- 1.Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?
In Venezuela, the Commercial Arbitration Act (CAA) (1998) is the legislation governing the enforcement of arbitration awards or arbitral agreements, making no distinction based on the international or national nature of the arbitration. Additionally, arbitration has been recognised by the Constitution as a mechanism for dispute resolution.
Additionally to the CAA, there are references to arbitration in other pieces of legislation, such as the Hydrocarbons Organic Act (2006) and the Gaseous Hydrocarbons Organic Act (1999), and the Act for the Development of Petrochemical Activities (2009), all of them in reference to joint venture agreements. Against these positive references, the Regulations of the Public Procurement Act (2009) provides in article 133 that any doubts, disputes and claims that may arise out of a public contract, which are not settled by agreement of the parties, will be decided by the competent courts of the Bolivarian Republic of Venezuela. There is also an arbitral proceeding provided for in the Civil Proceedings Code (CPC), which is supposed to apply to disputes of a non-commercial nature.
- 2.Has the UNCITRAL model arbitration law been adopted in your jurisdiction?
The Venezuelan CAA (1998) is based on the UNCITRAL model arbitration law, with some modifications. One of the main changes or differences between the Venezuelan CAA (1998) and the model law is that the Venezuelan legislation does not make a distinction between international or national arbitration, and both will receive the same treatment with regards to the enforcement of interim measures of protection, arbitral awards, or arbitral agreements. Another difference is that the challenge to arbitrators is limited to be based on the grounds established by the CPC for the challenge of judges. Venezuelan legislation introduces a distinction between ad hoc and institutional arbitration, which has not been included in the UNCITRAL model law.
- 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?
Yes, Venezuela is a member of the New York Convention and the Panama Convention. No other convention governing international arbitration has been ratified by Venezuela.
- 4.Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?
The Venezuelan minister of the people’s power for foreign affairs announced that on 24 January 2012, Venezuela denounced the Convention for the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). With this action, Venezuela complies with the formalities required to make official its withdrawal from ICSID.
The denunciation of the ICSID Convention was made in accordance with the provision of article 71 and will be effective from 24 July 2012. According to article 72, the denunciation will not affect rights and obligations of the state or nationals of the denouncing state arising from the consent given to ICSID jurisdiction before the notification of the denunciation of the Convention.
The bilateral investment treaties (BITs) in force that are affected by having ICSID as the only option for the settlement of disputes between investors and the state parties to those BITs are those with Germany, Chile and France, the last of them signed in 2001 and ratified in 2003. Other BITs have to be analysed on a case by case basis.
The Venezuelan withdrawal from CIADI does not imply that the investors protected by BITs have lost their options to submit disputes to international arbitration, since these treaties provide, in general, additional options to ICSID.
- 5.Has your jurisdiction refused to honour an international arbitral award issued against it?
No, Venezuela has never refused to honour an arbitral award issued against the country, whether national or international. However, the Constitutional Chamber of the Venezuelan Supreme Tribunal has established precedent in the cases of Constitutional Review of Venezuelan Criminal Code, and in the judicial opinion on article 22 of the Venezuelan Promotion and Protection of Investments Act (2001). According to the Constitutional Chamber in the mentioned cases, Venezuela is able to review the constitutionality of the arbitral awards rendered by international arbitral tribunals, whether they are commercial or investment arbitrations, which is particularly aimed at those awards rendered by international tribunals under the ICSID Convention. However, neither the Constitutional Chamber, nor any other tribunals have rendered any decision refusing to enforce an arbitral award against the Venezuelan government.
- 6.Is a pre-dispute clause or separate agreement to resolve international commercial disputes by arbitration enforceable?
Yes, pre-dispute clauses or separate agreements to resolve international commercial disputes by arbitration are enforceable in Venezuela in accordance with article 5 of the CAA, which expressly mentions the possibility for the arbitration agreement to be included in a separate agreement.
In the arbitration proceedings provided for in the Venezuelan CPC, which is applicable to disputes of a non-commercial nature, require the formalisation of a post-dispute “compromiso”.
- 7.Is a pre-dispute clause or separate agreement to resolve disputes by arbitration enforceable in consumer cases? Is there any legislation in your jurisdiction governing the arbitrability of consumer disputes?
