Arbitration

Arbitration: Colombia

María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Baker McKenzie

Legislation

1. Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?

Colombia

The legislation that governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings is Law 1563 of 2012 (the Arbitration Statute), the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, approved by Law 39 of 1990, as well as other international conventions, such as the Inter-American Convention on International Commercial Arbitration of 1975 (the Panama Convention), approved by Law 44 of 1986.

The Arbitration Statute governs both domestic and international arbitration in Colombia, and provides for separate regimes for each of these proceedings. The international section of the Arbitration Statute draws largely from the UNCITRAL Model Law on International Commercial Arbitration, including its 2006 amendments. As per article 62 of the Arbitration Statute, the provisions contained in the section on International Arbitration apply mainly to arbitrations seated in Colombia.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

2. Has the UNCITRAL model arbitration law been adopted in your jurisdiction?

Colombia

Yes. The international arbitration section of the Arbitration Statute (articles 62 to 116) follows, although with certain modifications, the UNCITRAL Model Arbitration Law. Some of the relevant modifications include the following:

  • The Arbitration Statute omits article 1.3 (b)(i) of the UNCITRAL Model Arbitration Law, which provides that an arbitration is international if the place of arbitration selected in the arbitration clause is located outside the state in which the parties have their places of business.
  • The Arbitration Statute omits article 1.3(c) of the UNCITRAL Model Arbitration Law, which provides that an arbitration is considered international if the parties have agreed expressly that the subject matter of the arbitration clause relates to more than one country.
  • Unlike the UNCITRAL Model Arbitration Law, the Arbitration Statute establishes that an arbitration is international if the subject matter of the dispute affects the interests of international commerce.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Conventions

3. Is your jurisdiction a party to both the New York Convention and the Panama Convention? Is it a party to any other conventions or treaties governing international commercial arbitration agreements, awards or proceedings?

Colombia

Yes, Colombia is a party to both the New York Convention and the Panama Convention.

In addition, Colombia has entered into The Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (the Montevideo Convention), approved by Law 16 of 1981, and the 1889 Treaty on International Procedural Law of Montevideo, approved by Law 68 of 1920.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

4. Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?

Colombia

Yes, Colombia is a party to the ICSID Convention, approved by Law 267 of 1996. The ICSID Convention came into force in Colombia on 14 August 1997 and, no reported steps have been taken by the state to withdraw from it.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

5. Is your jurisdiction a party to other conventions that directly affect the enforceability of arbitration agreements, rights or awards?

Colombia

No Colombia is not party to any other conventions that directly affect the enforceability of arbitration agreements, rights or awards.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Commercial arbitral agreements and arbitrability

6. Some jurisdictions have permitted parties to compel resolution of a dispute by means of arbitration only if the agreement to arbitrate was entered into after a dispute has arisen. Is a pre-dispute arbitration clause to resolve international commercial disputes by arbitration enforceable?

Colombia

Yes. A pre-dispute arbitration clause to resolve international commercial disputes by arbitration is enforceable. For international arbitration, the Arbitration Statute does not distinguish expressly between pre-dispute arbitration clauses and post-dispute arbitration clauses. Article 69 of the Arbitration Statute provides that an arbitration agreement can be entered into regarding disputes that have emerged or that could emerge, and that the arbitration agreement may be in the form of a compromissory clause or an independent agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

7. What are the requirements for an enforceable arbitral agreement?

Colombia

Article 69 of the Arbitration Statute requires that the arbitration agreement be in writing. This is the only requirement provided for in the Arbitration Statute for an arbitration agreement. Article 69 of the Arbitration provides what can be understood as a written agreement to arbitrate.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

8. Is there subject matter that is not legally subject to arbitration in the context of an international business transaction?

