Rafael Francisco Alves
June 2018, the international community celebrated the 60th anniversary
of the adoption of the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards 1958, known universally as the ‘New York Convention’. At the
time of writing, the New York Convention has 159 state parties,
including each of the developed and developing economies of Latin America. The
drafters of the New York Convention intended for such regime to provide for the
prima facie recognition and
enforcement of foreign arbitral awards, and for the exclusive grounds that
rebut this presumption, found in Article V of the Convention, to be construed narrowly
by national courts.
York University’s professor Franco Ferrari posed an interesting question from
which we have started this paper: How international should international
arbitration be? Should it be as international as possible, subject only to the recognition
of the applicable law chosen by the parties? While it is true that Article III
of the Convention provides that courts are to enforce awards in accordance with
their own rules of procedure, is it imperative that the standards of procedure
applied to such an exercise are international, and not domestic? Following Professor
Ferrari’s premise and the New York Convention’s purpose, it would be reasonable
to expect that procedure would be interpreted autonomously in relation to
domestic standards in order to achieve a uniform application of the New York
Convention among its signatories.
text is prepared with our reflections after the Conference on the Application
of the New York Convention in Latin America held at New York University School
of Law on September 13, 2018. In it, we examine examples of recent Latin
American case law and analyze the extent to which those courts apply the Article
V(1) New York Convention grounds for refusal of recognition/enforcement in
alignment to such autonomous international standards. Our focus in this paper is
directed towards the grounds enshrined in Articles V(1)(b) of the Convention,
which provides in general terms for the opposition to recognition/enforcement of
foreign awards on the grounds of denial of due process.
undertaking this task, we extracted case law materials from two primary
sources: the New York Convention Guide (www.newyorkconvention1958.org)
and the ICCA Yearbooks on Commercial Arbitration. A cursory glance at each of
these sources will reveal the limited nature of the published case law
emanating from Latin America. While there are 20 Latin American signatories of
the New York Convention, only 12 have had a decision regarding the application
of the New York Convention published in either of the aforementioned sources; and
of those 12 states, 7 have had less than five decisions published since
ratifying the Convention. Unsurprisingly, the states with the most published
decisions are among the most developed economies in Latin America, with the
Brazilian courts the most documented by far. With that in mind, we wish to
stress that this text does not purport to (i) analyze all of such decisions
exhaustively or even (ii) identify definitive trends throughout Latin America
as a whole. This text is merely designed to draw tentative conclusions based on
what presently exists in the public sources referred to in this paper.
I. The Relationship between Domestic
law and the New York Convention
international conventions create rights and obligations that primarily benefit and
oblige sovereign states directly. The New York Convention, however, has the
uncommon characteristic of being designed to apply in domestic fora. National
courts apply the Convention and it is for the benefit of private entities that
have been subject to a foreign arbitral award. Accordingly, while most
international conventions may carry out their effect while being left solely in
the realm of international law, it is essential that the New York Convention has
some means of translating into the domestic arenas of its signatories.
implementation of treaties into domestic law is not a uniform exercise across
the globe. Commentators commonly dichotomize the various legal systems into
‘monists’ and ‘dualists’. For a legal system to be ‘monist’ means that not all
treaties need be implemented into domestic law by a separate piece of domestic
legislation for a national court to be able to apply them, they must simply be approved
by the state. Such legal systems include, inter alia, those in Mexico, Chile, Colombia,
China, France, Germany, the Netherlands and Switzerland. In such states
national courts can be expected to apply directly those international
conventions that do not require implementation, unless the legislature decides
to enact an implementing law in any event. In a ‘dualist’ system, conversely, international
law must be positively ‘internalized’ into the domestic system in order for the
treaty to have any normative effects in the jurisdiction. Such systems include,
inter alia, those in the United Kingdom and nearly all other British
Commonwealth states, in addition to most Nordic states. Courts in dualist
systems do not apply the treaty directly – they apply the accompanying piece of
domestic law that implements it and will only ever use the treaty at most to
guide the interpretation of that domestic instrument. The position in Brazil is
the subject of substantial debate, as its ratification process of international
treaties requires approval by both the Brazilian legislative body and then the
President. Recent case law would seem to suggest, however, that Brazil is at
least a moderate monist system, if not dualist.
research reported in 2008 found that the clear majority of signatories viewed
the New York Convention as self-executing and therefore directly applicable in
their national courts, however for other states implementing legislation was
deemed necessary for the Convention to gain force in their jurisdictions.