Consumer disputes are arbitrable in Venezuela under the CAA regulations, and those particularly provided for in the Defence of the People’s Rights to the Access to Goods and Services Act (2008) with regard to normalised contracts.
The prior consumer legislation established a whole proceeding for the arbitration of consumer disputes, which was never put into practice in a substantial way, and was removed in the new consumer legislation in force in Venezuela.
- 8.What are the requirements for an enforceable arbitral agreement?
The requirements for an arbitration agreement to be valid are established in article 6 of the CAA, which provides that an arbitral agreement:
- must be in writing;
- the reference to an arbitral agreement contained in another document will be valid as far as that document is in writing and the reference implies that the arbitration clause is part of the contract; and
- in normalised contracts, the arbitration agreement must be explicit and separate from the main document.
For those cases where one of the parties is a state-owned company, article 4 of the CAA provides that the arbitral agreement must be approved by the board of directors of the company and be authorised by the minister to which the company is attached. In these cases, the arbitration agreement must specify the kind of arbitration, whether at law or ex aequo et bono, and the number of arbitrators.
In the case of state-owned companies under the umbrella of the “Corporación Venezolana de Guayana” (CVG), a corporation created for the development of the Venezuelan region of Guayana, there are some additional requirements, such as the authorisation of the president of CVG, and the explicit mention to the law applicable to the merits and the lex arbitri.
- 9.Is there a subject matter that is not legally subject to arbitration in the context of an international business transaction?
The arbitrability of disputes is established in article 3 of the Venezuelan CAA, which provides that the disputes must be susceptible to settlement, and that the following are not subject to arbitration:
- disputes contrary to public policy or involving crimes or misdemeanors, except with respect to the civil liability quantification, insofar as it has not been set forth by a final binding judgment;
- disputes directly concerning the sovereign activities or functions of the state or governmental persons or entities;
- disputes involving the civil status or capacity of persons;
- disputes regarding property or rights of legally disabled persons, without prior judicial authorisation; and
- disputes on which a final binding judgment has been pronounced, except the pecuniary consequences arising from its enforcement insofar as they exclusively concern the parties to the proceedings and have not been determined by a final binding judgment.
- 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?
Yes, article 8 of the CAA establishes the arbitration at law as a default condition of the arbitration if the parties have not agreed otherwise.
- 11.How does the law limit party autonomy with respect to the terms of an arbitral agreement?
The Venezuelan legislation does not establish any particular limitation with respect to the terms of the arbitral agreement. Parties are free to designate the number of arbitrators as far as it is an even number, and to specify how the arbitrators shall be selected. This pre-eminence of the arbitral agreement is established in article 15 of the CAA.
- 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?
In the Venezuelan legislation, the consent of the parties is essential for the participation in the arbitral proceedings. As a consequence, third parties, who are not signatories of the arbitral agreement, are not able to participate in the arbitration unless consent is given by the parties. This answer is under the understanding that a party that enters into the arbitration agreement by succession, that is by a merger, assignment of rights and so on, is not a third party.
- 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 signed the arbitral agreement?
Since consent is required, there is no possibility for a signatory party to pursue a claim in international arbitration against a non-signatory party.
- 14.Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it by a signatory of the arbitral agreement in a court of law?
As a general rule, a non-signatory to an arbitral agreement may not participate in the arbitral proceedings based on it. If that party pretends to compel arbitration of a claim asserted against it by a signatory of the arbitral agreement in a court of law, he would require the consent of all the signatory parties to the arbitral agreement.
- 15.Under what circumstances may a signatory to an arbitral agreement compel arbitration of a claim asserted against it by a non-signatory of the arbitral agreement in a court of law?
The consent of the non-signatory of the arbitral agreement would be required and the court would not submit the dispute to arbitration without this condition.
- 16.Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration?
No, there is no concept in Venezuela providing for class-action arbitration or group arbitration.
- 17.Are foreign arbitral institutions authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law in order to administer an arbitration seated there?
According to article 11 of the Venezuelan CAA, international associations, the organisations related to the economic and industrial activity, those that are related to the promotion of the alternative dispute resolution will be able to organise their own arbitration centres in Venezuela. However, the regime is open for international arbitration institutions to administer arbitral proceedings in Venezuela without any need to obtain licences or permits.
- 18.Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution such as the ICDR, the ICC or the LCIA vulnerable to challenge?
