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FTAA - NEGOTIATING GROUP ON DISPUTE SETTLEMENT


VENEZUELA

QUESTIONNAIRE

1. International Agreements

a. Is the jurisdiction a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (New York Convention). If so, are there any reservations? Name the domestic law that implements these commitments.

Yes. Venezuela acceded to the Convention in 1994 and it took effect in 1995. See Special Official Gazette No. 4.832.
Venezuela made the following Declaration (understood as effective upon ratification of, accession or succession to the text) to the New York Convention:

a. The Republic of Venezuela will apply the Convention only to recognition and enforcement of awards made in the territory of another Contracting State.

b. The Republic of Venezuela will apply the Convention only to disputes arising out of legal relationships, whether contractual or not, which are considered as commercial under Venezuelan law.

b. Is the jurisdiction a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, done at Washington on 18 March 1965 (ICSID Convention)? Is there a domestic implementing law? Is the jurisdiction a party to any bilateral investment treaties providing for settlement of investment disputes between a state and a national of another state?

Yes, the Law Approving the Convention was published in Official Gazette No. 35.655 of 3 April 1995.
Venezuela has signed the following Bilateral Investment Treaties that envisage mechanisms for the settlement of Investor-State disputes, with reference to the ICSID: Netherlands (1994), Argentina (1993), Switzerland (1993), Ecuador (1993), Chile (1993), Barbados (1994), Portugal (1994), Czech Republic (1995), United Kingdom of Great Britain and Northern Ireland (1995), Denmark (1994), Lithuania (1995), Peru (1996), Spain (1995), Paraguay (1996), Sweden (1996), Canada (1996), Germany (1996), Costa Rica (1997), Brazil (1995), Uruguay (1997), Belgium (1998), Italy (2001), and France (2001).

c. Is the jurisdiction a party to the Inter-American Convention on International Commercial Arbitration, signed in Panama on 30 January 1975 (Panama Convention)? Is there a domestic implementing law?

Yes, the Law Approving the Convention was published in Official Gazette No. 33.170 of 27 February 1985 and ratified on 16 May 1985.

d. Is the jurisdiction a party to any other international agreement related to international commercial arbitration?

Yes, Venezuela is party to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, signed in Montevideo on 8 May 1979, approved by a Law published in Official Gazette No. 33.144 of 15 January 1985 and ratified on 28 February 1985.

2. Arbitration

a. What is the source of law for international commercial arbitration within your jurisdiction? Please cite.

The Private International Law Act establishes the order of priority of sources as follows: the pertinent rules of international public law, in particular those prescribed in the international treaties in force in Venezuela, or in the absence thereof, the domestic rules governing private international law; in the absence of the latter, the former are applied by analogy, and lastly, the generally accepted principles of private international law.

Article 1 of the International Commercial Arbitration Act, published in Official Gazette No. 36.430 of 7 April 1998, lays down a formula: "Article 1. This Law shall apply to commercial arbitration, without prejudice to any multilateral or bilateral treaty in force”.

b. Does the law contain different rules for domestic and international arbitration?

No, the current legislation allows for broad interpretation of its rules.

c. Are there limitations on the types of disputes that may be arbitrated?

Yes, the restrictions relate to the subject matters set out in Article 3 of the International Commercial Arbitration Act: “The disputes excluded shall be those:

a) That are contrary to public order or which concern offenses and misdemeanors, except regarding the amount of civil liability, if said amount has not been set by a final judgment;

b) Directly relating to the powers and functions of the State or of persons or entities under public law;

c) Pertaining to the civil status or capacity of persons to exercise their civil rights;

d) Regarding the property or rights of persons lacking legal capacity, without prior judicial authorization; and

e) Subject to a final judgment, except for the economic implications of its execution if they concern exclusively the parties to the trial and have not been determined by a final judgment.”

d. Does the law specify rules for arbitration or do the parties have autonomy to set their rules?

No, domestic law does not specify rules for arbitration; instead it enshrines the principle of the will of the parties (Article 15, Commercial Arbitration Act): “When the parties do not determine their own rules of procedure for an independent arbitration, the rules set forth herein shall apply. Likewise, these rules may be applied to an institutional arbitration, if the parties so determine.”

e. What is the role of the courts during an arbitration? May courts intervene prior to or during the arbitration process?

The International Commercial Arbitration Act prescribes the protocol for cooperation between judicial officials and arbitrators, by means of which the Courts of the Republic participate in the various stages indicated below:

1. Independent arbitration:

  • Article 17. Las parties shall jointly appoint the arbitrators or delegate their appointment to a third party. The second paragraph reads: Should any of the parties decline to appoint its arbitrator, or if the two arbitrators fail to agree on the naming of a third, either of them may have recourse to the competent Court Judge of First Instance to appoint the other arbitrator. Third paragraph: If there is no agreement between the parties in the case of a procedure with a single arbitrator, the appointment shall be made by the competent Court Judge of First Instance, at the request of one of the parties.
     

