- Current Legislation
Despite repeated attempts to obtain congressional approval to adopt the UNCITRAL Model Law as the Argentine federal arbitration act, Argentina still lacks federal legislation specifically dealing with arbitration. Instead, the country’s civil procedure codes contain arbitration regulations. Because Argentina is a federal country, each province has its own code of civil procedure that applies within that province. The National Code of Civil and Commercial Procedure (“CPCCN”) applies to the Autonomous City of Buenos Aires (the capital), and in each federal court across the country.[3] Because the provincial codes tend to be consistent with the CPCCN as regards arbitration, this report will only refer to the CPCCN.
This section will discuss the relevant provisions of the CPCCN (A.1) and the most relevant international arbitration agreements to which Argentina is a party. These agreements are important because they provide rules in the absence of national legislation. These agreements include the International Commercial Arbitration Act of Mercosur (A.2); the Panama Convention (A.3); and the New York Convention (A.4). Finally, we will provide our comments on the recent legislative developments or related news that occurred on this matter (B).
A.1. National Code of Civil and Commercial Procedure
Articles 1 and 737 of the CPCCN govern arbitrable issues. Controversies of a monetary nature (Article 1) and which are subject to settlement by the parties (Article 737), are arbitrable. If both of these requisites are met, parties can submit their disputes to international arbitration, provided that the controversy would be “international” (Article 1). However, the law does not provide express guidance for determining when a specific controversy is “international” for purposes of this provision. Nevertheless, there is some consensus that “international” for the purposes of this provision, refers to cases relating to more than one legal system (e.g., parties with different nationalities; parties with addresses in different countries; or different locations of the goods or places where damage has occurred).[4]
Procedure under the CPCCN is obsolete, because it requires establishing a party’s consent to arbitration in a document separate from the arbitration agreement itself. This document is called a compromiso.[5] A party agreeing to arbitration should legalize the compromiso before a notary public or the intervening court (Article 739). Unless the parties provide otherwise, evidence production in ordinary court procedures will apply (Article 751). The default provisions regarding whether a party can appeal an award are that, unless the parties waive their rights to appeal or to file any other available remedy, these remedies remain available (Article 758). Thus, when a party wishes to waive the right to appeal an award, the party must provide clear language to this effect in the arbitration agreement or compromiso. Otherwise, the right to appeal remains available.
Courts in Buenos Aires usually uphold a party’s waiver of the right to appeal. However, in José Cartellone Construcciones Civiles S.A. v. Hidroeléctrica Norpatagónica S.A. o Hidronor, the National Supreme Court decided that a party’s waiver of its right to appeal should be disregarded when public policy considerations so recommend.[6] This decision has been heavily criticized both in national and international scholarly writing. As the defendant in that case was an Argentine public entity, it is debatable whether the José Cartellone doctrine can serve as precedent for future National Supreme Court decisions involving private parties. In fact, the National Supreme Court has ruled against the “Cartellone Doctrine” in subsequent cases[7], confirming thereby that this doctrine should be read extremely narrowly.
Local procedural law considers that parties cannot waive their right to request an annulment of an award. Parties can file for an annulment only in the following circumstances: (i) when the tribunal issues the award outside the term granted to it; (ii) when it contains issues that the parties did not request, or if it does not provide for the relief that the parties requested; or (iii) when the arbitrators failed to follow the procedures set forth by the parties.
A.2. International Commercial Arbitration Act of Mercosur
Absent any federal arbitration act in force in Argentina, the most important legislation to date dealing with international arbitration, is probably the Acuerdo sobre Arbitraje Comercial Internacional del Mercosur (Mercosur Accord on International Commercial Arbitration), issued in Buenos Aires on July 23, 1998 (“Buenos Aires Convention”).[8] Argentina, Brazil, Uruguay and Paraguay are parties to this convention. Bolivia and Chile also adopted the Buenos Aires Convention on that same date, by separate document executed with the Mercosur.
The Buenos Aires Convention applies to disputes between parties that, at the time of the execution of their agreement: (i) have their domiciles in signatory countries to the convention (Section 3, paragraph (a)); (ii) have contact with at least one signatory party of the convention; or (iii) have chosen the seat of the arbitration in one signatory party to the convention (Section 3, paragraph “c”).
