Making arbitration work better

  • July 3, 2023
Making arbitration work better

Scholar Elect Leonardo Souza-McMurtrie talks about his work on arbitration in Brazil and how his PhD will bridge a gap in studies of the process.

The Arbitration Agreement is a mystery; its workings are as inscrutable as they are crucial. No one knows how (or if) it works, which leads tribunals to make harmful decisions.

Leonardo Souza-McMurtrie

When he was studying law, Leonardo Souza-McMurtrie discovered arbitration. He took to it immediately and could see the possibilities it presented in his home town of Manaus where it was virtually unheard of despite offering huge benefits to companies.  He set up an NGO, while still a student, to persuade companies and law firms of the potential and went on to work part-time on setting up an arbitration institution in the city to handle disputes.

Having made the case for arbitration and explored it as a lawyer, member of arbitration institutions and Tribunal Secretary, he is now taking a step back to investigate the theoretical underpinnings that allow companies to sue nation states, often for huge sums. He says there is very little known about how the law works in relation to such cases. 

He adds: “As a child, I was mesmerised by the moving pieces of my father’s analogue watch. I am fascinated by intricate systems, particularly those involving humans. Perhaps that’s why I am amazed that whole nations choose to forego bloodshed in favour of peaceful resolution, based on the unlikely belief that private arbitrators – unknown but well-paid strangers – know better. 

“Investment arbitration reveals a world of beautiful and terrifying contradictions, where companies sue entire nations before private tribunals, putting the fate of water, land, human rights, energy, health, the environment, indigenous peoples’ rights, and natural resources in the balance.”

There is a network of 3,000+ treaties allowing it, with over 1,000 tribunal cases having been taken out. Hundreds of academic articles have been written about it and billions of dollars transferred, affecting the lives of millions of people.

Leonardo says there is “an incompleteness in the system”. He states: “The Arbitration Agreement, which is the keystone of this system, is a mystery; its workings are as inscrutable as they are crucial. No one knows how (or if) it works, which leads tribunals to make harmful decisions. I will find, describe, and deliver this missing piece of the system, to the benefit of the people affected by it.”

Childhood

Leonardo was born in Manaus, the capital and largest city of the northern Brazilian state of Amazonas. He lived there until he did his master’s. He went first to a traditional Catholic school before switching to a military school which he said was more flexible than his first school and had more people from outside Manaus. “It was a school of outsiders and it felt less constrained by the local, parochial hierarchies of traditional private schools,” he says.

His mother is a civil servant and works in the court system, having studied literature and then law. His father is a painter and didn’t attend university. In fact, Leonardo’s mother, who he describes as “a force of nature”, is the only person in the family to have attended university before Leonardo. His mother’s family were forced to flee from the desert-like parts of north east Brazil. Leonardo’s father comes from a riverside community and he was not registered until he was 10 when he moved with his parents to Manaus.

Leonardo, who has a younger brother, says he was very shy and bookish, on account of his mother’s love of literature, until he moved to high school. At military school he became more outgoing, with an exchange trip to Canada boosting his confidence. He says he didn’t achieve top grades at school or even at university until he found a subject that really interested him. Instead he took part in lots of extracurricular activities and clubs, ranging from military artillery to music. Leonardo played in an independent rock group at school and still plays classical guitar. Indeed he initially wanted to study music at university, but his mother, who had had not been able to get well-paid work after studying literature, advised him to do a more vocational subject. He chose law and, like her, studied at the Federal University of the Amazonas, starting his five-year degree in 2013.

Developing a passion for arbitration

By the end of his first year he took a seminar on oral argumentation and loved it.  He became fascinated by the process of structuring an argument and took part in regional moot court competitions relating to criminal law. In his fourth year he discovered arbitration, which he describes as being the opposite of criminal law. “You don’t have the drama of standing up and presenting in a big trial. Instead it is about subtle brilliance. I found something wonderful in the quiet, technical nature of it,” he says. He started doing competitions in arbitration, travelling to more than 10 countries to do so. He also founded an arbitration NGO while at university. He did this because of the lack of awareness of arbitration in Manaus. “Manaus is part of a big free trade zone and virtually no arbitration was happening,” he says, adding that this is despite the fact that arbitration offers cheaper, faster resolutions than the court system.