Colombia

The Arbitration Statute does not include a list of arbitrable matters. Domestic courts have ruled that certain rights cannot be subjected to arbitration and that only disputes over rights that the parties are generally free to waive may be referred to arbitration. These rights include, among others:

  • certain fundamental and collective constitutional rights;
  • certain labour rights;
  • rights under antitrust laws and certain intellectual property rights;
  • rights pertaining to the civil status of persons and, in general, family law rights; and
  • the discussion on the validity of administrative acts issued in exercise of sovereign ‘exceptional powers’.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

9. Are there any limits to the ability of a state or an instrumentality of the state to enter into an agreement to arbitrate in your jurisdiction? If so, under what circumstances may the state or its instrumentalities enter into such an agreement? Please describe the requirements that must be met for the state to enter into a binding arbitration agreement.

Colombia

There is no restriction to the ability of a state entity to enter in an arbitration agreement under the Arbitration Statute. Articles 1 and 2 of the Arbitration Statute provide that domestic arbitrations involving state entities must be decided under law (as opposed to ex aequo et bono) and must follow the rules applicable to institutional arbitration.

In respect of infrastructure disputes, article 14 of Law 1682 of 2013 expressly authorises the state to resolve them through arbitration.

Certain limitations are established, however, under several successive presidential directives that have been issued since 2015. Presidential Directive 04 of 2018 (currently in force) provides that an arbitral agreement (with national scope) may be included in contracts with Colombian Public Entities as a matter of public management only after a thorough study of whether it would be convenient and necessary to avoid Colombian administrative jurisdiction. The Legal Defence Agency of Colombia assists public entities in determining the necessity or convenience of including an arbitral agreement in a particular contract. In addition, Directive 04 provides that before entering into an arbitral agreement, the competent offices (ie, the Secretary General or the Director of the Legal Office) of the concerned entity must issue a formal opinion assessing the convenience and necessity of that course of action.

Directive 04 also establishes procedures for the appointment of arbitrators.

In cases of arbitral agreements with an international scope, Directive 04 establishes that the prior approval of the Director of the Legal Defence Agency of Colombia is needed. In addition, the Directive provides that the arbitral agreement may not call for the application of the rules of the ICSID.

Similar conditions to those originally included in Directive 04 were included in the District Directive 22 of 2018, which is applicable to the entities under the jurisdiction of the Mayor of Bogotá.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

10. Does the law specify whether an arbitration will be in equity or under law if the parties do not expressly specify the nature of the arbitration in the agreement?

Colombia

For international arbitration, article 101 of the Arbitration Statute establishes that the arbitral tribunal can decide ex aquo et bono only when the parties authorise it to do so.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

11. How does the law limit party autonomy with respect to the terms of an arbitral agreement?

Colombia

In international arbitration, the Arbitration Statute permits the parties to adjust the proceedings as they deem appropriate. For instance, under articles 72 and 73 parties can decide freely on the number of arbitrators, the appointment procedure and the arbitral institution. The parties can also agree on the seat and language of the arbitration.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

12. Under what circumstances does the law allow a non-signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

Colombia

In international arbitration, the Arbitration Statute is silent on this matter.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

13. Under what circumstances does the law allow a signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that did not sign the arbitral agreement?

Colombia

The Arbitration Statute is silent on this matter. Generally, party consent is required to proceed with arbitration.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

14. Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it in a court of law by a signatory of the arbitral agreement?

Colombia

The Arbitration Statute is silent on this matter. Under general procedural laws, the signatory may raise the existence of the arbitration agreement as a jurisdictional objection (article 101 of the General Code of Procedure) in court proceedings and prove that the non-signatory is bound by the arbitration agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

15. Is there any law in your jurisdiction specifically governing the arbitrability of consumer or labour disputes?

Colombia

Yes. The Arbitration Statute allows for the arbitration of consumer-related disputes. Prior to the enactment of the Arbitration Statute, the arbitration of such disputes was prohibited under article 43 of Law 1480 of 2011.

