I am Hunter Carter, a NYC lawyer for corporate, commercial, and real & intellectual property cases, with a passion for Colombia (I am also a partner at the law firm of Arent Fox LLP - here’s my bio). This site is a place I share news, research and analyses about Colombian law and business in order to disseminate information and analysis and stimulate dialogue.  (Please see disclaimers: Copyright-protected, this site is personal, the views are my own, my views are not legal advice, and this is not an advertisement for clients).

 

Improving Recognition and Enforcement of International Arbitral Awards – Analysis and Translation of Proposed Arbitration Law

 A proposed new arbitration law is circulating among legal circles in Colombia, and has reached me thanks to Daniel Peña of Peña Mancero Abogados.

There is good news. Recognition and enforcement of foreign arbitral awards has not followed the New York Convention, and can take up to two years (see my article on arbitration here and others here.)

All that is changing. The proposed law very closely tracks the he Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Arbitration Convention” or the New York Convention,  Daniel says in his blog. You can see that for yourself with my translation, below – just compare Articles 111 and 112 to Articles V and VI of the New York Convention. Click HERE to keep reading.

Preventing Piracy or Creativity – The Debate Over The Ley Lleras, Colombia’s Proposed Version of the Digital Millennium Copyright Act

A familiar debate is raging in Colombian intellectual property circles — copyright holders versus consumers of information — over whether copyright laws prevent piracy or creativity. 

The debate arises in the context of a proposed law “to regulate infringement of copyright and related rights on the Internet.” submitted to the Colombian Congress by the Minister of Justice and the Interior, German Vargas Lleras.
The “Ley Lleras” or “Lleras Law,” is a step in Colombia’s adherence to the intellectual property rights chapter of the anticipated US-Colombian Trade Promotion Agreement. Colombia will, by adopting this WIPO-treaty based approach, catch up to the United States, the European Union (and beat out the rest of Latin America) in embracing a modern rights enforcement approach. In the United States, the approach is codified in Title II of the Digital Millennium Copyright Act of 1998, sometimes referred to as the Online Copyright Infringement Liability Limitation Act (OCILLA).

The law strikes a balance between rights holders and information consumers by exempting online service providers from the duty to monitor for infringement, and by creating a safe harbor for them when, upon notice from a rights holder demonstrating its copyrights as set forth in the law, they block access to or remove an allegedly infringing work in order to avoid damages liability.  A counter-notification procedure protects those accused of posting infringing material who make a demonstration that the material is not protected. 

To read more, click on the headline or HERE.

Ed. Note: This article appeared in April 2011 Latin American Law & Business Report published by Thomson Reuters/WorldTrade Executive. See http://www.wtexecutive.com

 

Preventing Piracy or Creativity? The “Ley Lleras” Translated – Colombia’s Version of the Digital Millennium Copyright Act

A familiar debate is raging in Colombian intellectual property circles — copyright holders versus consumers of information — over whether copyright laws prevent piracy or creativity.

The debate arises in the context of a proposed law submitted to the Colombian Congress by the Minister of Justice and the Interior, German Vargas Lleras. For that reason many call it the “Ley Lleras” or “Lleras Law,” it is in reality Colombia’s attempt to catch up to the United States, the European Union, and much of the rest of the world’s economies in striking a balance between rights holders and information consumers. In the United States, the issue was settled, as a matter of legislation anyway, by Title II of the Digital Millennium Copyright Act of 1998, which Title is sometimes referred to as the Online Copyright Infringement Liability Limitation Act (OCILLA). It does not create or change the copyright laws, but instead deals with online intermediaries, excusing them from the obligation to patrol their services to prevent infringement, instead imposing the policing burden on rights owners. Consumers who want free access to all information, irrespective of the wishes of the author or his publisher, complain this law prevents innovation, but the only innovation it seems to prevent is innovations in circumventing author’s rights in the digital space.

I will have more to say about the myths and facts in the debate, but for readers interested in what the proposed law actually would do, I have translated it. To read it, click HERE or on the headline.

What’s Trending in Colombia Law & Business — Actual Google Searches Revealed

 What are people using Google to find about law and business issues in Colombia?

 This site receives most of its visitors through Google searches. WordPress, which hosts this site, reports the actual search terms.  I thought readers might find it interesting to see the searches, to reveal what is trending and what people are looking to learn about when they find articles on this site. 

