Cross-Speech in Contract Reality and

Non-Signatory Arbitration in Latin America:

Article 14 of the Peruvian Arbitration Law &
TSG v. Pesquera et al

Anthea Jay Kamalnath1

April 25, 2021

I. INTRODUCTION

As little commentary exists in English, it is the author’s hope that this note on the extension
of the arbitration agreement to non-signatories in international arbitration in Latin America in light
of the 2008 Peruvian “progressive” arbitration reforms will assist international practitioners and
academics alike. Section II considers comparative theories of extension with a specific focus on
French arbitral practice as transposition has been the means of construction for Latin America’s
normative framework of implied consent. Section III presents as case studies (i) the unique Article
14 of the Peruvian Arbitration Law (PAL) No. 1071 (2008), the only arbitral statute in the world
expressly providing for non-signatory extension of the arbitration agreement, and (ii) TSG Peru
SAC v. Pesquera Industrial Chicama et al (2009), the first case to consider Article 14 PAL
showcasing the transposition errors that may arise as transnational norms are articulated across
continents to national legislatures, arbitral tribunals, and annulment courts. Section IV concludes
that progressive statutory codification, overly reliant on foreign doctrine in its expansion of arbitral
scope, will often be lost in translation by reviewing domestic courts. Thus, the Latin American
theme of “contract reality” results in a cross-speech, not unique to the region given the very nature
of transnational norms, which fails to speak to commercial parties.

1
Anthea Jay Kamalnath is an attorney licensed to practice in New York and California and a MIDS LL.M. Candidate
(2021) at the Geneva Center for International Dispute Settlement, a joint program of the Graduate Institute for
International and Development Studies and the University of Geneva Law School. This note was prepared for the
MIDS Intensive Course “International Arbitration in Latin America” taught by Professor Eduardo Silva Romero.

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 II. LOST IN TRANSLATION: COMPARATIVE THEORIES OF
NON-SIGNATORY ARBITRATION

Extension as Transposition in Latin America

Notable in the Latin American trend to “constitutionalize” international arbitration is the

transposition of French arbitral jurisprudence. In the context of non-signatory arbitration, the Latin
American normative framework is built on the French doctrine of implied consent. The landmark
case Dow Chemical first articulated the French approach.2 Carving out the “group of companies”
doctrine, the Tribunal focused on (i) the participation of non-signatories in the negotiation and
conclusion of the contract containing the arbitral clause and (ii) the existence of sufficiently close
ties within the corporate group. This latter requirement was chipped away with the 1997 Jaguar
decision which adopted an activities-focus in further development of this doctrine of implied
consent. 3 In a subsequent line of cases, the Paris Court of Appeal added an awareness requirement
to this participation-based approach; it must be established that the non-signatories “were aware
of the existence and the scope of the arbitration clause.”4 A coup de grâce was delivered to this
subjectivist approach in the Dallah case.5 The Paris Court of Appeal focused on the participation
of Pakistan in permitting extension of the arbitration agreement signed between Dallah and the
dissolved trust with the stated objective of avoiding a denial of justice.6

III. CASE STUDY: CONTRACT REALITY IN

ARTICLE 14 OF PERUVIAN ARBITRATION LAW

Article 14 of the Peruvian Arbitration Law

In 2008, Peru undertook reforms to transition from a dualist to monist system in an effort
to incorporate international standards into a single system regulating international and domestic
arbitration. Taking the UNCITRAL Model Law (1985) with amendments as adopted in 2006 as

2
Dow Chemical v. Isover Saint Gobain, ICC Case No. 4131, Interim Award, Sept. 23, 1982.
3
Philippe Renault v. Sociétés V 2000 (Jaguar France), Cour de cassation, First Civil Chamber, May 21, 1997 (No.
95-11428).
4
Société Korsnas Marma v. Société Durand-Auzias, CA Paris, November 30, 1998; Société Ofer Brothers v. The
Tokyo Marine and Fire Insurance Co Ltd et autres, CA Paris, February 14, 1989; Société V 2000 v. Société Project
XJ 220 ITD et autre, CA Paris, December 7, 1994; SMABTP et autre v. Société Statinor et autres, CA Paris, March
22, 1995.
5
Pierre Mayer, “The Extension of the Arbitration Clause to Non-Signatories – The Irreconcilable Positions of French
and English Courts,” American University International Law Review, Vol. 27, No. 4 (2012).
6
Gouvernement du Pakistan, Ministère des affaires religieuses v Société Dallah Real Estate and Tourism Holding
Company, CA Paris, February 17, 2011 (No. 09-28533).

