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( Source of the document: ICC Digital Library )
'Leadership is the capacity to translate vision into reality.' - Warren Bennis
John's presidency of the ICC International Court of Arbitration marked the beginning of a new era for ICC arbitration. It will be remembered in particular for the increased independence of the ICC Court, the introduction of new arbitration rules, greater efficiency and transparency in the management of cases, a move to new headquarters in Paris and the opening of an additional branch office overseas, all of which will have long-lasting effects.
However, John's achievements do not stop there. During six and a half years as President of the ICC Court, international commercial arbitration in Latin America flourished as never before. Between 2008 and 2014, the number of Latin American parties involved in ICC arbitration doubled, rising from 185 in 2008 (10.5% of all parties) to 375 in 2014 (16.9% of all parties).2
This increase was not fortuitous. During his time as President, John made great efforts to encourage the development of ICC arbitration in Latin America, visiting most of the countries in the region,3 some more than once. During these visits he gave conferences on ICC arbitration and met with public officials, the business community and the judiciary. I had the honour of accompanying him on several occasions. In November [Page12:] 2013, for example, we had a very fruitful meeting in Buenos Aires with Elena Highton de Nolasco, Vice-President of the Argentinian Supreme Court, and several judges of the Buenos Aires Court of Appeals, where we openly discussed ways to improve interaction between national courts and arbitral tribunals. It was a unique opportunity to explain the role of the ICC Court and the benefits of ICC arbitration to the country's top judges.
A particularly notable achievement during these years was the restructuring of the ICC's National Committees in Argentina and Brazil.4 Both had been repeatedly criticized for not doing enough to promote ICC arbitration and for ignoring the upcoming generation of arbitration practitioners, yet all attempts to revitalize their internal structures had foundered. John intervened, urging both National Committees to take the necessary steps to provide the service the arbitration community deserved. As a result of his intervention, both National Committees were completely restructured.
In Argentina, two new members were appointed to the ICC Court, a commission was created to promote arbitration, and a special committee was set up to propose arbitrators to the ICC Court. The relaunch of ICC Argentina in November 2013 was marked by a conference attended by 200 people, which received wide press coverage. In Brazil, whose National Committee is now one of the most active and efficient in the entire ICC network, two new Court members were appointed and a mediation and arbitration committee was created. These reforms will undoubtedly lead to much more effective promotion of ICC arbitration and open doors to younger practitioners, and for this we owe much to John.
As a tribute to John's efforts in Latin America, this article will provide a survey of developments in international commercial arbitration in the region during his term as President of the ICC Court (2009(2015). First, however, an important question needs to be answered.
2. Can we talk of 'Latin American arbitration'?
This is such a commonplace expression that one could be forgiven for thinking that arbitration in the region constitutes a homogeneous unit. Indeed, companies looking to invest in Latin America often enquire about the benefits and challenges of arbitrating in the region, rather than in a particular country, yet Latin American countries are all different, each having a distinct legal system and approach to international arbitration. Some countries, for example, have statutes closely based on the UNCITRAL Model Law on International Commercial Arbitration,5 while others have taken a more liberal approach6 or even avoided the Model Law altogether.7 Similarly, national courts in different countries apply international arbitration statutes and international conventions in different ways. Some, like Mexico, are known to be favourable to arbitration, while others, such as Brazil, Chile and Colombia, are still moving towards an arbitration-friendly interpretation of the law.
Yet, despite these inevitable differences between sovereign states, a number of common trends can be discerned in international arbitration in Latin America. First, there is widespread distrust the way arbitration is handled in the region. Although largely unjustified, such distrust has been fuelled by the former attitude of some Latin American countries towards arbitration and some unfavourable, but isolated, decisions by national courts.
Until the early 1990s, many Latin American countries adhered to the Calvo doctrine, which was an obstacle to using arbitration to resolve disputes between foreign nationals and Latin American states. However, the influence of the Calvo doctrine has greatly diminished with the ratification by Latin American countries of free trade agreements and bilateral investment treaties providing for direct investor-state arbitrations and the enactment of modern arbitration laws in most countries.8
Arbitration in the region has sadly suffered from the stigmatization resulting from a number of infamous court decisions, notably Yacyretá,9Copel,10TermoRio,11 and Radio Centro,12 notwithstanding the fact that some of these cases ultimately ended in a satisfactory manner. No jurisdiction is immune from bad decisions, however, no matter how conversant with international arbitration their courts may be. The decisions of the New York courts in VRG Linhas Aereas S.A. v. MatlinPatterson Global Opportunities Partners II L.P. prove the point.13 Here, the enforcement of an award was refused because the arbitral tribunal had accepted jurisdiction over a non-signatory, even though the non-signatory had signed an amendment to the contract containing the arbitration agreement and the award had been confirmed by [Page15:] the courts at the seat of the arbitration. The difference between this decision and a bad decision from a national court in Latin America is that the former had almost no repercussions.
Other trends that span the entire region are fortunately more positive. One of these is the continuing growth in the use of arbitration. According to ICC statistics, the number of Latin American parties in ICC arbitration rose from 241 in 2009 to 375 in 2014 (+56%), while the number of arbitrations seated in Latin America increased from 27 in 2009 to 47 in 2014 (+74%).14
Equally impressive is how receptive Latin American countries are to international conventions on international arbitration. The great majority of Latin American countries have ratified the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention);15 eighteen have ratified the Inter-American Convention on International Commercial Arbitration (Panama Convention);16 and ten have ratified the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Montevideo Convention).17 Most Latin American countries have modernized their arbitration laws (ten countries have adopted (to varying degrees) the UNCITRAL Model Law on International Commercial Arbitration18) and other measures, such as creating specialized courts dealing with arbitration, have been introduced in a number of countries.
The rise in the number of arbitrations in Latin America and the increasing sophistication of practitioners in the region have led to an increase in the number of Latin American arbitrators. In ICC arbitration alone, the number of Latin American arbitrators grew from 94 in 2004 to 131 in 2014 (+39%).19 Many Latin American arbitrators also sit in arbitrations unrelated to the region. The use of Spanish and Portuguese in the conduct of arbitrations, as well as in conferences and publications on arbitration, is no longer unusual: long gone are the days when they were monopolized by English and French.
Another very positive pan-regional development was the creation in 2010 of the Latin American Association of Arbitration (ALARB), an association of lawyers dedicated to the practice of international arbitration in Latin America.20 Through the exchange of ideas, networking and other initiatives, groups like ALARB and the ICC Latin American Arbitration Group have contributed to the development of international arbitration in Latin America and drawn attention to the challenges it still faces.
To illustrate in more detail the developments that have taken place and the divergent approaches taken to arbitration in different countries, we shall look at the five countries where use of ICC arbitration is greatest, namely Argentina, Brazil, Chile, Colombia and Mexico.21
a) Legal framework
Argentina has always been at the forefront of ICC arbitration in Latin America. Between the late 1990s and the early 2000s, Argentina was one of the two countries in the region (the other being Mexico) with the highest number of parties in ICC arbitrations. The number of Argentinian parties involved in cases filed with the ICC Court between 2000 and 2004 was 121 (compared with 108 parties from Brazil and 151 from Mexico). However, the last ten years have seen the proportion of Argentinian parties fall compared to Brazilian and Mexican parties (2014: 20 Argentinian parties, 112 Brazilian parties and 54 Mexican parties). This may be for a combination of reasons, including local hostility to investment arbitration which has unjustly distorted perceptions of international commercial arbitration, a slump in the flow of foreign investments22 and, more importantly, the lack of a modern arbitration law and the belief that state courts are unsupportive of arbitration.
It was not until earlier this year that Argentina introduced national legislation governing arbitration. As it is a federal country, arbitration proceedings were governed by procedural laws at federal and provincial levels. At federal level, the National Code of Civil and Commercial Procedure (CP) applied in the Autonomous City of Buenos Aires and in all federal courts across the country. Its provisions, which dated back to 1967, were unable to meet the current demands of international commercial arbitration. For example, to submit a [Page17:] dispute to arbitration, parties were required to enter into a mandatory agreement (compromis) after the dispute had arisen; a pre-dispute clause providing for arbitration was unenforceable on its own.23 The CP further provides that (i) in the absence of an agreed procedure, arbitrators must follow the ordinary or summary judicial procedure, (ii) arbitral tribunals are not empowered to grant interim relief but have to resort to state courts for assistance,24 (iii) unless otherwise agreed by the parties, the award is subject to appeal,25 and (iv) a challenge against an award has to be filed directly with the arbitral tribunal within five business days.26
On 1 October 2014, after unsuccessful attempts to muster political support for a federal arbitration law based on the UNCITRAL Model Law, the National Congress enacted a new National Civil and Commercial Code (New Code) that includes a section specifically on the 'arbitration contract'.27 Although the New Code overlooks the jurisdictional nature of arbitration, which has been recognized by the Argentinian Supreme Court,28 it does at least (and at last) provide substantive legislation on arbitration at federal level.29
The New Code affirms many of the principles laid down in international conventions to which Argentina is a party and already recognized by local courts. These include Kompetenz-Kompetenz, the separability of the arbitration agreement, the power of arbitrators to issue interim measures, and the presumption of arbitrability in cases where there are doubts as to whether a matter is capable of settlement by arbitration. The New Code also removes the anachronism of the compromis as a prerequisite to arbitration and allows arbitral tribunals to direct the proceedings as they see fit, without having to follow the judicial procedure.
