Lima competes to be one of the best commercial and investment arbitration venues in the world

Peru is positioned as one of the main places for resolving commercial and investment arbitrations in the world, but it still needs to guarantee its internal political stability to reduce domestic disputes.

As part of the Open de Arbitraje – Lima 2024, held for the first time outside of Spain, the president of the organization of said event, Javier Íscar de Hoyos, said for The Republic that Peru “has a law on par with the best in the world”, which is why it is becoming “one of the most sought-after venues for international arbitrations”.

“Not only Peru, but also other countries that are looking to Lima as a venue, as it is a very safe place. They are far ahead of many European countries, although there are still some small deviations that need to be corrected in order to popularize these arbitrations locally,” he said.

The element that sets Peru apart from Europe and the rest of the world, explains the Spaniard, is the regulatory and legislative model “that has made arbitration mandatory in public procurement matters.”

“This means that, out of necessity, any conflict related to public contracts goes to arbitration, whether national or international, and this gives Peruvian lawyers a legal experience or culture that is far above the average in other countries, where it is not mandatory and there is less experience,” he points out.

Thus, the system is efficient because it has sought rigor by massifying conflicts related to public issues, something that has led to more people, lawyers and experts being trained to understand what arbitration is. In the end, “there is more culture and projection.”

Open of Arbitration 2024: Lima, the ideal venue

A distinction must be made between commercial and investment arbitration: the former seeks to resolve any contractual dispute between private parties, who choose a country as the venue to resolve the dispute under local laws. In this case, the venue must be previously fixed by contract.

This is where all the countries compete to be the best venue and offer the best rules of the game. Lima, according to Íscar de Hoyos, is on a par with other venues such as Paris, Madrid, Geneva, New York, Miami, London, Singapore or Santiago.

As for investment arbitration – which can also be contractual between private parties – it usually involves international treaties with a foreign investor affected by the change in conditions or “illegitimate decisions” by the country where the investor brings his capital. In this case, it can be raised even if it is not in the contract.

“Investors choose Lima as their headquarters, for example, a Chinese or US company could choose to come here to resolve their disputes. In the region, Peru is growing a lot in domestic arbitration and is beginning to have more international arbitration, but it is still far from places like Paris, Switzerland, London or New York,” said the lawyer.

However, the president of the Open Arbitration mentions that Peru is a country that tries to avoid conflict with investors, “although there will always be differences due to cultural or political issues.”

Along these lines, he asserts that our country “is not an example of litigation,” unlike others in the region, where arbitration is the usual mechanism for resolving internal disputes. In fact, he explains, right now Peruvian law “has changed and is about prevention rather than confrontation.”

“Respecting the rules of the game is also a factor to take into account when bringing in foreign capital. Money is fearful and investors in telecommunications, energy or construction choose a country that takes care of that money and that is not a roller coaster, a roller coaster ride. They choose it because they consider it a safe environment,” he concludes.