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its blueprint, Legislative Decree No. 1071 or the Peruvian Arbitration Law (PAL) promulgated
new and innovative features. Article 14 PAL is the only arbitral statute in the world to expressly
provide for the extension of the arbitration agreement to non-signatories.7
The first sentence of Article 14 PAL extends “the basic paradigm of mutual asset to
situations in which the agreement shows itself in behavior rather than words.”8 Its clauses of
“active and decisive participation” and the “negotiation, execution, performance, or termination”
form the method of evaluation for a Tribunal’s finding of “consent to submit to arbitration.” This
emphasis on the behavior of the non-signatory draws heavily from the French participation-based
approach of Dow Chemical and Jaguar to implied consent. Carlos Alberto Soto Coaguila and
Alfredo Bullar Gonzalez note that Article 14’s mandate to the Tribunal to consider “good faith”
was added by the legislative commission at the last minute as a gap-filler to cover “cualquier olvido
o vacío que la norma pudiera dejar pero la realidad pudiera demander.”9 The reference to claims
related to “any rights or benefits from the contract” of the second sentence of Article 14 PAL
captures cases of pacta in favorem tertii, subrogation, and succession.10 As Eduardo Silva Romero
observes, these un faisceau d’indices point to a “contract-reality” theory.11 The reality of the
contract and relations between parties takes priority over form.12

TSG Peru SAC v. Pesquera Industrial Chicama et al (2009)

TSG Peru SAC v. Pesquera Industrial Chicama et al (2009) was the first case to consider
Article 14 PAL. Although the underlying supply contract signed by TSG was with Harinas
Especiales SAC, the arbitral Tribunal joined non-signatories of the Pesquera corporate group as
respondents on the grounds that these companies were “economically linked and acted
fraudulently.”13 In its reasoning, the Tribunal did not point to a legal basis in PAL justifying

7
Cecilia O’Neill de la Fuente and José Luis Repetto Deville, “Main Features of Arbitration in Peru,” ILSO Journal of
International & Comparative Law, Vol. 23, No. 3 (2017), pp. 425-441 at 430.
8
William Park, “Non-signatories and International Arbitration: An Arbitrator’s Dilemma,” in ed. Permanent Court of
Arbitration, Multiple Party Actions in International Arbitration, Oxford University Press (2009), pp. 3-33 at 6; Note
also Article 13(6) PAL expressly provides for incorporation by reference which also allows a non-signatory to arbitrate
against a party with whom it has entered into a separate contract which refers to and incorporates the arbitration
agreement.
9
Carlos Alberto Soto Coaguila and Alfredo Bullar Gonzalez, Comentarios A La Ley Peruana De Arbitraje, Instituto
Peruano de Arbitraje Comercial y Arbitraje de Inversiones (2011) at p. 213 (“any oversight or vacuum that the norm
could leave but reality could demand).
10
Jesús Córdova Schaefer, “¡Yo no firme nada!: Los no-signatarios del convenio arbitral. La estructura del Artículo
14 de la Ley Arbitral Peruana,” Themis: Revista de Derecho, N° 71 (2017), pp. 69-89 at 84.
11
Eduardo Silva Romero, “El artículo 14 de la nueva Ley Peruana de Arbitraje: Reflexiones sobre el contrato de
arbitraje-realidad,” Lima Arbitration N° 4, (2010/2011), p. 54.
12
Cristián Conejero Roos and René Irra de la Cruz, “La extension del acuerdo arbitral a partes no signatarias en la ley
de arbitraje peruana: algunas lecciones del derecho comparado,”Lima Arbitration N° 5, (2012/2013), pp. 56-91 at 61.
13
Jesús Córdova Schaefer, ¿Arbitrar o no arbitrar? He ahí el dilemma: la vinculación del convenio arbitral a los no
signatarios, Thesis for Law Degree, Pontificia Universidad Católica del Perú: Facultad de Derecho (2013), pp. 1-390.