The award would be subject to a challenge before Venezuelan courts because the country would be the seat of the arbitration, not because the award was rendered under the auspices of a foreign arbitral institution.
- 19.Does the law require that arbitrators in international arbitrations be citizens or residents of your jurisdiction?
No, it is not required by the CAA that the arbitrators be citizens or residents of Venezuela. This means that foreigners can serve as arbitrators, but should comply with the requirements described below in question 23.
- 20.Does your law require that arbitrators in international cases be lawyers?
Arbitrators must be lawyers in any arbitration at law. If they are not qualified for practice in Venezuela, they should obtain an authorisation from the local bar association to serve as arbitrators. Non-lawyers can be arbitrators in those proceedings to be decided ex aequo et bono.
- 21.Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?
Yes, the fees of the arbitrators are subject to tax. Arbitrators should take into consideration the double taxation treaties in force in Venezuela in order to determine the procedure and the best alternative in accordance to the treaties to declare and pay their taxes.
- 22.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?
Yes, arbitrators must be independent and impartial, subject to be challenged on the grounds of lack of impartiality established in the Venezuelan CPC, but other standards could be agreed by the parties.
- 23.Will courts entertain requests to disqualify an arbitrator during an arbitration?
In general, the national tribunals will not be involved in the challenge of an arbitrator. However, the intervention of national courts is provided for in article 37 in the case that a challenge that has been successful requires for the parties to appoint a new arbitrator. When this appointment has not happened within the five days next to the separation of the challenged arbitrator, the judge of first instance will be authorised to appoint the replacement as per the request of the parties. Article 38 also establishes that if there is a tie in the vote of the arbitrators or if there is a sole arbitrator, the challenge will be decided by the ordinary tribunals of the country.
- 24.Does the law require that arbitral proceedings be held in a specific language?
There is no requirement in the law for the conduction of the arbitration in a given language.
- 25.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?
As a general rule, the answer would be negative. However, the question raises several interesting issues about the Venezuelan legislation. According to the provision established in article 11 of the Lawyers’ Act (1967), advocacy is understood to be a function attributed on the basis of a special legislation to someone who has obtained a university degree in law, or those occupations that require legal knowledge. As provided in articles 3 and 7 of the Lawyers’ Act, in order to act on behalf of someone else in a legal proceeding before a Court of Law, give legal advice, whether orally or in writing, and making any activity inherent to advocacy, a person is required to have a Venezuelan law degree, and be registered with the local bar association and the Venezuelan Institute for the Welfare of Lawyers.
In our view, arbitration is an activity involving advocacy and it will be, as a general rule, reserved to Venezuelan qualified lawyers. However, article 14 of the Regulations of the Lawyers’ Act stipulates that foreign lawyers could be authorised by the local bar association to practice in Venezuela if they have been hired by a private person or company for the performance of functions involving legal knowledge, as in the case for an international arbitration. As of this date and to the best of our knowledge, in relation with arbitral proceedings, there is no case where the bar association has granted or denied an authorisation to perform as counsel or as arbitrator in an arbitration located in Venezuela.
- 26.Are the fees of foreign layers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?
Since the service is rendered in Venezuela, fees would be subject to local taxation as a general rule. If one of the double taxation treaties is applicable, withholding on fees and payment of taxes should be done in accordance with the applicable treaty.
- 27.In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings?
There is no provision in the CAA on this regard. However, parties could agree on the consolidation of arbitral proceedings. The Arbitration Rules of the Arbitration Centre of the Caracas Chamber of Commerce provides in article 32 that the consolidation may be ordered by the executive committee at the request of one of the parties, if the terms of reference have not been signed by the parties.
- 28.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.
The practice will depend on the way arbitrators are used to conduct the arbitration. Venezuelan arbitrators would usually require the exhibition of the documents requested by one of the parties. This exhibition is obligatory for the requested party.
- 29.Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?
Yes. The principle of of Kompentenz-Kompetenz is established in article 7 of the CAA and has been duly recognised by the Constitutional Chamber of the Supreme Tribunal of Justice in judicial opinions, the latest being the one rendered in the case of Astivenca, dated 3 November 2010.
- 30.Do the courts follow the principle of the independence and separability of the arbitration clause?
