Foreign investors require that disputes in infrastructure projects be resolved through agile, impartial, and technical-legal mechanisms. In Colombia, arbitration (both national and international) is a valuable tool with a long tradition, although its costs and duration are often criticized.
Amicable Composition: This alternative dispute resolution method allows parties to reach an agreement without resorting to a trial. Facilitated by a neutral third party known as an amiable compositeur, it promotes communication and dialogue to find mutually satisfactory solutions. Its flexibility and speed enable parties to have greater control over the outcome and resolve disputes more efficiently and economically. Additionally, it fosters cooperation and respect, beneficial for maintaining long-term relationships.
In Colombia, amicable composition is regulated by Law 1563 of 2012, applicable in civil and commercial matters. It is particularly useful in disputes related to concession contracts and other commercial agreements, where speed and efficiency are crucial to avoid further economic losses.
However, amicable composition can sometimes become judicialized due to difficulties in distinguishing between technical and legal disputes. This confusion arises when decisions by the amiable compositeur are interpreted differently by the parties. To mitigate these issues, contracts and amicable composition agreements must clearly define the powers of the amiable compositeur and establish specific procedures for dispute resolution.
Dispute Boards (DB): Especially useful in private infrastructure investment, DBs are effective tools for preventing and resolving disputes in private projects. Composed of one or three experts appointed at the beginning of the contract, they remain throughout its execution to address and resolve conflicts early, preventing escalation to costly arbitration or litigation.
There are three main types of Dispute Boards:
- Dispute Review Board (DRB): Issues non-binding recommendations.
- Dispute Adjudication Board (DAB): Makes binding decisions.
- Combined Dispute Board (CDB): Can issue both recommendations and binding decisions.
DBs foster collaboration and trust between parties, contributing to project efficiency and sustainability by enabling quick and technical resolution of disputes, thus avoiding delays and cost overruns.
In summary, beyond judges as a forum for dispute resolution, Colombia offers a wide variety of options to improve the position of a foreign investor in the event of a contractual dispute.
About the Author
Daniel Peña is a Partner at PM Abogados. Lawyer from Externado University of Colombia with a master’s degree in law from the University of London, who has also studied in Grenoble, France as well as carrying out more in-depth studies in the Hague. Daniel has almost twenty years of recent experience as a partner of one of the most recognized law firms in Colombia in the area of arbitration and litigation, intellectual property, telecommunications, media and technology. He is an arbitrator of the Chamber of Commerce of Bogotá and the Chamber of Commerce of Medellín, the World Intellectual Property Organization, the National Arbitration Forum and an undergraduate and graduate professor at the Externado University of Colombia.
For inquiries, he can be reached at [email protected].