ALBA moves forward with plan to create regional investment arbitration alternative to ICSID at 7th Summit
By Fernando Cabrera Diaz
November 3, 2009
Members of the Bolivarian Alliance for the Peoples of Our America (“ALBA”) are moving forward with a plan to create a regional arbitration centre intended to replace the often criticized International Centre for Settlement of Investment Disputes (“ICSID”). The final declaration of the 7th ALBA Summit, which took place between October 16th and 17th in Cochabamba, Bolivia, instructed a dispute resolution working group to advance its work on the issue and develop concrete proposals in the near term.
The move had been anticipated after statements by Bolivia’s Vice-Minister for Legal Defence of the State, Javier Viscarra Osuna, who told reporters a week before the summit that a dispute resolution venue, as well as a centre for advice and training in matters of investment, would be considered at the summit. According to Agence France Presse, the Vice-Minister said that a working group had been tasked with advancing the creation of the arbitration venue, which was originally intended to deal solely with the claims from foreign investors, but had now been expanded to deal with other types of disputes.
Now, according to the 7th Summit’s final declaration, ALBA heads of state have instructed the dispute resolution working group to further its work in order to be able to submit concrete proposals (presumably to the heads of state) in Caracas, Venezuela within 30 days (from October 17th). The declaration offers no details as to the content of the proposals though one would expect the proposals to deal with the creation of the arbitration centre.
ALBA is a Latin American organization comprising a number of states including Antigua and Barbuda (June 2009),Bolivia (April 2006),Cuba (December Commonwealth of Dominica (January 2008),Ecuador (June 2009)Honduras (October 2008), Nicaragua (February 2007) Saint Vincent and the Grenadines (June 2009), and Venezuela (December 2004). The organization was established by Venezuela and Cuba as an alternative to the then proposed Free Trade Area of the Americas. Haiti, Iran and Uruguay are currently observer states.
As reported previously by Investment Treaty News, Bolivian president Evo Morales famously announced that ALBA members would be exiting ICSID at the 5th ALBA, but so far only Bolivia (2007) and Ecuador (2009) have formally denounced the World Bank’s arbitration centre. At that summit a plan to create an investment arbitration centre to replace ICSID was first proposed, but the idea was not publicly discussed at the 6th Summit the following year.
While ALBA moves forward with its plans for an arbitration centre, other regional initiatives are also under way. The Energy Council for South America, which comprises all 11 sovereign nations in the region, approved working groups last year tasked with designing a legal mechanism to settle investor-state disputes related to the energy sector.
In June of this year Ecuador’s Foreign Minister Fander Faconi officially proposed the creation of a centre for arbitration under the auspices of the Union of South American States at the 39th Session of the General Assembly of the Organization of American States in June, though no mention of such a centre was included in the summit’s final declaration.
Notably, the 7th ALBA Summit also saw the signing of the Treaty Establishing the Unitary System for Regional Compensation of Payments which aims to replace the U.S. dollar as the international exchange currency between ALBA nations. The agreement will create a virtual currency, the Sucre, by early next year which will be converted to a hard currency in the future. According to the summit’s final declaration, a technical meeting will be held by November to draft an implementation plan for that agreement.
Sources:
The Final Declaration of the 7th ALBA Summit is available in Spanish from the ALBA website at:
http://www.alternativabolivariana.org/images/declaracionVIIcumbrealba-tcp.pdf
Read previous ITN reporting:
“South American alternative to ICSID in the works as governments create an energy treaty”, By Fernando Cabrera Diaz, Investment Treaty Newsletter, August 6, 2008, available at:
http://www.investmenttreatynews.org/cms/news/archive/2008/08/06/south-american-alternative-to-icsid-in-the-works-as-governments-create-an-energy-treaty.aspx
“Ecuador prepares for life after ICSID, while debate continues over effect of its exit from the Centre”, By Fernando Cabrera Diaz, Investment Treaty Newsletter, September 7, 2009, available at:
http://www.investmenttreatynews.org/cms/news/archive/2009/08/28/ecuador-prepares-for-life-after-icsid-while-debate-continues-over-effect-of-its-exit-from-the-centre.aspx
Other Sources:
“Alba evalúa creación de arbitraje que reemplace al CIADI,” September 2, 2009 (Agence France Presse)