 Click HERE to keep reading.

Colombia’s Ambassador Silva Shows How Delaying the Trade Agreement Hurts US-Colombia Relations

Colombia’s Ambassador Gabriel Silva told a Washington, D.C. crowd at the NDN New Policy Institute that Colombia has been waiting a long time for the US-Colombian Trade Promotion Agreement (“TPA”) to be approved. Click HERE to keep reading.

Beyond The Headlines on Passing the TPA: What Senator Baucus and Amb. Kirk Actually Said  

The Senate Finance Committee held an important hearing this week when it invited US Trade Representative Ron Kirk to explain whether and when the Administration will submit the US-COL Trade Promotion Agreement to Congress. The result was a still split Administration position, reflecting its internal conflicts between pro-trade and economic recovery elements, on the one hand, and elements watching the re-election process and needing full support from unions especially at a time when, as in Wisconsin, the labor union movement is under siege. This is a false choice. Pro-union is pro-jobs, at-home jobs especially. To US workers their leadership is seizing on Colombia’s difficult issues is fine unless it costs US jobs and fails to save Colombian workers. US workers gain when their employers engage in robust exports to Colombia, and US workers are sidelined watching as Colombian firms are buying farm and manufactured and high-tech products and services from China, Canada, Europe, the Southern Cone, India, and soon Korea.

Hanging tough, President Santos, through Ambassador Silva, called for passage of the TPA “as negotiated.” This statement, as talks resume from last month on the changes necessary to satisfy the labor union forces in the Administration, was a tough stand. Colombia means, in effect, we’re not very interested in negotiating further changes and incurring further delay and are prepared to go elsewhere if there is no deal to be done.

 

More senators including Finance Committee Chair Baucus to take up the Colombian, Panamanian, and Korean agreements in the order they were negotiated and signed (as is Congress’s tradition). This is another way of saying we will hold up consideration of the Korea agreement until Colombia’s has been voted on. That is just what Senator Hatch said.

  

As I see it, the Administration will let the US-COL TPA pass on time, but it will be either grudgingly and as part of a compromise, or at the last-minute the Administration will take out-sized credit for cosmetic changes to an already strong, already-negotiated agreement. Either way, the Administration will get to keep some “street cred” with organized labor’s leadership. Forces more concerned with jobs and relations with a vital ally and strong friend will pass the TPA.  Thus, I stand by my published projections. Click HERE or on the headline to keep reading.

 

Truckers Striking, Washington Eyeing, China Vying, and Billionaires Buying – The Week In Colombia Law & Business

An agreement ends a truckers strike that jammed traffic. The US Administration scrambles to get “fresh perspective” on the Trade Promotion Agreement while President Santos and Ambassador Silva play the China card. Three billionaires are buying into Colombia. And the Millionarios soccer team make an amazing turnaround — from being seized for narco-connections, years ago, to an initial public offering next week. Click the headline, or here.

Why The Colombian Trade Promotion Agreement Will Go To Congress This Year 

During his five-day trip to Washington recently, Colombia’s Vice President Angelino Garzon, a former organized labor leader, had to struggle for attention. The week was dominated by the run-up to, and post-game analysis of, the annual State of the Union address. The capital was buried in snow. And other international news  — the fall of the Tunisian government, and mass demonstrations threatening the Mubarak government in Egypt  — crowded out Garzon’s agenda. (At their joint press conference, Hillary Clinton’s statement started on Egypt and her first question was about Egypt, while Garzon patiently stood and waited.) Garzon persevered, however, engaging a wide array of officials, labor, and human rights groups. The outlook for the US-Colombia Trade Promotion Agreement has improved significantly and a vote in Congress this year looks like it will happen. 

America’s Quarterly reported this week that the Colombian trade deal is “inching” forward.  In my judgment, that is correct but weak.  The fundamentals are all there for passage this year, and businesses should launch a full-throated push for approval now. Click on the headline or here to keep reading. 

Corporate Insolvency Law Revisions Adopted in New “Law of First Employment” - Updated

President Santos formally presented Congress with his proposed “Law of First Employment,” which is a bold attempt to increase employment in the formal economy.  As I explained in my post on the new “Law of First Employment,” the Government will create incentives (tax breaks, financing options, and the like) to encourage creation of small businesses by, and first time employment (including “telework”) of: youths under age 28; certain technical professions, the agricultural industry; women under 40; and in three specific states.  The law also aims to cut red tape and simplify labor-related procedures.

