The year ahead
A new year brings new trends, new legislation and new challenges, and as 2020 gets under way we take a look at some of the takeaways for Latin America from Baker McKenzie’s global report on developments in litigation and arbitration.
The use of arbitration in dispute resolution is on the increase globally, and Latin America is not the exception, and that growth looks set to continue as various countries enact new legislation, from class action and commercial codes to reforms to notary and arbitration rules, according to the Baker McKenzie report.
“The legal community tends to look to the past and present, writing and presenting on recent cases and the current state of the law. And yet the questions we hear from clients are often futureoriented. What trends are emerging? What’s around the corner?” Claudia Benavides (pictured), Baker McKenzie’s global chair of dispute resolution and a partner in the firm’s Bogotá offices, states in the report.
“The global economy is growing at about 3 per cent per year, roughly equal to the average growth rate for the last 50 years, but growth predictions are ticking slightly downwards, mainly due to concerns about trade, while high levels of government and corporate debt persist, arising from the financial crisis and subsequent period of low interest rates,” the report states. Added to that, populist policies in Brazil and Mexico have eroded investor confidence, and there is economic weakness in Argentina, while Venezuela’s crisis continues, all of which paints a gloomy outlook for Latin America.
COUNTRY BY COUNTRY
Argentina is expected to enact a new bill regulating class actions this year, and where, at present there are no specific regulations governing class actions. It is anticipated that a new class action act will formally set out the requirements and procedural steps to initiate a class action in Argentina, according to Baker McKenzie.
In Brazil, a new commercial code is expected to be enacted by mid-2020, and which would establish new regulations relating to several types of business, including limited companies, and some business contracts, with the reforms set to amend some of the more controversial changes brought in by the 2003 civil code, such as the requirements for supermajority quorums for decisions in limited partnerships, which have been regarded by some as unduly burdensome, according to the report.
Chile’s government has introduced a bill that seeks to update the current notary and registry system, using more technology, allowing it to carry out procedures and consult information remotely, keeping digital records, and having greater facility to send information to other systems and platforms, according to Baker McKenzie.
By incorporating more flexibility and efficiency into the registry system, the bill also aims to increase agility in the delivery of goods and services. Colombia’s congress is considering significant reform to its 2012 arbitration act, and which would include changes such as how an arbitration undertaken in Colombia could be deemed to be international, and the procedures national courts should follow when practicing interim measures in support of international arbitration. The bill for the reform of the arbitration law also designates the country’s court of arbitration as the appointing authority in the nomination, challenge or disqualification of arbitrators, instead of national judges, according to the report.
And in Venezuela, the country’s arbitration and conciliation centre plans to develop the use of dispute boards as an alternative dispute resolution mechanism for the construction sector, one of the main drivers of the country’s economy.
The boards would provide a panel of independent experts to assist in resolving issues before they escalate to formal dispute resolution channels such as litigation or arbitration, perhaps reducing the need for the use of such channels.
SECTOR BY SECTOR
Many industries are seeing a rise in litigation cases, particularly as companies expand their global footprint and increase their customer base amid growing demand for accountability for corporate wrongdoing, according to the report.
Consumer goods and retail is among the sectors in which an increase in class action lawsuits is likely, as consumers demand supply-chain transparency, with growing demand for ethical and sustainable products, and product quality is of increasing concern. The increased use of renewable energy will demand regulatory changes, coupled with a growing demand for the compliance with environmental standards and regulations, at both a local and global level, and which will make the energy sector a growing target of litigation, together with the mining sector, while an increased number of jointly public and privately funded projects will also bring risks to project financing, the report adds.
The rise of fintech and the need for legislation of the sector is also a concern for many economies in the region, as is the increased use of artificial intelligence, particularly in the financial sector, while the same technology applied in the healthcare sector, and other innovations, also increase the risk of litigation and the need for regulation.
The deployment of new technology, such as 5G networks, is also a cause for concern, while the manufacturing and automotive sectors face new challenges in the form of trade agreements, such as the recently approved USMCA between Mexico, the US and Canada, replacing NAFTA, and which bolsters workers’ rights across the three countries.
