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19 Dec 2018
On 26 July 2018, Argentina published in its Boletín Oficial (Official Gazette), law 27.449 on international commercial arbitration (Argentinian Law). This new law adopts the UNCITRAL Model Law on International Commercial Arbitration as amended in 2006 (Model Law), modernizing the arbitral framework and aligning Argentina with international standards. Before this enactment, in 2015, Argentina had included some provisions in its civil and commercial code, but they remained behind international standards. This new trend reflects clear governmental intent to position Argentina as a friendly seat of arbitration in Latin America and to increase foreign investment.
1. Scope of Application
This new law applies to international commercial arbitration proceedings if the seat of arbitration is located in Argentina (Art. 2). It also applies when parties seek (1) from a court to refer a matter to arbitration or to order an interim measure (Art. 19-21); (2) to enforce interim measures in Argentina or seek the assistance of Argentinian courts to order these measures (Arts. 56-61); and (3) when the parties seek to enforce or vacate an arbitral award (Arts. 102-105). These provisions align with the Model Law.
2. Major Innovations
The Argentinian Law encompasses four interesting innovations not found in the Model Law. First, an arbitration clause that grants a privileged situation to a party in regards to the appointment of arbitrators is void (Art. 24). Second, the Argentinian Law adopts an expansive interpretation of commercial matters (Art. 6) and includes the possibility that parties agree on electronic notices (Art. 9).
The third innovation deals with challenges to the arbitral tribunal. An arbitrator can be challenged due to lack of independence or impartiality when the arbitrator or the members of his or her firm or organization, in another arbitration or judicial proceeding, (1) act as counsel or representatives to one of the parties; or (2) with the same cause or same object, act as counsel or representative to a third party. If a court accepts the challenge of an arbitrator, and such arbitrator has already rendered his award prior to the court’s decision, the award will be void. (Art. 28).
Lastly, Article 106 of the Argentinian Law states that the definition of “agreement in writing” including “an arbitral clause in a contract or an arbitration agreement signed by the parties or contained in an exchange of letters or telegrams” set forth in the New York Convention (Art. II.2) “shall be interpreted and applied taking into account that the circumstances contained therein are not exhaustive.”
3. Differences with the Model Law
Although the Argentinian Law adopted the Model Law, it differs in five relevant aspects that merit attention:
First, the Argentinian Law does not accept the possibility that parties expressly agree on the international character of an arbitration agreement (Model Law, Art. 1.3.c).
Second, under the Argentinian law, parties have 20 days to raise objections pointing out any provisions of the law that have not been complied with (Art. 11). The Model law does not contain that time limit.
Third, for the Argentinian Law, an arbitration agreement is considered to be in writing if its content is recorded in any form (Art. 7.3). The article excludes the following terms of the Model Law: “whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.”
Fourth, an arbitral award shall always state the reasons upon which it is based. The sole exception to not disclose the reasons would be if the parties reach a settlement agreement (Art. 87). This contrasts with the Model Law Article 31.2, which also allows the parties to reach an agreement to avoid disclosing reasons in the arbitral award.
Fifth, the new law modified the time frame to set aside an arbitral award. Under the old regime, an application for setting aside had to be made within five (5) days (Código Procesal Civil y Comercial de la Nación, Art. 759). Conversely, to seek the annulment of an award, the new law sets a 30-day time frame from the date on which a party making the application receives the award (Art. 100). Even though the new law extends the time frame, it is still less than the three-month period established by the Model Law (Art. 34.3).
Two other important aspects of this new law deserve attention:
5. Final Comment
The adoption of the Model Law represents a major step in the right direction. Minor divergences from the Model Law do not tarnish this remarkable feat. Argentina has moved on from local procedural perspectives to a new era of accepted international arbitral standards.