What is the regime of challenges to arbitral awards in arbitrations seated in Colombia?

Dualist system: distinction between domestic and international arbitration

By way of introduction, it is important to note that the Colombian arbitration regime is structured on a dualist model. This means that Law 1563 of 2012 (the Colombian Arbitration Statute) regulates domestic arbitration and international arbitration differently, establishing for the latter an autonomous system for judicial control of the award as compared with domestic arbitration.

This analysis focuses on international commercial arbitration seated in Colombia, on the basis of Law 1563 of 2012 and its development in specialised doctrine. This regime is characterised by the existence of a single mechanism to challenge the award and by the restriction of judicial review to strictly defined grounds.

However, we should first mention that, in domestic arbitration, the award is adopted by majority decision and may be clarified, corrected or supplemented within five days of notification. The only remedy available against it is the extraordinary application to set aside (annulment), which must be filed before the tribunal on the basis of exhaustive grounds such as invalidity of the arbitration agreement, lack of jurisdiction, procedural irregularities or inconsistencies. The setting-aside judge does not review the merits and does not stay enforcement, save in cases involving public entities. Jurisdiction lies with the Superior Tribunal or, where a public entity is involved, the Council of State, and both the award and the judgment on annulment are subject to extraordinary review.

The application to set aside (annulment) as the sole mechanism to challenge the award

The starting point of the system is Article 107 of Law 1563 of 2012, pursuant to which an international arbitral award may “only be subject to an application to set aside on the grounds exhaustively established in this section”. This provision expressly defines the structure of judicial control of the award by excluding any other means of challenge.

The direct consequence of this rule is twofold. First, there is no second instance or ordinary appeal that allows the arbitral decision to be reviewed. Secondly, the judge hearing the application cannot rule on the merits of the dispute or review the evidential assessment or legal interpretation of the arbitral tribunal, as the same provision expressly provides.

This exclusive character reinforces that the setting-aside judge cannot review the substance of the dispute or reassess the evidence, being limited to verifying the exhaustive grounds provided for by law.

Nature, extraordinary character of the remedy and the grounds for setting aside

The application to set aside is an extraordinary remedy. This means it is not a second instance and it only lies in the cases expressly provided for by law and on the grounds set out therein, without any possibility of expansion by way of interpretation.

This nature is reflected in the limitation of judicial review. The judge cannot examine whether the arbitral decision is substantively correct, but only verify whether any of the grounds for setting aside is made out. In this sense, the remedy is not a mechanism to reopen the dispute or to debate the correctness of the decision adopted by the arbitrators.

Article 108 of Law 1563 sets out exhaustively the grounds for setting aside. They fall into two categories: those that must be raised by the interested party and those that may be declared by the court of its own motion.

The grounds that must be invoked by the party include, first, incapacity of the parties or invalidity of the arbitration agreement. Secondly, lack of notice or the impossibility of exercising the right of defence. Thirdly, that the award deals with matters not contemplated in the arbitration agreement or exceeds its terms. Finally, irregularities in the constitution of the arbitral tribunal or in the procedure, where it was not in accordance with the parties’ agreement or the provisions of the law.

For its part, the court may declare the nullity of the award of its own motion where the subject-matter of the dispute is not capable of settlement by arbitration or where the award is contrary to Colombia’s international public policy. These grounds reflect structural limits of arbitration that transcend the parties’ will.

Waiver and limitation of the application to set aside

On this point, the primary source is Article 107 of Law 1563 of 2012, the scope of which has been interpreted by case law and doctrine. A key feature of the Colombian regime is the possibility of waiving the application to set aside. That article provides that, if none of the parties is domiciled or resident in Colombia, they may exclude the remedy entirely or limit it to certain statutory grounds, thereby restricting judicial control.

However, this power has limits: it is not possible to create grounds other than those provided for by law. Its interpretation requires distinguishing between the strictly legal content of doctrine and case law. As regards the exclusion of ex officio control, this is a doctrinal position according to which a total waiver would prevent the judge from hearing the award and declaring its nullity of its own motion; however, it is not a settled conclusion in the jurisprudence. Where the remedy is only limited, the position may differ.

Procedure for the application to set aside

The procedure for the remedy is regulated in Article 109 of Law 1563. It provides that the application must be filed and substantiated, identifying the grounds relied upon, within one month of notification of the award or of the decision resolving any requests for correction, clarification or supplementation.

The technical nature of the remedy requires the party to identify precisely the ground on which it bases its application, as well as the facts that establish it. It is not an open-ended remedy, but a mechanism strictly delimited by law.

Effects of the application to set aside

The effects of the remedy are set out in Article 110 of Law 1563. Where any of the grounds is upheld, the court declares the nullity of the award, in whole or in part, as the case may be.

The statute distinguishes between different types of grounds in order to determine the extent of nullity. In some cases, setting aside affects only certain decisions in the award, whereas in others it entails total nullity. Based on the authors’ experience, partial setting aside can give rise to practical difficulties in some cases. It is also provided that setting aside the award does not necessarily affect the validity of the arbitration agreement, allowing the parties to return to arbitration.

Absence of an application for revision

Unlike domestic arbitration, in international arbitration seated in Colombia the law does not provide for an application for revision against the arbitral award. In such cases, the typical scenarios of revision are channelled through the grounds for setting aside, in particular international public policy.

However, it is possible to bring an application for revision against the judgment deciding the setting aside or recognition of the award, although it cannot be used to reopen debate on the merits of the arbitral decision.

Constitutional protection action (acción de tutela) against arbitral awards

The availability of tutela proceedings in respect of international awards is, above all, a matter of case law; the statute sets the general framework for international arbitration and doctrine has explained its limits. The Constitutional Court has recognised this possibility, but subject to considerable limits, stricter than those required for a tutela action against a judicial decision of the ordinary courts.

The tutela judge must respect arbitral autonomy and refrain from reviewing the merits; intervene only in the event of direct violations of fundamental rights; apply the doctrine of ‘vías de hecho’ within the limits specific to arbitration; and require reinforced subsidiarity, that is, prior exhaustion of the application to set aside (Constitutional Court, SU-174 of 2007).

The Constitutional Court has specified that, due to the special nature of arbitration, the admissibility test for tutela actions against awards is stricter than for ordinary judicial decisions (Constitutional Court, SU-033 of 2018). It has also characterised tutela actions against international awards as ‘most exceptional’, given the particularities of international arbitration.

The exceptional nature in international arbitration is explained because the prohibition of judicial intervention (Article 67 of Law 1563) and the exclusivity of the application to set aside (Article 107) reinforce its autonomy, whilst the possibility of choosing the applicable law, including foreign law (Article 101), limits constitutional review to international public policy; accordingly, subsidiarity is intensified, requiring prior exhaustion of the application to set aside when such a violation is alleged. Although the prohibition in Article 67 does not exclude tutela proceedings, the principal control mechanism in respect of international awards is setting aside.