sábado, 18 de febrero de 2017
In 2012, Colombia enacted Law 1563, which allows international arbitration to be included as the dispute settlement mechanism in cross-border transactions. This Law allows for international arbitration to be used (i) when the parties conduct business in different countries; (ii) when the place of performance is different than where parties are located; and/or (iii) when the subject matter affects international commerce. The Constitutional Court has held, however, that international arbitration may only be used when at least one party to the agreement is domiciled outside of Colombia, which should be considered, so as to not use this mechanism in transactions involving only Colombian parties. The Law also makes clear that the decision of the parties to use international arbitration must be explicitly stated in writing, making it even more essential that a M&A contract include an explicit dispute settlement clause.
Given that Colombian law now recognizes international arbitration, the benefits of this mechanism, over domestic courts particularly, cannot be over emphasized. International arbitration carries with it: a higher level of enforceability, as it is recognized in a majority of jurisdictions around the world; the ability of selecting arbitrators who are specialized in the subject matter of the dispute; a heightened level of confidentiality; greater neutrality, so that no one party has a geographical advantage; greater finality, without appeal; and significantly reduced time and cost, particularly in relation to the often drawn out procedures in domestic courts.
While Colombian law only requires that an agreement make it clear that international arbitration will be used, the clause presenting this decision should clearly set forth: the number of arbitrators (generally three arbitrators are preferred in cross-border transactions); how these arbitrators should be chosen, with preference to a mutual agreement of parties (using the Chamber of Commerce’s list of internationally approved arbitrators); the location and language of the arbitration, which should consider where the primary purposes of the agreement will be carried out, as well as the language in which the contract was drafted; both the substantive and procedural law that will be followed, which should mirror that provided in the agreement’s choice of law provision; the rules governing the arbitration itself, which should follow an internationally recognized set of arbitration rules, most preferably the International Chamber of Commerce; and clarity that all decisions issued by the arbitral tribunal will be final and that the clause governs the entire transactional agreement.