Enforcement of foreign decisions and arbitral awards in Venezuela

There is a number of dispute resolution mechanisms available for the disputes with the Chinese parties. Depending on bargaining power of the parties and few other circumstances, such as limitations of Chinese law, the dispute can be sometimes resolved outside of China. More frequently, however, the Sino-foreign disputes are resolved in China and this post offers a brief introduction to the methods available there .

As almost anything else in business, an optimal method for resolution of future disputes is worth of anticipating well in advance. Once there is a conflict, it is much more difficult for the parties to agree on the solution equally acceptable to both of them. There is a variety of options to choose from and each of them has its own advantages and disadvantages. Also, there is no “one size fits all” solution and each transaction as well as dispute should be approached individually. Of course, there is always is a default solution, which is going to state court in case the parties have not provided for any alternative mechanism, but this is not always the most optimal way to go.

Litigation

Chinese courts are commonly perceived by foreigners as rather undesirable scenario for dispute resolution. It is so due to the often mentioned problems, such as local protectionism of the Chinese courts or lack of their professionalism. However, in practice, this is not always true and especially the courts in the China’s well-developed regions, particularly in the biggest coastal cities are generally a safe harbor for disputes involving foreigners. The same holds true for the IP courts located in Beijing, Shanghai and Guangzhou. One needs to remember, however, that the jurisdiction of particular court depends on a number of factors, such as place of registration of the Chinese counterparty or place of performance of the contract and therefore, the Chinese top courts may not be the ones handling particular dispute in practice.

Arbitration

Arbitration is a common choice for foreign-related disputes in China. It happens so, because of a number of advantages of arbitration over litigation in such a context. To start with, China and the vast majority of the countries in the world are the parties to the New York Convention, which significantly streamlines the enforcement of foreign arbitral awards. There is no comparable treaty of that scale for the enforcement of state court judgements, what can cause practical problems if certain country does not have an agreement on judicial assistance with China and the enforcement of foreign court judgements is sought. Therefore, since the parties want money and not a piece of paper, the use of arbitration in the cross-border context can substantially improve the prospects for effective enforcement of arbitral award. Furthermore, in contrast to litigating in China, in arbitration English language can be used in proceeding and a party can be represented by a foreign counsel. In arbitration, the parties can also select arbitrators resolving their dispute and a foreign arbitrator is not an uncommon scenario in case of the Sino-foreign arbitration proceedings in China. The parties can also select a specific arbitration institution and rules applicable to the proceeding.

The China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC) are one of the most frequently chosen arbitration institutions in China for the foreign-related disputes. Alternatively, if the circumstances of the case permit – the dispute can be taken outside of China and resolved, for instance, by  the Hong Kong International Arbitration Centre (HKIAC) or the Singapore International Arbitration Centre (SIAC), which are fairly acceptable alternative choices for the Chinese parties.

Other options

One of the other methods popular in China is mediation. Mediation is typically faster, cheaper and increases the chances of preserving good relationship between the parties. However, one needs to remember that in order to mediate, the parties need to be willing to do so, since the role of mediator is to help the parties reach an agreement and not to ultimately decide their dispute. Furthermore, the product of mediation is a contract and so, the breach of mediation agreement typically equals to contractual breach.

One additional important tool frequently used in practice is engaging local lawyers for the purpose of negotiating with the Chinese party as soon as the dispute escalates. The lawyers can help the parties communicate and when the communication is impossible – they can prepare a document describing the claims and informing the Chinese party about the risk of undertaking further legal steps, such as staring court proceeding, what is made mainly for the purpose of brining the other party back to negotiation and finding a solution acceptable to both parties. This often helps save time and money, but it can be problematic if the other party ignores the actions of lawyer. Also, like in case of mediation, the problem lies in the enforcement of any agreement reached by the parties in the course of negotiation.