Contrary to the CPCCN, the Buenos Aires Convention treatment of international arbitration is in line with most of the relevant international arbitration statutes (e.g., UNCITRAL Model Law). Among the issues contemplated therein, the Buenos Aires Convention explicitly allows—and mandates—a court to assist an international arbitration tribunal in the course of such proceedings (e.g., by issuing interim measures).
One final element to consider regarding this convention is that the default provision regarding attorney’s fees and costs -absent any indication to the contrary- is that each party should be responsible for paying its own attorney’s fees and costs,. Consequently, if a party applying this convention wants to take a “loser pays all” or “costs follow the event” approach, it must provide specific language to this effect in the relevant arbitration clause or in the compromiso.
A.3. Panama Convention
Argentina is also a signatory to the Convención Interamericana sobre Arbitraje Comercial Internacional or Panama Convention. Again, given the absence in Argentina of specific legislation dealing with international arbitration, this convention is relevant because it stresses the court’s powers (and obligations) to enforce international arbitration clauses, provided that such disputes would be of a commercial nature and that a written arbitration agreement exists. As a result, when this arbitrability threshold is met, the convention also mandates the local courts to assist international arbitration tribunals.
A.4. The New York Convention
Finally, Argentina is a signatory to New York Convention, issued in New York in 1958 and adopted by Law No. 23.619. Argentina made two reservations to this convention that affect whether an Argentine court will recognize and enforce a foreign arbitral award: (i) that the award be issued in a country that is a signatory to the convention; and (ii) that the underlying dispute be considered of a commercial nature under Argentine law.
- Recent Amendment to Legislation
Over the recent years, there were several initiatives in Congress to enact specific and autonomous arbitration law. Most of those initiatives sponsored the adoption of the UNCITRAL model law, and others were made based on that law. However, such initiatives consistently lost parliament status, evidencing that arbitration was not in the political agenda of those administrations (perhaps influenced by the wrongful asimilation between investment arbitration -which has attracted a lot of political attention in Argentina in the past decades-, and commercial arbitration).
However, Argentina has very recently enacted a joint Civil and Commercial Code (“CCC”) for purposes of replacing both the existing Civil Code and the Commercial Code. The CCC will be in force as from August 2015. This Code has a specific chapter regulating the arbitration contract (Sections 1649 to 1665). Despite the fact that by such qualification arbitration will be regulated as a specif type of contractual agreement -without taking into account its jurisdictional characteristics-, it will provide at last, and at least, federal substantive legislation on this matter. As we will see below, while this initiative provides for several well known and useful arbitration principles, it also includes -at least- two potentially major problematic provisions.
Among the favorable notions, the new Code includes: (i) the principles of kompetence-komptence; (ii) separability of arbitration agreements; (iii) the tribunal’s power to render interim measures; (iv) exclusion of judiciary jurisdiction when an arbitration agreement exists; (v) presumption in favour of arbitrability in the event doubt exists as to the scope of the matters submitted to arbitration; (vi) the obligations of arbitrators to be available and to disclose any matter that might affect their impartiality, among others. Even though several of these principles were already being applied by the local judiciary without being provided for in a specific piece of legislation, we applaud their express inclusion into our legal system.
However, there are other provisions included in the referenced chapter of the unified Code, which cause us great concern. Particularly, the vague and ambiguous wording of the provisions that deal with (i) the non-arbitrability of disputes where public policy is compromised (Article 1649); and (ii) the specific mention that parties cannot waive their right to challenge an award in court (“impugnación judicial”) when such award is contrary to the Argentine legal provisions (“ordenamiento jurídico”) (Article 1656).
As to the former, in our view a proper interpretation of the provision should require construing very narrowly the issue of what constitutes public policy for purposes of arbitrability. Otherwise, the opposite result will provide an easy avenue for defendants wishing to challenge the Tribunal´s jurisdiction by simply contending that the dispute is not arbitrable because public policy is at stake.
