International Arbitration - International Legal Developments Year in Review: 2023

This article discusses significant legal developments in International Arbitration Law from 2023.

I. North America

A. United States

1. U.S. Supreme Court Developments

a. Enforcement of Arbitral Awards

In Yegiazaryan v. Smagin, the U.S. Supreme Court confirmed that foreign parties who seek to enforce an arbitral award in the United States may use the Racketeer Influenced and Corrupt Organizations Act (RICO)—which imposes criminal liability on persons who engage in a “pattern of racketeering” comprised of a series of predicate acts, including wire fraud and obstruction of justice—to collect on an arbitral award. In the 6-3 opinion, the Supreme Court held that courts must apply a context-specific, rather than a “residency-based” bright-line rule when determining whether a foreign plaintiff has pleaded a “domestic injury” sufficient to sustain a RICO claim. Smagin had obtained an arbitration award against Yegiazaryan in London, which was confirmed as a judgment in California pursuant to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Thereafter, Yegiazaryan allegedly engaged in various methods to hide assets. Smagin initiated an action alleging that Yegiazaryan’s actions “injured” his property (the California judgment enforcing the foreign arbitration award) under RICO, which only applies to domestic injuries.

The Ninth Circuit found that Smagin had successfully pleaded a domestic injury under RICO, and the Supreme Court affirmed, holding that a plaintiff alleges a domestic injury when the circumstances surrounding the injury indicate that it arose in the United States. In doing so, the Court adopted a “case-specific analysis” to determine whether the injury is “sufficiently ground[ed]” in the United States. Although the Court declined to provide a set list of factors, the Court’s analysis focused on two elements pointing to the existence of a domestic injury—(1) where the alleged racketeering activity occurred; and (2) the situs of the “injurious aims and effects of the activity”—in California.

The Supreme Court’s decision adds a potentially powerful tool for the enforcement of arbitral awards and may make the United States a more attractive forum for judgment creditors, particularly in light of the ability to recover treble damages and attorneys’ fees under RICO, and potentially impose liability on third parties under the theory that they have aided and abetted unlawful efforts to avoid enforcement of a judgment.

b. Mandatory Stay of Proceedings

In Coinbase, Inc. v. Bielski, the Court held that a district court must stay proceedings when a party appeals the denial of a motion to compel arbitration under the Federal Arbitration Act (FAA), thereby resolving a longstanding Circuit split. In its 5-4 decision, the Court found that an appeal under Section 16(a) of the FAA—which permits an immediate appeal from the denial of a motion to compel arbitration, among other orders—requires a stay. The Court acknowledged that the FAA “does not say whether the district court proceedings must be stayed,” but found support for its conclusion based on the “longstanding tenet of American procedure” that an appeal “divests the district court of control over those aspects of the case involved in the appeal.” Consistent with a pro-arbitration approach, the majority noted that its decision was also grounded in “common sense,” as certain benefits of arbitration—including “efficiency, less expense, less intrusive discovery, and the like”—would be “irretrievably lost” absent a stay of proceedings pending appeal.

2. Vacatur of Arbitral Awards

a. Grounds For Vacatur

In Corporación AIC, S.A. v. Hidroeléctrica Santa Rita S.A., the Eleventh Circuit ruled en banc that where an international arbitration is seated in the United States, and is otherwise governed by the New York Convention, Section 10 of the FAA provides the exclusive grounds for vacatur of an arbitral award. The Eleventh Circuit had previously held that awards issued under the New York Convention could be vacated only under Article V, which enumerates grounds for a court to refuse to recognize and enforce a foreign arbitral award governed by the Convention. With the Corporación AIC, SA decision, the Eleventh Circuit overruled its precedent, finding that Article V, by its terms, only set out the grounds for a court exercising secondary jurisdiction to refuse to enforce an award issued under the New York Convention, and that instead, “the primary jurisdiction’s domestic law” (the FAA) “provides the vacatur grounds for an arbitral award,” bringing the Eleventh Circuit in line with all other Circuit courts that have considered the issue.

