ARGENTINA

Luis E. Dates, Santiago Maqueda and Eugenia Pluchino

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 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), to which Argentina is a signatory party (1988). No legislative amendment has been made since their enactment.

A. 2 Institutions, Rules and Infrastructure

In October 2019, the Permanent Court of Arbitration (“PCA”) set up a staffed office in Buenos Aires, Argentina. This office constitutes the first PCA’s office in Latin America, and the third outside its headquarters in the Hague, the Netherlands. The main function consists of assisting with the promotion of Buenos Aires as a seat of international arbitration and providing the services of the PCA throughout Latin America.

B. CASES

B. 1 Adaptation Of An Arbitral Award To Comply With “Public Order”

In “Deutsche Rückversicherung AG (“Plaintiff”) v. Caja Nacional de Ahorro y Seguro en liquidación y otros (“Respondent”) s/ proceso de ejecución[1] The Plaintiff requested the recognition and enforcement of an arbitral award issued by an arbitral tribunal (the “Arbitral Tribunal”) on 26 April 2006, in New York City, USA, ordering the Respondent to pay the owed amount.

The Court of Appeals on Civil and Commercial Federal Matters[2] (“Court of Appeals”) had recognized the award and ordered its enforcement following the system of debt consolidation in Argentina regulated by Laws No. 23.982 and No. 25.565 (“Debt Consolidation System”).

The Respondent appealed this decision on the grounds that the Arbitral Tribunal had omitted the application of the Debt Consolidation System, violating the principles of public order, and thus the award was unenforceable. The case was elevated to the National Supreme Court of Justice in Argentina.

The National Supreme Court of Justice confirmed the decision of the Court of Appeals and ordered the partial enforcement of the arbitral award, by adapting the measure to the requirements of the Debt Consolidation System.

The National Supreme Court of Justice considered that, following the Argentine Procedural Code, the recognition and enforcement of a foreign award must comply with the public order principles of Argentinian Law. As such, ordering the enforcement of the award originally rendered by the Arbitral Tribunal implied a violation of public policy as it was not compatible with the Debt Consolidation System, and as it would have granted best conditions for collecting debts to an individual rather than to the State, solely to enforce a foreign award.

In particular, Judge Dr. Rosenkrantz upheld the principle of “pro-arbitration,” applying article VII of the New York Convention, which Argentina is a signatory of. In its first paragraph, article VII sets that the provisions of the Convention shall not, “deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.”

In this sense, ordering the partial enforcement of the arbitral award does not imply the modification of its substance, but rather the recognition of the plaintiff’s right to invoke the rules of the place where the award is being enforced, in this case, the Debt Consolidation System.

In conclusion, the National Supreme Court of Justice protected the principles of public order by adapting the award instead of ordering its annulment.

B. 2 Interpretation Of Disputes That Can Be Subject To Arbitration

In “Vanguer SRL (“Plaintiff”) v. Minera Don Nicolas S.A. (“Respondent”) s/ Ordinario[3] the Court of Appeals in Civil Matters (the “Court of Appeals”) upheld the decision of the lower court rejecting the jurisdiction of local courts to resolve this claim and confirming the jurisdiction of the Argentine institution, “Centro Empresarial de Mediación Arbitraje.”

The Plaintiff had adhered to the Respondent’s standard contract, containing an arbitration clause. The Plaintiff alleged that the arbitration clause was void on the grounds that article 1651, section d of the National Civil and Commercial Code (“CCC”), rejects the possibility to arbitrate disputes arising out of standard form (or “adhesion”) contracts.

However, the Court of Appeals interpreted that the provision of the CCC was originally meant for cases where one party is in clear advantage over the aggrieved party, construing an abuse of power.

In this case, the Court of Appeals conducted a broad interpretation of the CCC and considered that article 1651 section d, did not apply to the present case. This, on the grounds that both the Plaintiff and the Respondent executed the contract as business parties involving economic rights, which can be waived. In particular, it considered that standard form contracts can still be executed in equal terms if parties were aware of its content, and decided to sign it anyway.