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piercing the corporate veil, admitted evidentiary deficiencies in its determination of this “link”
between the companies, and ordered additional investigations into the respondent companies.14
The respondent non-signatory companies filed an appeal for annulment pursuant to Article 63 PAL
on the grounds of violation of due process. Finding manifest overreach by the Tribunal, the
Superior Court declared, “Nadie puede hacerse por sí mismo juez de nadie.”15 The Superior Court
noted the absence of the doctrine of piercing the corporate veil for the purpose of determining
fraudulent conduct in the text of Article 14 PAL16 and, peculiarly, the lack of consent of the parties
to permit the Tribunal to conduct such an analysis. Therefore, it found the joinder of non-signatory
respondents to fail due to lack of consent as “la imposición de este regimen procesal solo puede
verse justificada cuando es la propria persona la que se ha sometido a él.”17 The Superior Court
declared the joinder an “un acto vulneratorio e inconstitucional”18 and annulled the award.
Schaefer criticizes the judgment for misconstruing the ambit of the Tribunal’s compétence
de la competence by forgetting the power of jurisdictio, inherent to judges and arbitrators alike, is
to be distinguished from the exercise of coertio and executio which lie beyond a Tribunal’s reach.19
Jurisdictio finds textual expression in Article 67 PAL which grants arbitrators discretion in their
decision-making. Similarly, the Superior Court confuses the concepts of third parties and non-
signatories in its analysis.20 William Park and Bernard Hanotiau blame this conceptual misstep on
the misspeech inherent to characterizing such questions of the scope ratione personae of an arbitral
clause as an “extension.”21 To speak of “extension” implies, incorrectly, imposing a duty beyond
the circle of the consent of the parties. A third party consents to joinder a posteriori whereas a
“less-than-obvious”22 non-signatory is within the circle of consent to arbitral jurisdiction prior to
the constitution of the Tribunal. Confusing the latter for the former results in the Superior Court’s
ultimate erasure of the doctrine of implied consent embodied in Article 14 PAL.

IV. CONCLUSION

The underlying irony of Article 14 PAL and TSG v Pesquera et al is that pioneering and
progressive statutory language may give rise to restrictive interpretations, like that of the Peruvian

14
Ibid, 314
15
Ibid, 315. Exp. N° 00451-2009. Fifteenth Ground. (“No one can make himself a judge of anyone.”)
16
Exp. N° 00451-2009. Twenty-first Ground.
17
Ibid (“the imposition of this procedural regime can only be justified when it is the person himself who has submitted
to it.”)
18
Ibid (“an infringing and unconstitutional act”)
19
Ibid 318
20
Ibid 315
21
Park, supra note 8; Bernard Hanotiau, “Multiple Parties and Multiple Contracts in International Arbitration,” in ed.
Permanent Court of Arbitration, Multiple Party Actions in International Arbitration, Oxford University Press (2009),
pp. 35-68 at 42.
22
Park, supra note 8, 4.

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Superior Court, which risk unravelling time-honored doctrines such as the theory of implied
consent. “Contract reality” is thus lost in translation for commercial parties seeking to extend the
arbitration agreement to non-signatories. This cross-speech is not unique to Latin America and
extends across common and civil legal systems23 to the range of theories of non-signatory
arbitration24 which are applied with varying degrees of flexibility.25 Inconsistency and
incoherency may be unavoidable as transnational norms by their very nature draw from a
multiplicity of legal systems, histories, cultural traditions, and languages. This dilemma inherent
to international arbitration may be better understood by one philosopher’s lament, “I only have
one language, yet it is not mine.”26

23
Gary Born, International Commercial Arbitration 2nd edition, Kluwer Law International (2014), pp. 1418-501.
24
These include (i) implied consent, (ii) proprietary acts, (iii) estoppel, (iv) chain of transactions, (v) representation
or agency, (vi) incorporation by reference, (vii) group of companies, (viii) piercing the corporate veil or alter ego, (ix)
assignment or novation, (x) transfer of obligations, and (xi) denial of justice.
25
Eduardo Silva Romero and Luis Miguel Velarde Saffer, “The Extension of the Arbitral Agreement to Non-
Signatories in Europe: A Uniform Approach?”, American University Business Law Review, Vol. 5, No. 3 (2018).
26
Jacques Derrida, Le monolinguisme de l’autre: ou la prothèse d’origine, Editions Galilée (1996) at p. 2.