314/24, 12556 AM Inside Arbivation: Enforcement of foreign arbivaon awards in Latin America | Herbert Smith Freehills | Global law fm Tare elite ed ae co eRe tee a aR eta) America 7 Feb 2019 Insight! Global Article Enforcement proceedings can be of te utmost significance in international aration. Ia losing arty does not make voluntaty payment after an award has been made against if the award will be meaningless it cannot then be enforced against the losing party's assets. To ‘void uch a pyrthie victory domestic fats and international reaties- of which the New York Convention on the Recognition and Enforcement of Foreign Aroral Awards 1958 (‘New ‘York Convention’ o: the “Convention's the most important and successful instrument provide for enforcement mechanisms which assist the prevallng party to colacs the awarded sums When negotiating an arbitration agreement the partes remove the resolution of any potential d'spute from national courts, However, at the stage of enforcement, hey cannot De Avoided: the local court ofthe place where the losing party has assets have a fundamental role to play The New York Convention ‘The New York Convention offers a very straightforward method to ensure the enforcement ‘of foreign arbitral awards provided that its requirements are met. Although the losing party ‘may abjectto the attempted enforcement ofthe award, the grounds to resist enforcement nde the New York Convention are very lmited. In particular, Articles Vt andl 2) ofthe Convention provide that recognition and enfarcement may be refused! if ‘+ the arbitration agreement is not valid or the parlies tothe agreement were under some neapacty + the respondent was not glven proper notice of the appointment ofthe arbitratar oF of the proceedings or was otherwise unable to present ts case; 1 the award deals wth a citference not contemplated by or outside the terms or beyond the scope of the submission to arbitration: + the composition ofthe arbitral authority or the arbitral procedure was notin accordance withthe agreement of the partes, of, absent such agreement, notin accordance with the law of the country where the arbitration took place; ‘tye award is not yet binding onthe parties, orhas been set aside or suspensed atthe seat of the atbitation; 1 the subject matter of the aispute is not arbivable under the law ofthe enforcement country: or + ‘enforcement would be contrary tothe publc policy ofthat county hips: herbertsmithteshilsconvinsights:2018-02/nside-arbitration-enforcementolforsign-arbivation-awards-inatin-america wr314/24, 12556 AM Inside Arbitration: Enforcement of foreign arbitration awards in Latin America | Herbert Smith Fr ils | Global aw frm Despite these limited grounds, there are eases where a party seeking to resist enforcement ‘may turn the enforcement proceeding into an adversarial process that can be bath costly land time concuming The enforcement framework in Latin America In general, Latin America has been a late-adopter ofthe New York Convention compared to ther regions ofthe world* k might be for that reason that in some Latin American |uvisdietions local courts have applied the Convention alongside with provisions of damestic law. even when these provisions should not play a role inthe enforcement of reign arbitral ‘awards, I some worst case seenatios, some domestic courts have “Yorgotten* about the [New York Convention's existence or interpreted its provisions incorrectly, Being aware of the approach of specific domestic courts to the New York Convention, and the application can be key to a successful outcome for aellent in enforcement proceedings In Latin America, tis also crucial to be aware of procedural and substantive requirements necessary ina specifeuriciction ae well as other practicalties characterising the enforcement process there Comparison In this article we have selected five jurisdictions in Latin America (Brazil Argentina, Chil Colombia, and Peru}? whose courts have been regularly asked to enforce foreign arbitral awards and sought to highlight the key features of the enforcement process in each Jurisition From a comparative standpoint: ‘Each of these jurisletions have recently madernises ther arbitration laws, promulgating tion laws that are based (to greater or lesser extent on the UNCITRAL Modi! Law on International Commercial Arbitration ‘UNCITRAL Medel Law’) This means that even if local cout falls to apaly the New York Convention when deciding a recognition and enforcement application, there is some fall back as the madern domestic legistation reflects the provisions ofthe Convention, ‘The normative framework suggests that