Photo: Sonya Revell
On the map: Miami is an arbitration hub for international business disputes
Last summer, a special panel of judges met in Miami to hear claims by several construction companies that the Panama Canal Authority, which runs the canal, owes them $1.6 billion. The authority owes the money, the firms say, to cover cost overruns for work they did on the project to widen the canal.
The hearings were conducted behind closed doors, and the judges weren’t part of a regular court — they were arbitrators, chosen by both sides to settle the case out of court. Their decision will be binding.
The case, aside from its financial implications, is significant for other reasons: It’s an example of how widespread arbitration has become as a way to settle complex business disputes. More important for Florida, the fact that the hearings were held in Miami put an exclamation point on efforts to establish the city as a center for international arbitration — on a par with other major U.S. trade centers.
“Fifteen years ago,” says Eduardo Palmer, whose firm specializes in commercial litigation, including international litigation and arbitration, the hearings “would have gone to London, Paris or New York.”
Palmer has been among the leaders in building Miami’s international arbitration infrastructure. A University of Florida law graduate, he worked for eight years as a federal prosecutor before taking a job at Steel Hector & Davis in Miami in 1997. The firm, which merged into Squire Patton Boggs, was expanding throughout Latin America, and Palmer saw how growing investment in Latin America was leading to more business disputes among people and firms from different countries.
Historically, governments in Latin America did not embrace international arbitration. But fears of corruption or favoritism meant that “a French investor is not going to feel comfortable litigating his Brazilian investment in a Brazilian court, and a Brazilian investor is not going to want to litigate in France,” says Palmer. By the early 2000s, many Latin American countries had modernized their arbitration laws and signed on to international arbitration conventions so that foreign investors could settle disputes through arbitration rather than local court proceedings.
Palmer says he saw how Miami’s location positioned the city perfectly as a center for arbitration hearings relating to commercial disputes in the Americas. To focus attention on the city, he and a Swiss colleague, Daniele Favalli, decided to create an event in Miami for arbitration attorneys who practice in Latin America. In 2002, the duo persuaded the International Chamber of Commerce to sponsor the Miami Conference on International Arbitration in Latin America, which is now in its 15th year and will take place again this fall.
Meanwhile, Palmer and other members of the international section of the Florida Bar began laying the legal foundation that would enable Miami to attract actual arbitration hearings.
In 2005, the Florida Bar allowed foreign attorneys to practice in Florida during international arbitration hearings without being licensed in the state. In 2010, the Florida Legislature aligned state law with established international arbitration procedures to provide a procedural framework for hearings. In 2011, Miami won a bid to host the 2014 conference of the International Council for Commercial Arbitration — the first time in more than 20 years that the event was held in the U.S.
Other pieces of arbitration-related infrastructure fell into place as well: In 2013, Miami-Dade County created a court with judges trained to handle international commercial arbitration matters, such as motions to compel arbitration or to enforce an arbitration award. And the University of Miami created the International Arbitration Institute, one of only a handful in the world, offering a specialized graduate law degree program for arbitration attorneys.
Vaulting to the top
Today says Alvin Lindsay, a partner at Hogan Lovells in Miami and chair of the international law section of the Florida Bar, Florida annually ranks among the top three locations for international arbitration, jockeying with Washington, D.C., for second place behind New York. “Florida has worked hard to get to that position,” Lindsay says.
The same things that make Miami a popular international tourism destination also make it an ideal arbitration venue: Plenty of direct flights to and from Latin America, a multilingual professional workforce, and lower costs compared to other hubs such as Paris or London. “People from Latin America feel comfortable in Miami,” says Palmer.
The arbitration business brings considerable economic benefits. Attorneys and judges from around the world stay in local hotels and eat in local restaurants. Hearings create opportunities for court reporters and translators. Florida companies doing business in Latin America say the ability to arbitrate disputes in Miami saves time and money.
While other cities such as Atlanta aspire to become arbitration hubs, Miami’s Latin American niche ensures it will remain a top venue, says Palmer. “In general, Latin Americans think of Miami as the place where they do business.”
There will be no shortage of business for attorneys and arbitrators. Last year, nearly 1,000 new arbitration cases worldwide were filed with the International Chamber of Commerce. And the number of Latin American parties involved in ICC arbitration cases rose 15% during the year — with Brazil now ranking third for ICC arbitration users.
Meanwhile, early this year, the canal construction companies upped their claims to nearly $6 billion. So far, the ICC’s Dispute Adjudication Board hasn’t issued any decisions.