b. Arbitrator Bias

Courts grappled with an application of the “evident partiality” standard to determine whether arbitrator bias warrants vacatur of an award. In Andes Petroleum Ecuador Ltd. v. Occidental Exploration & Production Company, the Second Circuit held that awards should be vacated based on failure to disclose a relationship only where a “reasonable person, considering all the circumstances, would have to conclude that an arbitrator was partial to one side.” It also declined to vacate an award based on an arbitrator’s failure to disclose appointment to a separate tribunal alongside one party’s counsel. In Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, the Eleventh Circuit applied slightly different reasoning to similar facts to reach the same result, holding that arbitrators’ failures to disclose that they had served on panels with one party’s counsel were not “reasonably indicative of possible bias.”

c. Annulment

Emblematic of courts’ discretion to confirm or vacate arbitral awards, the Tenth Circuit in Compañía de Inversiones Mercantiles S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V. refused to vacate an order confirming a Bolivian arbitral award, after the underlying award was subsequently annulled by a Bolivian court. Rejecting a “presumption” of international comity, the Tenth Circuit held that the district court did not abuse its discretion because recognizing the Bolivian annulment would offend U.S. public policies protecting the finality of judgments and favoring “parties’ contractual expectations in the arbitration context, including the finality of awards,” as well as the “corollary interest” of “enforcing the resulting award.”

3. Foreign Sovereign Immunities Act (FSIA)

In Devas Multimedia Priv. Ltd. v. Antrix Corp., the Ninth Circuit held that a constitutional “minimum contacts” analysis is required to exercise personal jurisdiction over a foreign state under the FSIA, splitting from other federal circuits which have held that the FSIA does not incorporate such a requirement. Plaintiffs filed suit in federal court to confirm an International Chamber of Commerce (ICC) award against India’s space agency, Antrix. The court held that Antrix, a “foreign state” under the FSIA, was subject to jurisdiction, but the Ninth Circuit reversed, holding that the agency did not have the requisite “minimum contacts” with the United States. While the Ninth Circuit may now be seen as less favorable for parties seeking to enforce arbitral awards against foreign sovereigns, because the “direct effects” test establishing jurisdiction under the FSIA is considered similar to the “minimum contacts” analysis, the impact of this decision could be minimal.

4. Preemption

As a matter of first impression, the First Circuit held in Green Enterprises, LLC v. Hiscox Syndicates Ltd. at Lloyd’s of London that domestic law rendering an arbitration clause unenforceable was preempted by Article II of the New York Convention, which provides that courts should enforce arbitration agreements between U.S. citizens and non-citizens. Focusing on the text of the New York Convention, including Article II’s commandment that courts “refer the parties to arbitration” when there is a written arbitration agreement, the First Circuit concluded that the New York Convention was self-executing, i.e., directly enforceable as domestic law.

5. 28 U.S.C. § 1782

Following the U.S. Supreme Court’s 2022 decision that 28 U.S.C. § 1782 does not permit discovery for use in private commercial arbitral proceedings in foreign countries because such tribunals are not “imbued with governmental authority,” two recent New York federal district courts have concluded that Section 1782 discovery is also not available for use in International Centre for the Settlement of Investment Disputes (ICSID) proceedings. In re Alpene Ltd., the magistrate judge concluded that ICSID does not “exercise[] governmental authority such that granting discovery requests by parties in arbitrations before the ICSID would ‘promote[] respect for foreign governments and encourage[] reciprocal assistance.’” In re Webuild S.P.A., the court observed that various factors, including the ICSID tribunal’s functional independence and lack of affiliation with either state party to the bilateral investment treaty (BIT), the lack of “government funding,” and “the confidentiality of the ICSID Panel” weighed against concluding that the tribunal acted with governmental authority. Both decisions are currently pending appeal.

