Exequatur. Assessing the amount of the proceedings

The exequatur is a condensed judicial proceeding to verify whether a foreign award fulfills all the formalities required in order to acknowledge such award as a valid, final and enforceable jurisdictional decision.

In the proceedings between Reef Exploration Inc and Compañía General de Combustibles, on November 5, 2002, Tribunal D of the Commercial Court of Appeals[1] decided to modify the lower court’s decision acknowledging, among other matters, the enforceability of an arbitral award rendered in an institutional arbitration carried out in accordance with the AAA arbitration rules.

The Court of Appeals decided that the litigation costs had to be borne by the defendant, and based the calculation of the attorney’s fees on the assumption that the exequatur proceeding has no economic content.[2]

The defendant’s attorneys filed an extraordinary appeal against the Court of Appeals calculation of the attorney’s fees.[3] The appeal was denied by the Court of Appeals. The same party filed an appeal (queja) before the Supreme Court of Justice[4] in order to reverse (i) the Court of Appeals’ refusal of the extraordinary appeal and (ii) the Court of Appeals’ decision of November 2002.

On February 21, 2006 the Supreme Court of Justice rejected the appeal filed by counsels of the defendant.[5]

It is to be noted that the Supreme Court’s decision was rendered following the General Prosecutor’s opinion. In the General Prosecutor’s opinion the appeal should be rejected since the requirements stated in the law to accept the Supreme Court’s intervention were not met and, furthermore, the exequatur is a formal procedure without economic content.

The relevance of the Supreme Court’s decision is that it recognizes that the exequatur procedure has no economic content. This means that in order to start an exequatur procedure before the local courts the defendant must to pay a predetermined amount as court tax and the counsels’ fees at this stage of the process must be calculated without taking into consideration the amount arising out of the arbitral award. In sum, the judicial cost of the exequatur and enforcement process of the foreign arbitral was substantially reduced.