The arbitration of consumer matters is also addressed in articles 80 and 81 of Decree 1829 of 2013. Article 80 establishes that an arbitral agreement may be included in any contract involving a consumer relationship, particularly those to which the parties adhere to, as an option. The party to which the option is granted is entitled to accept it or reject it, and may make it effective by presenting a request to the Arbitration Institution. The acceptance of the arbitration agreement must be free and express and may not be inferred merely by entering into the legal relation. Failure to accept the option leaves it without effect. Article 81 requires that certain conditions may be included in the arbitration agreement. For instance, it allows the parties to agree to refer to arbitration all disputes arising from the consumer relation, in any of its phases. Also, it allows the parties to agree on the seat of the arbitration, the time frame for the final decision, the arbitral procedures and how the costs of the arbitration will be paid.

Regarding labour disputes, article 452 of the Colombian Labour Code requires that certain types of labour disputes related to collective labour rights be settled through arbitration. These are: (i) disputes regarding collective labour in the area of essential public services; (ii) collective labour disputes in which workers elect arbitration in accordance with article 444 of the Labour Code; and (iii) collective labour disputes of unions. That same article provides that other types of collective labour conflicts may be settled through arbitration if the parties freely agree to do so. Arbitration provided in the Colombian Labour Code is different from the arbitration provided for in the Arbitration Statute, as it occurs in the context of collective bargaining negotiations.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

16. Does your jurisdiction provide for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

Colombia

The Arbitration Statute does not include any provisions specifically related to class action or group arbitration. In a decision rendered on 11 May 2001 (Exp 1100122030002001-0183-01), the Supreme Court of Justice addressed this topic and noted that arbitral tribunals can decide class actions, where the parties to the class action are also parties to the arbitration agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

17. Are contractual waivers precluding arbitration of claims on a class-wide basis enforceable? Under what circumstances have such waivers been upheld or set aside by the courts?

Colombia

Parties may exclude class actions from an arbitration clause. What parties to an agreement may not do is to waive their right to initiate a class action; this is precluded under article 13 of the Colombian General Code of Procedure. If the parties exclude class actions from the arbitration clause, this provision may not be enforced and then they may initiate a class action before Colombian courts.

To our knowledge, no court has either upheld or set aside a waiver precluding arbitration of claims on a class-wide basis.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

18. If the parties’ contract is silent on the issue of class-action arbitration, is class-action arbitration allowed under the law of your jurisdiction?

Colombia

This would depend on the facts of the case, and in particular on the wording of the arbitration clause. If all the plaintiffs to a class action are also parties to the arbitration agreement, they may initiate class-action arbitration even though it was not expressly included in the arbitration clause.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

19. Are foreign arbitral institutions without a physical presence in your jurisdiction authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law to administer an arbitration seated there?

Colombia

Foreign arbitral institutions without physical presence in Colombia are allowed to administer arbitrations seated in Colombia.

There is no requirement for a foreign institution to be licensed under Colombian law to administer an arbitration seated in Colombia.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Arbitral institutions and arbitrators

20. Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution (such as the ICC, ICDR, LCIA or similar institutions) vulnerable to challenge because it was issued under the auspices of a foreign institution?

Colombia

No. International arbitral awards may be challenged on the grounds provided by articles 107 and 108 of the Arbitration Statute. These grounds do not include issuance of the award under the auspices of a foreign institution.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

21. Does the law require that arbitrators in international arbitrations be nationals or residents of your jurisdiction?

Colombia

No. The Arbitration Statute does not require specific residence of arbitrators in international arbitration proceedings (article 73, Arbitration Statute). The law specifically provides that a person’s nationality shall not be an obstacle to their serving as arbitrator.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

22. Does your law require that arbitrators in international cases be lawyers?

Colombia

No. The Arbitration Statute specifically provides that arbitrators in international arbitrations may or may not be lawyers, as decided by the parties.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

23. Does your jurisdiction provide immunity from civil lawsuit to arbitrators serving in an arbitration with its legal seat in your jurisdiction? Under what circumstances does such immunity apply or not apply?

Colombia

Arbitrators in domestic arbitration have the same rights, duties and responsibilities as judges and thus are immune from liability except for gross negligence or wilful misconduct. The Arbitration Statute is silent with respect of the liability of arbitrators in international arbitration; consequently, this matter is governed by the arbitration agreement and the applicable arbitration rules.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

24. Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?