Courts have continued to permit Section 1782 discovery for use in proceedings before foreign courts, including where the petitioner sought the discovery for use in both the foreign court proceeding and commercial arbitral proceedings seated abroad. Other courts have expressly prohibited the use of any evidence obtained through Section 1782 discovery in non-qualifying proceedings (such as private commercial arbitrations) or have required that the applicant obtain the court’s authorization before doing so.

B. Mexico

In Mexico, the Third Collegiate Court of the First Judicial Circuit held that interim measures may be adopted prior to or during arbitral proceedings under articles 1425 and 1470, fraction III of the Commercial Code in order to preserve an existing factual situation during the arbitration, but that such interim measures shall not constitute or modify the rights and obligations of the parties if they lack “fumus boni iuris” (prima facie appearance of a legitimate right), or if they imply the breach of a contractual obligation that may only be modified or revoked through a final arbitral award on the merits.

C. Canada

Canadian courts continued their trend of actively facilitating international arbitration. In Hypertec Real Estate Inc. v. Equinix Canada Ltd., the Superior Court of Quebec appointed a French law firm as amicus curiae to provide independent and impartial legal submissions in a de novo competence hearing. The Court found the Model Law origins of arbitration provisions in Quebec’s Code of Civil Procedure and reasoned that Canada’s and Quebec’s commitment to maintaining uniform arbitral practice and procedures with the rest of the world militated in favor of the appointment.

In Fotmer Corp. v. Tilray Brands, Inc., the Supreme Court of British Columbia held that, in accordance with the national neutrality principle, an American company’s place of business in Canada prevented the court from appointing a Canadian arbitrator over the objections of the opposing party from Uruguay. The Court added that a party’s desire for the arbitrator to be qualified in British Columbia law was not a compelling reason to override the principles of independence and impartiality.

In Johnston v. Octaform Inc., the Supreme Court of British Columbia held that it did not have the power to stay arbitrations under the province’s international commercial arbitration legislation, finding that a clear purpose of the legislation was to limit the role of the courts in arbitral proceedings.

D. NAFTA/USMCA

On July 1, 2023, the deadline for filing “legacy” disputes under the United States-Mexico-Canada Agreement (USMCA)’s three-year extension of the North American Free Trade Agreement (NAFTA) expired. In total, seventeen “legacy” disputes have been initiated.

1. Claims against Mexico

Four cases were filed by U.S. and Canadian mining companies due to imposition of retrospective tax liabilities, refusal to grant VAT refunds on royalty payments, illegal blockades of mines, and dilution of ownership interests. Two cases were filed by U.S. and Canadian oil & gas investors over violations of investment contracts with Mexico’s national petroleum company, Pemex, and an order by the Mexican employment tribunal to pay US$120 million to a company’s former employee. Two cases were brought by U.S. transportation investors due to Mexico’s revocation of parking collection and railroad concessions. In two cases, U.S. agricultural investors brought claims with respect to the sugar mill business and alleged expropriation of agricultural land, while another U.S. company initiated a case regarding the site of its sweets factory. The final case involves claims by U.S. investment funds with respect to their debt instruments and financial services.

2. Claims against Canada

All four cases against Canada were initiated by U.S. investors and relate to environmental measures that allegedly impacted their investments in the energy and mining sectors.

3. Claims against the United States

In the only case initiated against the United States, Canadian investors brought a C$15 billion claim over cancellation of the Keystone XL pipeline.

To date, no investor has brought a claim under USMCA’s terms (as opposed to its extension of NAFTA’s terms).

II. ICSID

On July 14, 2023, an ICSID tribunal issued an award in Nachingwea and others v. Tanzania, holding that Tanzania unlawfully expropriated claimants’ investment in a nickel sulphide exploration and development project by passing legislation in 2017 that repealed the legal basis for their license—thereby “creat[ing] uncertainty”—and then passing regulations in 2018 that made clear that claimants’ license “no longer existed” and that the “license areas had been reverted to the State.” The tribunal rejected Tanzania’s argument that its actions were justified under the police powers doctrine because Tanzania’s assertions that the cancellation of the license was “in the public interest” and “intended to improve the modality of managing the mining industry operations” were not supported by any evidence.