The NGO, NEA – Núcleo Especial de Arbitragem do Norte,  had eight associates working for it in 2015 when it was founded and when Leonardo left in 2019 it had 40. They approached companies, universities and law professors. They found that by focusing on law students and law firms they had more success when it came to spreading awareness of arbitration, for instance, they could make the case that law firms offering arbitration could offer a better service to their clients. Since setting up NEA, Leonardo has worked with people he approached in the early days who were sceptical at the time about listening to a young student but who now support the use of arbitration services.

After graduation, Leonardo worked for a law firm – Jacob & Nogueira Attorneys – that he had interned with during his degree. They were very supportive of the work he was doing at the time to create an arbitration institution to resolve conflicts, allowing him to work on this on a part-time basis. That organisation – the Câmara de Arbitragem e Mediação do Norte – CAMNORTE – was set up in 2018 and has taken on 16 cases since. When Leonardo was studying law there had been no arbitration cases in Manaus.

During the time he spent in law firms before doing his master’s in 2019 Leonardo also worked on electoral law, in total working on several elections. Between 2016 and 2020 when he was completing his master’s, he worked on two elections for governors and two for mayors. He describes the process as intense. Often he would sleep at his law firm because election cases, mainly about what politicians can do under the electoral rules and with public funding, usually had to be turned around very quickly before the election. He says many of the cases involve ‘fake news’, although proving something is fake can be tricky, he says, because it is usually based on half-truths.

Postgraduate studies

Leonardo did his master’s at Queen Mary University of London, which launched the first master’s in the world on arbitration law.  A colleague from his law school was accepted onto the course which spurred Leonardo to apply, not thinking he had any hope of getting in and having no means to support himself if he should.  Later his colleague posted that she had got a Chevening scholarship. So Leonardo applied for the scholarship and, to his surprise, was also accepted. Having been accepted he felt obliged to apply to Queen Mary. Within a week he was told he had got in. 

His master’s course coincided with Covid. Leonardo decided to stay in England at first to put all his efforts into getting good enough grades to be able to do a PhD since he had spent much of his undergraduate years focusing on his campaigning work.  At the time he had to make a decision, he also thought Covid would not last for long. Within two weeks the borders were closed and news started to spread about how badly Covid had hit Manaus in particular. Thousands of people died there, often as a result of a shortage of oxygen supply to the remote area. Leonardo speaks of one person in his community who worked as a nurse and died on the job because they simply could not stop due to the demand. He spent those early months anxiously watching the news. He says: “Not many people in the UK know people who died from Covid, but in Manaus everyone has lost someone close to them and everyone who was not ill was working to help support the health services. There were queues to get into the cemetery. The health system was overpowered and there was grief everywhere.”

Completely alone in London, Leonardo threw himself into his dissertation. He changed the topic from a traditional theme to something much more ambitious and unusual, researching how culture affects litigation. That entailed research on a huge range of topics, from baboon communities to Ming vases and ancient Greece. He won a high distinction – the only one in his specialism – and the COmparative and International Dispute Resolution Prize for taking that risk and in October he was able to return to Brazil. He moved to Sao Paolo to be near his girlfriend, who he had met in London, and married her soon afterwards.

In Sao Paolo, Leonardo took a job as an institutional development analyst at CAM-CCBC – Centro de Arbitragem e Mediação, the largest arbitration institution in the Americas. His role involved organising data involving arbitration cases and tribunals, as well as organising events. Having studied data processing as part of his master’s Leonardo was able to organise the data into the 2020-2021 CAM-CCBC Annual Report, of which he was an editor

Leonardo then decided he needed experience of working on the other side of arbitration, with those who decided the outcome of cases. He got a position as a dispute resolution specialist and research assistant at Justen, Pereira, Oliveira & Talamini,working directly with Cesar Pereira C.Arb FCiarb.  As well as dealing with dispute resolution cases focusing on infrastructure, international commerce, oil and gas and state entities, Leonardo is also working as a researcher, having published around 16 articles since working with his boss.

In late 2021 he applied to do his PhD at Cambridge. His first proposal was not accepted, but the following year he was successful. His wife was also accepted, but didn’t get a scholarship so she will be going to another UK university.  He hopes his PhD, by addressing the theoretical basis of the legal mechanisms underlying cases taken against countries by companies, will help to resolve a range of current problems with the law. “At the moment no-one knows how it works. It’s like trying to fix part of a car without understanding how the whole car works,” he says.

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