One of the most notable innovations of the New Code is the appointment of the arbitrators by the administering institution or the local courts in multiparty arbitrations when the parties cannot agree on the constitution of the arbitral tribunal.30 Article 1661 reinforces this provision by stating that any arbitration clause that puts a party in a privileged position in the appointment process is invalid, endorsing the principle established in the French Dutco case that parties must have equal rights in the constitution of the arbitral tribunal.31
Despite the positive aspects of this long-awaited reform, the New Code contains a number of provisions that raise serious concerns which threaten to overshadow those advantages. First, arbitration agreements can be made only in legal relationships 'that do not affect public policy'.32 This provision is particularly troublesome in a country where the courts have repeatedly held that arbitration agreements should be interpreted narrowly, as illustrated by the exclusion from arbitration of any questions related to the Mining Code, which is regarded as part of public policy.33 This disadvantage can be overcome only by adopting a very narrow definition of what constitutes public policy for purposes of arbitrability. Otherwise, it is an open invitation to recalcitrant parties to challenge the jurisdiction of the arbitral tribunal by arguing that the dispute is not arbitrable because it concerns public policy.34
Second, the New Code contains an ambiguous provision, according to which parties may not waive the right to challenge in the courts (impugnación judicial) an award that is contrary to the legal order.35 Use of the term impugnación judicial, without specifying which recourse, may extend the range of non-waivable judicial remedies to include the right of appeal, which could broaden the scope of review by state courts.36 Similarly, the reference to 'legal order' could be read as allowing judicial review of awards in cases other than those specifically foreseen in the CP and other procedural codes.37
Third, the New Code expressly provides that interim and/or preliminary measures ordered by arbitrators may be challenged in the courts if they violate constitutional rights or are unreasonable.38 This vague formulation is an open door to interference by the courts in the arbitral process for supposed unreasonableness.39
The effectiveness of the New Code will depend largely on the way the courts interpret the provisions discussed above. It cannot be ruled out that some of them might be declared unconstitutional if the Congress is considered to have legislated on procedural matters that are usually delegated to the provinces.
The legal framework of arbitration in Argentina also incorporates the Panama Convention, the New York Convention,40 the Montevideo Convention and the Mercosur Convention on International Commercial Arbitration. The latter was probably the most important piece of legislation dealing with international arbitration prior to the enactment of the New Code. Made in Buenos Aires on 23 July 1998, it is in line with modern international arbitration statutes and applies to disputes between parties who, at the time of entering into their arbitration agreement (i) had their domiciles in signatory countries to the convention, (ii) had contact with at least one signatory party of the convention, or (iii) had chosen the seat of the arbitration in one of the signatory parties to the convention. Argentina, Brazil, Uruguay, Paraguay, Bolivia and Chile are parties to the Convention. One of its singularities is a default provision making each party responsible for paying its own legal fees. Therefore, an arbitral tribunal will be unable to take a 'costs follow the event' approach unless the parties have included specific language to this effect in their arbitration agreement.
b) Case law
Argentinian courts are widely thought to be suspicious of arbitration, interfering in the arbitral process more than would be considered reasonable in a judicial system favourable to arbitration. Two notorious injunctions - in the Yaciretá41 and National Grid42 cases - have fed this perception. However, significantly, both cases involved state entities and the decisions were made by courts dealing with matters relating to the state. No similar ruling has been rendered in international commercial arbitrations between private parties, so it is arguable that the perception is unjustified in international commercial arbitrations not involving state interests. Despite the uncertainty caused by conflicting decisions reached by different chambers in certain courts of appeal, a number of positive decisions rendered since 2009 suggest that there is reason for cautious optimism.
In April 2014, the Buenos Aires Court of Appeal rendered a landmark decision recognizing the autonomy of arbitration proceedings and the duty of the parties to abide by the institutional rules to which they had agreed to submit their disputes.
The case, NSB S.A. et al. v. Accor Argentina S.A. (3 April 2014), concerned an ICC arbitration in which one of the co-arbitrators died after the final award had been approved by the ICC Court but before it was signed by the members of the tribunal. The award contained a partial dissent from the other co-arbitrator. Applying Article 12(5) of the 1998 ICC Rules, the ICC Court consulted the parties and decided that the case should proceed with the remaining arbitrators and the decisions that had been taken by a majority of its members should be taken by the President alone, as provided in Article 25(1) of the Rules. The losing party sought to have the award set aside on the grounds that (i) it had been signed only by two arbitrators, (ii) the decision was arbitrary, and (iii) the Secretariat of the ICC Court had denied it access to the (confidential) communications between the Court and the arbitral tribunal relating to the approval of the award.
Chamber B of the Court of Appeal in Commercial Matters of the Federal District refused to set aside the award, pointing out that no procedural fault had been committed that would have denied the losing party due process as the award had been approved before the co-arbitrator's death. It attached particular importance to the fact that the remaining arbitrators had confirmed in writing to the ICC and the [Page21:] parties that the final award was the result of deliberations among the three members of the arbitral tribunal, and it found that the ICC Court had simply applied the ICC Rules, to which the parties had submitted their dispute. It held that an award could not be challenged for the purpose of obtaining a substantive review of the decision and deplored the losing party's subterfuge. Finally, it confirmed the confidential nature of the information exchanged between the ICC Secretariat and the arbitrators and described that confidentiality as unwaivable.
This decision accords with the earlier decision of the Supreme Court of Justice in Armada Holland BV v. Inter Fruit S.A. (24 May 2011), where, in the context of enforcement proceedings, it was stated that the review of an award by national courts should be limited to the conditions for set out in the New York Convention and should not extend to the merits.
In Smit International Argentina SA v. Puerto Mariel SA s/ Tribunal Arbitral (1 March 2011), Chamber I of the Federal Civil and Commercial Court of Appeal applied the principle of the separability of the arbitration clause, stating that the termination of a contract does not affect the arbitration clause it contains. It further remarked that although not expressly recognized in Argentine law, the principle of separability was embodied in international conventions ratified by Argentina and should therefore be applied.
In CRI Holding Inc. Sucursal Argentina v. Compañía Argentina de Comodoro Rivadavia Explotación de Petróleo S.A. (5 October 2010), Chamber C of the Court of Appeal in Commercial Matters of the Federal District ruled that a dispute between two mining companies in which it was necessary to apply and interpret the Argentine Code of Mining could not be submitted to arbitration as it involved issues of public policy. Such a restriction of arbitrability flies in the face of international trends. It is alarming to see that this decision appears to have been followed by the New Code, which excludes from the scope of arbitration questions affecting public policy. As stated above, unless the concept of public policy under the New Code is construed narrowly, this provision could hinder the development of arbitration in Argentina.
In Captec S.R.L. v. Constructora San José Argentina S.A. (3 October 2012), Chamber D of the Court of Appeal in Commercial Matters of the Federal District decided that by engaging in mediation a party had implicitly waived an arbitration agreement. The Court of Appeal took the position that arbitration clauses must be interpreted narrowly and should apply only to contractual interpretation and fact-finding, not to legal issues. This decision is flawed for several reasons.
First, interpreting the arbitration agreement so restrictively disregards the will of the parties, who had provided for recourse to arbitration. Second, arbitral jurisdiction cannot be limited to factual questions. The CP clearly establishes that the only issues that cannot be submitted to arbitration are those that cannot be the subject of a commercial transaction.43 Therefore, the restriction created by the Court of Appeal is contrary to the parties' agreement, the law and scholarly opinion. Third, the mere fact of participating in a mediation should not be seen as an implicit waiver of an arbitration agreement. On the contrary, mediation is entirely compatible with arbitration, as shown by the proliferation of multi-tiered clauses providing for both mechanisms.
In Sociedad de Inversiones Inmobiliarias del Puerto S.A. v. Constructora Iberoamericana S.A. (7 February 2011), which set aside an ICC award in part, Chamber D of the Court of Appeal in Commercial Matters of the Federal District held that it was not possible to waive an appeal against an arbitral award in instances where the award was 'clearly invalid'. This finding followed a previous decision, José Cartellone Construcciones Civiles S.A. v. Hidroeléctrica Norpatagónica S.A. (1 June 2004), in which the Argentine Supreme Court stated that, even if the parties had waived their right to appeal, an award could be subjected to a de novo review if it were unconstitutional, illegal or unreasonable. The Court of Appeal found that the arbitral tribunal had (i) exceeded the powers conferred upon it by the parties by ruling on the set-off of certain credits and (ii) rendered a decision that was contrary to the Argentine Bankruptcy Act.
A similar approach was taken by Chamber B of the Court of Appeal in Commercial Matters of the Federal District in EDF Internacional S.A. v. Endesa Internacional y otros s/arbitraje (9 December 2009), where an ICC award was set aside on the grounds that the arbitral tribunal's interpretation of the applicable legal provisions constituted 'a defect of the proceedings in the phase of rendering the award', as well as a modification of the issues submitted to arbitration. According to the Court of Appeal, the arbitral tribunal should have decided whatever it deemed relevant, but on the basis of the Court of Appeal's interpretation of Argentinian law. This decision, too, relied on José Cartellone Construcciones Civiles S.A. v. Hidroeléctrica Norpatagónica S.A.
Fortunately, a more positive approach has since been taken by Chamber B of the Court of Appeal in Commercial Matters in Pluris Energy Group Inc. v. San Enrique Petrolera S.A. (21 April 2014). Here, an attempt was made to set aside an ICC award on the grounds that its findings were inconsistent with the evidence produced and that it had decided issues beyond the scope of the arbitration. The Court of Appeal dismissed the application and also ruled on the timing of a challenge against a [Page23:] partial award, which was a controversial issue in Argentina. Dismissing the challenge, the Court of Appeal reminded the parties that national courts could assist arbitrators but did not have jurisdiction to review the merits of their decisions, and insisted that courts should not interfere in arbitration proceedings. The Court of Appeal pointed to the ICC Court's scrutiny of awards, which in itself serves as a means of quality control and enhances their efficacy.