The tribunal also held that Tanzania’s expropriation of claimants’ investment was unlawful because Tanzania’s failure to provide “reasonable advance notice” to stakeholders like claimants—for example, “the critical provision” concerning the repeal of the legislative basis of the licenses was “only introduced a few hours before the Parliamentary vote”—was not “in accordance with due process of law.” The tribunal ordered Tanzania to pay more than $100 million in damages.

III. Europe

A. England and Wales

The Law Commission has submitted its final report and with it a draft bill amending the Arbitration Act 1996. The key changes provide for: (1) a default rule that the law of the arbitration agreement will be the law of the seat; (2) tribunals to have express power to issue an award on a summary basis to dispose of any issue, claim or defense which demonstrably lacks merit; (3) the framework for challenging awards for lack of substantive jurisdiction under Section 67 of the Act to be revised to prevent a full re-hearing of jurisdictional issues by courts where a Tribunal has already undertaken a full hearing on these issues; (4) tribunals to have an express power to award costs even if they find that they do not have jurisdiction; (5) courts’ supportive powers to be extended to cover peremptory orders issued by emergency arbitrators and third parties; (6) arbitrators’ general duty of disclosure to be codified; and (7) strengthening of arbitrators’ immunity.

FamilyMart Holding v. Ting Chuan and Republic of Mozambique v. Credit Suisse International defined a “matter” which gives rise to a stay of legal proceedings in favor of arbitration.

In Radisson Hotels v. Hayat, the Commercial Court held that a party to arbitral proceedings who fails to make a prompt objection to a partial award and continues to participate in the subsequent phase of the proceedings may be barred from subsequently challenging that award.

While the rule in Browne v. Dunn requires that challenged evidence must be put to a witness in order that it can be addressed, BPY v. MXV clarified that this might not be necessary if it was obvious what the response would be or if the witness had the opportunity to deal with it in written submissions.

B. Ireland

While third-party funding is generally prohibited in Ireland, it is now permitted for “dispute resolution proceedings,” including international commercial arbitration, court proceedings arising out of an international commercial arbitration, and mediation and conciliation proceedings arising out of those court proceedings or an international commercial arbitration.

The Minister for Justice may set down certain criteria for third-party funding contracts (including with respect to transparency of funders and recipients), but it remains to be seen exactly what criteria will be prescribed, if any, given the delicate balance between transparency and the principle of confidentiality that is central to commercial arbitration. Provided the third-party funding contracts meet any such criteria, they shall not be treated as contrary to public policy or otherwise illegal or void.

C. France

In Halyvourgiki, the Paris Court of Appeal refused to set aside an ICC award based on the arbitrator’s alleged lack of independence and impartiality due to undisclosed links with respondent (i.e., prior appointments; the preparation of multiple legal opinions; family ties). The non-disclosure of these links dated back to between three and 30 years and was not sufficient to establish “reasonable doubt” in the minds of the parties as to the arbitrator’s lack of independence and impartiality.

Conversely, in PAD, the Paris Court of Appeal overturned an ICC award due to an arbitrator’s failure to disclose close personal ties with the counsel of the party that had nominated him. While the arbitrator’s disclosure of such ties in a eulogy published online following the death of the counsel was not sufficient to show “reasonable doubt” in the minds of the parties, such doubt was established given the fact that the eulogy set out a link between those personal ties and ongoing arbitral proceedings.