The attitude of Latin American signatories has concurred with the majority,
however in accordance with international attitudes reinforced by UNCITRAL, many
have nevertheless given effect to the New York Convention by way of enacting
domestic legislation. In monist Mexico, for instance, the provisions of the New
York Convention are incorporated into the Mexican Commerce Code and accordingly
Mexican enforcing courts regularly apply the Commerce Code in lieu of the
Convention. In Brazil, the New York Convention was adopted in 2002 by a
Legislative Decree followed
by a Presidential Decree
promulgating the text of the Convention within the Brazilian territory.
However, Brazilian judges (particularly the Superior Court of Justice – STJ,
the competent court for the exequatur of foreign arbitral awards) continues to
apply, in general, Brazilian domestic law on arbitration (Law 9,307/96 – the
so-called Brazilian Arbitration Act), which provides for similar grounds for
the refusal of exequatur of arbitral awards.
Accordingly, even if the STJ still applies the Brazilian Arbitration Act in
most cases, it usually follows international standards when granting exequatur
to foreign arbitral awards, as will be detailed in this article.
in monist and dualist systems there exists differing degrees of attention to
the substantive provisions of the New York Convention. However, it should not
be forgotten that even in the most dualist systems there remains an irreducible
minimum applicability of the New York Convention, and similarly even in the
most monist systems domestic norms will be required to supplement the New York
Convention’s application. There will always exist lacunae in each law that the
other is required to fill. Where implementing legislation is unclear, in
accordance with Articles 31-33 of the Vienna Convention on the Law of Treaties
(to which all 12 of the aforementioned Latin American states are party, save
for Venezuela), courts are to look to the context of the New York Convention and
its text as a whole in forming an interpretation. Similarly, where a court
applies the New York Convention directly (as the Colombian courts regularly do),
we shall see below that ambiguities in the Convention may be resolved by
reference to the enforcing court’s most fundamental domestic standards. As
Professor Strong summarizes, the Convention does not “operate in isolation” –
but it is buttressed by “national arbitration laws, institutional rules, soft
law, and persuasive authority”.
II. The Enduring Prevalence of Party
V(1)(b) of the New York Convention, which like all the Article V(1) grounds may
only be submitted by the party opposing recognition/enforcement, provides that
the court may refuse to recognize and enforce the award if:
“(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”.
question of whether ‘proper notice’ has been given to the parties under Article
V(1)(b) was elucidated in the historic 1977 Mexican enforcement decision in Presse Office S.A. v Centro Editorial Hoy
In that case, an award was issued in favor of Presse Office in an ICC
arbitration seated in Paris against Hoy, and Presse Office subsequently sought
enforcement before the Mexican courts (Eighteenth Civil Court of First Instance
for The Federal District of Mexico). Hoy opposed enforcement under Mexican
Public Policy and Article V(1)(b) of the New York Convention, as it submitted
that as a principle of Mexican public policy the first notice of summons should
be served personally upon a respondent – whereas Hoy served it by mail (postal
service) pursuant to the ICC Arbitration Rules. The Court held that the
arbitral procedure did not violate the formal requirements detailed in Article
619 of the Code of Civil Procedure and Articles 14 and 16 of the Mexican
Constitution. By inserting the arbitral clause into the contract the parties were
considered to have autonomously waived the formalities established by Mexican
procedural legislation in order to instead be governed by the ICC Arbitration
Rules and to French law.
near identical decision was reached later that same year by the Mexican courts
(Tribunal Superior de Justicia, Court of Appeals -fifth chamber- for the
Federal District of Mexico), in Malden
Mills Inc v Hilaturas Lourdes S.A (1977). In that case the Court overturned the Civil
Court of First Instance, who denied enforcement of the award on the grounds
that all notices had been served by mail, in violation of Mexican public
policy. Just as in Presse Office, the Court held that the parties had waived
Mexican procedural formalities when agreeing to arbitrate (in this case under
the rules of the AAA).