The main takeaways from this short post are the following:

• Think about the dispute resolution mechanism in advance. There are quite many issues that need to be taken into consideration and there is no “one size fits all” solution. There might be the situations when going to the Chinese court makes perfect sense and there also might be the situations when it makes no sense at all. What is the best option for me in particular case? Which court can potentially have jurisdiction over my case? Does the country involved have a judicial assistance agreement with China for the purpose of enforcement? What should be the language of proceeding? Which arbitration institution to choose?
• Think about hiring professionals right from the very beginning, preferably at the stage of negotiating and drafting agreements. Choosing an optimal solution for resolution of future disputes can help save a lot of time, money and energy. In case of dispute occurring already – act promptly. If the dispute escalates, think about what you can do to best preserve your rights. Should you apply for interim measures? Do you need to first negotiate before you can go for arbitration in case of multi-tier clauses? Which documents are needed to start the proceeding?

The author of this post is Monika Prusinowska.

Las controversias mercantiles en Italia pueden ser resueltas de modo eficaz ante los tribunales italianos (ya sea mediante el procedimiento ordinario o mediante el procedimiento sumario) o, si así lo acuerdan las partes, mediante el arbitraje.

Normalmente un tribunal suele tardar en dictar sentencia  –en primera instancia- alrededor de tres o cuatro años y –en segunda instancia- en unos cuatro o cinco años, mientras que la duración del procedimiento de arbitraje suele ser más corta (alrededor de un año), ya que depende de las condiciones de contratación de las partes y de las reglas de arbitraje que rigen el mismo.

Por otra parte, los costes que derivan de los procedimientos de arbitraje son más elevados que los costes requeridos para los procedimientos judiciales, mientras que los plazos en los procedimientos arbitrales son generalmente más rápidos, especialmente si el arbitraje se lleva a cabo atendiendo a las reglas de una institución arbitral (por ejemplo, la Cámara Internacional de Arbitraje de Milán).

Ejecución de sentencias extranjeras y laudos arbitrales internacionales

Las sentencias extranjeras se reconocen y se ejecutan en Italia a través de diferentes procedimientos, dependiendo de que la sentencia haya sido dictada por un tribunal de un Estado miembro de Unión Europea o por un tribunal no comunitario.

En general, cualquier sentencia, decisión o medida que cumpla con determinados requisitos, que haya sido dictada por un tribunal de un Estado miembro de la UE y que sea exigible en ese Estado, es reconocida automáticamente en la jurisdicción italiana sin que se requiera ningún procedimiento especial y/o sin que se requiera una declaración de ejecución,  atendiendo a los Reglamentos UE 1215/2012, 44/2001 y los Convenios de Bruselas y Lugano II, cuando puedan ser aplicables.

Además, para las sentencias dictadas por un tribunal no perteneciente a la UE, existen una serie de convenios bilaterales relativos al reconocimiento y ejecución de resoluciones judiciales en materia civil.

En relación a los laudos arbitrales internacionales, en 1969 Italia firmó la Convención de Nueva York de 1958 sobre el reconocimiento y ejecución de sentencias arbitrales internacionales. En consecuencia, Italia reconoce los laudos arbitrales extranjeros de manera vinculante y los ejecuta de conformidad con la legislación procesal italiana en las condiciones establecidas en la Convención de Nueva York.

De ese modo, para que un laudo de arbitraje extranjero pueda ejecutarse en Italia, el mismo deberá presentarse ante el Tribunal de Apelación del lugar de residencia de la parte contraria (si se encuentra en Italia) o ante la Corte de Apelaciones de Roma (si la parte contraria reside en el extranjero). En este caso, el Tribunal de Apelación solo comprobará que el laudo extranjero respete los requisitos formales, sin entrar en el fondo de la controversia, después, el tribunal emitirá una orden ejecutiva, de ese modo el laudo se convertirá en equivalente a una sentencia que pueda ser ejecutiva.

Ejecución de sentencias y laudos arbitrales italianos en otras jurisdicciones

La posibilidad de hacer valer las sentencias y los laudos arbitrales italianos en el extranjero varía en función de cada una de las jurisdicciones.

En particular, las sentencias italianas son aplicables en el extranjero de conformidad con el Reglamento de Bruselas I bis de la UE y, cuando sea aplicable, con el Convenio de Lugano.