On the timing of the challenge, the Court of Appeal found that the partial award on liability was final with regard to the matters it resolved so any challenge against it should be made at the time it was issued. National courts44 and scholarly opinion45 in Argentina were almost unanimous in thinking that a partial award could not be challenged until the final award had been issued. This approach had the advantage of limiting the risk of national courts interfering in the arbitration. However, as the Court of Appeal rightly pointed out, issues addressed in a partial award are also finally resolved, to the extent that they become res judicata. Furthermore, requiring a party to wait for a final award before filing an application to set aside a previous award that may have been rendered several years previously is likely to undermine procedural efficiency and unnecessarily increase costs.
In PE Acquisitions LLC v. Envases del Pacifico S.A. (12 July 2013), Chamber D of the Court of Appeal in Commercial Matters of the Federal District specifically addressed the question of the ICC Court's extension of the time limit for rendering a final award.
The Court of Appeal rightly dismissed a request for a final award to be set aside on the ground that it had been rendered outside the time limit. The Court of Appeal held that the extension had been properly accorded by the ICC Court and made known to the arbitrators. It noted that there was no requirement under the ICC Rules for the ICC [Page24:] Secretariat to inform the parties directly.46 This was an opportune decision given the increasing tendency for dissatisfied parties to adopt the tactic of contesting the timeliness of final awards, e.g. by arguing that the parties had not authorized the ICC Court to grant extensions47 or that the extensions were unreasonable.48
Chamber A of the Court of Appeal in Commercial Matters of the Federal District reached a similar decision in Aronna Alberto Angel and Calcagno Héctor Federico v. Petrobras Argentina S.A. (5 November 2013), where the dissatisfied parties even went as far as challenging the arbitrators after the rendering of the final award.49
Until not so long ago, arbitration in Brazil did not operate with the efficiency it displays today. Under the antiquated legislation in force at the time, arbitration agreements were unenforceable and foreign awards had to undergo the tedious process of double exequatur to be enforced. Furthermore, like many of its neighbours, Brazil adhered to the Calvo doctrine. These unfavourable conditions help to explain why only four Brazilian parties were involved in the 427 cases filed with the ICC Court in the year 1995 and no cases were heard by Brazilian arbitrators or seated in Brazil.
After the turnaround in Brazil's economy in the 1990s, the government and the business community were eager to attract foreign investments and encourage international trade. They quickly realized that this would be impossible if the archaic legal framework under which arbitration operated was not modernized.
The first step in the modernization process was the enactment of the 1996 Brazilian Arbitration Law (BAL).50 Although largely based on the UNCITRAL Model Law, the BAL contains many provisions that are unique to Brazil and specifically intended to harmonize its former domestic legislation with modern trends in international arbitration.51 As a result of this reform, arbitral awards rendered in Brazil acquired the same status as court decisions, the requirement of double exequatur for foreign awards was abolished, and Brazilian courts were authorized to enforce arbitration agreements. The BAL also recognized the principles of Kompetenz-Kompetenz, party autonomy, contractual good faith, arbitrator impartiality, the separability of the arbitration clause and due process.
Shortly after the enactment of the BAL, the Supreme Federal Court questioned the constitutionality of some of its provisions when considering a request for homologation of a foreign arbitral award rendered in Spain.52 This challenge created uncertainty for the next five years until the Supreme Federal Court finally upheld the constitutionality of the BAL by a majority decision in 2001.
In the same year, a group of scholars and practitioners launched the Brazilian Arbitration Committee, which has played a major role in promoting arbitration in Brazil, notably through conference and publications, including the Brazilian Arbitration Review.
The modernization process continued with Brazil's ratification of the New York Convention in 2002, an amendment to the Brazilian Constitution in 2004 conferring jurisdiction over the recognition of foreign arbitral awards to the Superior Court of Justice (Superior Tribunal de Justiça, STJ), a decision of the STJ in 2005 confirming that the BAL applies retroactively to the effects of arbitration agreements made in the past,53 and legislation allowing state entities to provide for arbitration in public private partnership agreements and public concession agreements.54
These changes have spurred enormous growth in international arbitration in Brazil. This is reflected in ICC statistics for 2014, which show 112 Brazilian parties in new filings (making them the third most frequent nationality worldwide), 49 confirmations/appointments of Brazilian arbitrators and 20 new cases seated in Brazil. Brazil has been consistently the top Latin American country in terms of numbers of parties in ICC arbitration since 2006. The popularity of local events, such as the Rio de Janeiro conference on international arbitration, the congress of the Brazilian Arbitration Committee and the ICC Brazilian [Page26:] arbitration day, which now attract hundreds each year, is a further sign of the importance arbitration has acquired in Brazil, as is the presence of Brazilian José Emilio Nunes Pinto among the Vice-Presidents of the ICC Court.
The modernization process was completed in 2015 with the enactment of an amendment to the BAL (BAL Amendment),55 which clarifies a number of controversial issues such as the arbitrability of disputes with public entities over patrimonial rights; consolidates certain established practices such as the rendering of partial awards; and introduces a number of innovations such as the arbitral letter allowing arbitrators to request enforcement measures from national courts.
Other notable improvements resulting from the BAL Amendment include the principle that provisional measures can be requested from the arbitral tribunal only after it has been constituted; the possibility of appointing arbitrators who are not on the lists of arbitral institutions; the authorization of applications to set aside a partial award before the final award has been rendered; the interruption of a statute of limitations when an arbitration is filed, even if the arbitral tribunal subsequently finds it lacks jurisdiction;56 and the permissibility of arbitration clauses in companies' by-laws, with binding effect upon shareholders (including those opposed to the clause, who would be entitled to withdraw from the company).
A weakness of the BAL Amendment is the ambiguous wording of Article 33(4), which is likely to be source of controversy. This provision allows a party to seek a supplementary arbitral award from a national court if the arbitral tribunal has failed to decide all the claims submitted to it.57 However, it is not clear whether the supplementary award would be rendered by the national court or the arbitral tribunal. One would expect the arbitral tribunal to be in a better position to do so and thereby complete its mission.
The BAL allows national courts to intervene in an arbitration at different stages of the proceedings: at the beginning, to enforce an 'empty arbitral clause'; during the proceedings, to order interim measures or compel a witness to attend a hearing, for example; and at the end, to decide on applications to set aside the award. As a result of the BAL Amendment, national courts may now also decide on an application to set aside a partial award while the arbitration is in progress.
At the moment there are no courts specializing in arbitration, other than the STJ, which has exclusive jurisdiction over the recognition of foreign arbitral awards. This means that any judge in Brazil, even one unfamiliar with arbitration, might have occasion to interfere in the arbitral process. The result may be detrimental, as illustrated by the greater frequency of anti-arbitration injunctions in Brazil than in jurisdictions more favourable to arbitration.58
Happily, at appeal level steps have been taken to create commercial courts specializing in arbitration.59 In November 2014 the National Council for Justice (Conselho Nacional de Justiça, CNJ) announced the creation of two new judicial divisions specializing in mediation and arbitration in the capital of each state within Brazil. The implementation of this measure, which the Federal Council of Justice has set as one of its goals for 2015, will help to centralize matters involving arbitration and, as predicted by Nancy Andrighi, member of the STJ and the CNJ, bring harmony to relations between the courts and arbitrators. The initiative has the approval of the chief justices of all 27 appeal courts.
In Itiquira Energetica S.A. v. Inepar SA Industria e Construcoes, No. 428.067-1/10 (7 December 2011), the Parana Court of Appeal overturned the highly controversial decision that required parties to enter into a submission agreement (compromis) even when they had made a valid arbitration agreement and none of them contested the jurisdiction of the arbitral tribunal. Correcting its own previous decision, the Court of Appeal clarified that parties could freely choose between an arbitration clause and a submission agreement, each being equally valid. This decision was then confirmed by the STJ in Itiquira Energetica S.A. v. Inepar SA Industria e Construcoes, Special Appeal No. 1.389.763 (12 November 2013), unequivocally accepting the arbitration clause as a manifestation of the parties' consent to arbitration.
In Samarco Mineração S.A. v. Jerson Valadares da Cruz, Special Appeal No. 1.278.852 (21 May 2013), the STJ upheld the principle of Kompetenz-Kompetenz in a decision in which it held that national courts (i) should not review the validity of a non-pathological clause before the rendering of an award and (ii) may analyse the validity of an arbitration agreement prior to the commencement of the proceedings only if it lacks the necessary elements for constituting the arbitral tribunal and setting the case in motion (a so-called 'empty clause').
During the very same month, however, the Court of Justice of Rio Grande do Sul took quite the opposite approach in Companhia de Geração Térmica de Energia Elétrica - CGTEE v. Kreditanstalt Fur Wiederaufbau Bankengruppe, Appeal No. 70053386595 (12 June 2013) by declaring an arbitration clause null and void because there was evidence that the main contract had been forged. Flouting the principles of both Kompetenz-Kompetenz and the separability of the arbitration agreement, this court found that there was no consent to arbitrate and rendered a decision on the merits of the dispute.
In Matlinpatterson Global Oportunities Partners II L.P. et al. v. VRG Linhas Aereas S.A. (2012),60 the Sao Paulo Court of Appeal, dismissing an action to set aside an award, found that although Matlinpatterson Funds had not signed the arbitration clause, it had signed an aditamento, which expressly mentioned the contract containing the arbitration clause. The Court of Appeal upheld the reasoning of the arbitral tribunal, which had retained jurisdiction over Matlinpatterson Funds on the basis of the rule non concedit venire contra factum proprium.
However, not all courts in Brazil display such enlightenment. For example, in Itarumã Participações S.A. v. Participações em Complexos Bioenergéticos S.A., Petróleo Brasileiro S.A. Mitsui & Co., Ltd. (14 February 2013), the 19th Civi Chamber of the Rio de Janeiro Court of Appeal took the view that arbitration is an exception and can proceed only when the parties' consent is expressed in writing through a signature. It therefore set aside the partial award in which the arbitral tribunal had retained jurisdiction over non-signatories as the underlying contract created certain obligations towards them. To make matters worse, the partial award was set aside before the final award had been rendered, causing the arbitral tribunal to state in its final award that it would not address the claims filed against the non-signatories but would use the evidence they had produced insofar as it might have an impact on the issues addressed in the final award.