To simplify business procedures, the bill offers major revisions to simplify corporate insolvency law (Law 1116 of 2006) and speed up bankruptcy resolution.  (To keep reading, click here or on the headline above.)  

Corporate Insolvency Law Revisions – Translation

Here is myquick translation of the revisions to the Corporate Insolvency Law, contained in the new Law of First Employment. 

Recent Announcements

Some important announcements to note from my friends in Bogotá law firms, including new practice areas and a great analysis of the 2010 Tax Reform Act and Colombia’s law of competition.

The Antitrust Review of the Americas 2011, by Brigard & Urrutia

In a very careful and detailed piece, the lawyers of Brigard & Urrutia published near the end of last year an excellent overview of the evolving law of competition in Colombia, which was significantly reformed in mid-2009 (see my review of the new law from September 2009). Follow the link to read the entire report.

 

Lewin & Wills Announces Colombia Tax Flash® 2011, Comments on Colombia’s Latest Tax Reform for FY 2011

The end of the year brought news of the 2011 Tax Reform Act in Colombia. Adrian Rodriguez sent this fast and thorough analysis in Lewin & Wills’ Colombian_Tax_Flash®. To keep reading, click on the headline or here. 

Posse Herrera & Ruiz Names Ernesto Cavelier Partner And Opens Intellectual Property Practice Area

Posse Herrera & Ruiz is very pleased to announce the entry of Ernesto Cavelier as partner of the firm and the opening of its Intellectual Property practice area headed by Mr. Cavelier and supported by Ms. Helena Camargo, patent engineer Julian Diaz, four associates and paralegals, and three litigation associates from the litigation group. 

To keep reading, click on the headline or here.

 

Ernesto Villamizar Joins Posse Herrera & Ruiz To Head Real Estate Development Projects And Trust Practice Area

Ernesto Villamizar is a Universidad Javeriana lawyer and economist, has studies in Financial and Credit matters with the Chase Manhattan Bank – Banco del Comercio, and Graduate Management studies in the Universidad de los Andes.  

Click the headline or here to keep reading.

The Colombian Global Market Opens – Trades International Securities on the BVC

The Bolsa de Valores de Colombia (BVC) is Colombia’s stock exchange, but since November it has joined forces with the Chilean and Peruvian exchanges, creating a platform for trading in all three countries of issues registered in any of the three countries. In a separate new development, 21 issues of international securities can now be traded on the “Global Market of Colombia.”  (To continue reading, click here or on the headline above.) 

The “Law of First Employment” – Towards Formalization, Through Incentives, A National Database, and Regulatory Reforms

(Another tip of the hat to Clayton Steele and the good lawyers of Posse Herrera & Ruiz, for sending me this news.)

One of the great challenges facing the modernizing Colombia is the formalization of employment. Proponents of the US-Colombia Trade Promotion Agreement and other free trade deals have argued they will help social development by increasing formal sector employment. Informal employment not only contributes to poverty, it has cost the health care financing system in Colombia dearly, while formal employment brings not only needed payment into the system, but modern worker benefits and protections. Increased formal employment is needed on a massive scale to reduce income inequality and cement gains is social stability.

The Colombian Congress has passed a major piece of legislation designed to bring about more formal employment, called the Law of First Employment, in a very serious effort to rise to this enormous challenge. (Click the headline above or here to keep reading)

Government Announces Measures To Relieve Currency Pressures and Defend Employment Affect Tax Rates on Foreign Debt 

A tip of my hat to Clayton Steele and her enterprising colleagues at Posse Herrera & Ruiz, who brought to my attention the announcement of the measures to ease upward pressure on the USD:COP. (Click the headline above to read the measures.) 

ELECTION ALERT: US-Colombia Trade Agreement — Arent Fox 2010 Midterm Election Analysis

The midterm elections of 2010 and the widely anticipated shift toward a more Republican Congress will bring significant changes to domestic and foreign policy which will have a major effect on our clients’ business both here and abroad. A lot of people are asking me what the election means for the US-Colombia Trade Promotion Agreement (in Spanish, the “TLC”).  My colleagues in the Government Relations Practice Group of Arent Fox have prepared a special analysis and commentary on the proposed US-Colombia Trade Promotion Agreement as a result of the mid-term election results.

