Business and public administration experts from Latin America shared yesterday the situation in which the Region is and transferred the guidelines they are following to minimize the consequences of the health crisis, during a virtual meeting entitled: “We look forward. Ibero-American companies in the face of conflicts. Negotiation, mediation and arbitration ”. The event, organized by CIAR, CEIB, SEGIB and FIJE, and in which 150 people from more than 20 countries participated, aimed to analyze the impact of COVID-19 on arbitration and on contributing to the resolution of cross-border trade disputes in the Ibero-American sphere.
They opened the day, after welcoming words from the permanent secretary of the Council of Ibero-American Entrepreneurs (CEIB), Narciso Casado, the Ibero-American general secretary, Rebeca Grynspan; the president of CEOE, Antonio Garamendi; and the president of the Iberoamerican Arbitration Center, Luis Martí. Next, a debate table was held, moderated by the Secretary General of the Center, Javier Íscar de Hoyos, in which the head of Arbitration of Sacyr, Carlos Iso; the CEO of PepsiCo Venezuela, Central America and the Caribbean, Diego Castagnino; the vice president of the Court of Arbitration of the Lima Chamber of Commerce, María del Carmen Tovar; and the president of the Iberoamerican Federation of Young Entrepreneurs (FIJE), César Durán. After a round of questions, the Secretary of State for Trade, Xiana Méndez, closed the meeting.
CEIB Permanent Secretary Narciso Casado recalled that Garamendi summarized the more than 130 presentations by great business leaders who participated in the last Summit "Spanish Companies Leading the Future" in 3 key points: consensus, legal certainty and a long-term vision. In this way, he introduced the conference with these three concepts, since speaking of legal certainty is also speaking of arbitration, being, in addition, an essential element for the development of investment and trade. "A good conflict resolution system provides security to investors and merchants, through the opportunity to quickly resolve differences, tensions and disputes that may arise," said Casado. In this sense, he continued, it was necessary to provide Ibero-America with its own mechanism that would make it easier for conflicts not to be resolved by other external arbitrators, that would provide legal certainty and empower the private sector by giving it leadership.
For this reason, CIAR was born, with the aim of resolving international legal disputes, both commercial and investment, in order to administer the arbitration processes that appear before the Center, as well as to disseminate and promote culture and practice arbitration, conciliation and mediation as methods of dispute resolution. "A center that offers an agile mechanism, very little bureaucratized and that includes a large team of arbitrators from the Region appointed with full transparency," he said. CEOE has been present at CIAR since its origin, Casado indicated, and has supported its further development since the founding Assembly in Buenos Aires, in April 2015. Nearly 100 institutions from all of Ibero-America are part of CIAR, including the 24 most entrepreneurial organizations representatives of Ibero-America, Spain, Portugal and Andorra, members of the International Organization of Employers, OIE, thanks to the agreement signed with the Council of Ibero-American Entrepreneurs, CEIB. All of them, he assured, share the idea of strengthening and propagating our legal culture, and as Rebeca Grynspan recently pointed out, “strengthen our common languages, Spanish and Portuguese, recognize the quality of our professionals and legal experts, assuming that we are in a position to resolve our own conflicts ourselves ”.
The President of CEOE, Antonio Garamendi, sent a message of encouragement and support to all employers, workers and families, who are suffering the consequences of Covid-19, "against which we have all joined our efforts and made available resources, work , commitment and determination ”. He also highlighted the intense activity carried out by the CEIB, SEGIB and FIJE business organizations, not only around the Ibero-American Summit of Heads of State and Government, but also in the period between summits, through a line of work that , added to the existing ones, such as innovation, digitization, training, talent retention and SMEs, it is based on a solid base of public-private collaboration. Likewise, Garamendi highlighted the importance of the trust that is deposited in a country and that is achieved thanks to stability, law and order, all of them elements that maintain a close relationship with arbitration, and that, in these times crisis, has been a key factor for conflict resolution, especially in Latin America.
The CIAR project, he pointed out, is an initiative that had its origins in the impulse given by SEGIB, within the framework of the Ibero-American Summits of Heads of State and Government, the Conference of Ministers of Justice of Ibero-American Countries (COMJIB) and business organizations and legal professionals in our countries. It arose, according to Garamendi, with the sole purpose of providing Ibero-American companies with a quality tool that is fast, economical, practical and professional, with which they can resolve conflicts that have arisen in the context of international trade and investment. In this sense, he congratulated CIAR for the work it is doing, not only in the current context but for all the work it has been doing since its constitution, seeking greater legal certainty for the Ibero-American business community. He also highlighted unity as a key factor for the Region, in which arbitration, and more specifically CIAR, play a fundamental role in reinforcing not only unity, but also cooperation and trust.
