Constitutional Remedies Meet Arbitration in Latin America

Introduction

In the dynamic legal landscape of Latin America, the interaction between constitutional remedies and arbitration has become a focal point of analysis. This chapter delves into the intriguing interplay between constitutional challenges, notably the amparo in Argentina, the mandado de segurança under Brazilian law, tutela under Colombian law, amparo in Mexico, and the realm of arbitration.

Each jurisdiction’s distinct approach sheds light on the intricate balance between upholding constitutional rights and fostering a robust arbitration framework. This exploration navigates the nuanced ways in which these legal avenues intersect, harmonise, or potentially clash, contributing to the evolving fabric of legal practice in the region.

Argentina

Amparo action in Argentina

Amparo is a judicial action to challenge the constitutionality or legality of measures, acts or omissions from both governmental and private entities. The National Constitution recognises it expressly. ^[2] It has its specific legislation, too.^[3]

The amparo’s procedural rules aim to make this proceeding much more expedited than others to provide efficient protection for the affected party. However, the amparo is at the same time subject to stringent admissibility standards, most notably the following: (1) the unconstitutionality or illegality must be explicit, without requiring any significant evidence production or legal discussion,^[4] (2) the challenged act or omission must affect or threaten constitutional or legal rights,^[5] and (3) there must not exist a more effective judicial mean for preventing such harm.^[6]

Courts tend to interpret these rules very restrictively, so that amparos are admitted only in ‘delicate and extreme situations’.^[7] In addition, unlike other Latin American jurisdictions, Argentine law expressly precludes amparo against actions from the judiciary.^[8]

Amparo is not a standard course of action to prevent arbitration or enforcement of arbitral awards

While there is no express legal provision in this regard, the strict rules that apply to the amparo are generally interpreted as banning the possibility of filing an amparo against an ongoing arbitration proceeding or the enforcement of an arbitral award.^[9] Indeed, if any irregularity exists in the proceeding or award, the affected party has sufficient remedies within the actual arbitration proceeding or ordinary judicial proceedings available to challenge them (e.g., annulment lawsuit with any related injunctions). Thus, the amparo would be inadmissible in such cases.

However, there have been isolated and extremely exceptional cases in which courts granted amparo requests ordering to suspend an ongoing arbitration. For instance, in 2003, Panel C of the National Chamber of Appeals in Commercial Matters granted an amparo because the Argentine Chamber of Commerce arbitration was moving forward (the arbitral tribunal already being constituted) without the parties having agreed upon the terms of reference.^[10] The court considered that a subsequent annulment lawsuit could not remedy such a situation, and that the lack of agreement on the terms of reference could affect the plaintiff’s due process at the arbitration. Legal scholars criticised this decision. However, the judgment did not create a significant legal trend.

In addition, a substantial change in the legal regime took place in 2015 and 2018: the enactment by the Congress of a new Civil and Commercial Code (with generally pro-arbitration rules and express recognition of the kompetenz-kompetenz principle)^[11] and the National Law of International Commercial Arbitration (following the UNCITRAL model law), respectively.^[12] Following the years of such legal changes, the Supreme Court and the National Chamber of Appeals in Commercial Matters issued relevant decisions (1) limiting the local ’courts’ powers to review the merits of awards seeking to be enforced locally under the New York Convention,^[13] (2) enforcing the parties’ intent not to arbitrate,^[14] (3) authorising the partial enforcement of an award,^[15] and (4) restricting the grounds of annulment of an award.^[16]

Since current regulations and trends in Argentina tend to strengthen the parties’ arbitration agreement, implicitly they would preclude the amparo from acting as a means to suspend an arbitral proceeding or prevent the enforcement of an arbitral award, since doing so would contradict the parties’ arbitration agreement.

In our opinion, then, arbitration seated in Argentina should remain safe against such attempts that undermine the whole arbitral regime enacted by its recent legislation and supported by its most relevant case law.

