“Today, it is more necessary than ever to have mechanisms in place for resolving disputes, ”explained Juan Manuel Rivero Godoy, M.A.—secretary of the Permanent Court of Appeal of Mercosur, based in Asunción, Paraguay, and professor of public international law at the School of Administration and Social Sciences at Universidad ORT Uruguayduring the online conference “Dispute Resolution: A Look at Mercosur.”
The event, which was part of the lecture series organized by ORT’s Department of International Studies, took place on Wednesday, July 8, 2020.
Cooperation or conflict
First, the expert provided an overview of various international disputes that took place before the 20th century. At that time, disputes were resolved in one of two ways: through cooperation or armed conflict.
For Rivero Godoy, the 1907 Hague Conference marked“a turning point,”as it served as “an early precedent” for the peaceful resolution of disputes.
Given the current health emergency caused by COVID-19, the expert noted that there have been a number of breaches at the international level of international agreements or contracts involving jurisdictions in different countries. At this time—with restrictions on air, sea, and land travel—it is difficult to travel from one territory to another to file claims in the appropriate courts.
“The pandemic and any situation that deviates from the norm always presents various scenarios that can involve either cooperation or conflict. In general theories of mediation, negotiation, arbitration, cooperation, and dispute resolution, scenarios are always viewed as either cooperative or conflictual,” said Rivero Godoy.
However, unlike in the past, when conflicts were armed, “today we have countless arbitration centers that administer dispute resolution mechanisms. These types of mechanisms have become so widespread that they are no longer considered alternative options but are now well-established. Some, such as arbitration, are more common, while others, such as mediation or conciliation, are less so.”
One dispute resolution mechanism is good offices, in which the state or a prominent figure in the field of international relations—such as a politician or a legal expert—steps in. “It assumes that the parties had already reached a complete breakdown in communication. This simply brings the parties back to the table so they can resume communication.”
“The next step is mediation. The role of mediator requires specialized training. In this case, the mediator not only brings the parties together but also facilitates the exchange of solutions and proposals,” said the expert.
“Another mechanism we have is an investigation,” he added, “which involves forming a commission tasked with determining exactly what happened.” This mechanism is commonly used in the context of international peace and security.
Finally, conciliation is a process in which a panel of experts directly proposes a solution to the parties.
The Case of Mercosur
Mercosur has dispute settlement system, governed by the Olivos Protocol, designed to resolve any disputes that may arise.
This mechanism is based on arbitration. It also providesfor “multifunctional clauses”(various types of clauses).
The first step is negotiation between the states. If that fails, the parties may turn to the Common Market Group to resolve the matter. The Common Market Group could even appoint a panel of experts to issue an opinion. If the dispute persists, the parties may resort to ad hoc arbitration.
“Ad hoc arbitration means that the states involved in the dispute select, from a list of arbitrators drawn up by the countries themselves, one arbitrator of each nationality and jointly choose a third arbitrator to serve as chair. That tribunal is formed specifically for that case,” explained Rivero Godoy.
In addition, the Olivos Protocol stipulates that if the Mercosur member states decide to appeal to the World Trade Organization (WTO), they may no longer resort to the Mercosur dispute settlement mechanism, and vice versa. This is “a way to avoid duplication of proceedings and to standardize a single procedure.”
The Olivos Protocol also established the Mercosur Permanent Review Tribunal (TPR). Member states may choose to bypass the ad hoc tribunal and instead bring their cases directly before this tribunal, which serves as the court of last resort.
“What is the challenge facing a dispute settlement system within Mercosur?” asked Rivero Godoy. “The Mercosur tribunal—not only the Permanent Dispute Settlement Tribunal (TPR) but also the ad hoc tribunals—has always been limited to purely commercial matters. However, an integration system is not limited to trade; it must also address other issues such as human rights and social problems. Furthermore, I believe that one of the challenges is also to rethink the situation of private individuals, since they currently cannot access the tribunal.”