  • Article 28. The arbitral tribunal, or any of the parties with the approval of the arbitral tribunal, may request the assistance of the competent Court of First Instance in furnishing the necessary evidence and for enforcing the interim relief requested. The Court shall attend to said request within the scope of its competence and in accordance with the applicable rules.

2. Disqualification or challenge of arbitrators:

  • Article 37. Should the arbitrator reject the challenge or fail to make a statement on the matter, the other arbitrators shall accept or reject it in a written, reasoned statement, and the parties shall be notified at a hearing that must be held for that purpose within the five (5) working days following rejection of the challenge. A decision on the merits shall be taken at that hearing.

Once the grounds for the disqualification challenge of an arbitrator have been accepted, the remaining arbitrators shall declare the person as no longer forming part of the arbitration procedure and shall accordingly notify the party that made the appointment so that said party may find a substitute. Should no appointment be made within the five (5) working day following notification of acceptance of the grounds, the competent Court of First Instance shall appoint the substitute at the request of the remaining arbitrators. The Court’s decision shall not be appealable.

  • Article 38. In the event of a tie over the decision on the disqualification or challenge of one of the arbitrators, or in the case of a sole arbitrator, the record of the proceedings shall be referred for decision to the competent Court in the judicial district of the place where the arbitral tribunal operates. The Court’s decision shall not be appealable.

3. Voidability of the award

  • Article 43. The only action that may be brought against the arbitral award shall be an appeal for annulment. The appeal must be filed in writing with the competent Higher Court in the place where the award has been rendered, within the five (5) working days following notification of the award or of the judicial decision correcting, clarifying or supplementing it. The record of the arbitral tribunal’s proceedings must accompany the motion.
     

  • The filing of an appeal for annulment shall not suspend enforcement of the arbitral award unless, at the request of the appellant, the Higher Court so orders after the deposit of a security by the appellant guaranteeing enforcement of the award and any damages in the event that the appeal is rejected.
     

  • Article 45. The Higher Court shall not admit the appeal for annulment if it is untimely or when the grounds do not correspond to those indicated in this Law.

  • The writ by which the Higher Court admits the appeal for annulment shall set the amount of the security that the appellant must furnish to guarantee the outcome of the proceeding. The deadline for the deposit of the security shall be ten (10) working days as of the date of issue of said writ.

    If a security is not deposited or the appeal is not sustained, the Court shall dismiss it.

  • Article 47. If the appeal is admitted and the security deposited, the Higher Court shall examine the matter in accordance with the provisions of the Code of Civil Procedure for ordinary proceedings.

4. Recognition and enforcement of the award

  • Article 48. Regardless of the country in which the arbitral award has been rendered, it shall be recognized by the ordinary courts as binding and unappealable and, upon submission of a request in writing to the competent Court of First Instance, shall be enforced by the latter without need of exequatur proceedings, pursuant to the rules set forth in the Code of Civil Procedure for the compulsory enforcement of judgments.

f. Can the courts grant interim relief pending the outcome of an arbitration?

Yes, Article 28 of the Commercial Arbitration Act provides that: “The arbitral tribunal, or any of the parties with the approval of the arbitral tribunal, may request the assistance of the competent Court of First Instance in furnishing the necessary evidence and for enforcing the interim relief requested. The Court shall attend to said request to the extent of its competence and in accordance with the applicable rules.”

g. Does the law require citizenship or a particular bar membership for participation in an arbitral proceeding, as arbiter or representative of a party?

No, it merely indicates the limits set out in Article 619 of the Code of Civil Procedure of Venezuela.

h. Does the law require that the proceedings be conducted in a particular language?

No, Article 10 of the Commercial Arbitration Act provides that: “The parties are free to agree on the language or languages to be used in arbitration proceedings. Failing agreement, the arbitral tribunal shall determine the language or languages to be used. Except where another form has been agreed upon, this agreement shall be applicable to all written documents from the parties, all hearings and to the award, decision or any other communication issued by the arbitral tribunal.”

i. Does the law have mandatory choice of law provisions?

No, as stated above, the Commercial Arbitration Act upholds the will of the parties.

j. Does the arbitration law prescribe rules for decision making by the arbiters and the form of an award?

Article 8 of the Venezuelan law on commercial arbitration distinguishes between de jure arbitrators and ex aequo et bono arbitrators. The first must make their decisions in accordance with the rules of law, while the second are free to decide on the basis of equity. The latter poses no problem, but in the case of de jure arbitrators, given the law’s silence as to the law applicable in deciding on the merits of a dispute, the absence of choice of applicable law by the parties, there is no rule that guides them on which of the bodies of laws that are all applicable to the legal relationship submitted to arbitration, should apply to the specific case at hand.

Some Venezuelan scholars agree that in the case of international commercial arbitration, the answer is to be found in Article 8 of the Arbitration Act, which provides that “…arbitrators shall always be guided by the stipulations of the contract and commercial usage and custom.” This rule would allow for the application of Lex Mercatoria as a source in international arbitration.

k. Is the confidentiality of arbitral proceedings and awards protected by law?

