Mariana D. Hernandez-Crespo
University of St. Thomas – School of Law (Minnesota)
ADR in Business: Practice and Issues across Countries and Cultures, Vol. 2, 2011
U of St. Thomas Legal Studies Research Paper No. 11-10
When tapping into emerging markets such as those in Latin America, foreign investors, lawyers, and policy makers wrestle with finding effective and efficient strategies for reaching the goal of securing investments in the region. The traditional strategy for securing investment in the region has been to ensure viable means of conflict resolution so as to prevent contracts from being rendered vulnerable or even meaningless. Given the backlog, corruption, and inefficiency of the court system, International Financial Institutions (IFIs) have promoted alternative dispute resolution (ADR) as a second option for conflict resolution. However, ADR methods lack the coercive power of the judicial system to enforce outcomes, which forces parties into the courts when one of the parties refuses to abide by the agreement or awards. All of this adds to the cost of doing business in Latin America.
As a result, the insufficiency of the traditional paradigms for dispute resolution has led to a greater imperative for finding new ways to secure business investment in Latin America. New and innovative strategies, however, will require a multi-layered approach. First, the negotiation of sustainable agreements that are “nearly self-enforcing” can reduce risk as well as the cost of transactions in the region. Second, investment in building capacity for the maximization of dispute resolution in the region can begin to address some of the systemic issues that create insecurity and instability. Finally, any and all strategies depend on a thorough, first-hand knowledge of the people, cultures, and places in which a business aims to operate.
The research for this chapter was translated from Spanish and Portuguese, as was data gathered from local top experts in the sub-ADR fields. It includes a theoretical framework on how to secure investment through ADR in the region, as well as a country-specific examination of ADR in the three largest economies in the region: Argentina, Brazil and Mexico. The text for each jurisdiction consists of a framework that includes a country overview, the legal framework, development of arbitration and mediation, ADR Institutions and reaction to ADR. These are the building blocks for developing strategies for conflict management and the maximization of dispute resolution systems.