A. LEGISLATION AND RULES
A.1 Legislation
International arbitration in Argentina continues to be governed by (i) the National Civil and Commercial Code (2015), (ii) the Law on International Commercial Arbitration (2018) and (iii) the New York Convention, to which Argentina is a signatory. No legislative amendments have been made since their enactment.
A.2 Institutions, rules and infrastructure
Since the end of the COVID-19 pandemic, local arbitration institutions’ proceedings continue with the conduction of both virtual and in-person hearings upon the parties’ consent and the online submission of writs. In particular, the Commercial Mediation and Arbitration Center of the Argentine Chamber of Commerce would be currently working on updating its rules.
B. CASES
B.1 Dismissal of the appeal for annulment of the arbitral award
In Pérez Iturraspe, Teresa Manuela y otro (“Plaintiff”) v. Aufiero Jorge Félix (“Respondent”)[1] the National Court of Appeals on Commercial Matters (“Court of Appeals”) interpreted the request for nullity of the arbitration award based on alleged essential procedural faults in accordance with section 1656 of the Civil and Commercial Code.
The Respondent filed a nullity appeal alleging that the General Arbitral Tribunal of the Buenos Aires Stock Exchange had committed several essential procedural faults in accordance with section 1656 of the Civil and Commercial National Code. Among other things, it alleged that the award (i) did not apply the law chosen by the parties; (ii) ruled extra and ultra petita[2], violating the principle of consistency and sections 17 and 18 of the National Constitution; (iii) ignored the fact that the contractual fine imposed by the tribunal was not applicable to the alleged breach; and (iv) that the amount of the fine it had imposed was unconstitutional, illegal and unreasonable and, therefore, null and void according to the Supreme Court’s doctrine of the “Cartellone” precedent.
The Court of Appeals established that the context of the issue to be resolved was whether the grievances raised by the Respondent in relation to (i) the application of the law chosen by the parties, (ii) the principle of consistency, (iii) the disregard of evidence and (iv) the reasonableness of the fine, enable the judicial review of the award.
Preliminarily, the Court of Appeals pointed out that although in the arbitration agreement the parties waived “any appeal against the award,” the reality is that the nullity appeal is a mandatory and nonwaivable mechanism for the review of the award. This is because the jurisdiction of the Court of Appeals is limited to the objective verification of the grounds for nullity expressly provided for in the law, and it lacks jurisdiction to decide on the merits of the underlying award.
The Court of Appeals determined that when the parties agreed to arbitration as the sole instance for resolving their disputes and expressly resigned the possibility of filing an appeal, the court’s jurisdiction is limited to ruling on the existence of the specific grounds that affect the validity of the award. If the parties choose arbitration to benefit, among other things, from an unappealable award, thus reducing the time and resources invested in the process, it would be difficult to consider such a choice if the award tends to be reviewed by the judges.
The Court of Appeals determined that the nullity of an award requires the configuration of at least one of the following: (i) essential procedural violations, (ii) arbitrators ruling after the deadline, (iii) arbitrators deciding on nonagreed issues (section 760, Civil and Commercial Procedural Code and section 1656, Civil and Commercial National Code), (iv) award containing decisions that are incompatible with one another, or (v) award violating public order.
First, the Court of Appeals defined the essential procedural violation (allegedly not applying the law chosen by the parties to the dispute) as that which refers to the existence of formal defects that could have affected the guarantees of the regularity of the proceedings. Although the parties are free to establish the procedural rules, there is a nonwaivable guarantee of due process, which is manifested in the fact that the parties deserve equal treatment, having the same possibility of sufficiently presenting their case, producing evidence, and controverting the evidence offered by the other party. It concluded that for an essential procedural default to be admissible, the alleged defect must be (i) relevant, (ii) affect the right of defense, (iii) there must be a legal interest in its declaration, and (iv) it must be a nonconsensual action. Thus, the failure to apply the chosen law could be admitted as an essential procedural violation as long as it implies a departure from what was agreed by the parties in direct violation of due process.
The Court of Appeals explained that it is not enough to invoke a mere error in the interpretation or application of the law, but it is required that the award has manifestly disregarded the law chosen by the parties and without providing any justification for proceeding in this way. This is in order to prevent the nullity appeal from becoming a means of access to a second instance of review of the decision.
Second, the Court of Appeals went on to analyze whether the Arbitral Tribunal ruled extra and ultra petita in violation of the principle of consistency, explaining that this argument “can be invoked when the award omits to decide any essential issue included in the agreement (citra petita), exceeds the specific scope of any of those issues (ultra petita) or resolves issues that are foreign to them (extra petita).” The Court of Appeals concluded that the Respondent did not demonstrate that the award omitted essential issues; its appeal only showed an objection to the underlying decision on the case. Consequently, the Court of Appeals did not find sufficient grounds to accept the nullity appeal on the grounds that the Board of Arbitration exceeded its powers.
Third, the same conclusion was reached by the Court of Appeals when rejecting the Respondent’s claim regarding the nullity of the award due to the lack of consideration of relevant evidence. In this regard, it held that “it should be recalled that no arbitrariness can be inferred from the fact that the award had given preference to certain evidence to the detriment of others […] nor could any arbitrariness be inferred from the fact that the arbitrator had not considered one by one all the evidence added to the case, since he was not obliged to do so, but only to examine the evidence he considered sufficient for the resolution of the matter.”
Fourth, regarding the amount of the fine that the Respondent considered “unconstitutional, illegal and unreasonable” according to the doctrine of the “Cartellone” case, the Court of Appeals understood that such contractual fine was supported by what was expressly agreed by the parties. In addition, the General Arbitral Tribunal had substantially reduced its amount after analyzing the seriousness of the noncompliance and other circumstances of the case. The Court of Appeals ruled that the nullity appeal against the resolution clarifying the amount of the fine was not successful either. Thus, it understood that there was no excess of the General Arbitral Tribunal’s jurisdiction that would justify the nullity of the award.