Furthermore, in the Congress’ explanation of reasons for the new Code, it is explained that the addition of the non-arbitrability of disputes where public policy is compromised, is aimed at forbidding the State or any State entity from arbitrating their disputes. Thus and following this rationale, where a mandatory rule of law does not relate to public policy, or its purpose is the protection of private rights and interests, there would be no justification to conclude that the subject-matter of the dispute is not capable of being settled by arbitration. In any event, the question of whether or not a specific subject matter constitute or not public policy should be, in our view, for the arbitrator to decide.
Regarding the latter -Article 1656-, concluding that this provision precludes parties from waiving their right “to appeal” awards, would go against (i) the CPCCN, which even though it does not allow parties to waive the right to request annullment of the award, it does allow such parties to waive their right to appeal awards; and (ii) the international principle of finality of arbitral awards.
Since Article 1656 of the Code deals expressly with the courts’ power to revise awards when it is called to decided upon its validity, the last sentence of this provision -which states that parties cannot waive their right to challenge awards in court (without specifying the nature or scope of such challenge)- in our opinion should be understood that it only refers to the parties’ right to (i) challenge the validity of the award or (ii) ask for clarifications concerning awards; and not to revising the merits of those decisions.
Otherwise, allowing courts to revise every arbitration award would lead to the absurd result that every dispute would eventually finish being litigated in courts by way of appeal. Such result would go contrary to the basic idea of why any party decides to arbitrate its disputes -as opposed to litigating them- in the first place. And further, sustaining that all awards issued under the new Code would be subject to appeal, would go against federal legislation currently in force in Argentina (“Acuerdo de Arbitraje Comercial Internacional del Mercosur”), which provides that in an international arbitration award where such legislation is applicable (for example, if the contract has one point of contact with Argentina and the arbitration seat is in this country), unless express agreement between the parties providing otherwise the only available remedy would be the annullment request.
Overall, the Code incorporates at last lots of useful and well accepted international principles of arbitration. However, to the extent that the above problematic provisions are not interpreted correctly by future judiciary decisions, we consider that they could be potentially dangerous for the present and future development of arbitration in Argentina.
[1] Santiago Capparelli is a partner in Baker & McKenzie’s Buenos Aires office. He practices litigation, alternative dispute resolution, international and domestic arbitration and has represented parties in ad hoc arbitral proceedings, as well as in proceedings administered by the ICC and local arbitral institutions, such as the Buenos Aires Stock Exchange Market Arbitral Tribunal, the Buenos Aires Grain Market Arbitral Tribunal and the Private Center for Mediation and Arbitration.
[2] Julian Bordacahar is an associate in Baker & McKenzie’s Buenos Aires office. He practices litigation and international and domestic arbitration. He has been involved in proceedings administered by the ICC and local arbitral institutions, such as the Buenos Aires Stock Exchange Market Arbitral Tribunal. He teaches both International Commercial, and Investment Arbitration, at the School of Law of the University of Buenos Aires.
[3] Código Procesal Civil y Comercial de la Nación, [National Code of Civil and Commercial Procedure], Law No. 17.454, Sept. 20, 1967, as restated in Decree 1042/1981, Aug. 18, 1981, et seq.
[4] Antonio Boggiano, “Apectos internacionales de las reformas al Código Procesal Civil y Comercial de la Nación (1° parte)”, ED 90-880, cited by Julio César Rivera, “Arbitraje Comercial,” p. 32.
[5] Similar in nature to the “Terms of Reference” described in Article 18 of the ICC Rules, http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/rules_arb_english.pdf.
[6] Corte Suprema de Justicia de la Nación [CSJN] [National Supreme Court of Justice], 1/6/2004, “José Cartellone Construcciones Civiles S.A. v. Hidroeléctrica Norpatagónica S.A. o Hidronor/proceso de conocimiento.”
[7] CSJN, 24/8/06, “Cacchione, Ricardo Constantino c/ Urbaser Argentina SA”; CSJN, 11/3/08, “Pestarino de Alfani, Mónica Amalia c/ Urbaser Argentina SA”.
[8] Incorporated into domestic Argentine law by Law No. 25.223.
