What Colombian cases can say about the current position of some latin american countries towards investment law and arbitration

• Author: Stefanny Justinico-Moreno
• Position: Fellow at the Center for the Advancement of the Rule of Law in the Americas (CAROLA) at Georgetown University
• Pages: 311-341

WHAT COLOMBIAN CASES CAN SAY ABOUT THE

CURRENT POSITION OF SOME LATIN AMERICAN

COUNTRIES TOWARDS INVESTMENT LAW AND

ARBITRATION

STEFANNY JUSTINICO-MORENO*

ABSTRACT

This Note examines the historical evolution of the investor state dispute settle-

ment (ISDS) law in Latin America as the context for analyzing a range of

innovative practices of various countries in the region in response to perceived

imbalances in the application and effect of the ISDS law on national sover-

eignty. This Note develops a typology of three main trends among the innova-

tions and responses by groups of countries in the region to ISDS law. The Note

also analyzes some key decisions of the Colombian Constitutional Court as par-

ticularly illuminating of the ways in which one large group of Latin American

countries has reconciled their concerns for national sovereignty and regulatory

autonomy with the evolving body of treaty-based and customary law of investor

protections at the international level.

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312

II. THE REACTION OF STATES IN LATIN AMERICAN COUNTRIES

TOWARDS ISDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

A. The First Category: Disapproval of the ICSID Dispute

Resolution Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . 319

B. Second Category: Promoting Alternative Approaches Within

National Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

C. Third Category: Playing Within the Rules. . . . . . . . . . . . . . 322

III. AN OVERVIEW OF COLOMBIA AND ISDS . . . . . . . . . . . . . . . . . . . 325

A. Enhancing the Model for the Conclusion of IIAs . . . . . . . . . 326

B. The Profile of ISDS Cases in Colombia . . . . . . . . . . . . . . . . 328

* Stefanny Justinico-Moreno is a fellow at the Center for the Advancement of the Rule of Law

in the Americas (CAROLA) at Georgetown University. She is a Fulbright Scholar (2020-2021) and

an LLM graduate in Law and Economic Development from Northeastern University. She

obtained her law degree and a master’s in international law from La Sabana University in

Colombia. This contribution is made possible thanks to the support of the program “Pasaporte a

la Ciencia” sponsored by Instituto Colombiano de Cre´dito Educativo y Estudios Te´ cnicos en el

Exterior – ICETEX. This work product seeks to address a challenge related to the institutional

capacity of Colombia to deal and recover public funds from international litigation (“reto pais

Sociedad/fortalecimiento de capacidades”). V

C 2022, Stefanny Justinico-Moreno.

311

C. The Constitutional Courts and Their Influence in the Power

to Conclude IIAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332

1. The Decision: Still Within the Paradigm but

Sufficient to Raise Concern to Policy Makers . . . . 334

IV. CHALLENGES TO LATIN AMERICA WITH THE PANDEMIC . . . . . . . . . 337

V. CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

I. INTRODUCTION

The role of Latin American countries in investment arbitration has

undergone a considerable transformation over the last 30 years. When

the World Bank proposed the creation of the International Center for

Settlement of Investment Disputes (ICSID) as a center specialized in in-

vestor-state dispute settlement (ISDS) during the 1960s,

1

all Latin

American countries expressed their opposition in a statement that was

referred to as the “No of Tokyo.”

2

At that time, the region’s practice

was centered on the application of the “Calvo Doctrine,” formulated by

the Argentinian jurist Carlos Calvo.

3

The basis of this doctrine was the

1. See Taylor St. John, Enriching Law with Political History: A Case Study on the Creation of the ICSID

Convention, in INTERNATIONAL INVESTMENT LAW AND HISTORY 286, 305 (Stephan W. Schill,

Christian J. Tams & Rainer Hofmann, eds., 2018). The creation of a specialized center for the

resolution of foreign investment disputes overlaps with the fact that during that period some

states, particularly in Latin America, were overcoming the use of import substitution

industrialization (ISI) during the 1950s, when States imposed protectionist measures on local

production. When States subsequently migrated to a more “complex” or difficult method of

production, the presence of foreign enterprises was inevitably required. The direct consequence

was that a state’s participation in its own economic development was marginalized by external

participation from foreign companies. Even though foreign direct investment (FDI) increased,

domestic growth did not. This motivated States to nationalize some industries and worried many

investors, mainly from the United States, who saw the World Bank as an institution to resolve

these kinds of disputes. See Maria Antonia Correa Serrano, Foreign Direct Investment and Development

in the Pacific Alliance, in INTERNATIONAL INVESTMENT LAW IN LATIN AMERICA 437, 439–43 (Attila

Tanzi et al. eds., 2016).

2. See Katia Fach Gómez, Latin America and ICSID: David versus Goliath?, 17 L. & BUS. REV.

AMERICAS 195, 195 (2011); Mara Valenti, New Trends in International Investment Law Treaty Practice:

Where Does Latin America Stand?, 39 SEQU

¨E

ˆNCIA 9, 10 (2018). During the Washington Convention

negotiation that created the International Center for the Settlement of Investments Disputes

(ICSID), Latin American countries strongly opposed the center’s creation. The countries’

opposition to the World Bank proposal was expressed in the meeting on September 9, 1964, in

which all Latin American countries, the Philippines and Iraq, refused to confer special rights on

investors and expressed concern about waiving requirements for exhaustion of local remedies.

Rodrigo Polanco Lazo, The No of Tokyo Revisited: Or How Developed Countries Learned to Start Worrying

and Love the Calvo Doctrine, 30 ICSID REV. 172, 182 (2015).

3. Polanco Lazo, supra note 2, at 176.

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