International dispute systems adopted two decades ago have emerged over time as central components of legal, political, and economic development in Latin America. Two distinct systems – international investment and trade – have proven to be increasingly interrelated.
In the 1990s, Latin American States adopted sweeping changes in their legal, political, and economic frameworks and changed the relationships between States and other States, investors, and citizens. Central to those changes was the advent of new international dispute resolution systems that have had a significant impact on development and the rule of law in Latin America and beyond. One of those systems was investment-oriented and the other was trade-oriented.
As to investment, Latin American States began to ratify bilateral investment treaties (BITs), as well as free trade agreements (FTAs) with investment chapters, such as NAFTA. Most of them also ratified the convention providing for investment arbitration before the World Bank's International Centre for Settlement of Investment Disputes (ICSID). The first ICSID case registered against a Latin American State was filed in 1995, and Latin American States now have been parties to approximately 35% of the total 474 cases registered at ICSID.
As to trade, Latin American States began to ratify FTAs, and also joined the World Trade Organization (WTO) established in 1995. Some of the first trade cases at the WTO were brought against Latin American States, and several States in Latin America have become repeat players at the WTO as both complainants and respondents. Latin American States have since been parties to around 45% of the total 479 cases registered at the WTO.
These two systems historically have remained surprisingly independent from each other. However, today this separation is eroding as the two systems become increasingly, and sometimes unexpectedly, intertwined.
For example, a current WTO case between Guatemala and Peru is testing the relationship between provisions of a contemporary bilateral trade and investment agreement and the global trade system. Another example is the United States' recent use of its trade preference programs as leverage to encourage Argentina and Ecuador to comply with investment treaty awards in favor of U.S. corporations, as discussed in further detail in the full article available at Global Arbitration Review. These examples highlight the increasingly interdisciplinary nature of investment and trade disputes in today's multipolar world.
The authors have advised States before the WTO and investors and States before ICSID.
The content above is an excerpt of an article entitled Global Briefing – The Intersection of Investment and Trade that the authors published in Global Arbitration Review on June 18, 2014.
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