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Competence of arbitrators in the objection of corporate bodies decisions.

Disputes that arise in different types of companies regarding the effectiveness, nullity or unenforceability of the decisions taken in shareholders meetings or boards of directors should be resolved in accordance with the Colombian Commercial Code. Specifically, Article 194 of this regulation provided that “The objection claims included in this Chapter will be submitted to the judges even if an arbitration clause has been agreed and will be managed as provided in this Code and, failing that, in the procedure included in the Civil Procedure Code (…)”. In this way, the arbitration clause agreed in the company’s statues was considered as unwritten and the ordinary jurisdiction was the only one with the faculty to decide this type of controversy.

With the entry into in force of the Law 1563 of 2012 (Arbitration Statute), the Article 118 derogated Article 194 of the Colombian Commercial Code, and a question appeared regarding the arbitration clauses agreed under Article 194:

On one hand, it was argued that the Colombian Commercial Code Article had a substantial nature, which would imply that the compromise clauses agreed under Article 194 are considered unwritten and these matters could only escape the ordinary jurisdiction. This position was adopted in numerous pronouncements by the Delegation for Commercial Procedures of the Superintendency of Companies, The Superior Court of Bogotá, and the Colombian Supreme Court of Justice.

Although several judges continue to affirm that the arbitration clause is unwritten in corporate agreements signed prior to the entry into force of the Law 1563, pronouncements of the Colombian Supreme Court of Justice in constitutional actions consolidate a line of decision. Particularly in the judgement of March 5, 2019. (Rad No. 11001-02-03-000-2019-00447-00) and the judgement of December 16, 2020 (Rad No. 11001-02-03-000-2020-03427-00), the Court ruled that, even if the arbitration clause was agreed under Article 194 of the Colombian Commercial Code, the arbitration clause prevails, and the judges are not competent to take this matter.

The substantive argument of the Colombian Supreme Court of Justice to settle this matter is the nature of the Article included in the aforementioned Article 194, which, tough, its substantial nature is alleged and consequently it is intended to apply the provisions of Article 38 of the Law 153 of 1887 “The law is in force for its execution will be understood to be incorporated into any agreement”, it is really a procedural provision that only refers to the competent judge to hear the challenge of decisions of corporate bodies.  And in the same way, Article 118 of the Law 1563 is a procedural law whose enforcement is immediate, although the statutes will be signed before the entry into in force of the mentioned regulations.

The controversy that led the Colombian Supreme Court of Justice to rule in the judgement of December 2020, was based on the fact that the defendant in an objection of a decision of a social body alleged the arbitration clause include in the company statutes since 1991. On the other hand, the counterpart argued that, by virtue of the fact of that Article 194 of the Colombian Commercial Code was in force at the date of the constitution of the statutes, the clause was not valid.

Thus, the Delegation for Commercial Procedures of the Superintendency of Companies terminated the process. However, in a subsequent ruling, the Superior Court of Bogotá, revoked the aforementioned decision because it was considered that at the time such arbitration clause was agreed, Article 194 of the Commercial Code was in force and considered that the controversy could not be solved by the arbitration justice. It was against this decision that the constitutional action was filed because the right to due process was considered violated.

These rulings of the Colombian Supreme Court of Justice establish the line of decision for these controversies and finally concluded they can be submitted to arbitration if it has been agreed in the company statutes, regardless of the moment in which the arbitration clause was included.

The Law Project that pretends to modify the Arbitral Statute sets forth that the objection claims against decisions of the corporate bodies, may be submitted to an arbitration under the existence of an arbitration clause regardless of the moment of its inclusion.

Authors

Portrait ofSergio Rodríguez-Azuero
Sergio Rodríguez Azuero
The Senior Partner
Bogotá
Portrait ofMaría Fernanda Bejarano
María Fernanda Bejarano
Senior Associate
Bogotá
Portrait ofMichelle Lichtenberger
Michelle Lichtenberger
Associate
Bogotá