Overview of International Arbitration in Latin America: Progress, Challenges and Reforms in 2025

Arbitration in Latin America continues to show dynamic development, marked by institutional reforms, new strategic alliances, and landmark cases that highlight the ongoing tension between investment protection and state sovereignty. Throughout 2025, several countries have taken key steps to modernise their legal frameworks and enhance their dispute resolution systems, while also facing high-profile cases that draw both regional and international attention.

One of the most notable advances comes from Costa Rica, which recently enacted the Arbitration Harmonisation Law. This regulation unifies the domestic and international arbitration regimes and aligns Costa Rica’s legal framework with global standards, aiming to position the country as a reliable hub for commercial dispute resolution. (Here).

In Chile, the Santiago Arbitration and Mediation Centre and the International Arbitration Centre of Madrid signed an alliance to integrate their international activities, thereby strengthening Chile’s arbitration infrastructure and expanding its global reach (Here).

Regarding disputes, Colombia remains at the centre of the debate following the arbitration initiated by Canadian mining company Eco Oro. Although the international tribunal concluded that Colombia was not required to pay compensation, it acknowledged that the State’s actions caused harm to the company by restricting its activities to protect the Santurbán páramo ecosystem. This case raises questions about the boundary between sovereign environmental decisions and international commitments to investors (Here).

In Panama, the company First Quantum Minerals initiated an arbitration process following the closure of its copper mine due to social protests. Although the company has expressed its intention to suspend the arbitration, the Panamanian government has not yet received formal notification, creating uncertainty about the course of the dispute and the relationship between the country and foreign investors (Here).

Alongside these cases, there is a regional trend toward the critical review of bilateral investment treaties and the strengthening of more balanced legal frameworks. Countries such as Brazil, Argentina, Uruguay, Peru, and Mexico have made progress on reforms aimed at increasing transparency and flexibility in arbitration proceedings (Here). These reforms aim to create a more secure environment for investment without compromising the regulatory capacity of the States.

The year 2025 reaffirms that international arbitration remains a key tool in the region, but its legitimacy and effectiveness depend on respect for local laws, transparency in the process, and the recognition that States must be able to implement public policies without facing undue pressure. The evolution of arbitration in Latin America continues, driven by the need to protect both investor interests and national sovereignty.