these jursletions share a commitment to the regime of enforcement and recognition of arbitral awards. In fact, there is very ttle Uitference between these counties in terms ofthe nature of te recognition and ‘enforcement process and the grounds to oppose toi '+ Whatever differences exist terms of enforcement, these relate more to the local legal regime dealing with the attachment or hguidaton of assets * ‘Although the limited grounds to resist enforcement operate as a way to limit the scope of any review ofthe ments ofthe award, there is tll a window for the local courts to dot ‘especally considering that issues such as arbitrabllty and public policy have to be assessed by the enforcing courts according to thelr own laws. Most ofthe jurisdictions have recently attempted to limit the scope of these grounds by defining public poley ‘rom a restrictive perspective, onl covering the most basic and fundamental principles of the legal system, ‘tis also remarkable that each ofthese jurisdictions {with the excestion of Argentina) stl require decision on recognition by a ctferent court before any enforcement order is, Issued, This isa procedural step that most “arbvationstiendly” jurisdictions around the World do not require ands tke to cause delays when the successful paty attempts to collect the sum awarded BRAZIL Domestic legal framework for enforcement + Braziian Acbitration Act (1986) — Articles 34 to 40 * Brazlian Code of Civil Procedure - Articles 513, S1S(VI) and (Vil, $23 to 538 *# Internal Rules of the Superior Court of Justice Competent court ‘The Superior Court of Justice (‘STU recognises the foreign award hips: herbertsmithfeehils.convinsights:2019-02/nside-arbtration-anforcemant-of-forign-arbivation-awards-inatin-america an314/24, 12556 AM Inside Arbitration: Enforcement of foreign arbitration awards in Latin America | Herbert Smith Fr ils | Global aw frm Substantive requirements ‘+The award must have been issued by @ competent authorty and upon a valid arbitration ‘agreement * Parties must have been properly served with a summons ‘+ The award must bea final and binding decision ‘The award must not vielate national sovereignty human ights oF publi policy Procedural requirements + ‘The award must be authenticated by the Brazlan consulate and accompanied by an official or sworn translation ony in cases where the 1961 Hague Convention does not aph® = Upéated statement ofthe amount due 1 Allnecessary documents lo prove the sums awarded Adversarial proceeding? + Yes —2 party can resist enforcement on very limited groundss Public policy standard ‘ Resticted version of public policy —the fundamental principles af its including the pelea, legal, moral and economic aspects ofthe country ‘+ Ithas tobe interpreted in harmony withthe best international standards, voiding any reference to an internal perspective isdiction, Arbitrability requirement * Limited te cases ineving negotiable rights" drt disponivels). Therefore, certain matters may not be arbitrated even by agreement ofthe parties (family matters, certain public policy matters ane, arguably, individual emplayment-elated matters) ‘© However, most commercial disputes may be arbitated, including many cisputes involving ‘government-contrlled entities CHILE Domestic legal framework for enforcement + Chilean Law on Intemational Commercial Arbitration ~ Aicles 35 and 36 + CuilProcedural Coo Competent court + The Chilean Supreme Court recognises the foreign award by exequatur + Ater recognition, the cour that would have had jrtsdtion to rule onthe case fthat ‘caze had been brought in coutnstead af in abitation is competent for enforcement Substantive requirements +The requirements are identical othe New York Convention Procedural requirements + Original ardor a ly ceried copy + The orginal arbivation agreement ora ly caries copy must be submited Adversarial proceeding? + Yes ~during the exequatur proceedings Public policy standard + Restctes version of puble pai — fundamental basic rules ofthe country Arbitrability requirement + Parties cannot submit to arbitration esputes related to family law issues, felonies or Criminal velations; cases that should be hearé by specific lower courts; and all matters in hips: herbertsmithfeehils.convinsights:2019-02/nside-arbtration-anforcemant-of-forign-arbivation-awards-inatin-america314/24, 12556 AM Inside Arbitration: Enforcement of foreign arbitration awards in Latin America | Herbert Smith Fr ils | Global aw frm + Cases involving public pley issues are not aibitrable such as capacity or eivl status antivust; emaloyment and labour law; disputes between legal representatives