WorldCity Business Magazine

Arb Mecca

by WC

Grupo Guascor, a manufacturer of engines and marine transmissions based in Vitoria, Spain, recently signed a partnership with a Latin American distributor. The Spanish firm has no significant presence in South Florida. Still, when it came time to draw up an arbitration agreement between the two parties, Miami was the obvious choice of venue to resolve any eventual legal disputes. “Miami provides a neutral forum where both Latin Americans and Europeans feel comfortable settling their issues,” says attorney Carlos Concepcion of Concepcion and Associates of Coral Gables, who negotiated the arbitration agreement on behalf of his Spanish client.

The Quascor tale is an increasingly familiar one. As arbitration has become a more widely accepted mechanism for settling legal disputes in Latin America, Miami has surfaced as the venue of choice for the proceedings. Culture, climate, cost and geography have all played a role in promoting Miami as an arbitration capital. But so has the sophistication and diversity of South Florida’s legal community, as well as Florida’s well-respected and “arbitration friendly” legal system.

Underlining its newfound prominence as a player in the international arbitration game, Miami plays host later this month to the Third Annual Miami International Arbitration Conference. Presented by law firm Steel Hector & Davis, the two-day event is expected to draw 130 participants from more than 20 countries.

The conference is the brainchild Daniele Favali, a Swiss lawyer who arrived in Texas from Zurich in 1999 and one year later accepted a post with Steel Hector & Davis’ Miami office. Almost immediately, Favali recognized the city’s tremendous potential as an international arbitration center. He has been promoting the idea ever since.

Some attractions are obvious. Climate, for starters. “There’s no question that Latins would prefer Miami over New York, especially in January,” he says. Convenience is another factor: Miami is closer and easier to reach for most Latin Americans than alternatives, such as New York or Washington. And, of course, many Latin American businessmen, especially those involved in international business, have personal ties to Miami which might include real estate investments, bank accounts or kids in school.

Language is another obvious benefit that Miami offers. “The depth of professional resources (in Spanish or Portuguese) are larger here than in New York,” says John Rooney, an attorney at Shutts & Bowen. “Here we can do an arbitration from beginning to end in Spanish,” adds Rooney, who speaks both Spanish and Portuguese fluently, and is chairman of the International Arbitration Committee at the Inter-American Bar Association.

Cost is another factor. According to Favali, a partner of a major international law firm in New York or London would charge anywhere from 30 to 40 percent more than a partner in Miami. Also, hotels, office space and conference rooms for the arbitration proceedings are significantly cheaper in Miami. As some arbitration panels can last several days or even weeks, these costs are no small consideration.

But perhaps even more important than these “ambient” factors that make Miami a convenient half-way point where company executives and corporate lawyers can meet to work out their differences are the shifts in the legal, diplomatic and business environments that have made arbitration as opposed to litigation the preferred mechanism for resolving international disputes.

“Historically, Latin American countries were resistant to arbitration, but that resistance has been broken down, particularly over the past 10 years,” says Joe Matthews, a Miami-based trial lawyer and one of two Florida members of the American Arbitration Association (AAA) board of directors, the other member being former U.S. Attorney General Janet Reno.

While arbitration has long been an accepted method of dispute resolution in the U.S. and, particularly, in Europe, it is only recently that many Latin American countries have signed on to international treaties specifically the New York and Panama conventions which recognize the enforceability of international arbitration awards without review or meddling by local courts. International arbitration cases would have no teeth without those conventions. At last count, 18 Latin American countries had ratified those treaties, with Brazil and the Dominican Republic notably, Miami’s two largest trading partners the latest to join the club.

The growing acceptance of arbitration in Latin America, coupled with the ever-increasing international trade and investment within the region, have provided fertile ground the growth of international arbitration. And the crowning factor that has made Miami the emerging arbitration center is what Nicolas Swerdloff, of the Miami office of Hughes Hubbard & Reed, calls “the arbitration-friendly law of Florida.”

An arbitration negotiation allows the parties to draft and design the mechanics of their dispute resolution process. But the arbitration proceedings such as the appointment of the arbitrators and the selection of the location of the arbitration panel are still governed by the procedural rules of the local law. For that reason, explains attorney Joe Matthews, “the law of the place where the parties decide to arbitrate becomes hugely important.” And, he adds, “the sophistication of the Florida bench is well-known when it comes to arbitration.”

Last year, 834 cases were filed in the Miami region with the AAA, an 8 percent increase over 2003. While that number includes both domestic and international cases and there is no reliable breakdown between the two categories, it is almost certain that Miami’s attraction as a venue for international dispute resolution is driving the increase.

Should Miami be chosen as the seat of the secretariat for an eventual Free Trade Agreement of the Americas, there is no doubt in anyone’s mind that those numbers will continue to go nowhere but up.