Como ya se ha mencionado anteriormente, Italia también forma parte de la Convención de Nueva York de 1958, el cual se basa en el principio de reciprocidad para el reconocimiento y ejecución de los laudos arbitrales dictados en territorio de otro Estado parte del Convenio. Por lo tanto, un laudo dictado en Italia es ejecutable en jurisdicciones extranjeras que sean parte de la Convención de Nueva York.

General principles

There are a number of general contracting principles under Venezuelan contract law. These principles are mainly regulated by the Venezuelan Civil Code. General civil law principles like freedom to contract, capacity to contract, and formation are applicable under Venezuelan law. Contracts can be written or oral and, in general, no formal requirement for a contract to be enforceable and valid, the parties should however make sure that the signatories acting on behalf of another person or entity have authority to execute the contract.

Choice of Law and Jurisdiction

In general, the choice of foreign law by the parties as governing law for contracts is binding under Venezuelan law, provided that foreign law does not contrive essential principles of Venezuelan public policy. Collateral granted on assets located in Venezuela and other contracts relating to real estate located in Venezuela are governed by Venezuelan laws.

Choice of foreign jurisdiction is valid under Venezuela law. A foreign judgment rendered by a foreign court is enforceable in Venezuela, subject to obtaining a confirmatory judgment in Venezuela.

Such confirmatory judgment could be obtained from the Supreme Tribunal of Justice of the Republic in accordance with the provisions and conditions of the Venezuelan law on conflicts of laws, without a review of the merits of the foreign judgment, provided that: (a) the foreign judgment concerns matters of private civil or commercial law only; (b) the foreign judgment constitutes res judicata under the laws of the jurisdiction where it was rendered; (c) the foreign judgment does not relate to real property interests over real property located in Venezuela and the exclusive jurisdiction of Venezuelan courts over the matter has not been violated; (d) the foreign courts have jurisdiction over the matter pursuant to the general principles of jurisdiction of the Venezuelan Statute on Conflicts of Law (pursuant to such principles, a foreign court would have jurisdiction over Venezuelan entities if such entities submit to the jurisdiction of such foreign court, provided that the matter submitted to the foreign jurisdiction does not relate to real property located in Venezuela and does not contravene essential principles of Venezuelan public policy); (e) the defendant has been duly served of the proceedings, with sufficient time to appear in the proceedings, and has been generally granted with procedural guarantees that secure a reasonable possibility of defense; (f) the foreign judgment is not incompatible with a prior judgment that constitutes res judicata and no proceeding initiated prior to the rendering of the foreign judgment is pending before Venezuelan courts on the same subject matter among the same parties to litigation; and (g) the foreign judgment does not contravene the essential principles of Venezuelan public policy.

The submission by the parties of an agreement to arbitration in a country outside Venezuela would be binding in Venezuela. Venezuela is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Pursuant to the New York Convention, arbitral awards are enforceable in Venezuela without requiring a confirmatory judgment in Venezuela (exequatur) or a retrial or re-examination of the merits. However, the Venezuelan court in charge of enforcing the award can review the causes of nullity of awards contemplated in the New York Convention.

Enforcement

In practice, enforcement proceedings in Venezuela are generally lengthy, complex and cumbersome, and may be challenged (and therefore delayed) by the affected party on many legal grounds, and may be suspended or delayed. From our experience, an enforcement proceeding may take from several months to a few years, depending on the circumstances and complexity of the case.

In addition, a judgment or award for money issued by a foreign court or arbitration panel would likely be enforced in Venezuela only in bolivars at the then existing Cadivi exchange rate, and then the company receiving the bolivars would have difficulties in converting such bolivars into foreign currency as a result of the existing exchange controls.

In light of the above, counterparties of Venezuelan companies (whether public or private) generally take into account the assets of such companies located outside Venezuela as the real guarantee or support for the contractual obligations of such Venezuelan companies.

Contractual clauses allowing one party to unilaterally terminate a contract without judicial intervention in case of breach of the obligations of the other party may be unenforceable, unless the terminating party is the Venezuelan government or a Venezuelan state-owned company. As a general rule, termination for breach of the other party requires a declaration by the court or the arbitral tribunal (in case the contract contains an arbitration clause).

The author of this post is Fulvio Italiani