ENERGY ARBITRATION IN LATIN AMERICA
CD: How would you describe the level of disputes arising in connection with energy projects in Latin America? What are some of the common issues causing contractual conflict?
Bejarano: In recent years, if we had to highlight one area in the sector where disputes have proliferated, it would have to be disputes arising out of a regional effort to focus on clean and renewable energy. There are over 319 gigawatts of solar and wind power projects expected to be launched in the region by 2030, in every country from Argentina to Mexico. The scale of these projects and the cross-border nature of the contracting parties that participate in the construction and management of these power generation projects has translated into disputes from energy performance contracts (EPC) and project management contracts in particular. Many of these disputes relate to construction delays, capacity deficiencies in the constructed projects, and disputes around project costs, especially in circumstances where turnkey projects have been contracted but costs have significantly overrun the budget. Similarly, because many of these projects are currently being put into operation but were contracted before the coronavirus (COVID-19) pandemic, the region has seen disputes around force majeure issues and the changing cost landscape that resulted from exponential raw material cost increases, which have had a direct impact on project development.
Oct-Dec 2023 issue
Latham & Watkins LLP
Litredi, S.C.