Colombia

Foreign arbitrators serving in an arbitration seated in Colombia, may be subject to withholding tax and to value added tax.

Concerning withholding tax, fees earned by arbitrators that are foreign individuals without residence or domicile in Colombia and that are not physically located in Colombia during the process will be deemed as foreign source income. Therefore, no withholding tax should be applied to these fees.

If the arbitrators travel to Colombia, the fees will be deemed as Colombian source and they will be subject to a 20 per cent withholding tax for income tax purposes.

VAT is a debated subject. VAT (19 per cent) is triggered by the provision of services within Colombian territory or from abroad to Colombian purchasers. On the other hand, services that are provided exclusively abroad, because they are consumed outside Colombia, do not trigger VAT.

A conservative approach for the first scenario (arbitrators located abroad), is to assume that the arbitration decision is a service provided from abroad for an arbitration seated in Colombia, and therefore give rise to the obligation to pay VAT. In the scenario, in which arbitrators travel to Colombia ,it could be argued that their services are provided in Colombia and therefore the obligation to pay VAT will be triggered.

Tax deductions to the paying party and to the arbitrator may be applicable, as provided in the applicable law.

 

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

25. Must arbitrators in international arbitrations be independent and impartial? What is the legal standard governing conflicts of interest and disclosure by arbitrators in international arbitrations?

Colombia

The Arbitration Statute does not specifically address arbitrator conflict of interests. Article 64 of the statute does, however, require that international arbitration be interpreted so as to promote uniformity in international arbitration. Accordingly, under article 64, international standards for disclosure and disqualification may be applied to international arbitration in Colombia.

In international arbitration, article 75 of the Arbitration Statute obliges potential arbitrators to disclose all circumstances that give rise to justified doubts regarding their independence and impartiality.

Further, article 75 of the Arbitration Statute provides that parties may challenge an arbitrator where there are circumstances that give rise to justified doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not meet the requirements agreed by the parties (article 75, Arbitration Statute).

The Arbitration Statute enables the parties to agree on the procedure to decide a challenge, or apply the proceeding provided for in the law.

As per article 76 of the Arbitration Statute, challenges must be submitted as soon as the challenging party becomes aware of the grounds to challenge the arbitrator. The challenged arbitrator and the other parties to the arbitration have ten days to file a reply. The challenged arbitrator shall be replaced if he resigns or if the other party accepts the challenge. If this is not the case, and the challenge has to be decided, then the institution or the civil court will decide the challenge of a sole arbitrator or the remaining members of the tribunal shall decide the challenge.

If more than one arbitrator is challenged on the same grounds, the arbitral institution that appointed the panel, or whose rules govern the arbitration, will rule on the challenge. Absent such an institution, the civil circuit court will rule on the challenge.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

26. Will courts entertain requests to disqualify an arbitrator before the conclusion of an award?

Colombia

Article 75 of the Arbitration Statute provides for the limited circumstances in which courts can entertain requests to disqualify an arbitrator before the conclusion of an award (ie, where an arbitrator has been challenged and there is no arbitral institution administering the proceedings).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Arbitral proceedings

27. Discuss the public perception of the reliability of arbitration as a dispute resolution method in your jurisdiction.

Colombia

In our view, the general perception in Colombia toward arbitration is overall favourable. Arbitration is often used as dispute resolution mechanism in major contracts and transactions. State entities also resort to arbitration. To date, corruption allegations have referred to the underlying contractual relationship between the parties, but not the arbitration itself.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

28. Does the law require that arbitral proceedings seated in your jurisdiction be held in a specific language?

Colombia

In international arbitration, the parties are free to agree on the language of the arbitration (article 95, Arbitration Statute).

In domestic arbitration, the proceedings must be in Spanish (article 104, General Code of Procedure).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

29. Can foreign lawyers serve as advocates in arbitral proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel?

Colombia

In domestic arbitration, only Colombian lawyers may act as counsel (article 74, Colombian General Code of Procedure).