Read Former Congressman Phil English’s assessment here.

(Read the prepared remarks of US Chamber of Commerce Vice President for International Affairs John Murphy, delivered October 21, 2010, before the election, here.)

Bogotá Hotels Development Update

By Maria Gladys Escobar in La Republica

Work Begins on Two Hotels In The Capital

Bogotá. The development of new hotels continues and it shows. The work of two complexes  already started located in exclusive neighborhoods such as Santa Barbara and Business Center in Ciudad Salitre to invest about $ 150,000 million.

“NOEL” beats “Noah” in Colombian Trademark Dispute

Posted By Rodrigo Ramírez Herrera to IP tango on 11/04/2010 09:39:00

A trademark dispute about cookies in Colombia has been resolved by a ruling that holds that in considering a generic phrase to assess the risk of confusion between conflicting marks, only the dominant distinctive elements should be considered.

The Council of State determined that while the term “Noah” is a name of a biblical character and “Noel” is a word commonly used to evoke Christmas, “the similarities between these elements are crucial to generate a risk of confusion, because they are also the same international class 30, so that consumers can easily confuse the origin and quality of products.

The Colombia Law & Business Forum

On October 14, 2010, The Colombian American Association held “The Colombia Law and Business Forum,” sponsored and hosted by Arent Fox LLP in association with ProExport Colombia and The Colombia Law & Business Post.  Latin America and Colombia are hot emerging markets drawing significant investor attention.   This event was geared towards financial and strategic investors already in, or considering a move to, Latin America and Colombia, to increase understanding and access to this burgeoning economy.  

The main speaker was one of Colombia’s leading business executives, David Emilio Bojanini Garcia.   The forum also included:  

(i) a panel of investment bankers who discussed innovative infrastructure projects in Latin America; 

(ii) a legal panel discussion among transactional lawyers regarding “structuring for success” from the M&A, private equity, and tax perspectives; and

(iii) an Arent Fox legal panel addressing risk management issues.

Click on the headline above or here to find the detailed lineup of top-flight talent who addressed the conference, and links to their presentations.  

Congratulations to Juan Manuel Prieto

Juan Manuel Prieto, the senior partner at Prieto & Carrizosa, has been named Colombia’s new ambassador to Italy.

 

Congratulations To Posse Herrera & Ruiz Abogados of Bogota.

The hard-working lawyers at Posse Herrera & Ruiz recently sent out an announcement of their selection by Chambers as the top firm in Colombia.

Congratulations Alejandro Delgado Moreno

Bogotá law blogger Alejandro Delgado Moreno, whose site is under my “links” tab down the right, has accepted a position as an advisor to the new Minister of Technology, Information, and Communications (or “MinTIC” as they say).

He is “at your disposition,” he said in a recent email announcement. Here are his contact data:

Alejandro Delgado Moreno

Asesor

Despacho Viceministra de Tecnologías de la Información y las Comunicaciones

Ministerio de Tecnologías de la Información y las Comunicaciones

Edificio Murillo Toro Cra. 8a entre Calles 12 y 13

Bogotá, Colombia

Teléfono: +57 (1) 3442254

Fax: +57 (1) 3443434

e-mail: adelgado@mintic.gov.co

www.mintic.gov.co

Private Equity Study of Colombia, Brazil, Mexico

I am pleased to announce the publication of the Latin America Law and Business Report of the New York City Bar’s Report “Private Equity Developments In Brazil, Colombia, and Mexico.” 

We are very grateful to the Latin American Law & Business Report, whose subscribers currently have the only access to the entire report. In future posts here, however, I will be making the Colombia portions available through analyses to be provided on this site. In addition, I have a limited number of purchased re-prints available for those who cannot access LALBR.

Managing Corporate Taxation in Colombia (Lewin & Wills)

A top Bogotá tax law firm has published a detailed description of Colombian corporate taxation. Alfredo Lewin and Adrian Rodriguez wrote Managing Corporate Taxation in Latin American Countries 2010 - Colombia for LATAXNET (Latin American Tax Network ) covering rates, withholding, loss carry-forwards, incentives, and a host of other important topics. This is an incredible and valuable resource. (The link is to the file they helpfully posted with chapters on all Latin American countries.)

Chiquita continued: Illegal Foreign Payments? Suit Dismissed Against Dole Food Co. For Supporting Colombian Paramilitaries

When a California judge this week threw out a case against Dole Food Co. for supporting Colombian terror groups, the decision received little attention, but it is important news. 