Moreover, the Court of Appeals analyzed that in this particular case, it has not been demonstrated that the arbitration clause was abusive and the case does not involve public policy issues. In conclusion, there were not sufficient elements to declare the arbitration clause void.

This precedent is relevant as it highlights the responsibility of business parties when executing contracts and favors arbitration agreements with a broad interpretation of the CCC.

B. 3 Suspension Of The Effects Of Arbitral Awards When Annulment Is Pending

In “EN- Procuración del Tesoro de la Nación s. Recurso Directo,[4] the Court of Appeals on Federal Administrative Litigation Matters granted an injunction claim suspending the enforcement of the arbitral award issued by the arbitral tribunal (“Arbitral Tribunal”) on 5 March 2019 in the Arbitration “CCI 12364/KGA/CCO/JRF/CA/ASM/JPA.”

The arbitral award ordered the National State to pay the claimant, Papel Tucumán, the sum of USD 67,123,151 million plus interest. In response, the National State filed before the local courts requesting an annulment against the arbitral award and asked, by means of an injunction claim, for the suspension of its enforcement.

The Court of Appeals applied article 16 of National Law No. 26.854, which specifically provides for the requirements to grant an injunction requested by the National State. In particular, the Court of Appeals should assess if: (i) there is a concrete risk of suffering damages over public interests involving national wealth, (ii) the invoked right by the National Sate is legally sound and (iii) the requested measure -suspension- is adequate to preserve the ultimate aim -the annulment of the arbitral award-.

Accordingly, the Court of Appeals found that there was a concrete risk of affecting the public interest and national wealth as the final award was already issued and the arbitral tribunal ordered immediate payment. So, unless the suspension is granted, the National State was obliged to pay the requested amount.

Regarding (ii), the Court of Appeals considered that the National State had duly insisted that the arbitral tribunal lacked jurisdiction, on the grounds that the National State never consented the arbitration clause. It further considered that National Law No. 23.982 ordered the drafting of the arbitration clause, but there is no evidence the National Sate had not approved it.

Finally, it held that the suspension requested was adequate to avoid the enforcement of the arbitral award until the annulment was resolved. In this sense, the mere request for annulment does not suspend the effects of the award. Thus, the injunction was necessary and was an adequate measure.

In this regard, article V(1)(e) of the New York Convention establishes that an award should not be enforced, “if it has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.” In this sense, the competent authority of the country where the award was made is the Court of Appeals, and thus the request to suspend was duly filed.

To arrive to this conclusion, it interpreted article VI of the New York Convention, which provides that when a request to set aside or suspend the award has been made to a competent authority referred to in article V(1)(e), the authority where the award is intended to be enforced can postpone the decision on the enforcement or may also enforce it ordering the requesting party to give suitable security.

In conclusion, and considering the provisions of the New York Convention, the Court of Appeals considered that there were sufficient grounds to suspend the enforcement of the arbitral award until the annulment was decided by the local courts.

 

[1] Corte Suprema de Justicia de la Nación (National Supreme Court of Justice), 24 September 2019, “Deutsche Rückversicherung AG c/ Caja Nacional de Ahorro y Seguro en liquidac. y otros s/ proceso de ejecución,” Ex. CCF 6461/20091CS1.

[2] Cámara Nacional de Apelaciones en lo Civil y Comercial Federal, Sala III (National Court of Appeals on Civil and Commercial Federal Matters, Chamber “III”).

[3] Cámara Nacional de Apelaciones en lo Civil, Sala C, (National Court of Appeals on Civil Matters), Chamber “C,” 6 June 2019, “Vanger SRL c/ Minera Don Nicolas SA s/Ordinario,” Exp. No. 5688/2018/CA2.

[4] Cámara Nacional de Apelaciones en lo Contencioso Administrativo Federal, Sala I (National Court of Appeals on Federal Administrative Litigation Matters, Chamber “I”), 12 July, 2019, “EN- Procuración del Tesoro de la Nación s. Recurso Directo,” Ex. 15043/2019.

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