In Banco Santander S.A. and Banco BTG Pactual S.A. v. Paranapanema (3 July 2014), the Sao Paulo Court of Appeal set aside an arbitral award for breach of the principle of equality in the constitution of the arbitral tribunal. This was the first time such a decision had ever been made in Brazil. The arbitration had been administered by the Centre of Mediation and Arbitration of the Brazil-Canada Chamber of Commerce (CCBC). At the outset of the arbitration, the claimant nominated an arbitrator, but the two respondents, whose interests did not coincide, were unable to agree on a joint nomination. In accordance with the CCBC Rules, the CCBC President appointed an arbitrator on behalf of the respondents. The Court of Appeal, whose decision was undoubtedly influenced by the French Dutco case, considered this to be a breach of the principle of equality and set aside the award.
The BAL Amendment has confirmed that arbitral tribunals may maintain, modify or overturn interim measures ordered by national courts prior to the constitution of the arbitral tribunal. This amendment was inspired by decisions such as Itarumã Participações S.A. v. Participações em Complexos Bioenergéticos S.A. - PCBIOS (12 June 2012), in which the STJ confirmed that whenever parties have entered into an arbitration agreement, national courts have jurisdiction to order interim measures [Page30:] only until such time as the arbitral tribunal is constituted and that any measures they order are provisional and must be confirmed by the arbitral tribunal to remain valid.61
In Metrô v. Via Amarela, No. 0177130-22.2010.8.26.0100 (3 December 2012), the Sao Paulo Court of Appeal held that an application for correction of an award interrupts the period during which an action to set it aside can be filed only if the application is deemed admissible. During the ICC arbitration, the parties filed two successive applications for correction of a partial award, both of which were dismissed by the arbitral tribunal. The first application was filed within the 30-day time limit laid down in Article 29 of the 1998 ICC Rules; however, the second was not, so it was not admissible. Since the action against the partial award was filed within 90 days following notification of the decision on the second application (which was deemed inadmissible), the Court of Appeal found the action untimely.
A good illustration of the undesirable consequences such injunctions may have can be found in Sulamérica CIA Nacional de Seguros S.A. et al. v. Enesa Engenharia S.A. et al., where Brazilian and English courts arrived at contradictory decisions. The dispute arose out of the insurers' refusal to cover damages that arose from events that interrupted the construction of the Jirau hydropower plant in May 2011.
In November 2011, the insurers initiated arbitration proceedings seated in London, in which Brazilian law was applicable to the insurance policy. The following month, the insured parties challenged the arbitration clause in the Sao Paulo courts arguing that it had no effect as the insurance policy was an adhesion contract under Brazilian law and asking for the insurers to be enjoined from pursuing the arbitration. At the same time, the insurers requested an anti-suit injunction from the London courts to prevent the insured parties from pursuing the lawsuit in Brazil.
The Brazilian court ordered the suspension of the arbitration in London, while the English court enjoined the parties from pursuing court proceedings in Brazil. The Brazilian court considered that the question of the validity of the arbitration was to be determined by applying the law governing the insurance policy. The English court, on the other hand, applied the principle of the separability of the arbitration agreement, and found that the law most closely connected to the arbitration agreement was the law of the seat of the arbitration.
In Energia Sustentável do Brasil S/A e outros v. Sul América Companhia Nacional de seguros S/A, TJ-SP, AI No. 0304979-49.2011.8.26.0000 (19 April 2012), the São Paulo Court of Appeal upheld the anti-arbitration injunction, deciding that, as the arbitration clause did not contain the express consent of the adhering party, as required by Article 4 of the BAL and 44 of the SUSEP Circular No. 256/2004, the 'lesser evil' would be to suspend the arbitration pending a decision of the Brazilian courts on the issue of whether the arbitration clause was effective.
In Engevix Engenharia S.A. v. Paranasa Engenharia e Comércio S.A., the Sao Paulo Court of Appeal ordered the suspension of an ICC arbitration on the basis of an erroneous interpretation of a hybrid arbitration agreement, which provided that the arbitration would be administered by 'the Institute of Engineering', applying the ICC Rules. The Court of Appeal considered that the Institute of Engineering was better placed than the ICC to administer an engineering dispute, and also took into account the fact that both parties were established in Brazil and the project was to be performed in Brazil. However, it failed to consider that the ICC Rules provide that '[b]y agreeing to arbitration under the Rules, the parties have accepted that the arbitration shall be administered by the Court' and that '[t]he Court is the only body authorized to administer arbitrations under the Rules'.62 Nor did it consider that the Arbitration Rules of the Institute of Engineering provide that '[t]he use of other arbitral institutions rules will not be admitted'.63
Another example of conflicting injunctions can be found in the Petrobras v. ANP cases. In Petróleo Brasileiro S/A (Petrobrás) v. Tribunal Regional Federal da 2ª Região, Conflict of Competence No. 139.519-RJ (published 20 April 2015), the STJ held that the Rio de Janeiro Court of Appeal had wrongfully disregarded the parties' arbitration agreement by retaining jurisdiction over their dispute. The STJ observed that the BAL requires the arbitral tribunal's authority to rule on the dispute submitted to arbitration to be upheld without interference from the courts. It ordered that any actions and administrative proceedings relating to the subject of the dispute should be suspended until the arbitral tribunal had issued its final award.64
However, in Agência Nacional de Petróleo, Gas Natural e Biocumbustíveis (ANP) v. Petróleo Brasileiro S.A., BG E&P Brasil Ltda e Petrogral Brasil S.A. (8 May 2014), the First Federal Court of Rio de Janeiro ordered the suspension of the arbitration. Ignoring the principle of Kompetenz-Kompetenz, it held that the arbitral tribunal did not have sole jurisdiction to decide on the validity of the arbitration agreement and that it would be a waste of time to wait for the arbitral tribunal to rule on its jurisdiction when the arbitrability of the dispute was in doubt.
A number of STJ decisions have clarified aspects of the procedure for recognition and enforcement of foreign awards in Brazil. In Nuovo Pignone S.p.A. v. Marítima Petróleo e Engenharia Ltda and Petromec Inc., Special Appeal No. 1.231.554 (24 May 2011),65 the STJ held that, under the BAL, an award rendered in Brazil should be considered domestic and not subject to recognition by the STJ. It added that the nationality of the institution administering the arbitration has no impact on the nationality of the award.
In GE Medical Systems Information Technologies Inc. v. Paramedics Electromedicina Comercial Ltda, SEC No. 854 (16 February 2011), the STJ ruled that a challenge against the validity of an arbitration clause pending in the Brazilian courts does not prevent the recognition of a foreign award rendered pursuant to that clause. Similarly, in CIMC Raffles Offshore et al. v. Schahin Holding SA et al. (27 May 2014), the STJ ordered enforcement of a foreign award notwithstanding ongoing proceedings to set aside the award in the country where it was rendered. The decision was made on the grounds that the award did not violate any formal requirements of Brazilian law and it is consistent with YPFB Andina SA v. Univen Petroquimica Ltda (15 August 2012),66 where the STJ recognized a foreign award despite the fact that an application to vacate the award was pending at the place of arbitration.
In Kia Motors Corporation v. Washington Armênio Lopes et al. (19 October 2011), the STJ recognized the applicability of an ICC arbitration clause in a framework agreement to all related contracts, even when those contracts contained choice-of-law clauses. Also, on grounds of res judicata, the STJ refused recognition of the part of the arbitral award that dealt with issues that had already been decided by national courts.
Comverse, Inc. v. American Telecommunications Inc. (29 June 2012)67 was one of the first cases in which the STJ referred to the New York Convention when recognizing an award. The President of the STJ has confirmed that recognition of a foreign award by the STJ is necessary before it can produce any legal effects in Brazil. When recognizing awards, the STJ's powers are limited to a prima facie review of the award, as illustrated by a case in which it rejected an allegation that the award had been rendered without reasons on the basis of such a review, which revealed the presence of (albeit succinct) reasons in the award. 68
Of all Latin American countries, Chile has one of the strongest traditions of domestic arbitration, which is generally the preferred method of settling any sort of commercial dispute. Chile was one of the first countries in the subcontinent to ratify the New York and Panama Conventions, which it did without reservations in 1975 and 1976, respectively. It has also entered into numerous free trade agreements and bilateral investment treaties providing for investor-state arbitration and, as associate member of Mercosur, has ratified the Mercosur Convention on International Commercial Arbitration.
However, it was not until 2004 that Chile enacted specifically on international arbitration (Law 19.971). Before then, arbitration in Chile was governed by the archaic rules of the Organic Court Code (OCC) and the Code of Civil Procedure (CCP), which did not contain any provisions on international arbitration. Although a party to treaties covering the enforcement of foreign awards, Chile's lack of adequate national legislation undermined its suitability as a venue for international arbitrations.
These concerns were dispelled by the enactment of Law 19.971, which incorporates the UNCITRAL Model Law and applies only to international arbitrations in Chile, leaving domestic arbitrations still governed by the OCC and the CCP.
Law 19.971 recognized the principles of the separability of the arbitration agreement and Kompetenz-Kompetenz, limited court interference in arbitral proceedings, and confirmed party autonomy in the conduct of arbitration proceedings. It also abandoned the distinction between arbitration in law, mixed arbitrations and arbitration in equity that existed under the previous regime, and, by expressly stating that no [Page34:] one shall be prevented from acting as an arbitrator by reason of his/her nationality (unless otherwise agreed by the parties), it dropped the former requirement that arbitrators hold Chilean nationality.
The grounds for setting aside an award or refusing recognition and enforcement are the same as those in the UNCITRAL Model Law. The grounds for refusing recognition or enforcement apply irrespective of the country in which the award was made', which makes it potentially applicable to awards rendered in Chile with the consequent risk of a double challenge in the courts.