more recent Keytrade (2013)
case decided by the Brazilian Superior Court of Justice confirms a party-autonomy-centric
approach. In this case the complainant submitted that it had not been duly
notified of the arbitration, however the Court held that, under Brazilian law,
a party to a foreign arbitration residing or domiciled in Brazil may be
notified of the appointment of the arbitrator or the arbitration proceeding in
the manner prescribed by the procedural law of the place of arbitration (in
this case, England). It held that because the English Arbitration Act does not
set requirements for notification other than “by effective means”, the
complainant was duly notified[LOB1] ,
as it appeared from the file that it had in fact received the e-mails sent to
it for this purpose. The enforcing court looked to the autonomous will of the
parties exercised in the arbitration agreement to determine the rules that
govern the arbitral process, just as in the aforementioned Mexican cases.
party-autonomy-centric approach is consistent with doctrine applied by
enforcing courts across the globe, as occurred, for instance, in Egyptian
Concrete Company et al. v. STC Finance et al. (1996),
and in Kammergericht (2008).
It has the benefit of restricting the application of domestic standards to only
those that the parties have autonomously selected when agreeing to arbitrate,
and it accordingly engenders a uniform approach to the recognition and
enforcement of awards globally – as the drafters of the New York Convention
intended. Ultimately, the goal of the Convention is to ensure that one court
enforcing a certain award follows the same process as another court enforcing
that same award – and the approach described above does precisely that.
III. The Application of International
Standards of Due Process
addition to the above, Article V(1)(b) has a separate sub-ground for the
opposition of recognition/enforcement:
“(b) The party against whom the award is
invoked was not given proper notice of the appointment of the arbitrator or of
the arbitration proceedings or was otherwise unable to present his case”.
effect, this objection is that there was a violation of due process. It was
considered by the Supreme Court of Colombia in the Petrotesting (2011) case.
and Ross Energy were members of a consortium working together under an oil
exploration and production contract with Empresa Colombia de Petróleos. As part
of their relationship, the consortium members entered various agreements to
regulate their respective rights and obligations to each other in the
performance of the contract. Each of these agreements contained arbitration
clauses providing for settlement by the ICDR. These agreements also provided
for those disputes to be conducted in English, and seated in Colombia, and that
any translation costs would be incurred individually by the parties. Ross
Energy defaulted under the agreements due to its financial impecuniosity, and
Petrotesting filed a request for arbitration before the ICDR, as per the
day before the preliminary hearing, Ross Energy’s representative stated that it
would only participate in it if the hearing was held in Spanish, despite the
arbitration clause stating that proceedings would be held in English. The
parties and tribunal declined, and Ross Energy informed the tribunal and the
Claimants that it declined to participate in the hearing because its impecuniosity
meant that it was unable to pay for the hearings to be translated. Ross
Energy’s representative stated that by insisting on the use of English, Ross
Energy’s right to defend itself was denied. Months later, Ross Energy also
declined to participate in the hearing on the merits.
an award of 19 June 2006, a sole arbitrator found in favor of Petrotesting,
holding that Ross Energy breached its obligations under the agreements. Petrotesting
sought enforcement of the award before the Colombian Supreme Court.
Energy resisted enforcement on several grounds, including “forgery”,
“litispendence”, “arbitrability”, “public policy”, “excess of authority”, and
in particular, “due process”. Under Article V(1)(b), Ross Energy submitted that
because the proceeding had been held in English and because it did not have the
financial means to pay for a translation and hire a lawyer to represent it in
arbitration in the US, due process had been violated.