D. Spain

Spain, in particular Madrid, consolidated its position as one of the most attractive venues for international and commercial arbitration following the Constitutional Court’s now-consolidated doctrine, limiting the scope of control by courts of justice over the merits of awards. This trend has continued with the creation of the Madrid International Arbitration Center (CIAM) and the approval of the new CIAM Regulation, which will enter into force on January 1, 2024. The aim of the new Regulation is to streamline arbitration procedures, adapt to the current needs of international arbitration, and promote transparency. To this end, new measures are envisaged, including the creation of a hyper-abbreviated procedure, modification of the rules for the appointment and confirmation of arbitrators, and a more detailed regulation on the intervention of third parties and joinder of proceedings.

E. Germany

On April 18, 2023, the German Federal Ministry of Justice published a white paper on the modernization of German arbitration law, which is aimed at strengthening Germany as a seat for international arbitration. If implemented, it would be the biggest reform in German arbitration law since 1997. The white paper sets out twelve key points including, inter alia, the conclusion of arbitration agreements without form requirements, the expanded use of English, the introduction of an extraordinary remedy against final domestic arbitral awards, and the establishment of commercial courts integrating judicial support.

The German Federal Court of Justice has ruled in three appealed cases that EU law prevails and EU Member States are allowed to use upstream national judicial protection against ICSID arbitrations initiated by investors from other EU Member States under the Energy Charter Treaty.

F. Switzerland

On March 1, 2023, the Swiss Arbitration Centre released a Practice Note on the Swiss Rules of International Arbitration, which contains comprehensive clarifications on the Swiss Rules’ application. The Swiss Supreme Court held that an award confined to its operative part, lacking findings of fact or legal rationale, qualifies as an arbitral award and, in principle, may be subject to challenge before the Swiss Supreme Court. However, if the parties agree that the award need not contain any reasoning, such an award is not open to judicial review.

In the same year, the European Court of Human Rights (ECHR) issued a judgment holding that Switzerland failed to afford adequate procedural safeguards to former Olympic champion Caster Semenya during her unsuccessful challenge of an arbitral award before the Swiss Supreme Court, namely by failing to effectively examine her substantiated and credible claims of discrimination resulting from her elevated testosterone levels.

G. Russia

Russian courts crystallized their restrictive approach under article 248.1 of the Code of Arbitrazh Procedure to companies from “unfriendly” states trying to adjudicate disputes with sanctioned Russian entities in foreign jurisdictions, finding sanctions are per se sufficient to invoke the rebuttable jurisdiction of Russian courts without the need to prove the effect on access to justice in a foreign forum.

In light of Western sanctions, Russian parties have also started to consider alternative seats like sanctions-free Hong Kong. Sweden—while neither new nor sanctions-free—is also still considered relatively neutral and welcoming. However, Russian courts have still shown a readiness to issue anti-arbitration injunctions with respect to Hong Kong International Arbitration Centre (HKIAC) and Stockholm Chamber of Commerce (SCC) proceedings.

After the initial shock caused by Russia’s invasion of Ukraine and subsequent sanctions and countersanctions, investor-state claims have started to emerge. Following the transfer of their in-country assets under Russia’s external management, Fortum and Carlsberg sent their BIT notices of dispute to Russia. Russia’s Volga-Dnepr Airlines also sent a BIT notice of dispute to Canada in response to the latter’s seizure of the company’s plane, and Russian fertilizer maker Akron announced it would challenge the seizure of its shares in Polish Grupa Azoty.

H. Ukraine

In August, Ukraine terminated its BIT with Russia. The termination becomes effective on January 27, 2025, but Ukrainian investors will still be able to bring claims against Russia until 2035.

The International Register of Damages was established on May 12, 2023 to serve as a comprehensive compensation mechanism for Ukraine.

There was also noteworthy progress in cases involving expropriation of assets after the Russian occupation of Crimea in 2014. Naftogaz secured a $5 billion award and initiated enforcement proceedings in the United States. Oschadbank also commenced enforcement proceedings in the United States. The Permanent Court of Arbitration (PCA) upheld the claims of Ukrainian companies in Lugzor v. Russia and DTEK v. Russia.