According to ICC statistics, in the six years 2009(2014 a total of 67 Chilean parties were involved in arbitrations filed with the ICC, compared to 17 in the cases filed during the six years prior to Law 19.971 (1998(2003). This is in no small part a reflection of the success of Law 19.971.
b) Case law
After only ten years under the regime of Law 19.971, Chilean courts still have limited experience of international arbitration. Nonetheless, they have a growing reputation for being supportive of international arbitration, which is borne out by several of the decisions discussed below.
In Servicios Financieros Altis S.A. v. Grupo Casa Saba S.A.B. de C.V. (30 December 2011), the President of the Santiago Court of Appeal dismissed a challenge against a decision in which a sole arbitrator retained jurisdiction over a non-signatory party. The President of the Court of Appeal relied on Article 1449 of the Chilean Civil Code, which provides that where a stipulation has been made in favour of a third party, only that third party may demand what has been stipulated in its favour, and found that even though the claimant had not signed the contact containing the arbitration agreement, it could benefit from its effects.
In Fastpack v. Bureau Veritas (10 May 2011), the Santiago Court of Appeal retained jurisdiction over a request to cancel certain contractual provisions, including an arbitration clause, despite the respondent's objection that jurisdiction should lie with the arbitrators given the presence of an arbitration clause. The Court of Appeal took the view that, as arbitration is an exception to state court jurisdiction, where there were doubts over the effectiveness of the arbitration agreement, national courts were entitled to retain jurisdiction over the claims arising from the contract containing the arbitration clause. The Court of Appeal also misguidedly held that as both parties were Chilean [Page35:] companies and the contract was performed in Chile and China, the parties' decision to resort to arbitration in France under French law would deny them access to effective judicial protection.
In EGI-VSR v. Rio Bonito et al. (9 September 2013), the Santiago Court of Appeal defined the scope of Chilean public policy as a ground for setting aside an award under Law 19.971. The Court of Appeal explained that public policy here does not encompass all mandatory rules at the law of the place of arbitration, but only the fundamental principles of justice that are generally recognized in civilized jurisdictions (international public policy). Therefore, awards could be set aside on this ground only where there were serious procedural or substantive breaches, such as a lack of due process, corruption of the arbitrators, or fraudulent or abusive collusion between the parties. The Court of Appeal also made it clear that national courts should not review the merits of arbitrators' decisions when hearing applications to set aside an award.
In Ann Arbor Foods S.A. v. Domino's Pizza International Inc. (9 October 2012), the Santiago Court of Appeal dismissed an application to set aside an ICC award, restating the narrow scope of the review by national courts. The Court of Appeal explained that the grounds on which an award may be set aside are chiefly limited to serious procedural defects that would violate mandatory national rules. In particular, the Court of Appeal held that the appointment of a Mexican arbitrator was not incompatible with the parties' agreement on Santiago as the place of arbitration, as arbitrators may conduct the proceedings elsewhere. The Court of Appeal also made it clear that Chilean procedural law had no impact on the arbitration, which was governed by the ICC Rules. On 29 January 2013 the Chile's Supreme Court upheld the decision of the Court of Appeal, adding that the application was attempting to have matters decided by the arbitral tribunal reviewed de novo, which is not allowed under Chilean law.
In Productos La Sabana v. Tampico Beverages (29 April 2014), the Santiago Court of Appeal dismissed an application to set aside in part an ICC award in which the arbitral tribunal had allegedly exceeded its mandate. The arbitral tribunal had decided that the appellant should bear half of the other side's legal and arbitration costs, despite the fact that the arbitration agreement provided that each party should bear its own fees and costs. The appellant contended that the agreement of the parties could not be modified without their consent. The Court of Appeal held that the arbitral tribunal had not exceeded its mandate as the Terms of Reference included as one of the issues to be decided in [Page36:] the arbitration the question of how the costs where to be shared. This in effect modified the arbitration clause and revealed the duplicity of the appellant's conduct.
In Laboratorios Kin S.A. v. Laboratorio Pasteur S.A. (13 October 2014), the Supreme Court recognized both an arbitral award rendered in Barcelona and a foreign court decision refusing to set aside that award. The Supreme Court held that it could not review the merits of the arbitral tribunal's decision on jurisdiction, that the challenge against the arbitral tribunal had already been dismissed during the arbitration and the setting aside proceedings, and that national court decisions on the setting aside of an award are deemed part of the arbitration proceedings so Chilean arbitration law is applicable to them.
In EDF Internacional S.A. v. Endesa Latinoamericana S.A. et al. (8 September 2011), the Supreme Court rejected an application for the recognition of an award that had been set aside at the place of the arbitration (Buenos Aires). Each party had sought partial annulment of the award and the Buenos Aires Court of Appeal finally set it aside on the grounds of an erroneous application of Argentinian law. In reaching its decision, the Supreme Court relied on Article V(1) of the New York Convention, Article 5(1) of the Panama Convention and Law 19.971, which allows recognition to be refused if the award is not binding upon the parties or has been annulled or suspended by a competent authority in the country where it was issued.
The Supreme Court considered that annulment made the award legally ineffective. It also pointed to the inconsistency in the conduct of a party that seeks to set aside an award at the place of arbitration and then have it recognized by foreign courts. However, this statement is not entirely just as the applicant had requested the Argentinian courts to annul only parts of the award and it was other parts of the award that it sought to have enforced in Chile.
Colombia has long had an international policy favourable to international commercial arbitration. It ratified the Montevideo Convention in 1981, the Panama Convention in 1986 and the New York Convention in 1990. Similarly, it has entered into several free trade agreements and bilateral investment treaties with developed and emerging countries. However, the precarious legal regime for arbitration established by Law 315 of [Page37:] 1996, which consisted of only five articles, satisfied neither the needs and expectations of foreign investors nor Colombia's own efforts to attract foreign investment and promote international trade.
This all changed in July 2012 when a new law on domestic and international arbitration was enacted (Law 1563). This law treats domestic and international arbitration separately, following the UNCITRAL Model Law for international arbitration, albeit with certain adaptations aimed at reflecting current international practices.
Like all modern arbitration laws, Law 1563 keeps the intervention of the courts to a minimum (limited to assistance during the proceedings and legal review of the award thereafter). It also recognizes the Kompetenz-Kompetenz by prohibiting national courts from deciding on the arbitral tribunal's jurisdiction before the arbitrators have had an opportunity to do so. Unlike the Model Law, Law 1563 does not allow the courts to rule on the validity, effectiveness or enforceability of arbitration agreements, which are matters for the arbitral tribunal to decide.
Another notable feature of Law 1563 is that it allows parties to waive the right to file an action to set aside an award and to limit the grounds on which an award may be set aside, provided none of them is domiciled or resident in Colombia. It also provides that a partial award on jurisdiction can be challenged only after the final award has been rendered and that an exequatur is necessary for foreign awards to have effect in Colombia.
Law 1563 has undoubtedly contributed to the growth of international commercial arbitration in Colombia. According to ICC statistics, the number of Colombian parties in cases filed between 2012 and 2014 was 36, compared with 16 between 2009 and 2011. Another sign of Colombia's rise into the realm of arbitration-friendly jurisdictions is the fact that in 2014, for the first time ever, the ICC Court fixed the place of arbitration in Colombia (in two cases).
In contrast to these positive changes, Presidential Order No. 4 of 11 November 2014 (Presidential Order) placed severe restrictions on the inclusion of arbitration agreements and the nomination of arbitrators in state contracts. In particular, a specific decision is required authorizing a state entity or agency to enter into an arbitration agreement, and the decision must be justified on the basis of nature of the parties, the purpose of the contract and the amount at stake. Before nominating an arbitrator, the legal department of the state entity or agency must submit to the Legal Office of the Presidency a list of potential candidates with their resumes. Under no circumstances may a state entity or agency nominate as arbitrator anyone who is acting as counsel to a party in litigation with a public entity or already sitting as arbitrator in more than five arbitrations involving public entities.
According to the National Agency for the Legal Defence of the State, the purpose of the Presidential Order is to ensure that the decision to resort to arbitration is carefully thought through. Although foreign investors will be unaffected, small contractors will from now on have no choice but to submit their disputes to the state courts.
The enactment of Law 1563 was a major step in establishing Colombia as an arbitration-friendly jurisdiction. However, no matter how positive its provisions may be, it will remain a dead letter unless properly applied by the courts. An area of key importance for foreign investors dealing with Colombian companies is the enforcement and recognition of foreign awards in Colombia.
The first case in which the Supreme Court of Colombia was asked to recognize a foreign award was Sunward Overseas S.A. v. SEMAR Ltda (20 November 1992). In a controversial decision, the Supreme Court held that the conditions of both the New York Convention and the Colombian Code of Civil Procedure (CCCP) had to be satisfied in order for the foreign award in question, which had been rendered in New York in 1988, to be recognized. The Supreme Court took a similar position some years later in Merck & Co Inc. v. Tecnoquímicas S.A. (26 January 1999), concerning the recognition of an ICC interim award on jurisdiction and provisional measures that had been rendered in New Jersey. In this case the Supreme Court also stated that the recognition of interim awards was not possible under the New York Convention as they did not put an end to a dispute.
The position of the Supreme Court has evolved over recent years, and is now more in keeping with international trends and with Law 1563, which limits the grounds on which recognition may be refused to those listed in the New York Convention. This evolution is described below.
In Pollux Marine Services Corp. v. COLFLETAR Ltda (12 May 2011), the Supreme Court applied the provisions of both the CCCP and the New York Convention to the recognition of foreign awards and consequently refused the recognition of an award rendered in London because the requesting party had neither provided a certificate from the arbitral institution confirming the finality of the award (as required under Colombian law), nor supplied a translation of the arbitration agreement (as required under the New York Convention).