In international arbitration, article 73.3 of the Arbitration Statute provides that counsel are not required to be admitted to the practice of law in the jurisdiction of the seat of the arbitration, nor to be nationals of the country where the seat is located.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

30. Are the fees of foreign lawyers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?

Colombia

Such fees are deemed Colombian-source income, whether the services are provided domestically or from abroad. When the providers of the services are foreign lawyers without residence, domicile or permanent establishment in Colombia, a 20 per cent withholding tax should be applied. The withholding tax is the final tax for the lawyers and they are not obliged to file income tax returns.

Regarding VAT, see question 24.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

31. In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings into a single proceeding?

Colombia

The Arbitration Statute is silent on the matter. However, consolidation may be agreed to with reference to specific arbitration rules or in the arbitration agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

32. Please describe common practice and usage in international arbitrations seated in your jurisdiction with respect to a party’s right to require an opposing party to produce documents pertinent to the dispute.

Colombia

The Arbitration Statute does not impose any document production obligations on the parties to an international arbitration. Agreements on document production are often made when defining the procedural rules of the arbitration, with reference to the IBA Guidelines on the Production of Evidence in International Arbitration.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

33. Does the law impose a duty of confidentiality in arbitration? If so, on whom?

Colombia

The Arbitration Statute is silent in this respect. Parties to an international arbitration may establish confidentiality obligations by agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

34. Does the law authorise third-party funding for international arbitration? Are there any ethical limitations imposed upon counsel to the parties that restricts the use of such funding?

Colombia

The Arbitration Statute does not provide rules nor prohibits third party funding for international or domestic arbitration.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

35. Are there any mandatory national rules of professional ethics that apply to counsel in an international arbitration in your jurisdiction? If so, are those rules applicable to counsel from another jurisdiction participating in an arbitration in your jurisdiction?

Colombia

Colombian lawyers are bound by professional rules established in Law 1123 of 2007. These professional rules apply only to lawyers admitted to practise in Colombia and govern the conduct of counsel in any proceeding, including arbitration.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

36. Are there any mandatory rules on oath or affirmation for witnesses testifying in an arbitration in your jurisdiction that have to be administered prior to their testimony? If so, what are they?

Colombia

The Arbitration Statute does not require witnesses to take an oath in international arbitration. Domestic arbitration, on the other hand, follows the rules of the Colombian General Code of Procedure under which witnesses are required to take an oath (article 220 of the General Code of Procedure).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Court support for arbitration

37. Are there restrictions in your jurisdiction on the interviewing of witnesses in anticipation of hearings or giving of testimony?

Colombia

In international arbitration, article 92 of the Arbitration Statute follows the provisions of article 19 of the UNCITRAL Model Law under which tribunals are free to establish the rules for taking evidence in the absence of an agreement of the parties.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

38. Can arbitrators decide on their own jurisdiction? Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?

Colombia

Yes, the principle of Kompetenz-Kompetenz is recognised in Colombia. Under article 79 of the Arbitration Statute the arbitral tribunal can decide on the matter of its own jurisdiction only. A party must object to the jurisdiction, at the latest, at the time of filing the response to the claim, and the tribunal may decide on said objections jurisdiction before or in the final award. 

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

39. Do the courts follow the principle of the independence and separability of the arbitration clause?

Colombia

Articles 5 and 79 of the Arbitration Statute, provide that the arbitration agreement is autonomous from the contract in which it is included. Therefore, the invalidity, inexistence or unenforceability of the main contract does not invalidate the arbitration agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

40. Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?

Colombia

Article 80 of the Arbitration Statute allows international arbitral tribunals to grant interim measures that can later be enforced through judicial authorities, with independence of the state in which they were granted (article 88 of the Arbitration Statute). Such enforcement will follow the applicable law on the enforcement of judicial orders.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

41. Can arbitrators issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court lend its aid in enforcing such an order against a recalcitrant third party? Also, if arbitrators can issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them, are there any limitations to their doing so?