and individuals the former act on behalf of and disputes concerning foreign investment agreements exectied under Chilean Foreign Investment Salute coLomata Domestic legal framework for enforcement ‘Colombian Arbitral Statute (2012) - Ailes tH to 116 + General Code of Procedure Competent court + Chil Chamber ofthe Supreme Cour of Justice + Thitd section ofthe Administrative Chamber of the Counci of State, when public entities lor entties with administrative functions are partes to the dispute Substantive requirements 1+ The requirements are identical to the New York Convention Procedural requirements + Original ore copy ofthe aware, along with 2 translation of the award in Spanish + Case law has recently requested the original arbitration agreement ora duly certified copy under Article IV ofthe New York Convention Adversarial proceeding? + Yes —2 party can object to enforcement on limited grounds identicalto te New York Convention ‘+ However the courts also allowed to refuse enforcement under certain circumstances, such as arbitrabiliy and public policy Public policy standard + Restictec version of pubic potcy —most basic and fundamental principles of Colombian juridical institutions Arbitrability requirement ‘The principle is that elsputes related to non-mandatory waivable rights are arbirable «The law also provides for specific matters that cannot be settled by arbitration: disputes ‘hat involve marta status, the legalty of administrative acts, inzolvency anc some issues regarding antitrust law and intelectual property. Domestic legal framework for enforcement ‘Peruvian Law on Arbitration (2008) — Articles 7410 77, + CullProcedure Code Competent court + The Civ Court specatised in commercial matters recognises the foreign award + ter recognitin, the Fist Instance Commercial Cour is competent for enforcement Substantive requirements + The requirements are identical othe Nev Yor Convention but with fries clteations 5 to their inerpretation® Procedural requirements + Original or copy ofthe award, authenticated according tothe laws ofthe place where the award was rendered, and certified by a Peruvian diplomatic or consular official + the award was not rendered in Spanish. translation should be provided hips: herbertsmithfeehils.convinsights:2019-02/nside-arbtration-anforcemant-of-forign-arbivation-awards-inatin-america an314/24, 12556 AM Inside Arbitration: Enforcement of foreign arbitration awards in Latin America | Herbert Smith Fr ils | Global aw frm Adversarial proceeding? + Yer —2 party can object to enforcement on limited grounds identicalto the New Yark Convention ' The cours also allowed to retuse enforcement under certain circumstances, such as arotrabilty and public poliey Public policy standard + Restictes version of public policy - a group of principles and institutions that are Considered essential inthe organisation ofa state ane that inspite Its legal system Arbitrability requirement Mattes not of "ree disposition’ of the partes (matters ike criminal law) cannot be aroirated, Convactual disputes (even with the state) are af ree disposition’ and ean be aroitated. + Furthermore, the Iw provides that clsnutes on matters autnorized by law or intemational ‘eeaties or agreements can be referred ta arbitration. This provision leaves the door open to national laws and treaties to provide fer alraion on certain matters even If they are not freely cisposable by the partes. ARGENTINA Domestic legal framework for enforcement + Argentinean Law on Intemational Commercial Arotration (2018) - Articles 102 to 105, Competent court + Fits Instance Commercial Courts ‘Substantive requirements ‘The requirements are identical to the New York Convention Procedural requirements + Original aware or duly certited copy ‘the award was not rendered in Spanish, the court may request the party to submit a ‘eanelation Adversarial proceeding? + Yes —a pany can object to enforcement on limited grounds identicalte the New York Convention 1+ However the courts also allowed to refuse enforcement under certain circumstances ‘such as arbitrabily and public policy Public policy standard * Resticted version of public policy — the basic and fundamental principles that underpin the domestic legal system + Inthe past courts have included in the public polley exception norms that were not specially protected by ether courts in the region (fo instance, an award imposing @ particular type of interest has been considered against Argentinean public policy). This ractice has allowed courts to exert a certain control over foreign awards. However courts have recently reversed these types of decisions