Current Issues in Latin America José A. Rodríguez Márquez Chartered Arbitrator

Supreme Court of Appeals Supreme Court of Chile QISHENG RESOURCES LIMITED v SOCIEDAD MINERA SANTA FE Dated April 21st, 2016. Supreme Court of Appeals ARCE HOLDINGS CORPORATION v JUDGMENT OF THE COURT OF APPEALS OF SANTIAGO (Nullity motion) Dated June 26th, 2016. Supreme Court of Appeals RÍO BONITO, S.A. ET AL. v JUDGMENT OF THE COURT OF APPEALS OF SANTIAGO (Nullity motion) Dated November 23th, 2016.

QISHENG RESOURCES LIMITED v SOCIEDAD MINERA SANTA FE ISSUE: Qisheng Limited demanded the execution of the ICC Arbitral Tribunal Award dated February 13th, 2015, by which the Tribunal ordered the payment from Minera Santa Fe. Minera Santa Fe rejected the execution of the award claiming breach of bilateralism in the hearing, due process and violation of the public policy. Minera claimed that the arbitrator allowed the late offering of evidence without giving Minera the opportunity to dispute them, breaching the due process and therefore, the national public policy. The company based its claiming in the Ley No. 19.971 of Chile and Article V.2. of the New York Convention. RESOLUTION: The Supreme Court emphasized that the appearance in the arbitration process was evident and thus the claim of violation to the public policy under the New York Convention was not valid.

RÍO BONITO, S.A. ET AL. v JUDGMENT OF THE COURT OF APPEALS OF SANTIAGO ISSUE: Río Bonito appeals for judicial review under the Ley 19.971. It claimed that the award by the Arbitral Tribunal appointed by the Court of Appeals of Santiago, was contrary to the Chilean public policy because it breached the due process and the procedural principle of equality. RESOLUTION: The Court of Appeals rejected the motion since the arguments made were vague and did not establish how the public policy was breached, since the arbitral proceeding was conducted in compliance to all the procedural principles.

ARCE HOLDINGS CORPORATION v JUDGMENT OF THE COURT OF APPEALS OF SANTIAGO . ISSUE: Arce Holdings appeals for judicial review under the Ley 19.971 against the award made before the “Centro de Arbitraje y Mediación de la Cámara de Comercio de Santiago” claiming it was contrary to public policy. The arbitrator declared Matriz as the breaching party of the contract, but he did not order the payment of money damages. Moreover, Arce Holdings claimed that the arbitrator resolved about obligations that were not part of the original contract. Arguing that it breached the principles of autonomy, contractual liberty and binding force of the contracts. RESOLUTION : The Court based its decision on the Ley 19.971, the New York Convention, the UNCITRAL Model Law and the Inter-American Convention on International Commercial Arbitration of 1975. The Court pointed out the difference between domestic and international public policy, being the latter the applicable when claiming a violation on the international arbitration context. International public policy only encompass the most fundamental judicial principles in order to avoid serious violations of the due process, which may not be the same approach covered by the definition of local public policy.

Colombian Supreme Court of Justice Civil Jurisdiction HTM LLC v FOMENTO DE CATALIZADORES FOCA, S.A.S. Dated May 18th, 2016.

ISSUE: HTM demanded the execution of the partial final award made under Texas Laws (U.S.) by the Court of Arbitration of the International Chamber of Commerce. Fomento, in contrast, claimed that the arbitral clause in the contract was contrary to public policy because the Commercial Agency Contract, which originated the proceeding, should always be governed by the national law (the Colombian Commercial Code). RESOLUTION : The Supreme Court emphasized the obligations under the Ley 39 of 1990 which incorporated the principles of the New York Convention. The Court noted the differences between local and international public policy, explaining that only when the latest is breached they could deny the recognition of a foreign award if it results to be contrary to the nation fundamental institutions. The Court distinguished the concepts of public policy in terms of substantive law (i.e. good faith and non-discrimination principles) and procedural law (i.e. principles of proper notice, equality and justice). It also established the difference between public policy of direction and protection, declaring that only what is included in the category of “direction” can be related to the notion of international public policy relevant for the purposes of the nullity motion.

Mexican Supreme Court of Justice Amparo Trial 71/2014 COMISIÓN FEDERAL DE ELECTRICIDAD v AMPARO JUDGMENT OF THE 11TH DISTRICT JUDGE IN CIVIL LAW OF MEXICO CITY Dated May 18th, 2016.

ISSUE: CFE requested the judicial review in order to declare the nullity of the arbitral award, under the argument that the award, which was made under the ICC Rules, was contrary to the public policy according the Article 1457 of the Mexican Commercial Code. According to CFE, the award was not in compliance with the procedural principle of equality because the Arbitral Tribunal gave AES Mérida III, S. de R.L. de C.V an unjust privilege by relieving it from the burden of proof about the existence of one of the facts that motivated the dispute. RESOLUTION : The Supreme Court made different statements: Courts can annul an award according to the Commercial Code if (1) the subject matter was not arbitrable and (2) the award is contrary to public policy. In the claim of violation of public policy, the arbitral award does not need to injure the collectivity. Refers to public policy in the scope of arbitration, as “all that is not available for the parties and the arbitrator (…) that varies in time and space (…) and which content is determined by every State ”. Public policy protects the fundamental judicial institutions, and the disputes about it involves serious violations to the principles of procedural justice.

An award will be contrary to public policy when its content “goes further than the national laws, principles and judicial institutions and transcends the boundaries of the community due to the serious and offensive of its content”. About the allegation that any action must be properly justified by the authorities, the Court noticed that this duty differs in arbitration. An award cannot be reviewed under the same standards as the ones that apply to a judicial resolution.   The parties, by agreeing to arbitrate, have limited the scope of judicial review and thus, there is no room for claiming the constitutional requirements of legal basis and reasoning that are applicable to other judicial and authority acts. Related to the claim that the arbitral tribunal exceeded its jurisdiction, Courts can only review the regular interpretative exercise made by the arbitral tribunal, but it does not mean they can replace the judgment made by arbitrators.

Final considerations

JOSE A. RODRÍGUEZ MÁRQUEZ BUFETE RODRÍGUEZ MÁRQUEZ Thank you! JOSE A. RODRÍGUEZ MÁRQUEZ BUFETE RODRÍGUEZ MÁRQUEZ Paseo de los Tamarindos 90, 14th floor Bosques de las Lomas 05120 Mexico City. Phone number: (+52 1) 5536013658 www.brm.com.mx