Yes.

l. On what grounds will the courts set aside or decline to enforce an award?

The following specific grounds are set out in Article 49 of the Commercial Arbitration Act: “Recognition or enforcement of an arbitral award, regardless of the country that has rendered it, may be refused only:

a) When the party against whom it is invoked demonstrates that one of the parties was impaired by an incapacity when the arbitration agreement was entered into;

b) When the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of arbitration proceedings of which notice must be given, or was otherwise unable to exercise his rights.

c) When the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the law of the country where the arbitration took place;

d) When the award deals with a dispute not contemplated in the arbitration agreement, or contains decisions that go beyond the scope of the agreement;

e) When the party against whom the award is invoked demonstrates that it is not yet binding on the parties or has previously been set aside or suspended by an authority that is competent pursuant to what was agreed by the parties for the arbitration procedure;

f) When the court that should recognize or enforce the award finds that under the law, the matter in dispute is not arbitrable or that the subject matter concerned is contrary to public policy.

g) If the arbitration agreement is not valid under the law chosen by the parties.

m. What is the procedure for the enforcement of an award?

The award enforcement procedure is described in Article 48 of the Commercial Arbitration Act: “Regardless of the country in which the arbitral award has been rendered, it shall be recognized by the ordinary courts as binding and unappealable and, upon submission of a request in writing to the competent Court of First Instance, shall be enforced by the latter without need of exequatur proceedings, pursuant to the rules set forth in the Code of Civil Procedure for the enforcement of judgments.”

The party relying on an award or requesting its enforcement must submit, together with its request, a copy of the award, certified by the arbitral tribunal, along with a translation into Spanish, if necessary.

The rules established in the Code of Civil Procedure are set forth in Chapter II, Title IV.

n. Please list any institutions available within your jurisdiction that provide international commercial arbitration services. Provide Internet address where available.

Caracas Chamber of Commerce - http://www.arbitrajeccc.org (http://www.ccc.com.ve)

3. Alternative forms of Dispute Resolution (ADR)

a. Are other forms of alternative dispute resolution (mediation, conciliation) available for the resolution of commercial disputes within your jurisdiction?

Yes, they are available and are considered as voluntary mechanisms.

b. Does the law or do the courts mandate or encourage the use of ADR in commercial disputes? Are there any legal impediments to using ADR for the resolution of commercial disputes?

The Constitution of the Bolivarian Republic of Venezuela, promulgated in 1999, encourages the use of ADR in the following terms:

“Article 258. The Law shall organize the system of small claims courts (run by justices of the peace) in the communities. The justices of the peace shall be elected by direct, secret and universal ballot, pursuant to the law. The law shall encourage arbitration, conciliation, mediation and any other alternative means of dispute resolution.”

The legal constraints are prescribed in Article 3, second paragraph, subparagraph c), of the Commercial Arbitration Act, and are applied by analogy to ADR.

c. Can courts enforce agreements to mediate or use other forms of non-binding dispute resolution in commercial disputes?

Yes. These agreements shall be enforceable as a contractual obligation, if this is envisaged in a contract of a commercial nature between private parties.

d. Are there any organizations that specialize in ADR for commercial disputes not already mentioned?

As it does for the arbitration mechanism, the Arbitration Center, Caracas Chamber of Commerce administers mediation procedures.

e. What rules govern confidentiality and admissibility of evidence in other proceedings?

Mediation is based on the principle of confidentiality. The institutional arbitration mechanism administered by the Caracas Chamber of Commerce treats information as confidential in the absence of express authorization to the contrary by the parties.

4. Legal Sources and References

In addition to the references above, is there an authoritative Internet site containing up-to-date information on dispute resolution facilities available in this jurisdiction?

Supreme Court of Justice. http://www.tsj.gov.ve

Attorney-General’s Office. http://www.fiscalia.gov.ve

5. - Bibliography

Please list respected reference works relating to arbitration and ADR in your jurisdiction.

- El Arbitraje en la Práctica I. Autores: Diana C. Droulers, Luis Alfredo Araque, Irene Cirino, Germán Acedo Payarez, Irma Lovera de Sola, Bernardo Weininger, Carlos Valedón, José Luis Bonnemaison

- El Arbitraje en la Práctica II. Autores: Diana C. Droulers, Ricardo Henriquez La Roche, Alberto Blanco Uribe, Ivor Mogollón, Jairo Ching, José Tomas Blanco, José Pedro Barnola

- Seminario Sobre la Ley de Arbitraje Comercial. Autores: Aristides Rengel Romberg, Alberto Baumeister, José Vicente Haro, Allan Brewer Carias, Andrés Mezgravis, Tatiana Maekelt, James Otis Rodner, Diana C. Droulers

- Los Comerciantes de Caracas. María Elena González Deluca

- El Crédito Documentario. Dr. James-Otis Rodner. Segunda Edición - Ley de Arbitraje Comercial. Dr. Carlos J. Sarmiento Sosa

- El Arbitraje Comercial en Venezuela. Dr. Ricardo Henríquez La Roche
 

 
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