The president of the Iberoamerican Arbitration Center (CIAR), Luis Martí, stressed that a distant, consistent and persevering initiative has finally seen the light of day. Entrepreneurs and their organizations, he explained, are the protagonists of freedom of trade and investment and, for their part, lawyers and jurists are the protagonists of freedom of defense and the right to a fair trial; and both groups realized that it was necessary to promote arbitration in Ibero-America and, therefore, the creation of CIAR garnered support from the beginning, beginning with that of the Ibero-American General Secretariat. It is true, he pointed out, that the Spanish legal profession has promoted this idea since its inception, but without the help of business organizations, the implementation and consolidation of this initiative would not have been possible.
Among all of them, Martí continued, this project was understood as something good for Ibero-America, for its cultural world and its legal space. If we have the virtue of sharing common languages and numerous values, it is very important to get things done closer. And it is this closeness, he insisted, that he has managed to offer people who did not even dream of arbitration, give them cross-border and international arbitration, and who can access it as a prompt, close, affordable solution and in their language. "The objective is to resolve the disputes and conflicts that arise in Ibero-American cross-border trade, between Ibero-Americans and for Ibero-Americans," he concluded.
Ibero-American Secretary General Rebeca Grynspan emphasized that the first half of 2020 has been very hard on both sides of the Atlantic, where an unprecedented global contraction of the economy has been seen. The figures are getting worse in terms of growth projections, employment, lack of liquidity, breaks in payment chains and the inability of companies to meet their contractual obligations. It is clear, he added, that SMEs are the ones that are suffering the most from the consequences of this crisis, but not only them, since 39 of the 216 companies registered with the Fitch Agency are large and are at risk of short-term credit default. . In addition, he stressed, three large airlines have serious problems to maintain due to the crisis and foreign direct investment in the Region has fallen by 50%. All this, he explained, is part of a very complex panorama to be faced, but, in his opinion, "if we unite all our efforts, we will come out of the crisis with less costs than anticipated."
What Grynspan did assure is that there will be conflicts and disagreements due to the difficult situation, and it is essential to find the best possible solution to resolve them. "Dialogue, trust, union and legal certainty must be vindicated to avoid disputes and try to resolve problems in a friendly way," he said. In this sense, CIAR offers an agile and little bureaucratic mechanism, in addition to having numerous arbitration venues in different countries of the Region. According to Grynspan, companies are concerned about the lack of standards and arbitration to resolve conflicts and, therefore, they value the mechanism put in place by CIAR to value the common legal heritage. "We have to coordinate and cooperate more instead of competing, to get out of this crisis the largest possible business fabric, thanks to trust and collaboration," he said.
The Secretary General of the Iberoamerican Arbitration Center, Javier Íscar de Hoyos, in his role as moderator during the panel of experts on the subject, assured that businessmen and lawyers join CIAR so that, among all, it is a present and future reality. "It is the sum of Ibero-American wills, the fruit of generosity, that is, a center for all, for and for all," he stressed. He also posed a series of questions to the speakers, focused on the importance of the arbitration process, on the experience of companies with clients and suppliers, on the possibility of online arbitrations, on how the cost and time of the process influence, and in training and information on the subject in question.
Sacyr's Head of Arbitration, Carlos Iso, spoke about the importance of arbitration and whether it has been maintained to a greater or lesser extent during the crisis. In this sense, he informed that, from SACYR, numerous activities are carried out, including construction, in more than 30 countries and that in many cases it has been possible to continue with arbitration. The judicial procedures have stopped, while the arbitration world has responded quite satisfactorily in this situation, he stressed. Some cases have been delayed and others have been continued, so, in his opinion, arbitration has proven to be an efficient mechanism as a measure of conflict resolution, especially if it is worked in several countries. On the other hand, he added, the existence of CIAR is a crucial element for which it is necessary to bet and value the importance of having a solid institution that is establishing itself.
In turn, the CEO of PepsiCo Venezuela, Central America and the Caribbean, Diego Castagnino, reported that a positive aspect that the arbitration pandemic has shown is temperament, since it has been postulated as an alternative means of conflict resolution that it has come to adapt to the realities. In fact, courts have been closed in many countries and arbitration has remained active, in many cases online, in order to continue cases. In this process, according to Castagnino, CIAR has helped a great deal, since it has cutting-edge regulations and meets the expectations of companies, being an agile mechanism for dispute resolution. In addition, he continued, it has a high code of ethics, assessing the behavior of the arbitrators and the parties in the process. This, he added, has direct implication in the confidence that can be had in the system. "95% of the contracts I sign have arbitration procedures as means of conflict resolution," he assured.