Chiquita Brands Part III-C: Of Bananas, Money, Guns, and Drugs: What Did Chiquita Really Do?

Readers of my other posts about the Chiquita story will have seized on one of the central issues in determining Chiquita’s liability to the wrongful death claimants under the Anti-Terrorism Act and the Alien Tort Claims Act — how close is the relationship is between Chiquita’s payments to the FARC guerillas and the paramilitaries of the AUC, on the one hand, and the kidnappings and murders that resulted?

The federal court hearing the cases, Judge Marra presiding, ruled against Chiquita in the New Times Missionaries case that alleged that substantial payments were made to guerillas over a long period of time preceding the kidnappings and murders of the plaintiffs. Judge Marra ruled that if Chiquita’s payments were a “substantial factor” in the deaths it is sufficient to make Chiquita liable.  Legal observers and the parties hotly debate whether this standard of “causation” is too loose.

Chiquita’s Board appointed a Special Committee that found no evidence of anything more than admitted payments, specifically denying, in a footnote, any Chiquita involvement in arms shipments.

Was there more? In this post I take a detailed look at the allegations that Chiquita funded paramilitaries that Chiquita knew were using terrorist tactics against the guerillas in order to pacify the banana zone. The complaint on behalf of hundreds of plaintiffs against Chiquita in Henao Montes v. Chiquita Brands, No. 0:10-cv-60573 (S.D. Fla.) alleges that plaintiffs are either survivors of Colombian nationals who were murdered by the paramilitaries of the AUC, or were themselves injured by the AUC in Colombia, and seek to collect damages from Chiquita. Their allegations come right out and accuse Chiquita of involvement in drug and weapons shipments, to demonstrate a close link between the Chiquita payments and other actions, on the one hand, and acts of kidnapping and murder, on the other.

You be the judge. In Part 1 of this post, I am going to use an old trick of some judges, and hear the Defendant Chiquita’s argument first that the allegations do not measure up to the legal standard. Then, in Part 2, I will quote at length and comment on many of the operative allegations from the Henao Montes complaint.

Chiquita Brands Part III-B – Deterrence: How Private Litigation Can Supplement Anti-Terrorist Enforcement Actions

Increasingly, the crux of the Chiquita Brands case may be more than just admitted payments totaling US$1.7M to the paramilitary AUC from 1997-2004, but additional forms of support, including weapons shipments.

In testimony yesterday before the U.S. Senate Judiciary Committee, Subcommittee on Crime and Drugs, Lee Wolosky, a former National Security Council official and now lead counsel to many plaintiffs in the cases against Chiquita, addressed how private litigation can supplement anti-terrorist enforcement actions.

The deterrent angle that he argues in this testimony is undeniable. Any organization that is weighing a response to extortion threats for payments must be carefully evaluating whether it will face criminal fines and sanctions, and much larger potential damages awards under legal standards that are more easily satisfied than the high burden of proof for criminal conviction.

Chiquita Brands, Part III-A — What (Allegedly) Did Chiquita Do In Colombia and What Are the Legal Consequences?

An outcry has erupted in recent days over former Colombian hostage (and former presidential candidate) Ingrid Betancourt. Almost eight years ago, Betancourt defiantly drove through dangerous territory in Southern Colombia, apparently against the advice of security forces, to meet with FARC rebel forces and try to break an impasse in peace negotiations. Instead, she was herself taken hostage and held for over six years. She was rescued in a daring raid by government troops that made headlines around the world. Last week, however, she started legal proceedings against the Colombian government claiming US$6 million in damages.  A new word was coined describing the public outcry at her actions: “Ingrititude.”  She was forced to withdraw the claim and to announce that she only holds the FARC forces responsible for her capture and suffering and, inexplicably, does not intend to claim damages for herself.

Is anyone else potentially responsible? Who provided the FARC terrorists with material assistance? These questions are being addressed as former hostages (and survivors of other victims) have sued for damages in some cases – not against the Colombian government but against private companies like Coca-Cola, Drummond Coal, and Chiquita Brands.  As I reviewed in Part Two of this series, the cases against Coca-Cola and Drummond Coal were dismissed.  A recent court decision, however, sustained – as a provisional matter and subject to evidence — lawsuits which allege that Chiquita provided extensive material support – not just extorted monies but covert arms transport – in a campaign designed to destroy banana unions and keep Chiquita in business in Colombia.

