Rejection of arbitral award nullity request - Validity of an exequatur proceeding

I. In re “Hasbro Intl. Inc. vs Top Toys Argentina S.A. s/ queja” Room D of the Commercial Court of Appeals rejected the leave to appeal previously denied by a lower court. The lower court had rejected a claim where the plaintiff requested the declaration of nullity of an arbitral award rendered under the Arbitration Rules of the American Chamber of Commerce in Argentina.

The claimant considered that several “essential procedural defects” occurred during the arbitral proceeding and that the arbitral award should be declared null in accordance with section 760, 2nd par. of the Civil and Commercial Code of Proceedings (“CCCP”). The lower court found that none of the provisions of Section 760, 2nd par. CCCP were met in the particular case, and since the possibility of filing appeals or nullity claims had been previously waived by the parties, the final arbitral award was valid.

The plaintiff filed an appeal before the Court of Appeals, which rejected the appellant’s request, and confirmed the lower court decision.

The Court of Appeals decision confirms that in those cases where appeals or nullity claims against an arbitral award have been validly waived by the parties, the nullity of such award can only be requested based on the requirements established by Section 760, 2nd par. CCCP, which should be construed restrictively. If none of the requirements listed by Section 760 2nd par. CCCP occur (essential procedural failure; award rendered after the time limit, “extra petita” award), the nullity of such award should be dismissed.

II. In re “Reef Exploration Inc. vs. Compañía General de Combustibles S.A. s/ oficio Ley 22.172” Room D of the Commercial Court of Appeals accepted the claimant’s appeal against the lower court decision which repealed an exequatur proceeding filed by a foreign company. The claimant’s exequatur submission requested the local recognition of an arbitral award rendered under the Arbitral Rules of the American Arbitration Association (“AAA”) in Dallas, Texas, USA.

The defendant opposed the recognition, considering that (i) the discrepancies included in the request for arbitration were previous to the execution date of the contract containing the arbitration clause, (ii) the arbitral panel had no competence since a local judge had declared his own jurisdiction to hear this controversy, and had ordered the arbitration panel to withdraw from the case, (iii) the arbitral award violated public policy principles of Argentine law, and (iv) some procedural requirements of Sections 517-519 CCCP were not met in the case.

Regarding the first of the defendant’s arguments, the Court of Appeals construed that, even though the facts on which the arbitral claim was based had occurred prior to the execution date of the main contract, those facts or circumstances were intimately linked to that contract. Therefore, those facts were also subject to the arbitral jurisdiction. This conclusion was also reached by the arbitral panel, when it decided its own jurisdiction in the particular case (kompetenz-kompetenz principle).

Regarding the claimant’s second defence, the Court of Appeals resolved that the local judge’s declaration on his own jurisdiction is simply an invitation for the international arbitral panel to withdraw from the particular case, but this local decision is not mandatory for said arbitration panel.

The Court of Appeals decided that there were no elements or circumstances that could be considered to be an alleged violation of public policy principles of Argentine law (Section 517 4th par. CCCP) .The Court also understood that the jurisdiction clause had been validly agreed and acknowledged by the parties during the arbitration proceeding.

In addition, the Court of Appeals found that all requirements to authorize a foreign award under Section 517-519 CCCP were met, and therefore recognized the local validity of the international arbitral award rendered under the AAA Arbitration Rules.