Our experts summarize the top trends in International Arbitration in 2022

Our experts summarize the top trends in International Arbitration in 2022
> COVID-19 continues to play a significant role in the international arbitration scene
As we transition into 2022, the COVID-19 pandemic continues to disrupt almost every facet of life worldwide. Despite the greater availability of vaccines and major advancements in treatment, the surge of the Omicron variant across the globe has upended expectations of a speedy return to pre-pandemic life, and, once again, travel restrictions, lockdowns and other health-related measures are on the rise.
The pandemic will likely continue to be a source of new arbitration disputes across a wide variety of sectors, because of the economic disruption caused by the pandemic, as well as the impact of measures implemented by States to respond to the crisis:
> Renewable energy disputes
Latin America: Over the past decade, renewable energies have become one of the fastest growing sectors of the energy economy in Latin America, especially solar and wind energy. Given the large-scale capital requirements needed to finance these projects and supply the necessary technology (which is often only provided by a handful of companies), Latin American economies are highly dependent on private international investment to develop their renewable energy infrastructure. For investors, in turn, the economic performance of renewable energy projects is conditioned by complex commercial, financial, regulatory, environmental, and social factors, making the sector a fertile ground for the emergence of new arbitration disputes.
While, to date, there have been relatively few arbitration proceedings concerning renewable energies in the region, we can anticipate potential sources of disputes that may result in international arbitration in the foreseeable future:
Portugal & Spain: The energy transition currently being implemented in Portugal is also considered to have the potential to generate disputes; for instance, due to government intervention and the discontinued use of fossil fuels.
While, in Spain, as is well known, investment arbitrations against this country in the renewable energy sector have become mainstream in recent years. Spain’s legislative reforms in the renewable sector, mainly in 2013, frustrated the investment activities and profits expected by many investors, triggering a wave of arbitration proceedings under the Energy Charter Treaty (+ 50 treaty claims from renewable energy investors). A significant number of these proceedings favored claimants, and Spain has been ordered to pay considerable amounts to the investors.
> Increase in ESG-related disputes in commercial and investment arbitrations
In recent months, there has been a considerable increase in public and private interest in ESG (“Environmental, Social and Governance”). Political, social and investor pressure has accelerated the introduction of ESG measures worldwide, and new regulations related to ESG concerns will be implemented in the coming years. ESG issues have been a hot topic in discussions among private companies, public institutions, and investors.
Companies now face the challenge of adapting their business to these changes and complying with this new regulatory package. This new scenario not only requires the revision of the company’s internal policy and procedures, but it also requires the company to address the risks that may arise from its business relationships with other companies. Accordingly, ESG clauses are now regularly included in the latest commercial contracts. Against this backdrop, this emerging and complex issue is more than likely to generate disputes over the interpretation and application of ESG contractual clauses.
Arbitration, already the preferred mechanism for cross-border dispute resolution, is well suited to resolving highly complex ESG-related disputes. In fact, arbitration clauses are included in many contracts governing the energy, natural resources, infrastructure and construction sectors, which are some of the most likely sectors to be involved in ESG-related disputes.
ESG-related disputes will continue to increase in investor-state arbitrations. These cases will arise mainly from ESG regulation enacted by governments relating to the energy transition and sustainability to address climate change.
> Third-party funding in the context of international arbitration claims
There is an increasing appetite for litigation funding, and international arbitration is no exception. Portfolio funding is becoming more and more attractive, because it allows the funding or monetization of several claims with uneven prospects of success. Corporate awareness is being coupled with a wider range of funds (national, international, and those with different focus and ticket requirements).
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