Court explained that as Ross Energy’s impecuniosity and language-barrier
complaints are not specifically provided for in Article V(1) of the New York
Convention as grounds for refusing enforcement, enforcing courts often decide
the question of due process under their legal system’s principles regarding
procedure. It should be stressed that the Court considered that the application
of its own legal system is strictly limited only to the system’s most
“fundamental procedural guarantees”—which includes the notification to the
defendant so that he can appropriately present his defense—, and not to its
in determining the standard of due process the court applied the Colombian
principle of “the protection of fundamental rights”, which is derived from
Article 29 of its Political Constitution. This provides that the minimum
guarantees to be protected are, inter
right to access the administration of justice before a natural judge;
right to be informed of the acts that lead to the creation, modification or
extinction of a right or to the imposition of an obligation or sanction;
right to express freely and openly one’s opinions;
right to contradict or discuss claims or objections raised;
right to the conclusion of the proceeding within a reasonable time and without
unjustified delays; and, of course,
right to submit evidence and discuss the evidence supplied [by the other party].
Court held that as Ross Energy was duly informed of the commencement of the
proceeding, and it was both able to and did present its case (since it both submitted
a statement of reply and supplied evidence), Ross Energy was afforded the right
to defend itself in the proceeding. It simply did not attend the hearings.
it was held that the language difficulty faced by Ross Energy could not be
deemed a violation of due process, because in the exercise of its autonomy the
parties agreed in the arbitration agreement that the language to be used would
be English and this was the language used to draw up the contracts between the
parties. Thus, the Court held that Ross Energy could not claim to have been
“surprised by a strange language”.
Court also held that Ross Energy’s argument that it was economically impossible
for it to hire a US lawyer could not be taken into account by the Court, as it
was not raised in the arbitration proceeding and that the “cost of an
arbitration” has not been deemed “a valid ground not to participate therein”.
Ross Energy’s refusal to participate in the proceeding was based at the time
solely on the language barrier – it did not mention any issue in hiring a
lawyer. Moreover, the court considered that the fact that the parties agreed in
their contracts that disputes would be decided by “such a specialised and
reputed centre as the ICDR” meant that it could not possibly be accepted that
Ross Energy was surprised by the costs of the proceedings. To do so would run
contrary to the principles of pacta sunt
servanda and of good faith expected between contracting parties.
similar reasoning, the Colombian Supreme Court laid down its judgment in the Drummond (2011) enforcement case.
In this case the party opposing enforcement of an ICC award rendered in Paris
submitted that because it was in liquidation at the time of the arbitration the
proceedings should not have been allowed to continue – as the party was unable
to present its case. Just as in Petrotesting, the Court stated that the
application of Article V(1) of the New York Convention to this question is not
specifically provided for, and that the standards of the New York Convention
are “imprecise” – so the Court once again applied the “fundamental procedural
guarantees” of Colombian law to determine whether there had been a breach of
due process. The Court found that the opposing party participated in the
arbitration through two representatives, raised defenses and communicated to
the tribunal that it was in liquidation; and that therefore “the minimum
guarantees that constitute the hard core of due process were complied with”
in the arbitration. Further, the Court held that being represented by a
liquidator is not a violation of due process.
reading each of these cases, it is clear that the Colombian court was
determined to apply the Article V(1) grounds of the New York Convention
exhaustively. In Petrotesting, for
instance, the Court explicitly rejected Ross Energy’s opposition on the ground
of ‘res judicata’ by stating that “[t]he defence relied on is not included in
the exhaustive list of Article V of the Convention. This is sufficient reason
not to take it into consideration”. When the Court does consider the application
of Article V(1)(b) to a case, since there is no defined “international
standard”, this article was analyzed in light of the ‘fundamental procedural
guarantees’ of the Colombian legal system. In doing so, it might seem that the
Colombian Supreme Court has in Petrotesting
and Drummond applied a domestic
standard, derived from the Colombian constitution, to its application of the
New York Convention grounds for refusal. As we stated earlier, however, while
Article V is critical in identifying and safeguarding general principles of
procedural law, it does not “operate in isolation”,
but rather in order to create a dispute resolution regime that prioritizes
justice and consistency. As can be seen from the referred cases, Article V is
applied “in tandem with national arbitration laws, institutional rules, soft
law, and persuasive authority”.
Further, and fundamentally, research conducted by Peter Rutledge has found that
the fundamental procedural rules of national constitutions and international due
process norms are not mutually exclusive, but rather that the latter norms are
derived from the former.