Brazil

Mandado de Segurança under Brazilian Law

There are no constitutional remedies to directly challenge arbitral awards under Brazilian law.^[17] Nevertheless, there have been discussions about the possibility of using the mandado de segurança (mandado) to challenge awards. The mandado is a Brazilian constitutional remedy equivalent to the acción de amparo^[18] or the writ of mandamus. Under the Brazilian Constitution, the mandado is available for any person to protect a clear and perfected right ‘whenever the party responsible for the illegal actions or abuse of power is a public official or an agent of a corporate legal entity exercising duties of the government.‘^[19]

Mandado de segurança and arbitration

Case law has acknowledged that the mandado is available against judicial decisions in specific scenarios, specifically when no judicial recourse is available. The Brazilian Arbitration Act equates arbitration awards to judicial decisions.^[20] Therefore, as discussed below, scholars have discussed the possibility of filing a mandado against interlocutory decisions from arbitrators, as there is no recourse against them.^[21] However, most legal scholars conclude that the mandado is not available against arbitration decisions. More importantly, there is no precedent from a second-level or higher court accepting the use of the mandado against arbitration decisions. As noted in the 2022 Study by the Latin American and Iberian Chapter of the ICC Institute of World Business Law:

Since the enactment of the Arbitration Law in 1996, no rulings have been issued by the higher federal courts confirming the ability to use the mandado de segurança against arbitral decisions. The few precedents from lower courts suggest that this is more of a theoretical possibility.^[22]

When Brazilian courts dismiss mandados against arbitral interlocutory decisions, they align with the Brazilian Arbitration Act that enshrines private autonomy as the basis of arbitration. As a scholar explains, to admit a mandado de segurança ‘against a decision by arbitrators that violate a clear and perfect right of the parties in the course of the arbitration procedure [would] represent a violation of the procedure itself defined by the arbitrators and the parties for the solution of the dispute.’^[23]

In this regard, Professor Arnoldo Wald, one of the founding fathers of arbitration in Brazil, clarified in a famous article that:

it is not up to the judge to render decisions in mandados de segurança, or in any other judicial action, to prevent or to create obstacles to the initiation, progress or completion of the arbitration, as the first opportunity to decide about the jurisdiction of the arbitrators must be reserved for themselves, under the scrutiny of a posteriori judicial control [i.e., the annulment proceeding], exercised in a second moment, after the rendering of the arbitral award, but never before.^[24]

Further, the majority opinion is that arbitrators are private agents without ties to the state, exercising a non-state activity.^[25] The mandado is not a remedy to challenge decisions issued by arbitrators within an arbitration proceeding because the mandado is the available remedy (within the limits of the law) ‘whenever the party responsible for the illegal actions or abuse of power is a public official or an agent of a corporate legal entity exercising duties of the Government.‘ However, arbitrators are neither public officials nor agents exercising duties of the government.

The Court of Appeals of São Paulo confirmed this in 2011. It upheld a trial court’s decision that had dismissed a mandado filed against an arbitration award. According to the Reporting Justice’s opinion, adopted unanimously by the court:

the equivalence to the [public] authorities, brought by the [Mandado de Segurança Act], even if interpreted extensively, cannot be extended to the arbitrators, especially considering that the Arbitration Act provides for a specific procedure for possible cases of nullity [of the arbitration award] (Art. 33 of [Brazilian Arbitration Act]).^[26]

As noted by three of the most prominent legal scholars in Brazil, including Brazilian Supreme Court Justice Gilmar Mendes, in an important treatise on mandado, ‘the mandado de segurança cannot serve as a vehicle for the undue “judicialisation” of arbitration. It cannot constitute a form of anti-suit injunction, which is no longer admissible under our law.’^[27] In conclusion, although – in theory – the mandado is available to challenge arbitral decisions, both case law and the prevailing opinion of legal scholars find that the mandado de segurança cannot be used for this purpose.

Colombia

Tutela under Colombian law

Like other Latin American jurisdictions, Colombian law protects fundamental rights through a constitutional remedy called tutela, regulated in Article 86 of the Colombian Constitution and Decree 2591 of 1991. A tutela is an action that any person or legal entity can bring before a Colombian judge, for the immediate protection of its fundamental rights. Specifically regarding judicial rulings, a tutela is only available on an exceptional basis whenever the ruling is openly arbitrary and contrary to the Constitution, thus constituting what is known under Colombian law as a ‘vía de hecho’.^[28]

Tutela and arbitration

Arbitral awards rendered in international arbitrations seated in Colombia are subject to tutela on a highly exceptional basis. Colombia’s Constitutional Court has held so in its Judgment No. T-354 of 2019.^[29] This was the first time the Constitutional Court specifically studied the admissibility of constitutional remedies in the context of international arbitration.^[30]

In Ruling T-354, the Court restated that tutelas are available against domestic arbitral awards, on an exceptional basis, given their material equivalence to judicial rulings. According to the Court, for a tutela to be available against domestic arbitration awards, the following general procedural requirements must be met:

• the matter must be shown to have constitutional relevance (i.e., there is a violation of a fundamental right);
• there must be no other available judicial remedy;
• the tutela must be filed within a reasonable time from the alleged violation;
• the violation must be identified and shown to have had a definitive effect on the ruling; and
• it must not be a tutela against a tutela.^[31]

Additionally, the Court explained that for the tutela to succeed, the petitioner must show that the decision is illegal and that its legal basis is merely apparent (vía de hecho). A ‘vía de hecho’ may occur when one or more of the following exist:^[32]

• the decision is based on inexistent, unconstitutional or clearly inapplicable rules, or the tribunal has deviated, without any justification, from a mandatory precedent (‘vía de hecho por defecto sustantivo’);
• the tribunal has absolutely no jurisdiction (‘vía de hecho por defecto orgánico’);
• the tribunal has totally deviated from the agreed-upon procedure (‘vía de hecho por defecto procedimental’); or
• the ruling ultimately has no basis on the evidence, or the tribunal has not properly motivated its decision (‘vía de hecho por defecto fáctico’).

However, the Court determined international arbitration differs from domestic arbitration in Colombia. Tutelas against international arbitration awards issued by tribunals seated in Colombia are even more limited, given the unique features of international arbitration, which include when there is an express prohibition of judicial intervention in international arbitration proceedings. According to Article 67 of Law 1563 of 2012 (the Colombian Arbitration Act), a judicial authority may only intervene in the context of international arbitration in the specific cases outlined by the law. However, while no constitutional remedies are available for international arbitration awards under Law 1563 of 2012, according to the Court, a tutela is admissible due to the Constitution’s supremacy in Colombia. Legislation cannot exclude constitutional remedies. Although Article 67 cannot prohibit constitutional remedies against international arbitration awards, the tutela in the context of international arbitration does require a much stricter examination to proceed.

According to Article 101 of Law 1563 of 2012, parties to international arbitration can choose the applicable rules to the substance of the dispute. If foreign law applies to the substance of the dispute of an international arbitration seated in Colombia, the admissibility of the tutela cannot be determined on the basis of the same criteria used for tutelas against domestic awards (outlined above). If substantive foreign law applies, the tutela will only be admissible to review if the award violates Colombia’s international public policy. However, it is necessary to first exhaust the annulment proceeding based on that ground.

Because an international arbitration award can be annulled on the grounds of being contrary to Colombia’s international public policy, a party can allege, under said ground, procedural irregularities and beyond. This means that the analysis required to allow a tutela against an international arbitral award rendered by a tribunal seated in Colombia, even if Colombian law applies to the dispute, is even stricter.

Considering all these distinctive aspects of international arbitration, the Court concluded that while pursuing a tutela against an award issued by an international arbitration tribunal seated in Colombia is feasible, this remedy is extremely exceptional (excepcionalísimo).

Along these lines, Colombia’s Council of State held that tutelas are only available against international awards and not against procedural orders or other decisions issued by an international arbitration tribunal seated in Colombia.^[33] This decision arises from a case where a party filed a tutela against the arbitral tribunal’s decision, taken through a procedural order, to withdraw the Respondent’s counterclaim. The withdrawal was due to non-payment of the required deposits to cover the Tribunal’s and the arbitral institutions’ fees. The petitioner claimed that the tribunal violated their right to due process and access to justice, among other things. The Council of State ruled that the action was inadmissible due to the 2019 T-354 ruling and the very exceptional nature of tutelas in international arbitration. However, the Council of State did not provide any additional explanation as to whether there is any difference between final and partial awards; neither did it analyse if the decision of the arbitral tribunal, taken in the form of a procedural order, was really an award.^[34] This leaves open the question as to whether a tutela could be applicable against a partial award and which would be the standard for its admissibility.

Section 3 of the Colombian Arbitration Act, applicable to international arbitration, is based on the UNCITRAL Model Law on International Commercial Arbitration (the Uncitral Model Law). The grounds for annulment under the UNCITRAL Model Law and thus, the Colombian Arbitration Act, are designed to protect the parties against any irregularity that may impair their rights to due process and access to justice. These are the rights a tutela against awards typically aims to protect. Annulment in the seat of the arbitration is a recourse that provides adequate and sufficient protection to those fundamental rights eliminating the need to resort to a tutela whenever the arbitration is seated in Colombia.