with the priority given to aroiration through the enactment af a new arbitration In passed In 2018 based on the UNCITRAL Model Law. Arbitrability requirement + The following matters eannot be submited to ardtraion: matters refering 0 the eli status or capacity of persons, family afar, these invaling the rights of users and ‘consumers, contracts of adhesion and! those derived from labour relations, those involving rights in relation to properties located in Argentina, maters related to the valcty of registrations made ina public register in Argentina; and issues regarding hips: herbertsmithfeehils.convinsights:2019-02/nside-arbtration-anforcemant-of-forign-arbivation-awards-inatin-america314/24, 12556 AM Inside Arbivation: Enforcement of foreign arbivaon awards in Latin America | Herbert Smith Freehills | Global law fm ‘Furthermore the domestic code of Civil and Commercial lave which governs domestic ‘araitrations pravides that matters afecting public policy issues and cisputes wth the state are not arbitrable. These provisions have been subject to strong crtc'sm and the Government has sent a billto the parament to remove ther. In any ease, it's tnetear i these provisions would be applicable to international arbitration ani these provisions Were ta be tested inthe courts its tobe expected that they would be interpreted restrctvel inline withthe pro-arbitration trend that courts have recently ‘adopted in Argentina, The future ‘The adoption ofthe New York Convention as well as the fact that domestic arbitration laws In these jursdictons are based on the UNCITRAL Model Law demonstrate the legislative cottons already made by these Latin American urseetions to become an arbitration tiendly ‘There is more to be done, particulsty in cutting down the procecural steps involved in ‘enforcement and in improving jusieal education on the enforcement process in particular ‘on concepts such as public alley and araitrabilty; but most ofthe Latin American counties {are generally onthe right tack following the global maderisation trends in arbitration Notes: 4. New York Convention an the Recognition and Enforcement of Foreign Avbiral Awards (adopted 10 June 1958, entered into force 7 June 1958), 2.Far instance, Chile rallied the Convention on 4 September 1975; Colombia on 25 September 1875; Perv on 7 July 1988; Argentina on 18 March 1988; ond Brazil on 7 June 2002. In adaition to the New York Convention, Latin Ametican countries have ratified the Inter Amesican Conver n of 30 January 1875, lon on International Commercial Arita 3. All partes o the New York Convention, as mentioned In footnote 2. 4. Attachment proceesings are tiggeree by recognition and enforcement orders. Once the ‘enforcement is granted, the courts willhave to atach the enforcement debtor’ assets. These proceedings are governed not by national arbitration laws but local procedural rues, \hich provide forthe requirements for enforcement measures against immovable and ‘movable property. These rules certainly vary rom one jurisdiction tothe other~ and even Within each jurisdiction 5. The Hague Convention abolishes the requitement of legal'saion for foreign public documents, Therefore, where aviards are issued in countries that are signatories of the 1961 Hague Convention, there is no need to authenticate the award, but simply to apostle 6. Such as improper service of the arbitral proceedings; the debt arising from the award has ot yet accrued: there isan error in the seizure of assets ora wrongful evaluation of hese assets lack of standing to enforce the award lack of jurisdiction for enforcement of the award (Article 525 of the Brazilian Code of Cv Procedure) 7 For instance, a party cannot invoke thatthe arbitration agreement is not vais or the pares tothe agreement were under some incapacity, or that it was net given proper netice fof the appointment ofthe arbitrator or ofthe proceedings ar was otherwise unable to presentits cate i having appeared before the arbitral tribunal it id not raise t during the arbitration proceedings (Article 75, paras. 4 and 5 ofthe Peruvian Law on Arbitration, Mote Inside hips: herbertsmithfeehils.convinsights:2019-02/nside-arbtration-anforcemant-of-forign-arbivation-awards-inatin-america314/24, 12558 0M Inside Arbitration: Enforcement of foreign abitation awards in Latin America | Herbert Smith Frees | Global law fm Key contacts Lucila Marchini Associate, New York ©®@ View profile > Legal Notice The contents ofthis publication are for reference purposes only and may not be current as a the date of accessing this publication. 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