Let’s Talk About Arbitration: Key Insights for Organisations doing Business in Colombia
In this, the fourth of seven podcasts on international arbitration in Latin America from Baker McKenzie and Trench Rossi Watanabe, Claudia Benavides, global chair of Baker McKenzie's dispute resolution practice group, and Cristina Mejia, a Baker McKenzie partner, co-leaders of the firms dispute resolution practice in Colombia, discuss the current arbitration scenario in Colombia and why it is trending among the country's business community.
The rise of arbitration in Colombia
Arbitration is frequently used as an alternative dispute resolution mechanism. Its current popularity is largely the result of the opening up of the Colombian economy in the 1990s and the longstanding intention of governments in office in recent decades too attract foreign investment. Foreign investment increased significantly and arbitration became foreign investors preferred mechanism to resolve disputes with local parties.
The current Colombian International Arbitration Statue, which entered into force a decade ago, has an international arbitration chapter mainly based on the UNCITRAL model law. Colombia now speaks the same arbitration language as the rest of the world.
Only international public policy is assessed when considering the enforceability of an arbitral award
In 2011, the Supreme Court of Justice ruled on the notion and effects of international public policy. Colombia is a party to the New York Convention, under which the recognition and enforcement of a foreign award can be refused if it is contrary to Colombia's public policy.
In this decision, when reviewing whether a foreign award could be recognised in Colombia, the Court drew a distinction between local and international public policy and ruled that international public policy is the only one that must be assessed when considering whether a foreign award can be recognised in Colombia.
As a consequence, the potential disregard of internal rules that are part of Colombia's local public policy framework does not prevent the recognition and enforcement of a foreign award in Colombia.
Practical recommendations to bear in mind when thinking about using arbitration in Colombia
Companies must research and analyse whether their investments could be covered by investment treaties and to what extent those investments could be protected.
Always bear in mind the distinction between domestic and international arbitration. Colombia's dual arbitration system means that domestic arbitration is based on civil procedure rules which are formalistic and sometimes far from the particularities of a transnational dispute.
International arbitration, based on the UNCITRAL model law, gives the parties the chance to design and agree on procedural rules that meet their particular needs.
Baker McKenzie