The vice president of the Court of Arbitration of the Lima Chamber of Commerce and representative of the National Confederation of Private Business Institutions (CONFIEP), María del Carmen Tovar, spoke about the rise of virtual hearings during the pandemic. In this sense, he assured that in Peru, companies have already highly internationalized arbitration as the best way to solve conflicts, since a law was passed in the 1990s on this matter. In fact, he reported that private companies are very supportive of the arbitration world, since the judicial processes in the country are very deficient. During the crisis, he added, international arbitration has not stopped and companies have continued, since the centers were prepared for it, although it is true that state entities have been more reluctant. "Of 400 private processes, the majority have followed its course, and that is that having serious institutions in this matter helps a lot," he said.
The president of the Iberoamerican Federation of Young Entrepreneurs (FIJE) and representative of the Employer Confederation of the Mexican Republic (COPARMEX Youth), César Durán, stressed that being an entrepreneur in Ibero-America, especially in the young world and the SME, is to be aware of many areas in which you have to pay attention. For this reason, he considered that the challenge of culture is fundamental, to be aware of “compliance” and to be able to respond to all mandatory demands and responsibilities. He also highlighted the importance of having CIAR as a refereeing center and being able to communicate in a similar language and culture, adding added value to the entire Region. Having the confidence that, in any situation, you can count on CIAR's support to resolve conflicts in an agile manner and as an alternative to judicial procedures is crucial, he assured. "Having your support and having an effective platform at our disposal gives us a lot of confidence," he said. In this sense, Javier Íscar advocated for CIAR to become the benchmark arbitration center for young entrepreneurs.
Arbitration time and costs
The head of Arbitration of Sacyr, Carlos Iso, reported that the cost of arbitration is a hot spot, subject to criticism by companies. In his opinion, the main issue is trust in the institution and in the referees, and that should be the starting point. It is true, he acknowledged, that arbitration should not be so expensive at times, and this makes companies more reluctant to resort to it to resolve certain conflicts. As for the arbitrators, Iso assured that one is chosen between one or three depending on the amount and speed of the process.
The CEO of PepsiCo Venezuela, Central America and the Caribbean, Diego Castagnino, also explained that arbitration is not only used as an alternative means of dispute resolution, but, depending on the controversy, sometimes one opts to adopt conciliation measures . For this reason, it is important to improve and refine all these tools to help companies, because despite conflicts they have to continue operating. According to the vice president of the Court of Arbitration of the Lima Chamber of Commerce, María del Carmen Tovar, every businessman prefers to reach an agreement or negotiation before resorting to arbitration, since this involves a confrontational process, but even so, acknowledged that mediation is not very well received in Peru and is little used.
The president of FIJE, César Durán, assured that the issue of information in arbitration is also essential. And the best way to pass that information on to young entrepreneurs, he stressed, is through their own ecosystems. "There is nothing else that causes a greater impact than the recommendation of another young businessman for reasons of trust," he said. Durán emphasized the need to change the mindset and think about building a scenario of trust and culture for all and among all in the field of dispute resolution. For this, it is necessary to generate culture among young people in the Ibero-American region, disseminate and report the benefits of this instrument and that it reaches the businessman through the most appropriate channel. It is also important to debunk myths about the complexity of these processes and democratize these tools and mechanisms for Ibero-American companies.
The Secretary of State for Trade, Xiana Méndez, stressed during the closing that arbitration methods in international trade relations are increasingly common. He also assured that Spanish companies have played a key role in building a bilateral relationship of trust based on very strong cultural ties. The Spanish economy, he pointed out, has also benefited greatly from this relationship, which has allowed us to strengthen the competitiveness of our companies. Commercial exchanges have had an increasing trend, taking into account that they have doubled in the last 10 years. Spain is also the second largest investor worldwide in the Region and the first in the EU, since in 2018 32% of all Spanish investments abroad were in the Ibero-American region. The sectors of greatest interest, according to the Secretary of State, have concentrated in areas such as energy, infrastructure, information technology or telecommunications, among others. "Mutual trust has made this bilateral relationship fruitful," he noted.
However, stressed Méndez, in this context it is inevitable that conflicts will arise and, in this sense, legal certainty must be the basis of all investments. In his opinion, on the subject of arbitration there are several key points, which are the well-defined division of powers; the stability of the regulatory framework; the predictability and proper interpretation of this framework; and the importance of costs, since, on many occasions, mediation and negotiation can also be very convenient tools. Méndez considered it essential to reach friendly solutions and seek negotiated solutions to maintain confidence and strengthen bilateral relations. For this reason, it is very important to continue working on this type of conflict resolution in order to strengthen investment flows and achieve a solid and sustained recovery. In State / company relations, the Reciprocal Investment Promotion and Protection Agreements (APPRIs) are essential and form a legal framework that is highly demanded by the private sector. International arbitration, he assured, is the most widely used method today due to its wide scope, agility, lower cost, flexibility and confidentiality. And, in the Ibero-American sphere, he added, CIAR has been a benchmark for eight years now to make available to companies an effective dispute resolution system.