The ECHR declared admissible Ukraine and the Netherlands v. Russia, a case recognizing Russia’s effective control over the occupied parts of the Donetsk and Luhansk regions since 2014. This may be an important development in proving the jurisdiction of investment tribunals over such claimants as Ukrainian businessman Rinat Akhmetov, who initiated an investment dispute against Russia for losses in the territory in 2014-2022.

Ukraine’s Supreme Court confirmed its pro-arbitration approach, ruling that (1) arbitration clauses apply to non-signatories who assumed contractual rights and obligations; and (2) two Ukrainian counterparties can choose foreign commercial arbitration in contracts involving a foreign element.

IV. Pacific Rim

A. Australia

In a landmark decision, in April 2023 the High Court of Australia delivered its first judgment concerning the enforceability of an investor-state arbitration award in Australia. The Court found that Spain had waived its foreign state immunity from the recognition and enforcement of investor-state arbitral awards by Australian courts by signing the ICSID Convention.

In October 2023, the Federal Court of Australia rejected India’s attempt to set aside an application to enforce an award in Australia on similar grounds that India could not rely on foreign state immunity as a defense to the enforcement of an award as it had signed the New York Convention.

There has been an uptick in investor-state claims against Australia in 2023, albeit all linked to Clive Palmer, an Australian mining magnate. Mr. Palmer, through a Singaporean subsidiary, has commenced two arbitrations, and has given notice of his intention to commence a third, against Australia, claiming record-breaking damages of over AUD 410 billion. The first of these arbitrations involves a claim for AUD 300 billion (approximately US$200 billion), making it the largest known investor-state arbitration claim on record. The claims all involve Mr. Palmer’s interests in mining projects in Australia and have been brought under either the Association of Southeast Asian Nations (ASEAN)‑Australia‑New Zealand Free Trade Agreement or the Singapore-Australia Free Trade Agreement.

B. Japan

On April 21, 2023, the Japanese Diet passed amendments to the Arbitration Act of Japan, which will come into effect on April 21, 2024. The changes focus on the enforcement of interim measures, provide for the Tokyo and Osaka District Courts to have concurrent jurisdiction over arbitration-related cases if the arbitration is seated in Japan, and waive certain Japanese translation requirements.

On October 1, 2023, Japan acceded to the Singapore Convention on Mediation. The Convention will enter into force for Japan on April 1, 2024, when the national legislation implementing the Convention becomes effective.

In May 2023, the Japan International Dispute Resolution Center closed its hearing facility in Tokyo, which had opened just three years earlier. The search for alternatives continues.

C. China and Hong Kong

In 2023, China marked the tenth anniversary of the Belt and Road Initiative (BRI). The China International Economic and Trade Arbitration Commission (CIETAC) established the first international arbitration cooperation mechanism for the BRI in 2019 and has expanded to 55 member arbitration institutions in 2023. As parties in disputes among BRI countries might not be familiar with foreign laws, on September 11, 2023, CIETAC released the Memorandum of Cooperation on Foreign Law Ascertainment for the BRI Arbitration Institutions, which provides detailed rules on foreign law ascertainment issues among BRI countries.

Hong Kong and Mainland China entered into the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region on October 1, 2019, which enables parties to certain Hong Kong arbitration proceedings to apply to Mainland courts for interim measures. In recent years, the HKIAC has received increased numbers of preservation order applications under the Arrangement. As of October 27, 2023, the HKIAC has accepted 100 applications, most of which were for preservation of assets. Under the Arrangement, Mainland courts have granted 66 preservation of assets orders with a total value of approximately US $2.3 billion.

D. Singapore

In a case involving a shareholder agreement for an India-registered company, the Court of Appeal held that in determining arbitrability in the pre-award stage, courts must apply a multistep test when the law governing the arbitration agreement is that of another state. First, the court must determine whether the foreign law permits arbitration. If not, the matter cannot be arbitrated. If so, the court must look to the law of the seat, Singapore in this case, to decide. If that law permits arbitration, the arbitration may proceed. If neither permits arbitration, the arbitration cannot move forward as it violates the public policy of both the foreign state and Singapore.

