China – Dispute Resolution Methods

24 Maggio 2017

  • Cina
  • Arbitrato
  • Contenzioso

Some places are good to go to for arbitration, some places are better avoided. It is not this blog’s aim to hail the former and blame the latter but, rather, to outline why Switzerland certainly is a good choice when it comes to arbitration.

Arbitration clauses are sometimes called “Midnight Clauses”. They are called “Midnight Clauses” because they tend to be the very last clause that parties will negotiate on when trying to contractually finalize a business transaction. If the parties are looking for an excellent dispute resolution mechanism or are having last-minute difficulties in finding a suitable compromise, arbitration in Switzerland might be a valuable alternative. Why? There are a handful of unique selling propositions.

First of all, Switzerland has a long tradition of hosting international arbitrations of all kinds (both ad-hoc and institutional). The tradition dates back more than hundred years. As a consequence of this history and experience, you will find easy access to a great number of excellent legal practitioners, both counsel and arbitrators.

Second, Switzerland is politically neutral and is the seat of many international organizations (WTO, WIPO, IOC, etc.). This ensures an openness of mind to different cultures and values and makes Switzerland a great place for an international arbitration.

Third, Swiss substantive law offers a very liberal, clearly defined and predictable legal framework to its users. As a consequence, Arbitration in Switzerland is ideally combined with a choice of law clause in favour of Swiss substantive law.

Fourth and importantly, Switzerland offers both a very stable legal system and an excellent legal framework. Switzerland’s international arbitration law follows an efficient regime and is comprised of only 18 very concise articles. Furthermore, the Swiss judiciary applies a very arbitration-friendly approach in dealing with challenges of arbitral awards and only interferes in exceptional circumstances. There is only one challenge available and this challenge goes right to the Swiss Federal Supreme Court, Switzerland’s highest court. The Supreme Court will not review the merits of the award. It will, however, ensure that the most basic legal principles (public policy) are safe-guarded. Consequently, there are no cost-intense multi step annulment proceedings before state courts. Challenges are generally dealt with within six months.

Fifth, Switzerland offers great infrastructure both in terms of travelling access, hotels, security, court reporting and translation needs.

Last but not least, arbitration in Switzerland offers you great flexibility. You can arbitrate according to the arbitration rules of all of the major institutions, i.e., ICC, Swiss Chambers of Commerce, LCIA, SCC, DIS, AAA, SIAC, HIAC, CIETAC or under Ad-Hoc Rules and will find a suitable ground for your arbitration. For all of these reasons and many more, arbitral awards originating in Switzerland will profit from a great reputation and will be easily enforceable internationally in case of need.

Arbitration could be a strange world of wonders, but, on the other hand, if mastered professionally in the first place while planning and managing the process, arbitration could turn out to be a process that will be directed towards a winning strategy.

Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

1 – You must control your arbitral procedure – This may seem rather trivial. However, time and again, cases such as those this writer has scrutinized or managed indicate that when counsels who are aware of the “technicalities” and plan for them, they gain considerable advantages or at least control of the international arbitration.

2 – Precisely define your arbitration agreement/clauses – This essential cannot be emphasized enough, as to its importance and great impact over the arbitral process.  This preliminary phase of any arbitration process – which is always based upon some kind of consent granting the jurisdiction to an arbitral tribunal – is the key for safeguarding interests.

3 – Cautiously choose and define the seat of arbitration– The seat of arbitration is not “just” the venue where the arbitration will take place – it is the country whose courts will have jurisdiction over the matters surrounding, supporting and enforcing the arbitration procedure.

This might have crucial relevance, even for the validity of the arbitration agreement itself, since each country has its own internal arbitration laws regulating arbitration and, thus, might interpret validity or non-validity of an arbitration agreement irrespective of the law applying to the arbitration or the intent of the parties initially. For example, some countries may not enforce an arbitration without a signed arbitration agreement, whereas others, such as Israel, might acknowledge consent for arbitration without a written document.

