Venezuela: Recent, significant commercial arbitration developments include several Supreme Tribunal cases

In this article, we summarize two Supreme Tribunal of Justice of Venezuela (STJ) cases from 2019 that align with Venezuela’s increased disposition to commercial arbitration. By way of contrast, we highlight an STJ decision from early 2020 that places the general autonomy of arbitrators over the arbitral process at risk. Finally, we describe the Center for Conciliation and Arbitration’s (CEDCA) revised arbitration rules and its newly introduced Dispute Board Rules.

Recent STJ decisions favoring arbitration

Despite earlier precedent, which arguably impeded the development of commercial arbitration in Venezuela, recent jurisprudence has reflected a more pro-arbitration stance.

Recuperaciones e Inversiones Vibiemar, C.A. v. Cervecería Regional, C.A. (Judgment 51/2019) and Bisatur, C.A. v. Consorcio Cocomangos, C.A. (Judgment 299/2019)

In line with this trend, the STJ’s Political-Administrative Chamber held on February 14, 2019, that the mere existence of an arbitration clause was sufficient to negate state courts’ jurisdiction. The STJ found that domestic courts should limit themselves to verifying the existence of an arbitration agreement, and that once they have done so, the courts a duty to immediately refer the dispute to arbitration.

On June 5, 2019, the STJ’s Political-Administrative Chamber held that, since there was a valid arbitration clause, an arbitral party’s request – in this case, the plaintiff in trial – for interim measures before a domestic court did not constitute an implicit waiver of the right to arbitrate. The court reasoned that the respondent’s conduct in exercising his right to defense at trial also did not constitute an implicit waiver of the right to arbitrate, because his conduct had evidenced a clear willingness to arbitrate, by rejecting the court’s jurisdiction to hear the case from the first time he appeared in court.

Alimentos Polar Comercial, C.A. v. Modexel Consultores e Servicios, S.A. (Judgment 42/2020)

In contrast to the trend above, on February 20, 2020, the STJ’s Constitutional Chamber granted an arbitration party’s petition of avocamiento with respect to a tribunal’s draft final award. Avocamiento is a request for the STJ to take over a case from an inferior or lower level court or tribunal. The STJ ordered the arbitral tribunal and the arbitration center to provide all documents related to the arbitration, ordered a stay of the proceeding, and prohibited any enforcement of an eventual award until the issuance of its final decision on the avocamiento. This case represents a cause for concern for arbitration practitioners and users, because, pursuant to the STJ’s “Organic Law,” avocamiento is normally limited to serious public policy violations, allowing the STJ to take over a case currently in progress before the “courts of the Republic” where the lower court’s conduct is harmful to the judiciary’s reputation. An arbitral tribunal, however, is not a “state court.” Accordingly, it would appear that the Constitutional Chamber should not even have considered the petition—let alone substantially delay the arbitral proceedings.

In even entertaining the possibility of the petition, it is arguable then that this case signals a step backwards in Venezuelan jurisprudence, which has otherwise favored arbitration in recent years. It threatens to jeopardize arbitration’s place as an independent avenue for redress and one, that by design, is meant to permit parties (and particularly international parties) to resolve their disputes in a manner that is, at the very least, removed from the control of domestic courts. It is expected that the Constitutional Chamber will probably backtrack and ultimately clarify that an avocamiento is inapplicable to an ongoing arbitration, as is reflected in the parties’ agreement to arbitrate in the first place.

CEDCA amends Conciliation and Arbitration Rules and introduces Dispute Board Rules

In 2019, following months of consultations, CEDCA amended its Conciliation and Arbitration Rules effective February 19, 2020. Notable additions, include rules providing for electronic filing, rules concerning the appointment and role of arbitral tribunal secretaries (which was not addressed in prior Rules), added guidance for the process of selecting arbitrators, and rules addressing the possibility of adding additional parties to existing arbitration proceedings.

In addition, CEDCA introduced for the first time a set of Dispute Board Rules effective January 1, 2020. These rules authorize expert committees to monitor the execution of engineering, construction, and other complex projects, and to resolve certain conflicts that may arise early on during these projects’ execution.

Read this article in Spanish.

Marlon Meza is an independent arbitrator and consultant. He is a former member of DLA Piper’s international arbitration team based in Houston.