A review of the various allegations is very timely this week as the world considers: who is responsible in damages for murders and kidnappings carried out by the guerillas and paramilitaries in Colombia before they were beaten back by government forces?

Chiquita Brands’ Troubles With The Foreign Corrupt Practices Act (FCPA) In Colombia — Part II – Colombian FCPA Cases

What do the Chiquita Brands FCPA and related Alien Tort Statute cases mean for investors with present or prospective activities in Colombia? Are reports of perceptions of corruption an indication of the Justice Department aggressively challenging companies doing business in Colombia?  Is the FCPA a trap for investors in Colombia?

Only the unwary. As I wrote in Part One, best practices of international business require careful monitoring and training of managers and others to prevent corrupt payments, and to keep accurate records. But Colombia does not seem to be a disproportionate focus for FCPA prosecutions and investigations, and although there have been noted Alien Tort Statute claims by union leaders’ heirs, alleging wrongful death, they have not been successful. Will the newest Chiquita Brands’ cases, following after its $25M plea agreement with the DOJ, end differently? 

Chiquita Brands’ Troubles With The Foreign Corrupt Practices Act (FCPA) In Colombia – Part I – The FCPA Explained

Former FARC hostage Keith Stansell sued Chiquita Brands International, after being held more than 2000 days in captivity held by leftist guerillas of the FARC (Revolutionary Armed Forces of Colombia). Stansell alleges that Chiquita Brands made corrupt payments to the FARC – bribes, in his view; extortion, according to Chiquita and its Colombian counsel, in order to ensure the safety of Chiquita’s workers at its more than 200 banana farms in Colombia.  Stansell’s complaint against Chiquita joins complaints filed by some of Janis’s heirs and nearly 200 other plaintiffs. Chiquita has paid a fine – US$25 million – and made other agreements with the Department of Justice, for allegedly corrupt payments to the FARC’s mortal enemy, the paramilitary Autodefensas Unidas de Colombia (AUC).  Chiquita faces liability to sympathetic plaintiffs represented by litigation powerhouse Boies Schiller & Flexner’s Lee Wolosky, a former White House counterterrorism official in both the Clinton and second Bush administrations. In addition, there are shareholder derivative actions lodged against Chiquita Brands.

The Chiquita case – cases, really – teach a lot about risks that companies face – and can and should avoid. This article provides information about compliance with the Foreign Corrupt Practices Act (FCPA) and its aggressive enforcement, and outlines best practices to avoid liability.  In Part II, I look at Colombian FCPA cases, and in Part III I take a detailed look at the Chiquita allegations and the findings of it special litigation committee investigation. The conclusion, Part IV, will summarize the very unique nature of the Chiquita facts while cautioning that active compliance efforts are nevertheless necessary in Colombia as elsewhere.

Canada Approves Colombia Free Trade Agreement, Increasing Pressure on The United States

On June 14, Canada’s House of Commons approved a free trade agreement with Colombia. Questions should now be flying around Washington, coming from US exporters, why is the US Congress still sitting on its hands?  This article is a passionate argument that times have changed in Colombia, policies must keep up, that human rights activists must be heard and engaged seriously, and that trade normalization is vital for improvements in Colombia and to keep the US from losing significant exports to and influence in Colombia.

Who Is On The “Clinton List” and Can They Get Removed?

U.S. persons must not engage in transactions with individuals and entities the U.S. Government has put on the famed “Clinton List,” at risk of severe civil and criminal sanctions.  Also known as the OFAC list, or list of Specially Designated Nationals, this is a list no one wants to be on. Can people on this list get removed? It is not impossible. There is a way to do it. And it does happen.  How often? Read this post to the end and find out. You will be astonished how many have been removed in the last year.  What do almost all of them have in common?

Pass The US-Colombia Trade Promotion Agreement 

The Colombia FTA is good for America (exports), good for Colombia (growth through peace and stability), and good for the region.  Passage would boost U.S. exports, stabilize Colombia’s worldwide trade relations, and would reward and encourage Colombia for more major improvements in security, human rights, and the economy.