Colombia

Domestic arbitral tribunals are empowered to subpoena witnesses or documents from third parties (article 31, Arbitration Statute), since they have the powers provided for in the General Code of Procedure. International arbitral tribunals may seek the assistance of domestic courts to obtain evidence from third parties (article 100, Arbitration Statute).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

42. Can a party to an arbitration seek relief from the court to obtain evidence in aid of an international arbitration? What is the scope of such relief?

Colombia

In international arbitrations, the parties or the tribunal are allowed to request the assistance of local courts in obtaining of evidence within their jurisdiction. The court will respond to the request in accordance with the laws governing the corresponding type of evidence (article 100, Arbitration Statute).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

43. Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?

Colombia

Judicial authorities may grant interim relief prior to the commencement of the arbitral proceeding. Such authority is to be exercised according to the court’s procedural law, while taking into account the distinctive features of international arbitration (article 90, Arbitration Statute).

In addition, as per articles 71 and 90 of the Arbitration Statute parties to an international arbitration, prior to or during the arbitration proceedings, may request interim measures from a judicial authority. This request by a party will not be deemed as a waiver of the arbitration agreement.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

44. Have the courts issued injunctions enjoining arbitral proceedings from going forward?

Colombia

No such injunctions have been reported.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

45. Does the law provide that post-award interest accrues on an unpaid arbitral award?

Colombia

Yes. Colombian Law provides that post-award interest accrues on unpaid judicial rulings and, therefore, on unpaid arbitral awards. Interest runs automatically, by operation of law. Default interest rates are 1.5 times the current banking interest rate (average charged by banks for unsecured credit), certified by the Superintendency of Finance. When a state entity is ordered to pay, a DTF interest rate (a weighted average of the 90-day CDs interest rates - benchmark interest rate in Colombia) applies during the first ten months after the payment is due (article 195, Law 1437/2011).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

46. Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?

Colombia

In international arbitration, costs will be allocated as determined by the applicable arbitration rules and, in the absence thereof, as decided by the tribunal. In domestic arbitration, the parties share the payments that are due during the course of the arbitration. In the award, the tribunal decides whether one of the parties has to bear the costs of the arbitration. These costs can include the expenses of the proceeding (eg, arbitration fees, expert opinion fees, and the attorneys’ fees of the prevailing party).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Awards - content

47. Is an arbitral tribunal empowered to award punitive or exemplary damages? Is the arbitral tribunal empowered to award interest?

Colombia

In international arbitration, the parties can choose the applicable substantive law (article  110, Arbitration Statute). If the applicable substantive law allows punitive damages and interest, the arbitral tribunal will be empowered to award them.

Under substantive Colombian law, only compensatory damages are allowed, as the principle of full compensation governs liability regulation in Colombia (article 16, Law 446/1998). Under that same principle, Colombian law allows the award of interest.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

48. What are the grounds for challenging or vacating an international award issued in an arbitration seated in your jurisdiction?

Colombia

Grounds for vacating an international award are described in article 108 of the Arbitration Statute. International awards can be vacated when:

(a) a party to the arbitration agreement was under incapacity when entering into the agreement. or the agreement is not valid under the law to which the parties subjected it; (b) a party was not duly notified of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present their case; (c) the dispute does not fall within the scope of the arbitration agreement; (d) the appointment of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; (e) the subject matter of the dispute cannot be settled by arbitration under Colombian law; or (f) the award is in conflict with the international public order of Colombia.

Arbitral awards rendered in arbitrations seated in Colombia are considered as national awards (article 111.3, Arbitration Statute). Therefore, such awards are binding as judicial rulings. In 2019, the Colombian Constitutional Court ruled that international awards rendered in arbitrations seated in Colombia may be challenged through tutela actions (actions alleging violations of fundamental constitutional rights). The Court also stated that regarding international awards such challenges may be made in only very limited cases and only when Colombian law is the applicable substantive law. (T- 354/2019 Justice Antonio José Lizarazo)

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

49. Is “lack of reasonableness”, manifest disregard or a mistake in the application of the substantive law to the dispute of an international award grounds to vacate it?

