, Washington Convention, ICSID Convention, ICSID Withdrawal, Exclusion, Jurisdiction, International Arbitration, Investment Arbitration, Treaty Arbitration, Bilateral Investment Treaty, CIADI
JEL Classification: F21, K33, K40
Suggested Citation: Suggested Citation