Only a month later, in Petrotesting Colombia S.A. and Southwest Investment Corporation v. Ross Energy S.A. (27 July 2011), the Supreme Court started to depart from the position it had taken in Sunward Overseas and Merck, by recognizing a foreign award despite allegations [Page39:] that the conditions laid down in the CCCP were not met. In doing so, it made clear that the only defences available to a party opposing recognition of a foreign award were those set forth in the New York Convention.
This was an important decision also because the Supreme Court addressed the question of Colombian public policy for the first time. After a comparative law analysis, the Supreme Court concluded that 'the concept of "public policy" that may prevent a court of law from granting recognition and enforcement to a "foreign award" under the New York Convention is limited to the basic or fundamental principles of legal institutions, such as the prohibition of the abuse of rights, good faith, the arbitral tribunal's impartiality and due process. Therefore, the infringement of a mandatory provision of the exequatur judge's forum does not in itself entail a violation of [international public policy].'69 The Supreme Court also dismissed a party's allegation that its lack of language skills and economic resources constituted a breach of due process, making it clear that such a defence was limited to the situations foreseen in the New York Convention, i.e. lack of notice and the impossibility of presenting a claim.
In Drummond Ltd. v. Ferrovías and FENOCO S.A (19 December 2011), the Supreme Court confirmed the position taken in Petrotesting. Its decision recognizing a partial and a final award that had been rendered in Paris begins with the statement that the only grounds on which the recognition of a foreign award can be refused are those listed in the New York Convention. Departing from the position it had taken in Merck, the Supreme Court held that the recognition of partial awards is possible as they are final to the extent that they definitively settle part of the dispute. Finally, the Supreme Court stated that the mere involvement of a state entity in an international commercial arbitration does place the dispute within the realm of Colombian public policy, as the New York Convention does not distinguish between legal persons from the public and private sectors. Therefore, disputes arising out of state contracts are not subject to the exclusive jurisdiction of the Colombian judiciary and can be submitted to arbitration. The only restriction is that arbitrators must not decide on the acts issued by the public authorities in the exercise of their exceptional powers.
The last decision of the Supreme Court on this issue was Poligráfica C.A. v. Columbia Tecnología Ltda (19 November 2013). It was also its first ruling on the question after the entry into force of Law 1563, although this law was not applied in the case as the foreign arbitration [Page40:] had commenced earlier. The Supreme Court ordered enforcement of an Ecuadorian award under the Montevideo Convention rather than the New York Convention, Article VII of which made its application subordinate to any other international instruments relating to the recognition and enforcement of awards. The Montevideo Convention does not contain a similar provision, although the Supreme Court did not compare from an international public law perspective the provisions of the New York Convention and those of other international treaties entered into by Colombia in this field.
As the grounds on which the recognition of a foreign arbitral award may be refused are the same in Law 1563 as in the New York Convention, there should be no further controversies on this issue.
Mexico has shown long-standing support for arbitration. It ratified the New York Convention in 1971, the Panama Convention in 1978 and the Montevideo Convention in 1987, and in 1993 was the first country to adopt the UNCITRAL Model Law for both domestic and international commercial arbitration. It has also ratified several free trade agreements and bilateral investment treaties providing for investor-state arbitration.
The country's positive approach to arbitration explains why Mexican parties were the most frequent users of ICC arbitration until overtaken by the upsurge in Brazilian parties from 2006. There were, for example, 54 Mexican parties in the cases filed with the ICC in 2014, and in 11 cases the place of arbitration was in Mexico.
Mexico's arbitration law, which is part of its Commercial Code, recognizes the fundamental principles of international arbitration, such as the separability of the arbitration agreement, Kompetenz-Kompetenz, party autonomy and limited intervention by national courts. The recognition and enforcement of arbitral awards are subject to the conditions laid down in the UNCITRAL Model Law.
In January 2011 a new section on court intervention to support and control mediation and arbitration, largely based on the 2006 amendments to the UNCITRAL Model Law, was added. This amendment to Mexico's arbitration law provides for intervention by national courts for a number of purposes, including to refer parties to arbitration when there is an arbitration agreement, assist in the taking of evidence, recognize and enforce interim measures and arbitral awards, review arbitral tribunals' decisions on challenges against arbitrators, and decide applications to set aside awards.
It is a peculiarity of Mexican law that although public entities may include arbitration clauses in long-term service contracts and public works contracts, the early termination of contracts or their rescission by an act of public authority cannot be submitted to arbitration, but [Page41:] must be submitted to Mexico's federal courts. However, this limitation applies only to the validity of the state's decision to terminate the contract, but not to damages arising out of such termination, which may be submitted to arbitration. Besides, it should not preclude a foreign investor from pursuing an investment claim against the state under the relevant treaty.
Courts in Mexico have more experience of international arbitration than those in other Latin American countries. They have generally been supportive of arbitration, although there are no courts specializing specifically in matters related to arbitration. Whenever there is a need for court intervention, jurisdiction lies with the first instance (federal or state) court at the place of arbitration. If the place of arbitration is outside Mexico, jurisdiction over applications for the recognition and enforcement of a foreign award lies with the court at the place where the defendant is established or, failing that, at the place where assets are located.
Although no appeal is available against court decisions on arbitration matters, parties may request a federal court to review the first instance decision. Known as amparo, this remedy is also available for violations of constitutional rights. In cases of annulment, recognition and enforcement of awards, the amparo must be filed in a federal circuit court, whose decision is final, unless a breach of a constitutional right is alleged, in which case the Supreme Court may review the decision. In all other cases the amparo must be filed in a federal district court, whose decision may be reviewed by a federal circuit court and possibly by the Supreme Court if it considers this necessary.
In CFE v. Party X (30 November 2011), Mexico's Supreme Court attempted to define public policy under Mexican law in the context of an application to set aside an award by the award debtor, which alleged that the award allowed the other party to exercise rights that had already expired, thus breaching public policy.
At the request of the Second Civil Collegiate Court for the First Circuit, the Supreme Court exercised its power to take up the case. In so doing, it defined the concept of public policy under Mexican law, stating that the expiration of rights is not a matter of public policy and that any rights at the parties' free disposal can be submitted to arbitration. It added that the expiration alleged by the losing party could be reviewed only by the arbitral tribunal, which had assessed the evidence submitted by the parties and issued its decision. Consequently, the Supreme Court dismissed the application to set aside the award.
In City Watch, S.A. de C.V. v. ADT Security Services, S.A. de C.V. (13 June 2012), the Supreme Court overturned a lower court decision that had set aside an award on grounds of a breach of public policy. [Page42:] The Supreme Court admitted that national courts do have the power to vacate an award in the event of a breach of public policy, but not to review the merits of the award. In the case in question, assessing the justness of the arbitral tribunal's finding on damages and lost profit went to the merits of the dispute and did not fall within the concept of public policy. The Supreme Court explained that public policy should be understood as a set of principles protecting parties from serious violations of fundamental principles of justice and due process (including, for example, the dismissal or failure to entertain an allegation of res judicata). The Supreme Court also affirmed that the powers of the arbitral tribunal to determine the admissibility, relevance, materiality and weight of any evidence is absolute and cannot be called into question by national courts.
In Pemex v. Corporación Mexicana de Mantenimiento Integral (Commisa) (24 October 2011), the Eleventh Collegiate Court on Civil Matters for the Federal District set aside an award that had ruled on the termination of contracts by a public body. The contracts, which related to the construction and installation of natural gas platforms in the Gulf of Mexico, contained a clause providing for the resolution of disputes by arbitration in Mexico City, as well as a provision allowing Pemex as a public entity to rescind the contracts. A dispute arose, leading Commisa to initiate arbitration proceedings, whereupon Pemex rescinded the contracts.
Commisa challenged the constitutionality of the rescission in the Mexican courts, which held that state agencies enjoyed special privileges allowing them to rescind contracts and that an aggrieved party should file suit in the appropriate Mexican court. On the basis of this decision, Pemex challenged the jurisdiction of the arbitral tribunal but was unsuccessful. Meanwhile, changes to Mexican law in 2007 reduced the limitation period for actions relating to contract rescission by public entities from 10 years to 45 days, and in 2009 declared such disputes non-arbitrable.70
Commisa prevailed in the arbitration, and Pemex sought to have the award set aside. The Eleventh Collegiate Court on Civil Matters for the Federal District found that Pemex's rescission was an act of authority and, as a matter of public policy, was not arbitrable. This decision was based chiefly on the 2009 change in the legislation, which excluded from arbitration disputes over the rescission of administrative contracts intended to satisfy the needs of public policy.
Notwithstanding the Eleventh Collegiate Court's decision, the US District Court for the Southern District of New York confirmed the award, taking the view that the Mexican court had violated basic notions of justice by retroactively applying the 2009 law on the non-arbitrability [Page43:] of rescissions by public bodies in order to favour a state enterprise over a private party.71 This unfairness was confounded by the fact that the 45-day limitation period had passed, leaving Commisa without any means of litigating a dispute that the arbitrators had resolved in its favour. The court in New York acknowledged that its discretion on this issue was limited, as set forth in TermoRio,72 but stated that this case was 'very different'.
In Party X v. Party Y, Docket No. 92/2012 (13 July 2012), the Second Collegiate Tribunal in Civil Matters of the Third Circuit, confirmed that ex parte interim measures could be ordered without first hearing the affected party, in order to preserve the rights of the requesting party and the purpose of the measure itself, and that doing so does not harm a party's constitutional right to be heard. The ex parte interim measure forbidding the assignment of real estate had been obtained from an arbitral tribunal and was then enforced by national courts without service upon the affected party. The Second Collegiate Court concluded that, on balance, the conservatory purpose of the interim measure and the fact that its effectiveness depended on its being ex parte outweighed the right to be heard.
