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International Arbitration Yearbook

Baker McKenzie International Arbitration Yearbook 2020-2021 – Venezuela

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VENEZUELA

Eugenio Hernández-Bretón, María Eugenia Salazar, Gabriel De Jesús, Héctor Martínez and María Alejandra Ruiz.

A. LEGISLATION AND RULES

A.1       Legislation

International arbitration in Venezuela continues to be governed by the Commercial Arbitration Law, published in the Official Gazette of the Bolivarian Republic of Venezuela No. 36.430 on 7 April 1998. No legislative amendment has been made since.

In addition, Venezuela is a contracting State to a number of arbitration treaties such as the 1911 Caracas Convention, the 1958 New York Arbitration Convention, the 1975 Panama Arbitration Convention, and the 1979 Montevideo Arbitration Convention, and to more than 20 Bilateral Investment Treaties (BIT) that in some cases set forth alternative dispute resolution mechanisms, whereby a foreign investor whose rights under the BIT have been violated by Venezuela could have recourse to international arbitration, often under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) or by an ad hoc arbitral tribunal under the Arbitration Rules of the United Nations Commission International Trade Law (UNCITRAL), rather than suing the Venezuelan courts.

Because of the Covid-19 pandemic, the main Venezuelan arbitration centers have decided to offer interested parties the possibility to solve their controversies using electronic means. They have allowed their users to file their requests and briefs and conduct hearings through electronic means.

A.2       Institutions, Rules and Infrastructure

The main two arbitration centers in Venezuela are the Caracas Chamber Arbitration Center (CACC) and the Business Center for Conciliation and Arbitration (CEDCA), both have their head office in the city of Caracas. Nonetheless, there are other organizations at the regional level that provide support to the CACC and CEDCA in case it is necessary to administer some arbitration outside the city of Caracas. Both arbitration centers have well-equipped facilities for conducting in-person or online hearings.

On 16 July 2020,  due to the Covid-19 pandemic, the CACC Board of Directors approved an amendment of the 2018 Rules for online procedures in order to establish a secure, effective and quick communication between the parties, the arbitrators, and everyone involved in the proceedings.

The CEDCA Arbitration Rules were modified on 19 February 2020. On 13 May 2020, due to the pandemic, the CEDCA published a guide in order to include the possibility of conducting arbitration through electronic means. CEDCA also has a set of rules for Dispute Boards specifically designed for engineering and construction disputes.

Venezuela denounced the ICSID Convention on 24 January 2012, effective on 25 July 2012, which now renders ICSID unavailable to foreign investors. However, the ICSID Additional facility and ad hoc arbitral tribunal under the Arbitration Rules of UNCITRAL remains as alternative dispute resolution mechanisms under the Venezuelan BITs.

B. CASES

Constitutional Chamber of the Supreme Court of Justice Vs. CEDCA[1]

For the first time, the Constitutional Chamber of the Supreme Court of Justice issued a ruling on an avocamiento request in respect of an ongoing arbitration procedure. The avocamiento is an exceptional remedy that allows the Supreme Court of Justice to take over ongoing litigation that has been seriously affected by procedural irregularities and to decide the case on the merits if they consider it appropriate.  The CEDCA case involves an arbitration conducted under the CEDCA Rules in Caracas. The arbitral tribunal issued a “draft award,” in accordance with the CEDCA Rules, with an invitation to the parties to submit observations thereon. However, one of the parties filed a request for avocamiento before the Constitutional Chamber of the Supreme Court of Justice before the award was published and thus final.  Following this request, the Constitutional Chamber decided to suspend the arbitration, request the arbitration docket from CEDCA in order to determine whether the avocamiento should move forward.

 

[1] Constitutional Chamber of the Supreme Court of Justice. Ruling No. 042. February 20, 2020.

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Author

Eugenio Hernández-Bretón is an of-counsel in Baker McKenzie’s Caracas office. His practice areas are energy and natural resources, international and domestic arbitration, and litigation. He has acted as arbitrator and appeared as counsel and expert witness on issues in international law, private international, and Venezuelan law.

Author

Maria Eugenia Salazar is a partner in Baker McKenzie’s Caracas office. She advises on international arbitration and regulatory matters, with a focus on telecommunication and mining, and oil and gas. She has experience with local regulatory bodies, state-owned companies, and litigating before the Venezuelan Supreme Court and tax courts. She has also been recognized by Chambers Latin America as a leading lawyer in her field.

Author

Gabriel De Jesús is a partner in Baker McKenzie's Caracas office. He focuses on dispute resolution and commercial litigation and has been recognized by Chambers Latin America as a leading lawyer in the field. He is an associate litigation professor at the Universidad Monteávila and Universidad Metropolitana in Caracas.

Author

Héctor Martínez is a senior associate in Baker McKenzie´s Caracas office. He focuses on investment protection and investment arbitration procedures under the CIADI and CNUDMI Rules. He has participated in arbitration procedures representing foreign companies before CIADI and CNUDMI tribunals.

Author

María Alejandra Ruiz is a Mid-Level associate in Baker McKenzie's Caracas office. She focuses on dispute resolution and commercial litigation and has been recognized by Legal 500 as a Rising Star in the field. She has extensive experience in the preparation and follow-up of litigation and arbitration matters. She is also an associate litigation professor at the Universidad Monteávila and has been recognized by Chambers and Partners in the category of “Diversity & Inclusion Future Leader (South America)".

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