E. Malaysia

The Court of Appeal held that where the validity of the arbitration agreement is at issue, in this case in a Hong Kong-seated arbitration, both the tribunal and Malaysian courts have the power to determine validity.

F. Vietnam

The Justice Council of the Supreme People’s Court confirmed as precedent a ruling of the Ho Chi Minh City People’s Court that a dispute that arose out of a non-compete agreement clause in an employment contract was arbitrable because one of the parties was engaged in commercial activities.

V. Middle East

A. Saudi Arabia

The Saudi Center for Commercial Arbitration (SCCA) released the SCCA Arbitration Rules 2023, in force from May 1, 2023. Significant amendments to the initial 2016 rules include the creation of the SCCA Court, tasked with key decisions (e.g., deciding on arbitrator challenges and reviewing draft awards); new powers granted to arbitrators (e.g., encouraging amicable dispute resolution); and new provisions governing emergency arbitrations (e.g., implementing a two-week timeframe for issuing interim awards).

B. United Arab Emirates (UAE)

In September 2023, the UAE revised Federal Law No. 6/2018 on Arbitration, which governs arbitrations seated in the country (except in Financial Free Zones such as the Dubai International Financial Centre). Key amendments pertain to hearings (e.g., recognizing the possibility of virtual hearings) and arbitrator qualifications (e.g., permitting the appointment of arbitrators in cases administered by institutions where they hold supervisory roles, subject to certain safeguards).

VI. Africa

On February 19, 2023, the African Union adopted the final Draft Protocol to the Agreement Establishing the African Continental Free Trade Area on Investment. The Draft Protocol aims to promote growth and development across the continent through investment policy reform and cooperation, with an express focus on sustainability. Under the Draft Protocol, state parties will need to terminate all existing intra-African BITs within five years and not enter into any new such BITs.

Within a year of adopting the Draft Protocol, member states will have to adopt rules and procedures for preventing, managing, and resolving investor-state disputes, which will be appended in an annex. An earlier draft of the annex contained state-state dispute settlement provisions, as well as investor-state dispute settlement provisions under the UNCITRAL Rules or the rules of any arbitral institution, although it is yet to be determined whether such mechanisms will be maintained or replaced by a permanent investment court.

VII. South America

A. Argentina

In an April 5, 2023 judgment, the Commercial Court of Appeal rejected a nullity appeal that raised issues such as essential procedural flaws and the inclusion of incompatible decisions. The Court highlighted that the substance of the arbitral tribunal’s decision could not be reviewed by national courts if the parties had expressly excluded the possibility of appeals on the merits. Further, because the tribunal was a court of justice, it was authorized to make the legal decision it deemed appropriate considering the facts of the case.

In a March 2, 2023 decision, the Commercial Court of Appeal established that arbitral jurisdiction cannot be extended to issues not covered by an arbitration clause.

B. Uruguay

A project proposing reform of the legal framework for national arbitration was approved by the lower house of the Uruguayan parliament, signaling its imminent transformation into law. The reform aims to harmonize the national arbitration system with the international regime based on the UNCITRAL model.

In a March 23, 2023 judgment regarding recognition of a foreign award, the Supreme Court held that a contract entered into by two Uruguayan entities to be performed in Uruguay could not be subject to foreign law as that would contradict Uruguayan public policy and that the nullity of the choice of law provision entailed the nullity of the arbitration agreement, thus rendering the award unenforceable. The decision is difficult to reconcile with the New York Convention and was a sharp departure from the Supreme Court’s trend of consistently refusing to analyze whether the law applied by a tribunal to the merits of a dispute is correct.

C. Brazil

The Superior Court of Justice (STJ), Brazil’s highest court for federal, non-constitutional matters, has been instrumental in strengthening Brazil’s status as a pro-arbitration jurisdiction and its alignment with international best practices.