The question of whether arbitral tribunals should have the power to order ex parte interim measures has been the subject of much debate. Most arbitration laws and institutional rules do not expressly grant such power to arbitrators.73 The arguments put forward in support of this position include the risk of breach of due process, the fact that interim measures in arbitration are not subject to appeal, and the threat that a partial account of the events would have on the impartiality of the arbitrators. On the other hand, it can be argued that as arbitrators have a jurisdictional role, they should be able to order measures similar to those available to national courts. Besides, when notified, the affected party can always ask for the decision to be reconsidered to correct any partiality.
The possibility of granting ex parte interim measures is foreseen in Articles 17B and 17C of the UNCITRAL Model Law, which provide that a party may, without notice to the other side, apply to the arbitral tribunal for interim measures and for a preliminary order directing the other side not to frustrate the purpose of the measure requested. Once the order has been issued, the arbitral tribunal must give notice to all parties and invite the other side's comments on the measure requested. The preliminary order expires within 20 days.
In Party X v. Party Y, Docket No.748/2010-II (11 April 2013), the Eighth Collegiate Court on Civil Matters for the First Circuit partly set aside an award on the grounds that the arbitral tribunal did not apply the law agreed upon by the parties. The case concerned the recovery of provisions for tax contingencies following the sale of a company's capital stock. The parties' agreement provided that disputes were to be decided in accordance with New York law. The Eighth Collegiate Court found that by applying Mexican law the arbitral tribunal flouted the parties' agreement, so the award was set aside.
Most Latin American countries have realized that one of the best means of attracting foreign investment is to develop arbitration and this explains their ratification of multilateral and bilateral treaties and adoption of modern arbitration laws. At the same time, most national courts have become more aware of international arbitration and display greater understanding and sophistication in their treatment of the issues it raises. These issues are wide-ranging and have broadened out from the redundancy of the compromis and the power of arbitrators to render interim measures and decide on their own jurisdiction to more complex questions covering such matters as the scope of public policy and the extension of arbitration agreements to non-signatories.
All things considered, and leaving aside the particularities of each country, arbitration can be said to be on the right track in Latin America, although there are challenges ahead. Difficulties that normally arise in cases involving states, and especially investment arbitration, should not be allowed to affect international commercial arbitration, nor should anti-arbitration injunctions and courts interference in arbitral proceedings on the basis of alleged constitutional rights be countenanced. No effort should be spared to educate public officials, judges and the general public so that the progress achieved under John's leadership may continue. As for John, he now deserves a well-earned rest with Jenny in a Latin American paradise, undisturbed by the likes of Justin Bieber!
Member of the Bars of Paris and Buenos Aires; Managing Associate in the Paris office of Linklaters; former Managing Counsel at the Secretariat of the ICC International Court of Arbitration; firstname.lastname@example.org.
Statistical Reports, (2009) 20:1 ICC International Court of Arbitration Bulletin 5 at 6 and 7; [2015:1] ICC Dispute Resolution Bulletin 7 at 9.
Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Bolivia, Mexico, Dominican Republic, Panama, Costa Rica.
ICC National Committees play a key role in the development of arbitration by proposing ICC Court members, members of the ICC Commission on Arbitration and, of course, candidates for appointment as arbitrators in ICC cases.
E.g. Chile (Law No. 19.971 of 29 Sept. 2004; Colombia (Law 1563 of 12 July 2012).
E.g. Peru (Legislative Decree 1071 of 28 June 2008).
E.g. Argentina (National Code of Civil and Commercial Procedure of 20 Sept. 1967).
However, in the context of investor-state arbitration, there is talk of the return of the Calvo doctrine, as countries such as Bolivia, Ecuador and Venezuela have denounced the ICSID Convention and introduced changes to their law on grounds of sovereignty.
Entidad Binacional Yacyretá v. Eriday et al. In 2004, Yacyretá obtained an order from an Argentinian court enjoining the ICC arbitration proceedings until a challenge against the arbitrators had been finally settled. The arbitrators were accused of not taking into account the party's interest when drawing up of the Terms of Reference and the ICC Court of not communicating the reasons for its decision to reject the challenge. The arbitrators resigned and Eriday, claimant in the arbitration, nominated a new arbitrator. The Argentinian court ordered it to withdraw this nomination within three days, failing which it would be fined USD 7 million and USD 1 million per day of delay. In November 2012, a new injunction was issued by the same court following a new challenge from Yacyretá against an arbitrator nominated by the claimant.
Companhia Paranaense de Energia (Copel) v. UEG Araucaria Ltda. In this case, a Brazilian court of appeal overturned a lower court's anti-arbitration injunction preventing UEG from participating in an ICC arbitration in Paris against Copel, a state-owned company. Copel argued that companies under state control could not submit their disputes to arbitration. At Copel's request, the president of the appeal court reversed the latter's decision, as a result of which UEG was again prevented from pursuing arbitration proceedings. The injunction remained in force for fourteen months until the parties eventually settled.
TermoRio S.A. E.S.P. v. Electrificadora del Atlántico S.A. E.S.P. (Electranta). Following an award in TermoRio's favour, Electranta, a state-owned company in Colombia initiated proceedings in the Colombian courts to have the award set aside. The Colombian court vacated the award on the grounds that the arbitration had not been conducted in accordance with Colombian law, which contained no express reference to the use of the ICC Rules. TermoRio's attempt to have the award enforced in the USA on the ground that the New York Convention did not allow for enforcement of an award that had been lawfully set aside by a competent authority at the seat, unless it is 'repugnant to fundamental notions of what is decent and just in the United States' or 'violate[s] any basic notions of justice to which we subscribe'.
Infored v. Grupo Radio Centro. Radio Centro, Mexico's leading radio broadcasting company, brought proceedings in the Mexican courts to have the award set aside on the grounds that the arbitrators were not experts in the radio broadcasting industry, as required by the arbitration clause. On the basis of a narrow reading of the arbitration clause, the lower court set aside the award, but its decision was overturned by a higher court, which held that the parties had subsequently consented to the appointment and qualifications of the arbitrators. After a long battle in the courts, the award was finally upheld.
VRG Linhas Aereas S.A. v. MatlinPatterson Global Opportunities Partners II L.P., Decision of the Southern District of New York, 19 Jan. 2012; decision of the Court of Appeals for the Second Circuit, 1 July 2015.
(2010) 21:1 ICC International Court of Arbitration Bulletin 5 at 7, 13; [2015:1] ICC Dispute Resolution Bulletin 7 at 9, 14.
Argentina, Antigua and Barbuda, Bahamas, Barbados, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St Vincent and the Grenadines, Trinidad and Tobago, the United States, Uruguay and Venezuela (source: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html, last visited July 2015).
Source: www.oas.org/juridico/English/sigs/b-35.html, last visited July 2015.
Source: www.oas.org/juridico/english/treaties/b-41.html, last visited July 2015.
Chile, Costa Rica, Dominican Republic, Guatemala, Honduras, Mexico, Nicaragua, Paraguay, Peru and Venezuela (source: www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html, last visited July 2015).
(2005) 16:1 ICC International Court of Arbitration Bulletin 5 at 9; [2015:1] ICC Dispute Resolution Bulletin 7 at 13.
Between 2009 and 2014, 526 parties were from Brazil, 253 from Mexico, 106 from Argentina, 67 from Chile and 52 from Colombia. These and subsequent statistics on ICC arbitration are drawn from the annual statistical reports published in the ICC International Court of Arbitration Bulletin and its successor, the ICC Dispute Resolution Bulletin.
Foreign direct investment received in Argentina in 2013 was USD 9,082, compared to USD 12,116 in 2012. See https://es.santandertrade.com/establecerse-extranjero/argentina/inversion-extranjera.
Article 739 of the CP provides that the compromis must be legalized by a notary public or court. However, if there is valid arbitration clause and one of the parties refuses to enter into the compromis and take part in the constitution of the arbitral tribunal, the other party can request the competent court to do so on behalf of the defaulting party. For example, in the case Wallaby S.A. v. Despegar.com.ar S.A. s/ordinario, Chamber A of the Court of Appeal in Commercial Matters of the Federal District stated that, even though the parties had entered into an arbitration clause, the clause did not specify the rules applicable to the arbitration. Consequently, the rules of the CP applied, obliging the parties to enter into a compromis. The Court of Appeal further stated that an arbitration clause empowers a party to compel the defaulting party to enter into a compromis and constitute a tribunal. In light of the above, the parties were ordered to enter into the compromis.
However, most legal scholars consider that arbitral tribunals are empowered to issue such measures. For example, see R. Arazi, 'Arbitraje nacional e internacional', LL 19.8.05; J. Rivera, 'El arbitraje en Argentina', www.rivera.com.ar/.../rivera_el_arbitraje_en_argentina.
In 2008, the Argentine Supreme Court confirmed the validity of a waiver of the right to challenge an arbitral award. Accordingly, parties can waive the right to appeal against an award, but not an annulment (see Cacchione, Ricardo Constantino v. Urbaser Argentina S.A., 11 Mar. 2008). For this reason, a party wishing to waive the right to appeal against an award must include clear language to this effect in the arbitration agreement or compromis.
As a result, arbitral tribunals did not necessarily become functus officio with the rendering of a final award, as they maintained jurisdiction to decide whether to allow recourse against the award, even in the absence of an application for correction or interpretation of the award.
The New Code was enacted through Law No. 26.994. The 'arbitration contract' is dealt with in Articles 1649 to 1665 of the New Code. The New Code replaced the former Civil Commercial Codes and entered into force on 1 August 2015.
Cacchione, Ricardo Constantino v. Urbaser Argentina S.A., 24 Aug. 2006; Pestarino de Alfani, Mónica Amalia v. Ubaser Argentina S.A., 11 Mar. 2008.
The provisions on arbitration of the New Code were inspired by the UNCITRAL Model Law, the Civil Code of Quebec and the French arbitration decree of January 2011.
See Article 1659(b), second paragraph, of the New Code.
