Throughout this summer, in part inspired by CPR’s recent activity in Brazil, “CPR Speaks” will be publishing a four-part series looking at the state of alternative dispute resolution (ADR) in a number of other rapidly changing locales. We begin with Colombia, to be followed by Taiwan, Turkey and Mexico.
Colombia: A Dynamic Economy with a Vibrant ADR Environment
By Boaz Cohon, CPR Student Intern
In 2014, market research firm Capital Economics reported that Colombia had surpassed Argentina as the third largest economy in Latin America. This economic success surprised few, as Colombia’s Gross Domestic Product (GDP) had grown close to 5% in both 2013 and 2014, despite the slowdown occurring throughout the rest of Latin America and falling oil prices (one of Colombia’s main exports), all while keeping inflation under 4%. Moreover, Foreign Direct Investment (FDI) in Colombia grew to $16,198,401,721 in 2013 from only $10,564,672,091 in 2008.
Colombia is a paragon of excellence in economic expansion for Latin America, and one factor that has helped contribute to Colombia’s stunning growth—particularly its high levels of FDI—is a corporate and legal environment conducive to international as well as domestic alternative dispute resolution (ADR).
Ever since the new constitution was crafted in 1991 arbitration and mediation have been enshrined within the governing document of Colombia, which states, “Individuals may be invested temporarily with the function of administering justice in the condition of conciliators or arbitrators authorized by the parties to utter failures in law or in equity, under the terms established by law.”
Additionally, in 2012, Colombia modified its arbitration laws to follow UNCITRAL Model Law with the main difference being that Colombia’s arbitration statute (1563/2012) incorporates a broader definition of what can be considered international arbitration: any dispute that affects the interests of international commerce is covered by this category. Regarding mediation a 2001 law (640/2001) made conciliation mandatory prior to commencing litigation. These legal reforms and a governmental commitment to promoting ADR have insured its continued development in Colombia.
Colombia’s ADR profile has been further promoted by the internationally recognized Arbitration and Conciliation Center of the Bogota Chamber of Commerce, an organization that deals with more than 300 arbitration cases and 7,000 mediation cases annually. The Arbitration and Conciliation Center is the only place in Latin America that is sanctioned by the International Centre for the Settlement of Investment Disputes (ICSID) to host ICSID arbitrations and it has begun to support e-Arbitration proceedings via its Online Plan.
It is fortunate that Colombia has taken to ADR, for its domestic legal institutions are not effective at litigating commercial disputes. Although the judiciary is considered relatively independent and litigation is thought to be less expensive than using a private center for commercial arbitration, there are multiple issues that cripple the legal system’s effectiveness. For one, the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN) along with assorted right-wing paramilitary groups and drug-trafficking organizations (DTOs) use extortion, threats and bribery to sway corrupt members of the judicial system such that other participants can take advantage of this endemic corruption.
Moreover, a World Bank analysis in 2014 found that the average commercial litigation takes 1,288 days to be resolved. This lethargic pace is far too slow for businesses in a competitive global economy.
Thus, it is not only clear that the already vibrant ADR community within Colombia continues to head in the right direction, but also that ADR is necessary to facilitate prompt, equitable commercial dispute resolution. As Colombia’s economy continues its breakneck pace and increasingly trends towards globalization in today’s exceedingly international world economy, the efficacy of its alternative dispute resolution system will be key to continuing on the path to prosperity.
The CPR Institute would like to thank Boaz Cohon for this contribution. Boaz, a summer public policy/legal intern at CPR, is majoring in Political Science and History at Vanderbilt.