First, the STJ held that parties to an arbitration agreement cannot seek judicial assistance for the production of documents prior to initiating arbitration proceedings. Per the STJ, such requests can only be made directly to the tribunal in the arbitration, unless a party, for some good reason, cannot wait until the tribunal is constituted.

Second, the STJ held that an insurance company cannot sue in court under a transportation contract containing an arbitration clause. Specifically, the STJ held that an insurance company cannot take into account the arbitration clause in the underlying contract when pricing its insurance and, subsequently, refuse to comply with the obligation to arbitrate contained in that same contract.

D. Chile

Chilean Courts continue to hold a supportive stance towards international commercial arbitration. In July, the Supreme Court recognized a foreign arbitral award and ratified that a defense based on public policy is only admissible if based on a breach of fundamental rules and principles of Chilean law. The Court of Appeals of Santiago confirmed that grounds for annulment of arbitral awards under Chile’s International Commercial Arbitration Act are limited and narrowly defined. It held that violations of public policy for these purposes must be extreme and affect principles such as due process, equal and fair treatment, or the impartiality of the arbitral tribunal.

E. Colombia

Colombia was awarded the largest arbitration award in its history when an ICC tribunal directed an American construction company to pay Colombia-owned energy company Ecopetrol more than US$1 billion in damages.

F. Venezuela

In July 2023, an ICSID tribunal ordered Venezuela to pay ExxonMobil more than US$1.4 billion, largely reinstating the US $1.6 billion award that had been annulled by an ICSID ad hoc Committee in 2017.

G. Ecuador

In March 2023, a U.S. court enforced a US $412 million ICSID award for Perenco, a Bahamian oil company, in its claim against Ecuador stemming from the country’s seizure of two Amazonian oil properties.

H. Peru

Political instability in Peru has contributed to an increase in arbitrations, particularly claims against the government. As of July 2023, Peru is “the South American country with the most open proceedings.” For example, an ICSID tribunal recently awarded two Singaporean power companies US $110.7 million after finding that Peru violated the Peru-Singapore Free Trade Agreement.

Carla Gharibian is the editor of this article. The following authors contributed to this article: Tom Pearson (Singapore, Malaysia, Vietnam); Timur Bondaryev, Volodymyr Nakonechnyi, Anastasiia Kotliarchuk, Daria Paliienko (Ukraine); Robert J.C. Deane, Les Honywill (Canada); Jeffrey Rosenthal, Katie Gonzalez, Katerina Wright, Regina Paparo (United States); Caoimhe Clarkin, Marcus Walsh, Gavin Woods, Bella Chan (Ireland); Keara Bergin, Christopher DeNicola (ICSID); Héctor Scaianschi Márquez (Argentina, Uruguay); Peter Ashford (England and Wales); Christina Nitsche (Germany); Amélie-Lou Blouin (France, Middle East, Africa); Antonio Canales (Spain), Mercedes Fernández (Spain), Gustavo Galindo (Mexico), Melissa Stear Gorsline (NAFTA/USMCA), Haifeng Huang (China/Hong Kong), Elie Kleiman (France, Middle East, Africa), Viktoriia Korynevych (NAFTA/USMCA), Annie Leeks (Australia), Anatoly Matveev (Russia), Michael Neumeier (Australia), Fernando Pastore (Brazil), Claire Pauly (France, Middle East, Africa), Maria Pradilla Picas (Colombia, Venezuela, Ecuador, Peru), Valentin Rougier (France, Middle East, Africa); Zara Shafruddin (Australia), José Antonio Vázquez Cobo (Mexico), Jessica Zhang (China/Hong Kong); Bernardo Pires (Brazil); Lars Markert (Japan); Anthony Lynch (Chile); Janine Häsler, Andreas Wehowsky (Switzerland); Preeti Bhagnani, Eric Lenier Ives, Clara Petch (§1782).