The seat of arbitration may also have a great impact even over interim measures. It is crucial to review what kind of interim measures are possible or impossible according to the law of the seat of the arbitration – some cases revolve around interim measures without which the arbitration might be meaningless.

The seat of arbitration might also have a great impact in light of the public policy in the specific country  – which might not enable the validation or enforcement of an arbitral award counter to its public policy principles  – and thus make an arbitral award worthless.

4 – Definition of the possible remedies and the exclusion of others – This is another essential that, for some reason, in practice is often overlooked, despite the obvious advantage this might have over the scope of the arbitration. Parties to an arbitration agreement have the power not only to provide the matters that are subject to arbitration and the applicable law, but also to control their legal exposure in arbitration – and, in fact, minimize or maximize it – if they just give thought to remedy definitions, rather than leave it inattentively  hanging as a midnight clause.

For instance, a party might define that punitive or tort damages are included or excluded. Similarly, parties can provide to cap possible compensation (such as a certain value of the transaction), all in a manner so that the arbitration process can be navigated solely to what the parties, or any one of them, actually seek. This will contain and minimize the risk of the unexpected or unknown.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

For instance, parties sometimes provide that the tribunal will have the jurisdiction to render awards as to questions of interpretation of the contract and its terms – but such a provision may be found to not provide jurisdiction as to breach of the contract – this might turn out to be a substantial obstacle for the enforcing party.

5 – Determining the applicable law – This has great relevance and importance for obvious reasons – and yet many times parties are found to have agreed upon an applicable law – such as British or Swiss law – without actually looking into said law and its possible implications for the matter in the case in dispute. It is indeed worth the extra effort to consult with counsel acquainted with the proposed applicable law while presenting the scope of interests to be protected and any possible downsides in the transaction.

6 – Determining and controlling arbitration costs – International arbitration could be extremely costly, especially if parties have not provided in advance for the terms for conducting the process. Parties could and should consider controlling costs, inter alia,  by the following:

  • Providing for a sole arbitrator rather than a tribunal of three
  • Providing that the arbitration will be conducted by written submissions and affidavits only
  • Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
  • Providing in advance for short hearings and a limitation on the number of hearings
  • Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
  • Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

7 – Ensuring that enforcement is possible – An essential element to be reviewed in advance, even before engaging in an arbitration agreement, is the possibility of enforcing the arbitral award. In general, the New York Convention of 1958 provides sufficient reference for this consideration. This may not always be the case. Thus, a technical review of the convention is sufficient to ensure enforceability in a particular case or situation.

There are instances in which legal or political considerations may preclude enforcement even when the target jurisdiction is part of the New York Convention. For instance: non-mutuality of enforcement among countries, an award that contradicts public policy of the target enforcement country, difficulties originating from conflicts of law – since the enforcing jurisdiction will usually apply its set of laws, rules and values.

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.

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.

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

Commercial disputes in Italy can be efficiently resolved by Italian courts (either through ordinary or summary proceedings) or, if agreed upon by the parties, through arbitration.

The court usually decides a case – in first instance – in about three to four years and – in second instance – in about four to five years, while the length of arbitration proceedings is generally shorter (about one year), since it depends on the parties’ terms of engagement and the governing arbitration rules.

That said, the costs of arbitration proceedings are higher than the costs required for court proceedings, while timing of arbitration proceedings are generally faster, especially if the arbitration is carried out under the rules of an arbitration institution (e.g. The Milan International Chamber of Arbitration).

Enforcement of foreign judgments and international arbitration awards

Foreign judgments are recognised and enforced in Italy through different procedures depending on whether the judgment was issued by a court of an EU member state or by an extra-EU member state court.

In particular, any judgment, decision and measure which meets certain requirements, issued by a court of an EU member state and enforceable in that state is automatically recognised in the Italian jurisdiction without any special procedure and/or any declaration of enforceability being required, pursuant to the Regulation (EU) no 1215/2012, