International Arbitration 2019

Last Updated August 08, 2019

Colombia

Law and Practice

Authors



Gamboa Abogados is a boutique firm that dates back to 1943, when Ernesto Gamboa Álvarez (RIP) opened his law firm in Bogotá. Nowadays the team has 14 lawyers. Gamboa is a member of the international legal network LaWorld, allowing it to provide services to its clients through its allies around the world. Gamboa Abogados has over 70 years of experience in the area of litigation, and handles complex disputes from all legal areas, with a particular specialty in transnational commerce and infrastructure. Gamboa represents national and foreign companies in at least seven international and domestic arbitral proceedings a year. The firm's partners also act as arbitrators before the ICC, the AAA and Colombia´s most important chambers of commerce. Gamboa is recognised for its expertise in litigating before Colombia’s Supreme Court of Justice, which is a considerable advantage for clients that require representation in proceedings of recognition or annulment of international awards.

Today, most contracts entered or performed in Colombia and embodying internationality-related aspects such as: (i) parties with a place of business in different countries; (ii) performance of a substantial number of contractual obligations in places outside the parties’ country of domicile; and (iii) disputes referred to arbitration bearing an impact on international trade (Article 62 of Law 1563/2002, the Colombian Statute on Arbitration), contain arbitration clauses usually referring to rules of arbitration issued by recognised arbitral institutions.   

Given the fact that international arbitration is mostly used in Colombia in contracts bearing elements of 'internationality', the commonest modality of use thereof is the choice of international arbitration as a method of dispute resolution. In Colombia, nationals and domestic companies are not permitted to resort to international arbitration (only domestic arbitration) unless elements of internationality, mentioned above, exist in the contract. Likewise, state agencies such as the National Agency for Infrastructure (Agencia Nacional de Infraestructura – ANI) generally include an arbitration clause to submit disputes to international arbitration, wherever the contractual relation relies on the stated elements of internationality provided in the Colombian Statute on Arbitration. Model contracts drafted by the cited state agency normally designate Colombia as place of arbitration. As to enforcement of foreign arbitral awards, the first enforcement of an international award in Colombia under Law 1563/2012 2016 took place in 2016. Since then, few rulings made by the Supreme Court of Justice have dealt with requests to enforce international awards.

A first hurdle originates in the constitutional mechanism of grievance known as 'acción de tutela' (constitutional complaint or amparo complaint) adopted in Colombia. This constitutional complaint is aimed at safeguarding fundamental rights when violated or threatened by reason of acts by 'public authorities' or private individuals in discharging public functions. A tutela action is exceptionally admissible against court decisions subject to compliance of certain requisites provided under Constitutional Court case law. All Colombian courts can hear tutela actions.

Recently, there was a debate in Colombia concerning admissibility or inadmissibility of tutela actions against international awards rendered by arbitral tribunals seated in the country. One sector of the doctrine considers tutela actions inadmissible to the extent that arbitrators do not act as 'public authorities' and, hence do not discharge 'public functions'. In the same vein, they emphasise that Colombian arbitration law has provided that the only course of action available against international awards is an action for annulment. Nevertheless, there are precedents where Colombian courts have reviewed tutelas filed against international awards, without mentioning or discussing whether such action is admissible against them. It must be stressed that the Constitutional Court is currently hearing a tutela action filed against an international award and a decision is expected to be handed down in the near future. The Constitutional Court decision will be of utmost significance in eventually determining whether international awards may be barred through tutela actions. In the context of review, the Court asked a number of Colombian experts in international arbitration to state their opinion on the matter and most of them maintained that tutela actions should not be admissible against international awards.

Another potential hurdle is the current debate on the participation of third parties not signatory of the arbitration agreement in arbitration proceedings. No uniform position has been adopted on the issue. Some tribunals have acknowledged that, where a third party tacitly states its consent with the contract bearing the arbitration agreement, it is binding thereon. However, other tribunals grounded on the New York Convention indicate that such consent should be in writing and, based on this argument, have denied the participation of non-signatory third parties. It should be noted that, in domestic arbitration, specific provisions concerning involvement of third parties in arbitration proceedings have been passed – this has been supremely useful for arbitral practice in the country.

In recent years, Colombia has become a very attractive country for foreign investment. One major sector receiving foreign investment is the power, road, airport and port infrastructure. Contracts in this field are complex, supremely technical and significantly costly; given the international elements involved, such contracts commonly include arbitration clauses of an international nature. The prevailing distrust vis-à-vis the Colombian judiciary also has an impact. There is a steady increase of both commercial and investment arbitration. 

In Colombia, parties to international arbitration often resort to the services of the International Chamber of Commerce (ICC) given its worldwide reputation, institutional support and stringent administration of proceedings. As an alternative, they frequently resort to the American Arbitration Association (AAA). Similarly, the main Chambers of Commerce in Colombia (Bogotá, Medellín, Cali and Barranquilla) have adopted their own rules and standards for international arbitration, and arbitrations seated in Colombia often use these rules, which are widely known to Colombian solicitors and arbitrators.

Law 1563/2012 regulates arbitration in Colombia on a two-tier basis: the first is devoted to domestic arbitration, and the second – significantly different – is devoted to international arbitration; the latter is essentially grounded on the UNCITRAL Model Law on International Commercial Arbitration, although bearing minor differences.

The Colombian Statute on Arbitration is not entirely based on the UNCITRAL Model Law. In fact, it contains some modifications introduced for adjustment to Colombian case law. Furthermore, certain particulars of the Colombian Statute are based on the French arbitration regime. For instance, regarding criteria to determine whether or not an arbitration should be considered international, the Colombian Statute provides additional criteria but excludes others contemplated in the Model Law. Thus, when the subject matter of dispute adversely impacts international trade, Colombian laws allow settlement of the dispute through international arbitration. However, it fails to include the criteria set out in Article 1(3)(b)(i) and Article 1(3)(c) of the Model Law, respectively providing the following: that the place of arbitration be situated outside the state in which the parties have their places of business, and that the parties had expressly agreed that the subject matter of the arbitration relates to more than one country.

Regarding conditions to make an order on warrant on conservatory measures, the Colombian Statute on Arbitration is silent as to the need to prove the alleged sufficient legal basis or the likeliness of causing damages to the requesting party, in excess of damages sustained by the counterparty and irremediable by means of economic compensation.

In connection to deadlines to file an application for setting aside an award, Colombian laws provide a one-month term counted as from the service thereof, while the Model Law provides a three-month term.

The most recent Colombian Statute on Arbitration was enacted through Law 1563/2012. The law may be considered fairly new, particularly if taking into account that the very first arbitration proceedings ruled under the Statute concluded with awards rendered by the end of 2013 and the beginning of 2014. Additionally, and as mentioned before, the first judgement of a Colombian court recognising an international award under Law 1563/2012 was rendered in 2016.

At present, all provisions in the Law 1563/2012 chapter on international arbitration are valid and remain unmodified.

Article 69 of the Colombian Statute on Arbitration provides that arbitration agreements should be written. Notwithstanding, contrary to the 1958 New York Convention, the Colombian Statute provides that 'written agreement' shall mean an agreement the content of which is documented by whatever means. Hence, it is not always a commitment or compromissory clause. In that sense, the law provides that such an agreement may be verbal but documented in writing – for instance, electronic communications or any other means. Likewise, there may be an arbitration agreement if contents thereof are included in a complaint and such inclusion is not contested by the counterparty in its answer to the complaint.

Disputes associated to family law issues may not be referred to arbitration as these may impact the civil status of people; similarly, issues impacting third parties alien to the arbitration agreement may not be referred to arbitration, as well as matters associated to tax liabilities, execution proceedings, inalienable labour rights and criminal issues. Most prohibitions have a legal origin but case law has endorsed the scope thereof.

As to arbitrability, the Colombian Statute chapter on international arbitration is severable from domestic regulations restricting disputes referable to arbitration. In the same vein, arbitrability in the international arbitration chapter does not modify the limitations applicable to domestic arbitration. Accordingly, reference should be made to other legal provisions to identify matters referable to arbitration. Pursuant to Colombian laws on domestic arbitration, the only arbitrable disputes are those that have arisen from a legal relationship or are withdrawable under free disposal laws or matters eligible for settlement. 

In Colombia, there has been a debate on whether disputes associated to commercial agency agreements may be referred to international arbitration – this, to the extent that the Commercial Code provides that any such contracts performed in Colombia shall be governed by Colombian regulations, and any agreement to the contrary shall be deemed inexistent. The issue is seemingly resolved in favour of international arbitration jurisprudence case law, according to the Supreme Court of Justice ruling made on 24 June 2016 on the case HTM LLC v Fomento de CatalizadoresFOCA S.A.S., where an international award was recognised. In its ruling, the Court maintained that, although the Commercial Code provision remains in force, it is silent as to the arbitrability of disputes associated to agency agreements, while it mentions the law governing the contract. Therefore, there being no express prohibition, it is concluded that the matter may indeed be referred to international arbitration.

Under the Colombian Statute on Arbitration, judicial authorities prosecuting disputes subject matter of an arbitral agreement, should refer the case to the incumbent arbitral tribunal, upon request. Contrary to the New York Convention, the Colombian Statute on Arbitration does not recognise or admit the courts’ power to examine whether such arbitral clause is void or inexistent. On the other hand, where court proceedings have been instituted before Colombian courts despite the fact that the dispute be arbitrable, the parties should claim the 'arbitral agreement' as defence in the process pending before ordinary courts, at the risk of considering that the parties waived the same.

As explained in the preceding paragraph, judges or courts hearing issues that should be referred to arbitration are obliged to submit the case to the appropriate arbitral tribunal and instruct the parties to honour their agreement. In practice, when either of the parties asks the court to submit the proceedings to arbitration, judges act accordingly. Exceptionally, some court decisions are contrary to law or have dismissed the parties’ request to terminate the proceedings and submit the file to the incumbent arbitral tribunal.

Colombian arbitration rules indicate that, where a contract containing an arbitral clause is void or invalid, it does not mean that the clause is invalid per se. Therefore, an arbitral clause may be considered valid even if the master contract is not.

Consistent with the answer above, it may be said that Colombia unanimously agrees on the principle of severability or autonomy of arbitral clauses. To that end, an arbitral tribunal may further review and decide on the validity of the arbitral clause, regardless of the contract contents.

In Colombia, the parties’ autonomy is broad with respect to the selection of arbitrators. The Colombian Statute on Arbitration provides that the parties may discretionally agree on the number of arbitrators, as long as it is an odd number. In turn, the Rules of Arbitration of the Chamber of Commerce of Bogotá Arbitration Centre (CCB Rules) state that the number of arbitrators should be either one or three. Without prejudice to the above, the parties should comply with every standard on independence and impartiality in the appointment of arbitrators. Appointment of arbitrators by each party is forbidden in domestic arbitration; rather, they must be appointed by mutual agreement or by third parties.

In this regard, reference should be made to the Colombian Statute on Arbitration and the rules adopted by major Chambers of Commerce in the country. In fact, Law 1563/2012 provides that, if the parties fail in indicating the number of arbitrators, the tribunal will consist of three arbitrators; it also provides that, failing an agreement between the parties to designate the sole arbitrator, or failing an agreement between designated arbitrators to appoint the third one, the incumbent judicial authority will be in charge of appointing the arbitrators.

However, in case of arbitration proceedings subject to CCB Rules (for example), the selection method changes. In the first place, if the parties fail to define the number of arbitrators to integrate the tribunal, it shall be a sole-member tribunal, unless the Arbitration Centre deems it appropriate to designate three arbitrators. If the parties’ arbitral agreement does not provide a mechanism for the selection of arbitrators, they will be designated randomly from the roster of international arbitrators kept by the Arbitration Centre or from a list provided by the parties. Where the tribunal consists of three arbitrators, each party will appoint one, and the Arbitration Centre will designate a third arbitrator. Clearly, when the parties’ agreement is in line with rules issued by different international arbitration institutions, the matter will be governed according to the relevant rules.

As mentioned in the precedent answer, under the Colombian Statute on Arbitration, judges are only permitted to participate in the selection of arbitrators when the parties or arbitrators already selected fail making the required designation, provided that the arbitration is conducted under Law 1563/2012. In such case, the judicial authority participates in the selection of arbitrators, upon request of either of the parties.

In Colombia, where the parties are private parties or private companies, civil judges are competent to make the selection. If one of the parties is a Colombian pubic entity, the competent authority will be an administrative judge.

Ordinary judges are required to respect the parties’ will and comply with the arbitral clause. Therefore, no judge will be entitled to designate the number of arbitrators to integrate the tribunal nor to determine the arbitrators’ qualifications, if the parties already addressed the matter under the arbitral agreement. Likewise, judges are required to bear in mind criteria regarding independence and impartiality of the arbitrator. Law also provides that, in the event where judges are required to designate a sole arbitrator or third arbitrator to integrate the panel, it is advisable that the latter is of a nationality other than the parties’.

The Colombian Statute on Arbitration regulates the challenge of arbitrators and the procedure to appoint replacing arbitrators. In principle, the parties may define the manner to raise challenges or the course of action to follow under the relevant rules of arbitration. The law also provides that a party is only entitled to challenge the arbitrator designated by it, on the basis of reasons known after the appointment.

It is worth emphasising that according to Colombian laws, the grounds for challenging arbitrators in international arbitration differ from the grounds provided for domestic arbitration. On one hand, regulations on domestic arbitration provide that any arbitrator may be challenged on the same grounds applicable to ordinary judges. In that sense, reference should be made to rules provided in the General Code of Proceedings. On the other hand, the chapter on international arbitration under the Colombian Statute on Arbitration provides that any arbitrator may be challenged when reasonable doubt arises in connection to his/her independence and impartiality, or in the absence of qualifications approved by the parties.

Thus, Colombian regulations on international arbitration provide no comprehensive listing of grounds for challenging arbitrators. In that regard, Colombian courts have ruled that “the standard of impartiality expressed in the international rule of law, may not be inferred from the listing set out in local procedural statutes; rather, it should be adopted on the basis of reasonableness criteria” (Supreme Court of Justice, Civil Section, Ruling CS9909, 12 July 2017 – Tampico Beverages Inc. v Alquería). Consequently, case law on international arbitration states the need of enforcing the IBA Guidelines on Conflicts of Interest in International Arbitration, this to determine whether an arbitrator is subject to any condition or situation affecting his/her independence and impartiality.

Once appointed, an arbitrator is required to disclose any situation which may call into question his/her independence and impartiality. In the event where circumstances likely to affect those aspects arise during the arbitration proceedings, arbitrators should disclose them promptly. Likewise, as explained in the preceding answer, it is commonly understood in international arbitration that reference should be made to the IBA Guidelines to determine an arbitrator’s independence and impartiality. Colombian courts consider such guidelines a source of 'soft law'and arewidely accepted within the arbitral community.

As stated above in 3.2 Arbitrability, certain disputes are not arbitrable under Colombian laws.

Article 79 of the Colombian Statute on Arbitration provides that arbitrators have full discretion to determine their competence. To that end, no other judge may determine whether or not an arbitral tribunal is competent to hear a given dispute. This provision reflects the doctrine of kompetenz-kompetenz, whereby arbitrators have authority to declare their own competence, even prevailing over any other legal authority the parties may have approached.

As stated above, the arbitral tribunal is the only body empowered to determine whether or not it has competence to hear given matters. The only scenario where an ordinary court may rule on the arbitral tribunal’s competence is in the context of actions filed to set aside the award, arguing that the tribunal had no competence to resolve the matter.

Article 79 of the Colombian Statute on Arbitration provides that the parties may challenge the tribunal’s competence, no later than by the time of answering the request for arbitration. In the event where the parties, in the course of the proceedings, consider that the tribunal exceeded its competence, the challenge should be raised immediately. To that end, both the main rules on international arbitration existing in Colombia and the Statute on Arbitration provide the possibility to waive the right to challenge. The foregoing means that, if a party fails raising the challenge in due time, it may not rise it afterwards. Arbitrators are empowered to resolve ab initio the defence raised or, in the alternative, in the award on the merits of the case. In this context, if resolved under the award, the parties may resort to ordinary tribunals to challenge the competence of the arbitral tribunal by means of an action for annulment. It is worth mentioning that Law 1563/2012 (contrary to the CCB Rules) makes no distinction between partial and final awards. As a result, Colombian courts have recognised partial awards containing decisions on the competence of the arbitral tribunal in bifurcated proceedings. To conclude, it may be said that, in Colombia it is not mandatory to await the rendering of a final award to file an action for annulment or to request recognition of the award containing competence-related decisions. Furthermore, Colombian case law has pointed out that the lack of claim in this regard might be construed as a waiver of the right to challenge.

As indicated above, since enactment of the Colombian Statute on Arbitration, few rulings have been made on the recognition or annulment of international awards. Among the most recent rulings of the Supreme Court of Justice (CSJ) on the matter of recognition of international awards, we may highlight one relating to the competence of the arbitral tribunal. In its ruling, the CSJ makes no analysis on the reasons underlying the tribunal’s declaration of competence; rather, it considers the factual arbitrability of the subject matter and whether or not the decision was consistent with Colombia’s international public order. After reviewing such criteria, the CSJ recognised the tribunal award. Based on the few rulings made in the past three years on recognition and annulment of international awards, it may be concluded that the criterion enforced by the CSJ is deferential.

Colombian law provides that, where a party initiates a judicial process disregarding the arbitral clause, the other may raise as defence the lack of competence of the ordinary judge and the existence of an arbitration agreement. In this case, the ordinary judge should transmit the proceedings for the purposes of integrating the arbitral tribunal which, according to the doctrine on kompetenz-kompetenz, will determine whether or not it is competent to hear the dispute.

Notwithstanding, there have been cases where ordinary judges declared their own competence in proceedings where one of the parties claimed the existence of an arbitration clause. Some have been settled through constitutional tutela actions, arguing violation to the fundamental right to due process. In reviewing such tutela actions, the Constitutional Court acknowledged the doctrine on kompetenz-kompetenz, emphasising that, where the parties claim existence of an arbitral agreement, judges are obliged to refer the proceedings to arbitration.

In general, ordinary judges are willing to recognise arbitration clauses when either of the parties claims existence thereof.

The Colombian Statute chapter on international arbitration is silent as to participation of third parties not signatories of the arbitral agreement. Otherwise, regarding domestic arbitration the law actually admits such possibility, through inclusion of parties called warrantor and necessary joinders, in the proceedings.

Therefore, on the matter of international arbitration, some tribunals seated in Colombia consented to the engagement of third parties to arbitration proceedings, when it is inferred that the latter agreed, even tacitly, on the terms and conditions provided in the contract containing the arbitral agreement. Similarly, it is understood that there are situations where non-signatory third parties may become bound by the arbitral agreement. As a reference, the following are mentioned: corporate mergers, assignment of the contract containing the arbitral agreement; contract warrantors or beneficiaries, business groups and other events where a company’s corporate veil may be lifted.

There is no provision stating that the above-mentioned circumstances do not apply to foreign third parties, which are therefore entitled to act on equal footing as nationals.

It should be noted that, eventually, this issue depends on the rules of arbitration chosen by the parties. For example, although the CCB Rules contain no express provision on the circumstances where third parties may participate, it provides that arbitrators have the power to determine and regulate their participation.

The international chapter of the Colombian Statute on Arbitration vests arbitral tribunals with broad powers to order conservatory measures, unless otherwise agreed by the parties. Under the Stature an arbitral tribunal is entitled to order conservatory measures that:

  • “i. Uphold or reinstate the statu quo, pending resolution of the dispute;
  • ii. Entail actions to prevent current or threatening damages or hindrance of the arbitration proceedings or to refrain from performing actions likely to damage or hinder the arbitration proceedings;
  • iii. Constitute a vehicle to preserve assets eligible for award enforcement;
  • iv. Preserve evidentiary material that may be useful and relevant to settle the dispute” (Law 1563/2012, Article 80).

Again, the Colombian Statute on Arbitration allows a party seeking conservatory measures, to request the arbitral tribunal the issuance of a preliminary order to prevent the concerned conservatory measure from turning vacuum.

It is worth noting that ICC Rules, widely used and recognised in Colombia, provide that the arbitral tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. According to the ICC Rules, conservatory measures should take the form of an order, giving reasons, or of an award, as the arbitral tribunal may consider appropriate. Likewise, the ICC Rules provide that the parties may apply for conservatory measures to any judicial authority, before the file is transmitted to the arbitral tribunal and, occasionally, thereafter. A party that needs urgent conservatory or interim measures that cannot await the constitution of the arbitral tribunal, may apply for such measures under the ICC Rules provisions on Emergency Arbitrator.

All those measures take the form of an 'order' and, hence, are fully binding upon the parties.

Colombian judges are responsible for enforcing conservatory measures or interim orders issued by an arbitral tribunal. Pursuant to the Colombian Statute on Arbitration, the competent judicial authority to which the arbitral tribunal must order enforcement of conservatory measures or interim orders, shall be a Circuit Civil Judge. Notwithstanding, when either of the parties is a public entity, the competent authority shall be an Administrative Court. This provision is consistent with the ICC Rules provisions on the matter.

Interim Relief in Aid of Foreign-seated Arbitrations

There being an express provision regarding enforcement of conservatory measures under the section on international arbitration in the Colombian Statute on Arbitration, Colombian judges may enforce conservatory measures ordered by an international arbitration tribunal. In this regard, the Statute provides that, enforcement of conservatory measures does not require bringing-up an action for recognition thereof. All of the foregoing means that, implementation of the measure may be requested to the Colombian judge, regardless of the country where it the order was made.

In principle, Colombian judges may secure any type of conservatory measures or interim orders issued by an arbitral tribunal. However, there are exceptional grounds or events where judicial authorities may refuse enforcement of conservatory measures. Thus, if a conservatory measure is adopted in the context of a dispute alien to the arbitral agreement or, if the arbitration clause is invalid or the security required by the tribunal is not posted or the tribunal stays the measure or the matter in dispute is not arbitrable under Colombian laws, or its enforcement is contrary to Colombia’s international public order or fails to comply with procedural arbitration requisites, eventually the conservatory measure ordered may not be enforced.

Emergency Arbitrators

Colombian laws permit the use of emergency arbitrators and allow the parties to submit the arbitration to rules of international arbitration they consider more suitable. To that end, if the rules chosen by the parties enable the use of such type of arbitrators, use thereof is admissible. There are countless antecedents where emergency arbitrators have been used in international arbitrations seated in Colombia.

In line with the preceding paragraph, should the parties submit themselves to the ICC Rules, a decision made by an emergency arbitrator will take the form of an 'order' and, therefore, it is stringently binding upon the enforcing judge and the parties.

In this connection, it is worth emphasising that, in Colombia, emergency arbitrators have not been expressly regulated. Accordingly, to determine the manner how local judges may participate after the emergency arbitrator’s designation, reference should be made to the rules of international arbitration chosen by the parties.

The Colombian Statute on Arbitration provides that the arbitral tribunal shall require the petitioner of an interim order or conservatory measure to post a bond, unless considered inappropriate or unnecessary.

The international chapter of the Colombian Statute on Arbitration provides that the parties may freely agree on the most appropriate arbitration procedure, provided that they abide by the Statute. For such purposes, the parties may directly determine the procedure or refer to any available rules of arbitration. Likewise, Colombian laws provide that, in regard to international arbitration, it is not required to resort to procedural standards pertaining to domestic Colombian Law.

As a general rule, the parties in international arbitration are empowered to select the procedure or institutional rules applicable thereto. Failing this selection, if the arbitration is seated in Colombia, the procedure set out in the chapter on international arbitration of Law 1563/2012 will apply. In particular, it must be noted that the Colombian Statute on Arbitration provides that, failing an agreement of the parties, the tribunal is empowered to designate the applicable procedure.

The chapter on international arbitration in the Colombian Statute on Arbitration contains no regulation setting forth arbitrators’ powers and authority. Notwithstanding, a comprehensive review of the entire chapter enable the identification of some thereof. Firstly, the arbitral tribunal, consisting of one or more arbitrators, is empowered to determine its own competence in line with the standard on kompetenz-kompetenz. Likewise, as stated above, arbitrators may decree and enforce conservatory measures. If the parties fail to select the arbitration procedure, arbitrators are entitled to conduct the proceedings in the manner they may deem appropriate. To that end, the tribunal is also empowered to designate the place to discuss or practice evidence, regardless of the place of arbitration.

Under the CCB Rules arbitrators are entitled to rule on the admissibility and assessment of evidence. Likewise, under such rules, arbitrators have authority to regulate and resolve matters concerning third parties’ involvement.

In accordance to evidentiary standards referred to hereinbelow, in Colombia, legal representatives render testimonies in cross-examination. In such context parties can confess through their legal representatives. Nevertheless, in international arbitration there is no such power for legal representatives, as cross-examination is not contemplated. Thus, they offer their testimony as any other witness.

In general, international arbitration in Colombia is governed under the principle of autonomy of the parties to freely determine issues relating to admissibility, relevance and value of evidence discovered in the proceedings.

Yet, there are special standards on evidentiary matters. For instance, the principle of contradiction, contemplated in the Colombian Statute on Arbitration, provides that the arbitral tribunal will transmit to the parties all and any evidence supporting the tribunal’s final decision.

As explained above, in Colombia the IBA Rules on the Taking of Evidence are considered a source of 'soft law'. Consequently, when enforced, the practice of testimonies differs from that customary in domestic processes, given that there is no difference between cross-examination and testimony. Hence, a party will be considered witness if summoned to make a deposition and, as a result, there will be no confession, as usually permitted in cross-examination.

Likewise, testimonies are made in writing – only when the counterparty challenges those testimonies, will they be verbal. Finally, the IBA Rules accept and provide the possibility that a witness and the party requesting the evidence be in contact before the deposition.

As to rules of evidence, the statements in the precedent answer also apply for international arbitrations seated in Colombia and subject to the IBA Rules. In domestic arbitration, the applicable regulations are those contained in the General Code of Proceedings, which differ from others used in international arbitration. For instance, in domestic arbitration the parties may not define the manner to practice evidence; testimonies and cross-examination differ; confession is admitted in the context of cross-examination; and, witnesses’ deposition is necessarily verbal rather than written.

The arbitral tribunal may, ex officio, order the discovery of documents in possession of the parties or third parties and decree the deposition of witnesses. This authority to order the discovery of documents is broad. Also, the tribunal is entitled to summon witnesses to appear in the proceedings.

Colombian laws are silent as to confidentiality in international arbitration, as contemplated under the UNCITRAL Model Law. While it is possible to infer that international arbitration is confidential in nature, it is advisable that the parties expressly agree such condition or refer to procedural rules on the matter.

The award, and given information relating to the arbitral proceedings should be disclosed for processes like request for recognition, enforcement, annulment or any other judicial action permitted.

The award must be in writing, signed by all arbitrators and indicate the delivery date and place of arbitration. Likewise, awards should be duly motivated, unless the parties agree otherwise or waive the tribunal’s obligation to state the grounds for decision. Arbitrators will only rule ex aequo et bono if the parties have agreed so in the arbitral agreement.

According to the ICC Rules, the arbitral tribunal must render its final award in six months counted as from approval of the terms of reference. On its part, the CCB Rules indicate that the six-month time limit to render the award counts as from the answer to the complaint or the answer to the counterclaim. Likewise, it is possible to extend the term once, if the tribunal so recommends. In any case, the time limit to render the final award depends on the rules of arbitration chosen by the parties.

In this regard, the substantive law chosen by the parties in the arbitral clause must be taken into account. Pursuant to Colombian law, punitive damages are inadmissible. In fact, Colombian laws contemplate comprehensive compensation to remedy damages caused and proven by the claimant, without room to enrichment as a result of a compensation decreed. Along these lines, damages caused and the amount thereof must be fully proven if Colombian law is chosen as substantive law.

Recovery of interest depends on the substantive law chosen by the parties in the arbitral clause. According to Colombian laws, the parties are permitted to charge legal interest, as “every monetary obligation is subject to legal interest recovery”. Thus, recovery of legal costs will depend on the rules of arbitration selected by the parties in the arbitral clause; however, unless otherwise agreed, there will be room for recovery of court costs and attorneys’ fees in favour of the prevailing party.

Under the CCB Rules, the arbitral tribunal will set out the costs of arbitration in the award and, if deemed adequate, in any other decision. As to the CCB Rules, the term 'costs' include, inter alia, tribunal fees, travel expenses of arbitrators and witnesses and legal costs, to the extent that the relevant amount be approved. Similarly, in the case of interpretation, rectification or addition of an award, the tribunal may fix new costs.

Regarding costs, the CCB Rules provide that these will be borne by the losing party. However, the arbitral tribunal may apportion each item of costs among the parties, if deemed reasonable and taking into account the particularities of each case.

In Colombia no appeal may be filed against arbitral awards as law only admits an action for annulment against awards.

Article 107 of the Colombian Statute on Arbitration provides that the parties may waive the action for annulment or limit the same to one or more grounds provided in law, provided that the parties have no domicile in Colombia. Contrario sensu, this means that, when one or more parties are domiciled in the country, there is no room to waive or limit the action for annulment.

As stated above, the Colombian Statute on Arbitration is fairly new. To that end, the Supreme Court of Justice has reviewed few arbitral awards thereunder. As to actions for annulment, from 2015 to date, the Supreme Court of Justice has resolved three actions filed against international awards, and none has succeeded. In such cases, the court review has been deferential. As to recognition of awards, it may be said that the standard is the same: five awards have been reviewed since 2015, and all recognised. Consistent with the Colombian Statute on Arbitration, the criterion used by Colombian courts consists of reviewing whether the award is compatible with Colombia’s international public order and, whether the subject matter is arbitrable under Colombian Law.

Colombia is a party to the 1958 New York Convention, ratified with no reserve, through Law 39/1990. Likewise, Colombia ratified the 1975 Panama Convention on International Commercial Arbitration.

Regarding international arbitration, for an award to be enforced in Colombia, procedures vary depending on whether it is an award made in arbitration proceedings seated in Colombia or in a different country. In the first case, the internecinal award will be deemed domestic, and may be enforced directly before competent judges without need of prior recognition. In the second case, it is mandatory to pursue a process for recognition of the foreign award before the Supreme Court of Justice or the Council of State. Upon recognition of the foreign award, it is possible to seek enforcement and execution.

Standards for recognition of awards in international arbitration provided in the Colombian Statute on Arbitration are the same provided in the 1958 New York Convention.

Without prejudice to the foregoing, there is a risk that the arbitral award be contested through tutela actions (constitutional complaints or amparo complaints) and constitutional case law for protection of rights considered fundamental. If a Colombian judge determines that an international award violates fundamental rights, enforcement in Colombia may be hindered. It must be taken into account that, regarding international arbitration there are no antecedents on unenforceability of an award by virtue of tutela actions, although judges have resolved to hear tutela actions filed against awards of such kind.

The Colombian Statute on Arbitration expressly provides that recognition of awards non-binding upon the parties or set aside or stayed by an authority in the country of arbitration, will be dismissed. Therefore, no set aside or stayed award may be enforced in Colombia. Importantly, the party interested in dismissing the recognition must argue the foregoing.

Any state or state entity may effectively raise its defence before a Colombian tribunal, on the grounds of sovereign immunity from enforcement.

The preamble and articles 3 and 9 of the Colombian Constitution relate to the country’s sovereignty and stress that such sovereignty is exercised through bodies representing citizens. In the same vein, foreign relations of Colombia are grounded on national sovereignty.

Although Colombia has no regulations in place regarding jurisdiction and enforcement immunities and, while Colombia is not a party to the UN Convention on Jurisdictional Immunities of States and Their Properties, both the Supreme Court of Justice and the Constitutional Court maintain that states have sovereign immunity from enforcement. In a recent ruling (SU443 of 2016), the Constitutional Court ruled that “the Colombian State has no power to implement coercive measures of enforcement against third party States”.

The Colombian Statute on Arbitration provides, for the recognition of awards, that the competent judicial authority, either the Supreme Court of Justice or the Council of State, is required to prove that the subject matter of dispute is arbitrable in accordance to Colombian laws and that the recognition or enforcement of the award is not contrary to international public order in Colombia. Those criteria binding upon the courts basically reflect the guidelines set forth in Article 5 of the New York Convention of 1958.

As stated above, under the new Colombian Statute on Arbitration, very few requests for recognition or actions for annulment of international awards have been filed before the Supreme Court of Justice. As to requests for recognition of international awards, the court has granted every recognition, since 2016. In turn, no action for annulment has succeeded.

In connection to public order, even before the entry into force of Law 1563/2012 and under the former statute on arbitration, the Supreme Court of Justice pointed out the difference between international public order and domestic public order. According to the Court case law and on the basis of comparative law, the annulment or recognition of an award must weigh whether or not the award breaches Colombia’s international public order. In that sense, it is required to verify that recognition of the award bears no impact on international procedural public order or international substantive public order.

Pursuant to Law 472/1998, compensatory class actions are those instituted by an eligible plural number of persons (20 or more) satisfying uniform conditions with respect to the underlying causes of their respective individual damages. Colombian laws contain no special standards on domestic or international arbitration for class actions. As a result, it may be sustained that arbitration would be admissible in class actions, provided that the parties so agree in the arbitral agreement and, provided that the subject matter is arbitrable.

Taking the foregoing into account, the arbitrability of class actions is subject to general standards; thus, only rights or property rights that the parties can freely dispose of, may be referred to arbitration. Emphasis should be made on the fact that, inclusion of arbitral agreements in contracts of adhesion subject to rules on consumer protection may be considered abusive, with no effect whatsoever.

Colombia has no specific code of ethics for international arbitration. In connection to arbitrators, it is only provided that they must be independent and impartial. Nevertheless, as stated above, the Supreme Court of Justice maintained that, in international arbitration, the IBA Guidelines on Conflicts of Interest should apply. Likewise, the parties may agree on the application of such guidelines, both on conflicts of interest and representation of the parties.

In this regard, it is worth pointing out that, in domestic arbitration, arbitrators and counsels should abide by the Disciplinary Code of Lawyers, a statute not applicable to international arbitration.

Colombian laws make no reference to third-party funding. Therefore, it may be deemed permitted. Given the lack of regulation, there must be a reference to international criteria and standards on the matter. It is our opinion that, in the event where one of the parties to an international arbitration is funded by a third party, this circumstance must be disclosed to the tribunal and the counterparty. Similarly, arbitrators should make disclosure, as appropriate, in support of their independence and impartiality vis-à-vis a third party.

The Colombian Statute on Arbitration contains no provisions on consolidation of arbitration proceedings. Hence, if the rules selected by the parties allow such consolidation, any criteria set out under such rules must be taken into account to implement the intended consolidation. These criteria may be, inter alia, that the arbitrations to consolidate be among the same parties and, that the respective arbitration clauses be compatible with each other.

As stated in previous answers, the international chapter of the Colombian Statute on Arbitration is silent as to the matter of third parties bound under the arbitral clause, despite being non-signatory thereof. However, some arbitral tribunals seated in Colombia have acknowledged that, where a third-party tacitly states its consent to the contract containing the arbitral clause, the latter is binding thereon. Likewise, reference to other theories of comparative law to enforce the arbitration clause upon non-signatory third parties is possible in the following cases:

  • corporate mergers;
  • assignment of the agreement containing the arbitration clause;
  • third-party warrantor or beneficiary of the agreement containing the arbitration clause;
  • business groups

Given the Colombian laws’ silence as to third parties not signatories of the arbitral agreement in international arbitration, it is not possible to state that Colombian courts may compel third parties to resort to arbitration. However, in line with the stated criteria on recognition awards, it may be said that recognition of an award binding upon third parties supports the court decision to uphold its validity.

Gamboa Abogados

Carrera 7 # 76-35 Oficina 501
Bogotá D.C. - 110221
Colombia

+57 1 3211391

info@galegal.co www.galegal.co
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Gamboa Abogados is a boutique firm that dates back to 1943, when Ernesto Gamboa Álvarez (RIP) opened his law firm in Bogotá. Nowadays the team has 14 lawyers. Gamboa is a member of the international legal network LaWorld, allowing it to provide services to its clients through its allies around the world. Gamboa Abogados has over 70 years of experience in the area of litigation, and handles complex disputes from all legal areas, with a particular specialty in transnational commerce and infrastructure. Gamboa represents national and foreign companies in at least seven international and domestic arbitral proceedings a year. The firm's partners also act as arbitrators before the ICC, the AAA and Colombia´s most important chambers of commerce. Gamboa is recognised for its expertise in litigating before Colombia’s Supreme Court of Justice, which is a considerable advantage for clients that require representation in proceedings of recognition or annulment of international awards.

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