Thus, the Colombian Supreme Court’s limitation of its supplementation of the
New York Convention to “fundamental procedural guarantees” enshrined in the
Colombian constitution means that it, in reality, limited the supplementation
to international standards of due process despite technically applying domestic
Argentine Supreme Court of Justice decision in Milantic (2016)
approached the interpretation of Article V(1)(b) similarly but cast the
interpretation as being supplemented by the “the Argentine international public
order” rather than specifically by “fundamental procedural guarantees”. These
phrases are evidently not wholly dissimilar, however, as the court stated:
validity and application of international conventions is carried out in our
country if the resolution being executed (in this case, the award) has been the
result of a process where the principles, guarantees, guidelines or canons
that are established expressly in our national constitution or that may be
undoubtedly derived from its provisions have been complied with”.
the principle of due process given effect to in Article V(1)(b) of the New York
Convention was applied in Milantic by
reference to “the Argentine international public order”, which the court
defines as consisting of the principles and guarantees enshrined in the
Argentine Constitution. Though the Argentine court did not qualify the reference
to only Argentina’s most “fundamental” constitutional norms, as the Colombian
courts did in Petrotesting and Drummond, the fact that such norms must
be derived from the Argentine constitution means that a largely similar approach
New York Convention has as its main objective the establishment of a uniform
and pro-recognition enforcement regime, which Professor Ferrari asserts
requires that arbitration be “as international as possible”, meaning that a
nationalistic approach when interpreting the Convention shall generally be
avoided, even in respect of those national provisions that transpose the New
York Convention into domestic law. This, he notes, is essential so that the
different interpreters of the Convention do not reach irreconcilably
inconsistent conclusions. Accordingly, under his interpretation countries have
a duty to analyze international arbitration by referring to “international
standards” rather than domestic ones.
however, the New York Convention cannot operate in isolation. Where ambiguities
exist in the wording of the Convention, it is right that enforcing courts find
solutions in light of not only Articles 31-33 of the Vienna Convention, but
also in light of that jurisdiction’s most fundamental procedural guarantees
enshrined in its constitution. This is so by virtue of the reality elucidated
by Professor Rutledge – that international norms of due process are derived
from those same fundamental principles.The
cases we have examined specifically regarding ground V(1)(b), the Petrotesting (2011) and Drummond (2011) cases, elucidate this
reality. The Colombian Supreme Court contemporarily applied the Convention’s
grounds restrictively and exhaustively – and supplemented ambiguities or
lacunae in them with the most fundamental procedural principles enshrined in
the Colombian Constitution, rather than any specific domestic rules. While
Colombian national law was indeed applied by the court to buttress the New York
Convention, those fundamental principles that it applied are considered to be
the very source from which “international standards” are derived.
how international should international law be? In our view, Professor Ferrari’s
position that international law should be as international as possible holds
true, but to resolve ambiguities in the Convention by resorting to domestic
fundamental procedural guarantees does not frustrate that ideal. Nor, as we
have explained, does applying the law autonomously chosen by the parties.
Partner of Von Wobeser y Sierra, S.C. The author wishes to acknowledge the
assistance of Ana Toimil and Alex Barnes in the preparation of this article.
 Partner of L.O. Baptista
Advogados Associados. LL.M. New York University (NYU), Class of
2010, Arthur T. Vanderbilt Scholar.
 Information available at https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-1&chapter=22&lang=en.
Franco Ferrari, ‘How International should International Arbitration be? A Plea
in Favour of a Realistic Answer’, 853.
 Rafael Alves:
UNCITRAL Report, 2008 – A/CN.9/656.
Legislative Decree nº 52, 25 April 2002.
Decree nº 4.311, 23 July 2002, available at http://www.planalto.gov.br/ccivil_03/decreto/2002/D4311.htm
Rafael Alves, Jura Novit Arbiter under Brazilian law, in: Iura Novit Curia in
International Arbitration, NYU Center for Transnational Litigation, Arbitration
and Commercial Law, JurisNet, 2018, p. 50-53.
S. I. Strong, ‘General Principles of Procedural Law and Jus Cogens’, Penn State
Law Review (2018), 382-83.