Siemens v. BKMI and Dutco, Court of Cassation, 7 Jan. 1992, XV (1992) Yearbook Commercial Arbitration 124 et seq. It is worth noting that the principle, as recognized by French courts, is not to afford all parties the right to participate in the constitution of the arbitral tribunal, as it is commonly suggested, but to have the same rights in the constitution of the arbitral tribunal.
See Article 1649 of the New Code.
See below CRI Holding Inc. Sucursal Argentina v. Compañía Argentina de Comodoro Rivadavia Explotación de Petróleo S.A.
In the explanation of the reasons for the new legislation, it is stated that the non-arbitrability of disputes where public policy is involved is aimed at precluding the state or any state entity from arbitrating their disputes. If that was the intention, then it does not seem reasonable to consider as non-arbitrable any dispute affecting public policy, given that there are many mandatory rules that do not relate to public policy, which are aimed at protecting private rights. Besides, the New Code expressly excludes its application in cases involving the state, so a double restriction seems redundant. This provision further reflects the hostile attitude of the Argentine state to arbitration.
Article 1656, last paragraph, of the New Code.
However, such an interpretation would be inconsistent with provincial procedural codes, the CP and the prevailing position in other jurisdictions, all of which authorize the parties to waive the right of appeal.
Likewise, such an interpretation would be contrary to the New York Convention.
Section 1655 of the New Code.
Most modern laws give arbitral tribunals sole jurisdiction to render interim measures after their constitution (e.g. France, Brazil).
Argentina adopted the New York Convention by Law No. 23.619 with the following reservations: (i) the foreign award to be recognized and enforced must have been issued in a country that is a party to the Convention, and (ii) the underlying dispute must be considered to be of a commercial nature under Argentine law.
See section 2 above.
This was an ICSID arbitration under the UNCITRAL Arbitration Rules, with the ICC as appointing authority. The Argentine government requested the Argentine Court of Appeal in Administrative Matters to set aside the ICC Court's decision to reject the challenge of an arbitrator on similar grounds to those expressed in Yacyretá and to stay the arbitration proceedings until the issue had been decided. Although the federal court ordered a stay, this did not seriously impact the arbitration as its seat was Washington D.C.
See Articles 736 and 737 of the CP.
Harz und Derivate et al. v. Akzo Nobel Coatings S.A. et al., Chamber D of the Court of Appeal in Commercial Matters of the Federal District, 28 Oct. 2009; Solidstate Controls Inc. de Argentina SRL v. Meyer, Federico Luis, Chamber A of the Court of Appeal in Commercial Matters of the Federal District, 27 May 2012; Estado Nacional - Procuración del Tesoro de la Nación v. Tribunal Arbitral, Chamber II of the Federal Contentious-Administrative Court of Appeal, 25 Oct. 2011. In the latter case, the Court of Appeal decided to redirect the challenge to the lower court for it to decide on the proceedings to be applied in accordance with Article 319 of the CP.
J.C. Rivera, Arbitraje Comercial. Internacional y Doméstico (Buenos Aires: LexisNexis, 2007) at 423.
As a matter of practice, the ICC Secretariat used to notify extensions granted by the ICC Court for drawing up the Terms of Reference and rendering the Final Award only to the arbitrators, who would in turn inform the parties. In recent years, that practice has changed, and nowadays the ICC Secretariat notifies these decisions to both the arbitrators and the parties simultaneously. In addition, the dissatisfied party alleged that the partial award was ultra petita because it addressed issues that the arbitral tribunal was supposed to decide in the final award. The Court of Appeal noted that (i) procedural orders can be modified unilaterally by the arbitrators, (ii) bifurcation does not have the effect of splitting the jurisdiction of the arbitrators, and (iii) there are substantial differences between the structure of judicial and arbitral proceedings, so an act that would be null and void in judicial proceedings is not necessarily null and void in an arbitration.
The ICC Court is authorized to extend the time limit for rendering a final award under Article 30(2) of the ICC Rules. By agreeing to the Rules, the parties necessarily accept such authorization.
Article 760 of the CP provides as one of the grounds on which an award can be set aside the fact that it has been rendered outside the time limit agreed by the parties.
The Court of Appeal remitted the challenge to the ICC Court on the basis of its understanding of Article 11 of the 1998 ICC Rules of Arbitration, whereupon the ICC Court rejected the challenge.
Law 9.307 of 1996.
The BAL was inspired by the Spanish Arbitration Law of 1988, the New York Convention, and Panama Convention.
M.B.V. Commercial and Export Management Est. v. Resil Industria e Comêrcio Ltda, 12 Dec. 2001.
Espal Representações e Conta Própria Ltda v. Wilhelm Fette GmbH, 18 Aug. 2005.
Public-Private Partnerships Act, Article 11(III); General Law on Concessions, Article 23-A.
The BAL Amendment was enacted on 26 May 2015 by Law No. 13 129/2015, which entered into force on 27 July 2015. The Brazilian Vice-President vetoed the provisions allowing consumer and employment disputes to be submitted to arbitration, even though these provisions were in fact more protective of consumers and workers than the previous text.
The arbitration is considered engaged once all arbitrators have accepted their appointment. Nevertheless, once the arbitration is engaged, the date of the request for arbitration determines the time in which the statute of limitation is interrupted.
Original: 'A parte interessada poderá ingressar em juízo para requerer a prolação de sentença arbitral complementar, se o árbitro não decidir todos os pedidos submetidos à arbitragem.' Translation by author: 'The interested party may request from courts the rendering of a supplementary arbitral award if the arbitral tribunal fails to decide all the claims submitted to arbitration.'
The recent decision of the Mato Grosso do Sul Court of Appeal in case Petroplus Sul Comércio Exterior S.A. et al. v. First Brands do Brasil Ltda et al., by which it upheld an anti-arbitration injunction ordering First Brands to adjourn recently initiated ICC proceedings, is a clear example of this undesired interference. In the case at hand, Petroplus had obtained an interim measure from the 3d Campo Grande Lower Civil Court. Concurrently, First Brands initiated ICC arbitral proceedings requesting the arbitral tribunal to grant an interim measure overturning the court's decision and allowing First Brands to vote at the shareholders' meetings. In response, Petroplus obtained a decision from the Mato Grosso do Sul Court of Appeal ordering First Brands to halt the arbitral proceedings, subject to a daily penalty. The decision was based on Article 14.V of the Brazilian Code of Civil Procedure, which states that the parties must not prevent judicial decisions from taking effect. The Court of Appeal further developed the alarming argument that the pursuit of the arbitration would violate Brazilian sovereignty, as the future decision of international arbitrators might prevail over an earlier decision rendered by a Brazilian court. According to the Court of Appeal, First Brands should have first complied with the lower court's interim decision and then requested the dismissal of Petroplus' action based on the existence of the arbitration agreement. See Interlocutory Appeal No. 1401116-61.2014.8.12.0000/50000.
For example, Resolution 20/2010 of Rio de Janeiro assigned cases involving arbitration to seven specific trial courts; Resolution 679/2011 of Minas Gerais gave commercial courts jurisdiction over cases involving arbitration; Resolution 538/2011 of São Paulo established a special chamber of commercial law to resolve disputes involving commercial matters, including arbitration; and the Circular Letter 69/99 of Paraná determined that witness summonses and requests for urgent relief made by arbitrators come within the jurisdiction of civil courts.
See section 2 above.
By the same token, the Sao Paulo Court of Appeal, in All America Latina Logistica S.A. et al v. Agrovia S.A (2 July 2014), confirmed that, once constituted, it is for the arbitral tribunal to uphold, modify or overturn an interim measure issued by state courts. Furthermore, the same court, in Nike Licenciamiento Ltda v. SBF Comercio de Productos Esportivos Ltda (23 Apr. 2013), held that interim measures from national courts after the constitution of the arbitral tribunal would impinge on the latter's jurisdiction. Likewise, in the Petroleo Brasileiro SA v. Agencia Nacional de Petroleo Gas Natural e Biocombustiveis (ANP) (25 Apr. 2014), the 5th Federal Court of Rio de Janeiro agreed to issue an interim measure suspending the effect of a board resolution of the ANP only because the arbitral tribunal had not then been constituted, making clear that it would thereafter be for the arbitrators to decide on whether the measure should be maintained, modified or terminated.
Articles 6(2) and 1(2) of the 2012 ICC Rules.
Article 1(3) of the Arbitration Rules of the Institute of Engineering.
The positive attitude of the STJ towards arbitration was also evidenced by its decision in Ferro Atlântica S.L. v. Zeus Mineração Ltda (29 June 2011), where it considered that state court intervention in arbitral proceedings violates the parties' freedom of contract in submitting their dispute to arbitration.
In this case, the Rio de Janeiro Court of Appeal had considered that the award should be subject to recognition by the STJ as the proceedings had been administered by the ICC. However, since the award was rendered in Rio de Janeiro, the STJ clarified that it must be considered a domestic award.
In this case, the STJ found that Univen was estopped from challenging the arbitrators' impartiality in the enforcement proceedings as it failed to do so during the arbitration. The STJ further stated that it was prevented from reopening the merits of the dispute and it made reference to the provision of the ICC Rules, pursuant to which, by agreeing to arbitration under those Rules, the parties waive any form of appeal.
The case concerned an award in which the arbitral tribunal retained jurisdiction over a non-signatory party.
Siemens Aktiengesells Schaft v. Woodbrook Drive Systems Acionamentos Industriais Ltda, Conflict of Competence No. 132.088-SP, 5 Feb. 2014.
Translated by author.
Section 98 of the Law of Public Works and Related Services.
Corporación Mexicana de Matenimiento Integral, S. de R.L. de C.V. v. Pemex-Exploración y Producción, No. 10 Civ. 206 (AKH), 2013 WL 4517225 (S.D.N.Y. Aug. 23, 2013).
See supra note 11.
Peruvian law is an exception.