Argentina’s economy seems to be heading into the right direction after the devastating economic crisis experienced 15 years ago, which led to dozens of cases against Argentina at International Center for Settlement of Investment Disputes (ICSID). In addition to a very comprehensive political and economic reform, the Argentinian government is also undertaking a legal reform in an attempt to further strengthen and recover its position as one of the powerful economies of Latin America. Part of this legal reform has included arbitration legal reform.
In 2015, Argentina amended its legislation on arbitration by introducing a special chapter in the new Civil and Commercial Code, which entered into force on 1 August 2015. Argentina also passed a new law on Public-Private Partnerships, now expressly providing for arbitration clauses in agreements concerning such partnerships. The most recent initiative is a new draft bill on international commercial arbitration, introduced to the Argentinian parliament in 2016, which, while still only in draft form, has a potential to solve many of the problems practitioners and judges have been struggling with for decades in Argentina.
Argentinian legislation on arbitration was fragmented and outdated, thus in a desperate need of a reform. There was no unified international or domestic arbitration statute, which caused significant problems in practice, leading to legal uncertainty and mistrust of arbitration as a dispute resolution mechanism in general. Arbitration regulations were divided into federal and provincial legislation. Federal legislation was regulated by two difference statutes (the Civil and Commercial Code and the Civil and Commercial Procedural Code).
In August 2015, the new Civil and Commercial Code was finally approved, introducing a new set of substantive provisions in relation to arbitration under Section 29. The procedural aspects, however, remain governed by Section VI of the Civil and Commercial Procedural Code where unfortunately, most of the sections remain outdated and unchanged since 1967, when this law first entered into force.
And while Argentina might be heading into the right direction in modernizing its arbitration legislation, the current situation is far from ideal. Namely, Articles 1649-1651 governing arbitration agreements may still pose significant troubles in practice.
Pursuant to Article 1649, an arbitration agreement agreement exists when the parties agree to submit all or certain disputes, which have already arisen, or which might arise in connection with a certain legal relationship governed by private law (whether contractual or noncontractual) to the decision of one or more arbitrators. An important exclusion, however, is that only disputes which do not involve public policy are considered as arbitrable. Article 1651 further explicitly excludes disputes which are considered as non-arbitrable, including disputes relating to matrimony, capacity and family law, consumer law, standard form of contracts, labor law and those in which the state is one of the parties. All these disputes cannot be submitted to arbitration as, regardless of the fact that they fall under private law, public policy is considered as being compromised. The non-arbitrability provisions are surprisingly broad, thus leading to numerous jurisdictional objections in practice, while leaving significant discretion to local courts in their interpretation of “when the public policy is considered compromised”.
Another troublesome provision concerns remedies against the award where once again, Argentinian judges are left with considerable discretion as the provisions of the Civil and Commercial Code are insufficiently clear. Article 1656, paragraph 3, is one of the most controversial articles. It provides that arbitral awards may be reviewed before Argentinian courts if there is a ground for nullity pursuant to the provisions of the Civil and Commercial Code. However, the grounds for annulment are not specified in the Civil and Commercial Code itself, thus leaving it to the judges to find a practical solution. In practice, judges usually apply the same grounds for annulment of arbitral awards which are listed in other local procedural codes. The same article further provides that the parties cannot waive their right to challenge a final award. However, it remains unclear what the precise meaning of “judicial challenge” is and whether it refers to annulment or appeal, as this is not defined in the Code.
As this brief overview of the recent arbitration reform in Argentina demonstrates, arbitration in Argentina is still in the process of development. Luckily, the core ingredients of a healthy arbitration regime such as the principle of severability of the arbitration agreement, the principle of Kompetenz-Kompenetz and the principle that the presence of an arbitration agreement excludes the jurisdiction of domestic courts are already integrated in the Civil and Commercial Code, so it may be just a matter of time before Argentina has a world-class arbitration regime.