IFC Investing Intensely, Backing Bancolombia Big-time

There have been seven transactions – more than one a month – in the less than six months since I last wrote about the IFC investing in Colombia,  including the largest IFC deal ever in Colombia, $400 million dollars.  That brings the amount IFC has invested in its 43 deals since 2004 to well north of $2.5 billion. The financial sector remains IFC’s largest focus, with big bets on Bancolombia and microlenders associated with the Women’s World Bank.  Infrastructure funding is also a big winner, with an innovative private equity fund and a port deal in the mix. IFC even funded a 100% family owned dairy company.

IFC Funds Salvadoran Firm’s Cali Hotel Plans

In addition to the seven recent Colombia transactions I have covered, there is one more that relates to Colombia and is worth noting.  Grupo Poma from El Salvador is arranging for additional IFC financing that includes another hotel, this time in Cali, Colombia. Poma is the group behind the Marriott-flagged property on the Avenida El Dorado in Bogotá.

IFC Backs 100% Family Owned Dairy Firm Alqueria

Rounding out the seven newest projects announced by IFC in Colombia is financing for Alqueria, the third largest dairy products company in the country.  The IFC facility is a mix of debt and equity.

IFC Backs Ashmore I Infrastructure Private Equity Fund

IFC will invest up to $20 million equivalent, not exceeding 20% of total commitments, through a $500 million private equity fund focused on Colombian infrastructure.

Infrastructure projects abound in Colombia these days, thanks to a pro-investment climate and dramatic improvements in public safety and access to the country.  So, when news broke last year that the Colombian government was helping to create a private equity fund for infrastructure projects, it was big news, and I wrote about it here. The fund’s $500 million size and its infrastructure purpose made it big news. The fund is dedicated to projects in sanitation, telecommunications, transport, energy, and logistics. It was also big news that Ashmore I was formed as a private equity fund or Fondo de Capital Privado, FCP. FCP’s are a special kind of private equity fund that are specifically designed to attract institutional investors, mainly pension funds, due to specific safeguards in corporate governance standards, such as investment committees, external managers, and reporting requirements. Ashmore Investment and Inverlink were selected to be the managers of the fund. Ashmore and Inverlink were the winners out of five teams who submitted bids. Macquarie Capital is the technical advisor.  Bancoldex (Banco de Comercio Exterior de Colombia) will be a 50% investor in the fund. 

IFC Boosts Women’s World Bank Micro-lenders

IFC continues to back micro-lenders with two recent deals associated with the Women’s World Bank.  Bancamia is being transformed with $30 million in IFC funding from an NGO to a bank.  IFC is injecting $6 million into Fundación Mujer Mundial, from Popayan, in Cauca department.

Arbitration and Bylaws: Protecting Foreign Investors With a Foreign Arbitration Clause in the Bylaws of a Colombian Corporation

Arbitration provides investors an extra sense of security when partnering up with Colombian entities. There is a trend toward greater freedom of contract in creating business entities and in resolving disputes. In general, arbitration provides certain advantages over local courts. it is an important factor to consider in Colombia that arbitration is broadly permitted.  Foreign arbitration is permitted (where at least one party is a foreign national) on almost completely equal footing. Nothing in these laws expresses a limitation on arbitration or even foreign arbitration of an investor dispute under the bylaws that can be resolved by private agreement.

Winners Announced For the Ruta Del Sol Concessions

The Ruta Del Sol is the biggest infrastructure project underway in Latin America after the Panama Canal, and has made a major advance, as INCA, the Colombian national concessions authority, announced the winning bidders to construct, operate, and maintain the gigantic highway system.

Brief Summary of Colombia’s Investment Promotion Policies

The Government of Colombia, seeking to rebuild the country as decades of violence now recede into the past, has adopted a number of pro-investment strategies. This post describes the elements of the overall scheme.

Private Equity Actors In Colombia

In anticipation of the first Colombia Private Capital Forum, in Bogotá November 19, 2009, this post discusses the known private equity and venture capital players in Colombia.

Dispute Resolution and Enforcement In Colombia Compared to Brazil and Mexico

When businesses assess emerging market economies, what is the importance of their dispute resolution systems?  Each of Brazil, Colombia, and Mexico has been enjoying substantial economic growth over the last several years. Each also faces very negative worldwide perceptions about corruption in their legal systems.

