THE YEAR IN REVIEW

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AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW

International Investment and Development


This article highlights  2015 developments in international investment law and development rulemaking in Bolivia.

Bolivia – Investment Arbitration

On June 25, 2015, the new Bolivian Conciliation and Arbitration law was enacted25 to regulate ADR, including commercial and investment arbitration. The Bolivian government made a bold gamble by incorporating its own investment dispute settlement system after having separated from the international investment arbitration system by denouncing the twenty-two BITs that it had in force,26 denouncing the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, and being the first country to separate from the
International Centre for Settlement of Investment Disputes.

The investment arbitration provisions of Law No. 708 fall within the provisions of Article 320 II of the Bolivian Constitution: “Every foreign investment shall submit to Bolivian jurisdiction, laws and authorities, and no one may cite an exceptional situation, nor appeal to diplomatic claims to obtain a more favorable treatment.”27 The following common provisions applicable to all cases of
investment disputes are established28:

(a) Bolivian law shall be the applicable law;

(b) compulsory conciliation prior to the arbitration is incorporated;

(c) either the conciliation or the arbitration will be held in the territory of Bolivia, but hearings to produce evidence and other proceedings may be held outside the Bolivian territory; and

(d) the arbitration shall be decided in accordance with the law and shall apply the Bolivian constitution and laws to decide the merits of the dispute.

The settlement of investment disputes is classified by Law No. 708 as follows:

1.Disputes concerning foreign and mixed investment.29

The law refers to controversies affecting, on one hand, foreign investments and joint
investments made by the State and, on the other, foreign or domestic investment in which
the private partner of the company becomes a stakeholder under the terms defined in Law
No. 516. In this case, the place of arbitration, the arbitration rules, and the appointing
authority can be chosen by mutual agreement of the parties. Parties may also adopt
national rules, the rules of international arbitration centers such as the International Chamber
of Commerce, or ad hoc courts applying the rules of UNCITRAL, among others. For this
category, the duration of arbitration may be extended for up to an additional
600 calendar days.

2. Bolivian investment disputes.30

Law No. 708 provides for domestic investment arbitration by natural or legal persons and public or private entities, opening a window for Bolivian investors to collect State debts in this way.
The unique feature in this law is that administration by international arbitration centers is
not allowed. Rather, the arbitration center is chosen by the parties and the rules
regarding conciliation and arbitration are administered by the national arbitration center.

3. Disputes between State and intergovernmental companies.31

The provisions of Bolivian investment disputes are applied in the case of wholly
state-owned enterprises while the provisions of foreign investment disputes are applied
in the case of joint state-private companies receiving contributions from private
partners.

The biggest criticism of Law No. 708 is in the case of foreign investment disputes in which arbitration is compulsory and based in Bolivia.32 The courts, from a place of competence, decide on actions for annulment of awards. There are concerns that foreign investors will not have access to a neutral venue and, therefore, will assess more favorable investment terms offered in neighboring countries.Also, Law No. 708 does not establish the mechanism of implementation or the standards of protection granted by the State, something that will surely be regulated or established in the BITs to be signed in the future.


25. Law No. 708, G. O. 770 NEC (June 25, 2015) (Bol.) (replaces Law No. 1770 enacted on 1997
of arbitration and conciliation).

26. See Carlos Corz, Bolivia denounced at least 20 international treaties that were contrary to the Constitution, LA RAZON (May 20, 2015, 10:38 AM), http://www.la-razon.com/seguridad_nacional/Bolivia-tratadosinternacionales-contrarios-Constitucion_0_2274372629.html.

27. Bolivia’s Constitution of 2009 (2009), art. 320 (Bol.).

28. See Law No. 708, art. 129.

29. Id. at art. 132, 133.

30. Id. at art. 130, 131.

31. Id. at art. 127.

32. This is only true for investment arbitration. In international commercial
arbitration the seat of arbitration and applicable law may be freely agreed by the parties. See id. at art. 54.