Yes, according to article 7 of the CAA, the arbitral tribunal is empowered to decide any challenge to the entire commercial agreement and establishes the separability of the arbitration agreement.
- 31.If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the courts under normal circumstances? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?
The current trend in Venezuelan case law is that the defendant must challenge the jurisdiction of the local courts as a threshold matter. The tribunal usually would declare lack of jurisdiction and send the parties to the arbitral proceedings without need to defend the merits of the lawsuit in court.
- 32.Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?
Yes. According to article 26 of the CAA, the arbitrators are empowered to grant interim relief, and local courts will be obliged to enforce them under article 28. The parties are required to request the assistance of the first instance court, which will treat the order as an interim measure rendered by the court itself, issuing an order to the enforcement tribunals. The enforcement authority of the courts is concurrent to the powers of the arbitrators.
- 33.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?
The arbitrators are not empowered to issue orders, subpoenas or use other legal processes to compel the production of evidence. As it is with the courts of the civil or commercial jurisdiction, judges or arbitrators are not allowed to force the production of evidence by a third party. However, a party who does not collaborate with an order given by the court or an arbitral tribunal could be prosecuted on the basis of impeding the performance justice, which is a criminal offence.
- 34.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?
Article 28 of the CAA allows the arbitral tribunal to seek the assistance of the courts for the production of evidence, particularly when the seat of the arbitration is Venezuela. The assistance of the courts will consist in the compliance with the collaboration requested by the arbitral tribunal.
- 35.Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?
Yes. Although there is no provision in the CAA allowing the parties to seek provisional relief from a court without seeking relief from the arbitral tribunal, the Constitutional Chamber has been favourable to the possibilities of the parties requesting interim measures of protection from the courts, independently of the arbitral proceedings. The criterion of the Chamber was first given in the case of Astivenca, and it is based on the Constitutional right to obtain full judicial protection.
- 36.Have the courts issued injunctions enjoining arbitral proceedings from going forward?
There have been no orders impeding arbitral proceedings from going forward. However, in the case of Consorcio Barr, the Superior Court ordered the other Venezuelan tribunals and administrative authorities to refrain from allowing the enforcement of any arbitral award rendered in an arbitration involving the same parties until a decision on the merits of a constitutional injunction pending was rendered.
- 37.Does the law provide that post-award interest accrues on an unpaid arbitral award?
The arbitral tribunal must expressly grant the payment of interest in the award. Usually, interests run until the award is rendered and the amount could be subject to an experts’ commission in order to determine the amount in interests by that date. The resulting amount will be final and subject to enforcement by the courts.
- 38.Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?
Yes, article 20 of the CAA provides for the arbitral tribunal to set the amount of costs of the arbitral proceeding in general and to award it to the prevailing party.
- 39.What are the grounds for challenging an international award issued in an arbitration seated in your jurisdiction?
Article 44 of the CAA clearly establishes the only grounds on which a challenge to an arbitral award, either national or international, may be based on. They are closely similar to the grounds established in the UNCITRAL Model Law for the challenge of arbitral awards:
- capacity of one of the parties: the award may be set aside if there is evidence that one of the parties was under some incapacity at the time of entering into the arbitration agreement;
- proper notice and procedural guarantees: if the party challenging the award has not been properly notified of the appointment of an arbitrator or of the arbitral procedural acts requiring such a notification. The party may challenge the award if it has been unable to present its case;
- constitution of the arbitral tribunal and arbitral proceedings: the party may seek annulment of the arbitral award if the arbitration proceedings have not been conducted in accordance with the proceedings provided for in the CAA. This provision is particularly relevant in those ad hoc arbitrations where the parties have not agreed to apply other arbitration rules. There is also an obligation to comply with the public policy provisions of the CAA;
- jurisdiction: if the award is addressed to a dispute not included in the arbitration agreement, or includes decisions exceeding the scope of the agreement itself; and
- arbitrability: the challenge will proceed if there is evidence that the dispute was not arbitrable under article 3 of the CAA, or the award is contrary to the public policy of that country.
- 40.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?
The interpretation of the law, whether it is right or wrong, is an exclusive attribution of the arbitral tribunal and local courts are not empowered to review the criteria applied by the arbitrators.
- 41.To what degree have international awards rendered in your jurisdiction been vacated on the grounds of ‘public policy’?