The Latin America Venture Capital Association reports on these factors in its 2009 LAVCA Scorecard, which measures “perceived corruption,” strength of the judicial system, bankruptcy procedures, protection of minority shareholders, corporate governance, and intellectual property protection.  Another look at dispute resolution and enforcement issues is found in The World Bank 2010 Doing Business report (link is to Colombia page). It measures “protecting investors,” “enforcing contracts,” and “closing businesses” (bankruptcy procedures).

Colombia compares very favorably to the world, to Latin America, and to the OECD on protecting investors, and Colombia compares favorably to Latin America and the Caribbean on closing businesses, with rankings that are fairly high. Colombia’s bankruptcy procedures are ranked well by the World Bank, better than by the LAVCA Scorecard, which is primarily focused on venture capital/private equity needs.  

But the data point for costs and delays in enforcing contracts sends Colombia’s ranks down considerably (rank no. 152 vs. no. 5 and 32, respectively, in the other categories). It is a real outlier.  But it is based on hypothetical court processes, whereas contract enforcement in Colombia often relies upon arbitration. Arbitration is very robust in each of the three countries (see this site’s post about arbitration in Colombia).  

Thus, the already positive signs for the Colombian dispute resolution system in terms of investor protection, corporate governance, and bankruptcy procedures should not be discounted because of the weak local court system for enforcing contracts – unless and until the strong local system for arbitration and recognition of foreign arbitration is tested and factored into the analysis.

What Are “Legal Stability Contracts” And How Do They Work?

What is a legal stability contract, exactly?  The concept is clear enough — a contract between an investor and the government to prevent adverse changes in specified legal standards governing the investment, in exchange for a premium and accomplishment of the investment and its jobs and other objectives. The legal standards stabilized by the contracts vary, of course, as do the investor’s obligations — the amount of investment, the legal stability premium, the number of jobs anticipated, and so forth. 

How should the contracts be evaluated, and how do they actually work? For those interested in reviewing one in English, there did not appear to be any publicly available translation until now.  GYPLAC, S.A., a plasterboard manufacturer building a facility at the Mamonal Free Trade Zone in Cartagena, Colombia, signed Legal Stability Contract No. 1 of 2009, which I have chosen at random to provide a relatively recent example of a stability contract. 

There are several other posts on this site about stability contracts (see the category to the right).  Comments on the analysis and information provided are welcomed as are other analyses of stability contracts.

New Competition Law Takes Effect

Colombia’s Competition law was updated in late July, after two years of consideration.  Law 1340 of 2009 (no English translation appears to exist yet, but the old law was translated and available through Globalex) updates the old competition laws, primarily Law 155 of 1959, Decree 1302 of 1962 and Decree 2153 of 1992.  Its main features are a central authority, national public notice of proposed combinations, statutory timeframes for the authority to consider proposed transactions, a presumption in favor of approval of transactions that concern less than 20% of a market, rule of reason analysis dependent upon the impact of a transaction on competition, presumptions in favor of transactions that increase or are not harmful to competition as shown by empirical evidence, and increased penalties matched with flexibility to reward whistleblowers and self-reporting.

Bogotá law firms have been prolific in drawing attention to the new Competition Law’s central features.  Posse Herrera & Ruiz distributed the analysis of the new law, prepared by partner Alvaro José Rodríguez, that is reproduced in full below. In addition, Brigard & Urrutia in Bogota published a review of the law that has been reproduced on the World Services Group professional services network website. Prieto & Carrizosa published its report  (in Spanish only, currently). And Cavelier Abogados published its review of the Competition Law in its Infolex legal bulletin.   Comments are welcome here and readers should refer to these law firms for more information about this description.

Why Look At Colombia? A Country Transformed?

Do you know about the social and economic transformation of Colombia?  The July 2009 slide show prepared by the Colombia Trade Ministry (ProExport) is entitled “The Transformation of a Country.”   With detailed and relevant data, the slides reveal an amazing social transformation on a massive scale: greatly reduced violence, increased economic activity, improved conditions for most (but not all) of the country. Comparative data shows Colombia surprisingly out-performing other Latin American countries and cities in some significant ways.  There are also several industry-specific slides (for example, communications, health, automotive, infrastructure). 

 

I have researched and written two posts on the social and economic transformation in Colombia.  Please read the first post, and confront and analyze the data and statistics.  Please post any comments you may have about their accuracy (and links to more accurate information).  In the second post in the series, I critically evaluate the poor (dated) quality of information and impressions that (primarily) Americans have about Colombia. Please also post comments in reaction to my evaluation.

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