ARGENTINA

Luis E. Dates and Santiago Maqueda

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 party (1988). No legislative amendments have been made since their enactment.

A.2       Institutions, Rules and Infrastructure

Due to the COVID-19 pandemic, several local arbitration institutions had to adjust to the current situation. In this regard, the General Arbitral Tribunal of the Buenos Aires Stock Exchange, the Arbitration Chamber of the Buenos Aires Grain Exchange, and the Business Centre for Mediation and Arbitration (CEMA) had to suspend oral hearings and procedural deadlines during the lockdown. Gradually, such entities began resuming the proceedings and accepting the conducting of virtual hearings upon the parties’ consent. In particular, CEMA has implemented a new procedure to initiate mediation in times of pandemic.

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 (“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 Regime”). The Debt Consolidation Regime is, in general terms, an emergency measure by which outstanding debts from the government and related governmentally-owned entities (such as the Respondent in this case) are unilaterally converted to bonds or similar types of instruments in order to restructure internal governmental debt.

The Respondent appealed this decision on the grounds that the Arbitral Tribunal had omitted the application of the Debt Consolidation Regime, 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 Court of Appeals’ decision and ordered the partial enforcement of the arbitral award by adapting the measure to the requirements of the Debt Consolidation Regime.

The National Supreme Court of Justice considered that, following the Argentine Procedural Code, the recognition and enforcement of a foreign award must comply with Argentinian law’s public order principles. 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 Regime. It also 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 Regime.

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

This precedent is relevant as it continues to define the scope of the public order clauses under current legal rules in Argentina, which could be viewed as ambiguous under the CCC. In particular, it affirms that the existence of public order rules or issues in a dispute does not necessarily lead to the impossibility of deciding it under arbitration. Still, rather it is a matter that must be analyzed on a case-by-case basis.

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 (“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 CEMA.

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 CCC provision was originally meant for cases where one party is in clear advantage over the aggrieved party, generating an abusive exercise of rights.

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 concluded that in this particular case, it had 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 tends to create a pro-arbitration interpretation of ambiguous clauses from the CCC, which otherwise could be construed as undermining the parties’ rights to consent to arbitration.

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 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 may grant the injunction 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 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. The Court of Appeals also found that the National State had duly insisted that the arbitral tribunal lacked jurisdiction on the grounds that the National State never consented to 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 State had not approved it.

Finally, the Court of Appeals held that the suspension requested was adequate to avoid the enforcement of the arbitral award until the annulment was resolved. In this latter regard, it weighed that 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.”

To arrive at 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.

This precedent is relevant as it tends to establish a case law that allows to exceptionally suspend the enforcement of awards on the basis of preliminary claims and injunctions, at least when requested by the National Government.

B.4 Absence of waiver of the appeal against an arbitral award. Irrenounceability of the appeal for annulment

In “Sidus S.A. (“Plaintiff”) v. Genomma Laboratories Argentina S.A. (“Respondent”) s/ Ordinario”,[[5]] the Plaintiff filed a request for appeal against the award that rejected its claim for breach of contract and damages against Respondent who raised the inadmissibility of the appeal, invoking section 1656 of the CCC which, accordingly to Respondent, would only allow an appeal to set aside the award.

The Court of Appeals on Commercial Matters rejected Respondent’s request of inadmissibility of the appeal on the basis that the parties had never renounced the possibility of submitting such a request. In this sense, the parties had chosen the Rules of the General Arbitration Tribunal of the Buenos Aires Stock Exchange, which mandate in its article 63 that, unless the parties agreed otherwise, they can submit against awards the same challenges that would be submitted against local judges.

The Court also indicates that a distinction should be made between the challenge of nullity as an mechanism that cannot be waived for reviewing the arbitral award and the appeal award. In addition, the Court it recalls that the National Supreme Court the CSJN has understood that “the only remedy of challenge against the arbitral award, having the parties waived the appeal, is that of nullity”.

On the basis of the foregoing, the Court concluded that the appeal was admissible as a procedural tool expressly provided for the parties in the arbitration clause. Notwithstanding, after the appeal had been dealt with, it was finally rejected and the contested award was upheld.

This precedent is relevant as it tends to enforce party autonomy that in this case was to submit their disputes to arbitration with the possibility of an appeal. It also reminds the importance of the election of an arbitral institution and the value of the study of its rules.

 

[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 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.

[5] Cámara Nacional de Apelaciones en lo Comercial, Sala B, (National Court of Appeals on Commercial Matters, Chamber “B”) 7 de octubre de 2019, “Sidus S.A. c/ Genomma Laboratories Argentina S.A. s/ Ordinario”.

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