There is no substantial case law involving an international award rendered in Venezuela, vacated on the grounds of “public policy”.
- 42.What is the period of time a party has to challenge such an award?
The parties will have five days to file the challenge from the date the award, or its correction, clarification or complement, has been notified.
- 43.Please describe the standard used by the courts in deciding whether to vacate an international arbitral award rendered in your jurisdiction.
The courts will examine the particular grounds for challenge and will not have any deference related to the international nature of the particular arbitration.
- 44.Please describe any recent significant experiences or cases that illustrate the attitude of your courts toward the annulment of international awards rendered in your jurisdiction.
The Venezuelan courts will not distinguish between national or international awards when they receive an application for judicial review. The development of case law with regards to the annulment has been positive in the way that local tribunals will not allow the use of any other action, such as the constitutional injunction or “Amparo Constitucional”, which has obliged law practitioners to better understand the meaning of the challenge to an arbitral award.
- 45.Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?
Article 43 of the CAA provides for the superior courts of the place where the award was rendered to be the only court empowered to vacate such an award. Challenges against awards rendered in foreign jurisdictions do not fall within the jurisdiction of local courts.
- 46.May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?
Yes, it is possible to waive, limit or expand the scope of court review.
- 47.Please describe the process for enforcing an arbitral award rendered in another jurisdiction.
The proceeding for the enforcement of the arbitral award is provided for in article 48 of the CAA. The enforcement must be requested in writing from the court of first instance, jointly with a copy of the award, duly certified by the arbitral tribunal. According to the mentioned article, there will be no need of exequatur and the award will be enforced in accordance to the rules of enforcement applied to judgments rendered by the national courts.
According to article 524 of the CPC, once the interested party has requested the enforcement, the court will set a time not less than three days and no longer than 10 for the debtor to comply voluntarily with the award. Once this time has elapsed, the court will issue a decree ordering the enforcement of the award.
- 48.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?
Obtaining an order for the enforcement of an arbitral award should take no longer than 15 days in accordance with the CPC, while in practice the full proceeding until collection of the amounts due, could last from three to six months.
- 49.Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgement?
As mentioned above, the enforcement of an arbitral award may take some months. The domestication of a foreign judgment is made through exequatur before the Supreme Tribunal of Justice and can take about one year.
- 50.Please describe some significant recent experiences with the enforcement of foreign arbitral awards.
The request for the enforcement of a foreign arbitral award should not raise major issues as far as the requesting party complies with the requirements established in article 47 of the CAA, and follows the proceedings before the court. The attitude of the Venezuelan tribunals towards arbitration in general has changed for the better since the Constitutional Chamber of the Supreme Tribunal of Justice has rendered judicial opinions recognising the main principles of arbitration and the role of local courts in the arbitral proceedings.
- 51.To what degree has ‘public policy’ been a ground to refuse enforcement of an international award rendered abroad?
Venezuelan courts have adopted a restricted criterion for the application of the concept of “public policy”. The concept would be applied only in those cases where a gross violation of Venezuelan public policy would be caused if the award is enforced in the country.
- 52.Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?
No. If the award has been set aside, the party against whom the award is invoked will be entitled to oppose to the enforcement in accordance with article 49.e of the CAA, which explicitly provides that the enforcement of an award could be denied if there is evidence that the same has been suspended or set aside by a competent authority.
- 53.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?
Our view is that the trend is positive for international arbitration, and several facts allow this view:
- the arbitration centres located in Caracas have seen an increase in their caseload;
- local lawyers are more interested in arbitration than they were before;
- Venezuelan arbitrators have acquired relevant experience in dealing with complex cases at national and international levels, subject to different languages, and legislations; and
- the Venezuelan courts have assumed a truly collaborative and positive approach to the use of arbitration in general and the judicial criteria rendered by the Supreme Tribunal of Justice, particularly from the Constitutional Chamber, has adopted the main principles of international arbitration.
We would advise foreign lawyers to consider Venezuela as a seat for international arbitrations since the country is a member of the main international arbitration conventions, the legislation is based on the UNCITRAL Model Law, which makes it familiar to foreign arbitration specialists, and the tribunals have a positive approach towards international arbitration, to the point that issues such as interim measures ordered by the courts before the constitution of the arbitral tribunal have been favourably resolved.
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