Peru’s emergence from the pandemic coincided with the short-lived presidency of Pedro Castillo, who secured a narrow run-off win against three-time candidate Keiko Fujimori in June 2021, only to be removed from office by Congressional vote (and arrested on charges of “rebellion and conspiracy”) some 18 months later. Congress subsequently replaced him with former Vice President Dina Boularte (who thereby became the country’s first female president), but lacking her own political constituency, she endured a torrid first year in office that saw the country end 2023 with negative economic growth.
The damage was largely done during the Castillo administration, his policies causing significant disinvestment as both foreign and local investors left the country seeking alternative opportunities in more stable economies. Moreover, Boularte’s weak congressional position saw her unable to oppose a number of populist motions – most notably, the authorisation of pension fund withdrawals that removed much of the liquidity from the country’s capital markets.
Nevertheless, 2024 began on a more positive note following the president’s appointment of a number of new ministers to key posts (most notably, economist José Arista at the Ministry of Economy and Finance, and Romulo Mucho at the Ministry of Energy and Mines), a step which has been interpreted as signalling a willingness to seek to restore investor confidence moving forward.
Ironically, while Boularte’s popularity continues to languish at around 10%, it is thought probable that she will see out the end of her mandate (July 2026), since – were they to depose her – members of Congress would also have to stand for re-election, a step most are unwilling to contemplate. The result has been an increasing degree of political stability that appears set to last until at least late 2025 when a new presidential election process will begin.
2023’s poor economic indicators notwithstanding, the country registered some 140 M&A deals during the course of the year – primarily in the mining, energy and agribusiness sectors – and there is a certain optimism that deal flow will increase slightly, given that the country’s inflation rate remains manageable: the World Bank forecast 2.5% GDP growth, primarily as a result of increased copper production.
In this context, law firms have largely remained cautious. Nevertheless, standout developments include Estudio Legal Hernández’s absorption of a dispute resolution team (made up of one partner, two of counsel, and a senior associate) from Estudio Echecopar in May 2023; and the more recent strategic swoop by Payet, Rey, Cauvi, Pérez Abogados (PRCP) for the seven-strong mining team (including three partners) formally at CMS Grau in October. While the latter, with its long history in the sector, has already begun to rebuild its capabilities (most notably with a hire from Hochschild Mining), the move was an undoubted coup for PRCP, which positions it as a key player in this most important of Peruvian legal sectors, along with national powerhouse Rodrigo, Elías & Medrano Abogados, and the aforementioned, increasingly strong Estudio Hernández, which itself added a new partner to its mining practice in early 2024.
More generally, the significant reduction of investment during Castillo’s administration and the subsequent political turmoil has impacted the local legal community more-or-less across the board. While firms with a broad service offering (such as the aforementioned firms, along with Garrigues, Rebaza, Alcázar & De Las Casas and others) have been able to offset the considerable decline in transactional mandates with counter-cyclical work (most notably contentious matters, including tax litigation), less diversified firms have struggled considerably. If anything, the period since the pandemic has served to consolidate the gulf between the leading group of firms characterised by their broad service offering (both domestic and international), and the bulk of smaller, mid-market firms. Nor, with the very specific exceptions of competition and the electricity market, does Peru have an as yet very developed segment of boutique service providers as is the case in a number of other markets.
One firm arguably bucking this trend is Stucchi Abogados, which has doubled its practitioner headcount since its establishment two years ago. Certainly, the firm has shed its former status as a competition boutique, adding practices in the corporate/contractual, labour and tax spaces, along with a deepening of its capabilities across a broad range of regulated market sectors. Veteran market presence Benites, Vargas & Ugaz has also been making a notable push to broaden its service offering; long ‘pigeon-holed’ as a white-collar boutique, today the firm offers services across some 20-odd practice areas, ranging from corporate/M&A and energy, to banking and labour.
Other developments saw DS Casahierro (DSC) absorb boutique firm Estudio Lázaro & Ruiz Abogados in June 2023, with Reddy Lázaro and Renzo Ruiz becoming partners in the real estate and procedural teams, respectively, and further strengthening DSC’s infrastructure and projects and international trade and customs practices. More recently, former Muñiz, Olaya, Meléndez, Castro, Ono & Herrera Abogados‘ capital markets partner Alfredo Lau-Tam left his former firm to establishLau-Tam Abogados. Elsewhere, the former general counsel of the Peruvian branch of French energy company Engie, Eric Franco, launched boutique firm Legal Delta in May 2024, which seeks to target the local and regional infrastructure markets.
In terms of specific trends in 2024 and beyond, law firms have noted an increase in new transactions, and a slight decline in refinancing deals. Many have observed a relatively steady market, with a notable trend in financing through banks rather than via capital markets.
There is also an expectation among firms that there will be an uptick in work in the energy, renewables and healthcare sectors. While the country poses a particular risk to external investors due to its historical political instability, and in conjunction with the wider adverse economic climate, there is a newfound sense of hope in Peru’s macroeconomic profile. Several firms expect that credit will improve, and investors will grow optimistic about the national government. A report by Garrigues and the Spanish Chamber of Commerce in Peru found that, between the inception of Law No. 31112 in 2021 and August 2023, INDECOPI’s Antitrust Commission received 36 merger applications, of which it approved 27. The push for digital transformation, accelerated by volatility, will continue to drive dealmaking in the country, with a surge expected in acquisitions related to AI and machine learning.