Reported in ICCA as Mexico No. 1 (Yearbook Commercial Arbitration 1979, Volume
IV, pp. 301-302), Presse Office S.A. v Centro Editorial Hoy S.A., Tribunal
Superior De Justicia, Eighteenth Civil Court of First Instance for The Federal
District of Mexico, 24 February 1977.
Reported in ICCA as Mexico No. 2 (Yearbook Commercial Arbitration 1979, Volume
IV, pp.302-304), Malden Mills v. Hilaturas Lourdes SA, Tribunal Superior, Court
of Appeals (5th Ch.) for the Federal District of Mexico, 1 August 1979.
 id. at page 303. The Mexican court
stated that: “Even though it is clear that in this case the summons was not
made with the formalities established in Arts. 116 and 117 of the Code of Civil
Procedure, it is also clear that the parties agreed that any controversy
arising from the purchase and sale agreement […] should be resolved through
arbitration in the city of New York or Boston, […] in accordance with the
existing Rules of the American Arbitration Association or the Arbitration Council
[…] It should be taken into consideration that, as in this case, if an express
contract exists which provides for submission to the Rules of the American
Arbitration Association, it results that the summons was made in correct form
since the parties waived the formalities established by the Mexican procedural
legislation regarding notices, and submitted themselves to the Rules of the
American Arbitration Association, which permit notices by mail, and the lower
court judge was not just in considering that the defendant should have been
summoned in a different manner.”
 Reported in ICCA as Brazil
No. 34, (Yearbook Commercial Arbitration 2014, Volume XXXIX, .364-366) Keytrade
AG v. Ferticitrus Indústria e Comércio de Fertilizantes Ltda) Superior Tribunal
de Justiça, 7 August 2013, SEC no. 4024.
Egyptian Concrete Company & Hashem Ali Maher v. STC Finance & Ismail
Ibrahim Mahmoud Thabet & Sabishi Trading and Contracting Company, Court of
Cassation, Egypt, 27 March 1996, 2660/59.
Kammergericht [KG], Berlin, Germany, 17 April 2008, 20 Sch 02/08.
Reported in ICCA as Colombia No. 7 (Yearbook Commercial Arbitration 2012,
Volume XXXVII, p.200-204) Petrotesting Colombia S.A. et al. v. Ross Energy S.A.,
Supreme Court of Justice of Colombia, 11001-0203-000-2007-01956-00, 27 July
Petrotesting Colombia S.A., Southeast Investment Corporation v. Ross Energy
S.A.S. / 11001-02-03-000-2012-02952-00, page 54. The Court stated: “As the
standards of the New York Convention are vague and imprecise in respect of
these issues, courts seized with an exequatur procedure have opted in several
cases, when deciding on the recognition or enforcement of awards, for carrying
out this scrutiny in the light of the procedural principles of their country,
without applying specific rules but rather fundamental procedural guarantees.
In the United States of North America, for example, this question was
highlighted in the famous case ‘Parsons & Whittemore v. Rakta, US no. 7”.
Reported in ICCA as Colombia No. 8 (Yearbook Commercial Arbitration 2012,
Volume XXXVII, p.205-209), Drummond Ltd. v. Instituto Nacional de Concesiones –
INCO et al., Corte Suprema de Justicia, Civil Cassation Chamber, 19 December
Empresa Colombiana de Vias Ferreas Ferrovias (Colombia) v Drummond Ltd (US) /
11001-03-26-000-2003-00034-01(25261), page 42.
see supra note 6.
S. I. Strong, ‘General Principles of Procedural Law and Jus Cogens’, Penn State
Law Review (2018), 382-83
Peter B. Rutledge, Arbitration and the Constitution, 145-59 (2013).
Corte Suprema de Justicia, 30 March 2016, causa A. 69.572 (Milantic Trans S.A.
v. Ministerio de la Producción (Astilleros Río Santiago y otro)); not in the
ICCA yearbook but full judgment accessible at: http://public.diariojudicial.com/documentos/000/067/912/000067912.pdf.
id. at page 43
see supra note 10.