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A Step Backwards in Terms of Correct Case Law? - International Law Office

International Law Office

Arbitration & ADR - Argentina

A Step Backwards in Terms of Correct Case Law?

July 31 2008


On February 28 2008 Division D of the Commercial Court of Appeals upheld the first instance decision rendered in Rivadeneira Hugo Germán v ABN Amro Bank NA,(1) which had rejected the lack of jurisdiction objection filed by the defendants due to the existence of an arbitral clause agreed by the parties.(2)

On upholding the decision the court held that:

“arbitral clauses, constituting a waiver of the general principle that parties are subject to judicial jurisdiction for the settlement of any disputes, should be interpreted in a restricted manner.”

According to the court, arbitral clauses should be interpreted with respect both to matters over which arbitral tribunals may have jurisdiction and to what parties may conceivably understand or have understood when agreeing the arbitral clause.

Moreover, the court upheld the decision that the admissibility of arbitral clauses is limited to disputes dealing with the interpretation of contractual clauses or matters of fact, “excluding those events regarding matters of law or legal enforcement, which are exclusively restricted to judicial jurisdiction”.

Although to some extent the court admitted that arbitral clauses are contractual agreements to which parties must be subject as they are to the law itself, it declared that such clauses must be interpreted with regard to Article 1198 of the Civil Code.

Consequently, the court declared that due to the “unusual economic cataclysm which occurred [in Argentina] after the signing of the contract” (referring to what was agreed by the parties in 1999), it could not be considered that “the parties had decided to subject legal interpretation, other economic emergency dispositions and the calculation of damages to arbitral jurisdiction”. It concluded that:

“there were not enough elements to enable the tribunal to hold assertively, categorically and firmly that the parties had freely subjected an absolutely new matter to arbitral jurisdiction that had significantly shaken up the economic scheme of the contract.”

This decision is in line with the position assumed by some provincial tribunals(3) and moves away from other judicial rulings.(4) The varied criteria considered in case law inevitably create doubts regarding:

  • the validity of arbitral clauses agreed upon;
  • matters which may be subject to arbitration;
  • the degree of parties’ autonomy;
  • what may be interpreted by arbitral tribunals with equivalent jurisdiction to judicial courts; and
  • the effect that an unforeseeable contractual future context may have on the validity of arbitral clauses previously agreed by the parties.

Due to the uncertainty created by the so-called ‘context scenarios’ in the court’s decision, which apparently “set no clear limit and scope as to arbitral clauses”, it would be appropriate for the Commercial Court of Appeals to clarify its legal opinion with a reversal of the contradictory doctrine established by its divisions or for the Supreme Court of Justice to resolve the dilemma created by the Rivadeneira decision.

It would seem that the decision adopted in this case constitutes a step backwards in terms of correct case law.

For further information on this topic please contact Manuel J Mariño, María Laura Velazco or Dalma S Parisi at Marval O'Farrell & Mairal by telephone (+54 11 4310 0100) or by fax (+54 11 4310 0200) or by email (mjm@marval.com.ar or mlvel@marval.com.ar or dsp@marval.com.ar). The Marval O'Farrell & Mairal website can be accessed at www.marval.com.ar.

Endnotes

(1) Decision published in www.eldial.com on April 30 2008, Commercial Court of Appeals, Division D, February 28 2008.

(2) This case involved an arbitral clause included in a mutual fund management regulation.

(3) Civil and Commercial Court of Appeals of San Isidro, Division II, Peyras, Hernán Matías v Nordelta Constructora SA, dated December 21 2004. In that decision, Division II declared that an emergency decree could not be taken into account by parties on subscribing the arbitral clause and therefore the arbitral tribunal could not render an award related to the unconstitutionality of the devaluation of the Argentine peso and the pesification regime established by the enactment of Law 25.561.

(4) Commercial Court of Appeals, Division B, December 16 2005, Porcelli, Daniel v ABN Asset Management Arg SG; Commercial Court of Appeals, Division C, August 23 2006, Llanos, Miguel v Santander Investment Soc Gerente; SCJ, May 11 2004, Basf Argentina SA v Capdevielle Key y Cía SA.


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