Ultimately, the Court of Appeals concluded that none of the claims alleged by the Respondent were sufficient to demonstrate that the final award and the resolution clarifying the amount did not comply with the minimum parameters to reach a valid jurisdictional decision under the terms of section 18 of the National Constitution. Therefore, it rejected the nullity appeal, with costs to the Respondent.
This precedent is relevant as the Court of Appeals managed to safeguard one of the greatest benefits of arbitration: the unappealable decision. The importance of this benefit also lies in its intrinsic relationship with the celerity and procedural economy that it implies and that invites the contracting parties to choose arbitration.
B.2 Validity of arbitration clause in adhesion contracts
In the case of Soluciones Integrales SRL (“Plaintiff”) v. Ternium Argentina SA (“Respondent”)[3] the Court of Appeals upheld the lower court’s decision to reject jurisdiction on the basis of an arbitration clause included in an adhesion contract.
The Court of Appeals examined the enforcement of an arbitration clause, admitting its validity and enforceability. The Court of Appeals recalled the concept of the arbitration clause “as a contract which is subject, as such, to the requirements of validity which, in terms of consent, capacity, object and cause, are required by [section 1650 and concordant section of the Civil and Commercial National Code].” It understood that the content of the arbitration clause “is exclusively left to the will of the parties, who may agree on arbitral jurisdiction in respect of all litigious cases that arise as a consequence of the substantial relationship that binds them, or limit it to the specific aspects that refer to that relationship, excluding the cases of nonarbitrability provided for by law” (section 1651 of the Civil and Commercial National Code).
In particular, applicable Argentine law generally states that arbitration clauses are not admitted in adhesion contracts. However, the Court of Appeals clarified that when it is a contract entered into between businessmen or commercial corporations concerning monetary issues, such prohibition (set forth by section 1651 (d) of the Civil and Commercial National Code) should not apply since doing so would neglect the parties’ intention to arbitrate their conflicts.
In this sense, the Court of Appeals concluded that the arbitration clause could be admitted to operate even in the case of an adhesion contract as long as (i) its abusiveness has not been demonstrated and (ii) there are no public policy issues at risk that would justify the deviation from what was agreed by the parties. Indeed, “[t]he obligation-creating force of the contract must, when this occurs, be considered in force [section 959 of the Civil and Commercial National Code].” Moreover, any other issue that may be raised in relation to the existence, validity or effectiveness of the arbitration clause must be examined — in the absence of any stipulation to the contrary — by the arbitral tribunal itself, considering the kompetenz-kompetenz principle proper to the matter (section 1654 of the Civil and Commercial National Code) and the fact that the agreement is not manifestly null and void or unenforceable (section 1656, first paragraph of the Civil and Commercial National Code).
This precedent is relevant as it confirmed the trend in case law regarding the enforcement of the inclusion of arbitration clauses in adhesion contracts. Furthermore, it clarified the parameters to be considered when deciding on their enforcement and ratified the kompetenz-kompetenzprinciple according to which, the arbitral tribunal must rule on the existence, validity or effectiveness of arbitration clauses in this type of contract.
B.3 Tacit waiver of arbitral jurisdiction
In Art Logistic SA (“Plaintiff”) v. Garcia Laredo, Victor Eugenio (“Respondent”),[4] the Court of Appeals confirmed that holding the mandatory pre-judicial mediation[5] does not imply a tacit waiver of arbitral jurisdiction. The Plaintiff had brought its action on the grounds that — within the framework of the mediation process — a verbal offer to change the jurisdiction had been made and validated by the other party.
In its decision, the Court of Appeals reaffirmed the case law in this regard in the sense that the arbitration clause is “a waiver of the general principle of submission of disputes to the ordinary courts” and that the Civil and Commercial National Code provides in section 1649 that it is a contract “whereby the parties submit disputes that may arise or that have already arisen from a legal relationship existing between them, whether conventional or not and always of an available nature, to the decision of one or more arbitrators.”
In this sense, the Court of Appeals concluded that the arbitration agreement could not be affected by initiating a pre-judicial mediation process, even if there was a possibility that the parties had agreed on a change of jurisdiction as the Respondent denied the existence of such an agreement. This is of course in turn confirmed by the fact that the parties did not reach an agreement in that context.
This precedent is relevant as it reaffirms the case law that considered the mediation as another form of alternative dispute resolution (not aiming at a definitive solution) in which the conclusion of such a process could not in any way be understood as a tacit waiver of the agreed arbitral jurisdiction if there was no agreement of the parties.
[1] Cámara Nacional de Apelaciones en lo Comercial, Sala B, (National Court of Appeals on Commerical Matters), 22 March 2022, “Pérez Iturraspe, Teresa Manuela y otro c/ Aufiero Jorge Félix s/ Organismos externos,” Exp. No. 10.795/2020.
[2]According to the Respondent, the arbitral award departed from undisputed issues and failed to resolve the totality of the issues raised by the parties.
[3] Cámara Nacional de Apelaciones en lo Comercial, Sala D, (National Court of Appeals on Commerical Matters), 8 February 2022, “Soluciones Integrales SRL c/ Ternium Argentina SA s/Ordinario,” Exp. No. 1648/2021.
[4] Cámara Nacional de Apelaciones en lo Comercial, Sala D, (National Court of Appeals on Commerical Matters), 24 February 2022, “Art Logistic SA c/ Garcia Laredo, Victor Eugenio s/Ordinario,” Exp. No. 15.639/2021.
[5] The pre-judicial mediation is a mandatory required instance before any trial before a state court.