Colombia

No. Article 107 of the Arbitration Statute provides that a court deciding an annulment request cannot rule on the merits of the controversy and cannot assess the criteria, evidentiary qualifications, motivations or interpretations of the arbitral tribunal.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

50. Have international awards rendered in your jurisdiction been vacated on the grounds of "public policy"? If so, how has the "public policy" ground for vacating an award been interpreted in your jurisdiction?

Colombia

There are no reported decisions vacating an international award on the grounds of public policy.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

51. What is the period of time a party has to challenge such an award after its issuance?

Colombia

Parties have a one-month term after they have been served notice of the award to challenge it (article 109.1, Arbitration Statute). The Supreme Court of Justice has interpreted this requirement strictly.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

52. Please describe any recent significant experiences or cases that illustrate the attitude of your courts towards the annulment of international awards rendered in your jurisdiction.

Colombia

In December 2018, the Supreme Court of Justice decided an annulment action against an international award issued by the International Chamber of Commerce, rendered in Bogotá in July 2017 (Consortium Ferrovial- SAINC vs Carbones del Cerrejón Ltd). The claimant argued that the arbitrators had excluded evidence during the proceedings, thereby violating their rights (ground 1.b. article 108, Arbitration Statute), and that the arbitral proceedings were not in accordance with the agreements of the parties (ground 1.d. article 108, Arbitration Statute). The Court denied the annulment request. It stated:

  • that the annulment of an international award is a very restricted action on the basis of the exhaustive grounds set forth in the Arbitration Statute;
  • that annulment is not another instance in the arbitration proceedings and, therefore, the Court cannot review the merits of the case or the tribunal’s interpretation of the evidence;
  • that  the purpose of annulment is to guarantee the effective protection of due process; and
  • that the annulment of an award must be based on a gross violation of the fundamental right of due process.  

In January 2019 the Supreme Court of Justice decided another annulment action against an international award issued by the International Chamber of Commerce and rendered in Bogotá in April 2016 (Esther Ventura and Juan Maria Rendon vs Viviane y Michael Ventura). Viviane and Michael Ventura argued that they did not fully agree to the arbitration clause, that the arbitration proceeding should have been a local proceeding and not an international one, and that the award violated Colombian public policy because the arbitrators rendered the award without waiting for a ruling on a criminal matter pending between the parties. The Court denied the annulment request, finding that the parties validly signed the arbitration agreement, that the arbitration was international not domestic, and that there was no pending litigation between the parties. The Court stated that annulment is restricted to procedural matters related to the scope of the arbitration agreement, due notification of the parties, respect for defence rights and the appointment of arbitrators.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Awards enforcement

53. Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?

Colombia

No. Colombian judges can vacate an international award only if it has been rendered in Colombia (article 62, Arbitration Statute). 

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

54. May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?

Colombia

The parties may waive or limit the court review of an arbitral award rendered in Colombia, provided that none of the parties is domiciled in Colombia (article 107, Arbitration Statute).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

55. Please describe the process for enforcing an arbitral award rendered in another jurisdiction.

Colombia

To be enforced, an arbitral award rendered in another jurisdiction has to be recognised (article 116, Arbitration Statute).  Claims for recognition of arbitral awards rendered in another jurisdiction must be submitted to the Civil Chamber of the Supreme Court of Justice or, if the award involves a public entity, to the State Council (article 68, Arbitration Statute).

Article 111 of the Arbitration Statute defines the procedure for the recognition of international awards. The party seeking recognition must provide the original award or a copy, together with an official Spanish translation (if needed). The court will admit the recognition claim to process if the required documents were submitted by the claimant. If the claim is admitted to process, the court will grant the other party a ten-day term to present objections. Thereafter, the court will have 20 days to rule on the recognition claim.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

56. Assuming that the award is covered by a convention applicable in your jurisdiction, how long does it take to obtain an order of enforcement in the first instance? How long does it take for the enforcement process to run its full course through to the last instance?

Colombia

In practice, the length of proceedings depends on the docket of the court. In our experience, these proceedings typically take between one and two years.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

57. Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgment.