While Peru maintains its status as a global leader in the mining industry, the protracted process for obtaining mining concessions has led numerous mining associations to initiate an unprecedented communications campaign advocating for a simplification of the administrative aspects of mining, including the introduction of fast-tracking projects, consolidating environmental agencies, eliminating certain requirements and reducing environmental oversight in the mining sector. Acknowledging the sector’s crucial role in the country’s national development, in January 2024 President Dina Boluarte’s government announced the launch of a comprehensive plan encompassing 25 multisectoral proposals aimed at streamlining the permitting process for existing mining projects.
With the rising global interest in ESG, Peruvian regulations are growing to meet the demand, and with that, the pressure for compliance and disclosure is also increasing, particularly for mining entities. As more and more companies are considering the environmental impact of the work they’re carrying out, the interest in the carbon market is on the rise, with companies looking to invest in carbon credits to offset the environmental impact of their mining activities.
While many entities continue to work on old PPPs and infrastructure projects, 2024 has seen an upturn in work within the Peruvian projects and infrastructure space. The Peruvian Government’s interest in investing in public and social infrastructure has grown exponentially, and the country is now witnessing a rise in projects developed under PPP schemes. Additionally, with the market shift towards clean energy, the related project development, financing and M&A work is also increasing.
Interest in PPAs for renewables projects is also increasing and new players are reported to be acquiring green projects. While, due to the novelty of this kind of work, the regulatory framework for renewables projects is still in the making (with antitrust and premerger control legislation applied to new projects to supplement the lack of existing regulation), in the PPAs space for wind and solar power projects regulation has been strengthened.
Furthermore, on 24 March 2024, in support of the green transition, Congress also passed the Law for the Promotion of Green Hydrogen (Law No. 31992), promoting the research, development and distribution of green hydrogen in Peru. A bill to promote the development and construction of solar and wind is also in the works but, at the time of writing, was yet to be passed.
Meanwhile, arbitration remains active, particularly in relation to public contracts. For such contracts between the state or state-owned entities, arbitration is a mandatory dispute resolution mechanism, hence making it a key source of work for firms. Peru is famously recognised as a hub for international arbitration in the Latin America region, with construction and infrastructure-related arbitration being especially popular. Several firms have commented on the increasing difficulty in settling cases at the negotiation stage, which has consequently resulted in the rise of cases progressing to arbitration.
With a proliferation of boutique litigation firms across the nation, this sector also continues to grow, with a noted uptick in contract breach cases and disputes concerning payment obligations.
In Peru, white-collar crime is closely linked to the Peruvian State and various public functions, as opposed to corporations and individuals. The practice has experienced notable growth in recent years, with political cases forming a considerable portion of the workflow. Since the Lava Jato scandal, full-service firms have recognised the importance of having a dedicated white-collar crime practice, which has resulted in a healthy mix of large and boutique firms offering their expertise in the field. There is a notable trend towards white-collar crime cases in the fraud, environmental and business sectors.
In terms of developments in the compliance space, Congress has enacted a new law that broadens the definition of felonies to include offenses such as tax fraud, money laundering and terrorism. This regulatory shift has led to a surge in demand for criminal compliance programmes, with many companies seeking guidance from law firms Additionally, there is a notable trend towards increased focus on internal investigations, with companies turning to law firms for a more legally informed perspective on the facts at hand. The dynamics of compliance work have further evolved with the growing emphasis on ESG compliance.
As for the TMT sector, this remains dominated by four major operators: Telefónica, Claro, Viettel and Entel. Recent developments in telecommunications include government efforts to promote the adoption of 5G technology. Additionally, OSIPTEL has introduced new measures to improve connectivity in rural areas. Changes to data protection regulations, implemented two years ago, have sparked further discussions in this area. OSIPTEL has also imposed fines for violations and non-compliance with regulations, resulting in increased demand for legal services in this domain.
In the intellectual property space, both boutique and full-service firms frequently receive complex work concerning IP rights, the creation of global IP strategies, piracy considerations, and the management of trademark portfolios.
Mirroring broader economic trends, and in light of recent financial growth, Peru’s real estate market has enjoyed an increase in commercial, development and investment work, with top firms illustrating activity in large-scale and high-profile projects in the mining and tourism industries. Of course, Peru’s real estate sector reflects the country’s diverse geography and natural landscape, which results in varying growth potential.
Elsewhere, in the labour sector, 2022 and 2023 saw the introduction of significant regulatory changes affecting labour relations (including measures to eliminate workplace harassment and new regulations regarding teleworking due to the Covid-19 pandemic) as well as a renewed emphasis on workplace health and safety.
Ongoing scrutiny of Peru’s pension systems, criticised for failing to provide adequate returns to citizens despite high fees, has led to significant legislative changes. On April 18, 2024, the Boluarte government enacted a new law allowing savers to withdraw additional funds from their pension plans. This legislation, crafted in Congress, contradicts the financial sector’s lobbying efforts but has garnered widespread public approval due to the pension system’s historically low returns. The new law has notably impacted Peruvian markets; pension funds – which are some of the largest purchasers of sovereign bonds and local stocks – are now expected to liquidate substantial holdings to meet the withdrawal demands. This anticipated sell-off has contributed to market volatility, evidenced by a notable decline in the Lima Stock Exchange since the bill passed an initial committee vote.