Mexico

Amparo action in Mexico

Amparo is a judicial action to challenge the constitutionality of government measures, such as laws, regulations, administrative acts or judicial decisions. Virtually all government actions from the three branches (executive, legislative and judicial) may be subject to amparo actions. The Amparo Statute calls these measures ‘acts of authority.’ Under the Statute, an act of authority is a unilateral, imperative and coercive action (or omission) from a government entity, a private entity or an individual whose actions emulate the action of a government entity.^[35] Under the Statute, the person or entity conducting an act of authority is called a ‘responsible authority’.^[36]

There are two types of amparo: direct and indirect. The former is to challenge final court judgments (i.e., decisions that end a dispute, even if they do not rule on the merits) that violate constitutional norms.^[37] The court’s decisions on direct amparos are final (not subject to appeal) unless they deal with exceptional constitutional or human rights issues.^[38]

Indirect amparos, on the other hand, are brought to challenge actions or omissions that violate human rights, such as laws, administrative acts or court decisions that do not end a dispute (e.g., interim measures).^[39] Unlike direct amparo actions, these proceedings have two instances (i.e., the court’s decision is subject to appeal).^[40]

Arbitrators are not ‘authorities’ for amparo purposes

Mexican courts have held that arbitrators are not ‘responsible authorities’ under the Amparo Statute because:

• Arbitrators’ actions do not emulate the acts of authorities because arbitrators cannot enforce their own decisions. ^[41] Other authorities, like courts, have this power.
• The arbitrators’ authority to solve disputes relies on the parties’ agreement.^[42] Unlike courts or administrative authorities with ‘natural’ jurisdiction derived from the law, arbitrators lack official or ‘delegated’ jurisdiction.^[43]
• The parties’ appointment of arbitrators is a private affair that does not affect the public interest. It solves a private dispute.^[44]
• With this in mind, arbitral awards alone are not directly subject to amparo challenges in Mexico. However, as we explain below, court decisions confirming or annulling awards may be challenged through amparo.

Arbitrations are not entirely safe from amparo in Mexico

Although arbitral awards are not directly subject to amparo under Mexican law, judgments confirming or annulling the award are. So the question, until recently, hinged on the appropriate type of amparo to challenge these judgments.

Actions from the judiciary (an authority) are subject to amparo. Under Mexican law, federal courts may review arbitral awards and rule on their validity.^[45] Thus, a court’s judgment on an award’s validity is inevitably subject to amparo under Mexican law. This invites disgruntled parties to concoct constitutional claims against the judgment confirming an award to try to annul it by surpassing the limited annulment grounds under Mexican law. At a minimum, these amparo actions will delay the enforcement of an award. The extent of the delay depends on the type of amparo. Direct amparo would only allow for one instance (no appeal). Indirect amparo has two instances. The Mexican Supreme Court ruled on the appropriate type in 2019.

Before 2019, Mexican courts were split regarding the type of amparo that would apply against judgments confirming or annulling awards. Some courts held that it should be direct because the legislator aimed to set aside or enforce an arbitral award as quickly as possible (considering it only involves one level of review, unlike indirect amparo, which involves two).^[46] Additionally, the decision is a final judgment because the set-aside or confirmation action is an independent and autonomous proceeding.^[47] Along these lines, the courts also held that direct amparo was more appropriate because these special proceedings followed all the legal formalities and ended a dispute regarding the award’s validity.^[48]

Other courts thought it should be indirect because it is the appropriate remedy for challenging a court’s decision regarding the recognition and enforcement of an award or a request to set it aside.^[49] The Supreme Court held that it should be indirect because a court’s ruling on these requests is not a final judgment that concludes a trial.^[50] Further, the decision on an award’s validity does not relate to any civil action, whether personal or real. Strictly speaking, final judgments rule on personal, real or civil claims.^[51] Here, the court’s judgment does not rule on the merits of the parties’ dispute. It only rules on the award’s validity, a procedural, non-substantive matter.^[52]

Because of the Supreme Court’s decision, the post-award stage in Mexico now consists of three instances (i.e., set-aside orconfirmation proceeding, indirect amparo and appeal).

While legally correct under a strict interpretation of the Amparo Statute and judicial practice, the Supreme Court’s ruling is unfortunate for the development of the arbitral practice in Mexico. Now, a party prevailing in an arbitration seated in Mexico is left at the mercy of disgruntled debtors who may seek to delay enforcement. The increased judicial intervention of this sort normally encourages dilatory tactics from debtors.

Footnotes