Colombia

An arbitral award is usually recognised faster than a foreign judgment. Colombia is party to few treaties providing for the recognition of foreign judgments, which means that in most cases recognition will depend on reciprocity, in accordance with the General Code of Procedure; that is, the applicant will have to provide evidence that a court in the originating country would recognise a judgment rendered by a Colombian court. In the case of recognition of an arbitral award, proceedings are meant to be more expedient, do not involve the practice of evidence and are not subject to appeal.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

58. Please describe some significant recent experiences with the enforcement of foreign arbitral awards.

Colombia

The Colombian Supreme Court of Justice has generally recognised foreign arbitral awards under the Arbitration Statute. Since grounds for denying recognition of an award are very similar to grounds for annulment, the Court has interpreted them as being highly limited.

In March 2018, the Supreme Court of Justice recognised an arbitral award issued by the Madrid Chamber of Commerce Court of Arbitration. The recognition action was filed by Worldwide DMCC. As no objection was made by the counterparty, the Court limited its role to determining that the subject matter could be decided through arbitration under Colombian Law, and that the award did not violate Colombian public policy. The Court stated that it could deny recognition on public policy grounds only if the award violated the essential values and principles that inspire Colombian legal institutions.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

The outlook

59. To what degree has “public policy” been a ground to refuse enforcement of an international award rendered abroad?

Colombia

The violation of public policy is a ground for refusing the enforcement of a foreign arbitral award (New York Convention, article V.2.b). This ground is included in the Arbitration Statute as a ground for denying recognition of an award and can be reviewed by the court even if the parties have not raised it. The Supreme Court of Justice has held that in order to refuse the enforcement of an arbitral award on the ground of “public policy”, the recognition of the award must affect the values and principles that inspire Colombian legal institutions (Supreme Court of Justice, decision of 24 June 2016 – HTM vs FOCA - and 23 March 2018 - Innovation Worldwide vs award Carboesco).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

60. Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?

Colombia

There are no reported cases on this matter. Nevertheless, if the courts at the seat of arbitration are deciding on the annulment of the award, the Colombian Court can postpone its decision on recognition (article 112, Arbitration Statute).

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

61. Has your jurisdiction refused to pay an international arbitral award issued against the state or an instrumentality of the state in your jurisdiction? If so, please provide a brief explanation.

Colombia

There are no reported cases on this matter.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

62. What is your view of the future of international arbitration and is the trend positive in your jurisdiction? What advice do you have with respect to dispute resolution for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction?

Colombia

Arbitration has constantly and steadily grown in Colombia. Large public construction projects are now routinely subject to arbitration. Mergers and acquisitions under Colombian law are also routinely subject to arbitration and increasingly with seat in Colombia, given the advantage of not requiring recognition prior to enforcement, the availability of interim relief from local courts in aid or arbitration, and the availability to enforce directly through Colombian courts interim relief ordered by an international arbitration tribunal. Courts ruling on annulment requests have been deferential to arbitral tribunals. They have prohibited re-litigation of the merits and dismissed annulment requests based on alleged errors of law incurred by the tribunal. Also, foreign arbitral awards have generally been recognised in proceedings that follow international standards and that seek to strictly apply the New York Convention.

However, there are still concerns about the possibility of challenging awards through tutela actions (actions alleging violations of fundamental constitutional rights).

A bill to amend the Arbitration Statute is being discussed by Congress. This bill seeks to further develop the provisions in the statute and resolve differences in statutory interpretation.

In sum, the outlook is positive and there is a general expectation that Colombia will continue to increase its standing to host regional international arbitrations.

Generally, our advice to foreign clients (and foreign lawyers advising foreign clients) entering into transactions with companies in Colombia is to seriously consider the potential advantages of arbitration, and of arbitration seated in Colombia, when negotiating the dispute resolution clause.

Answer contributed by María Angélica Burgos, Claudia Benavides Galvis and Jorge Valencia

Get unlimited access to all Latin Lawyer content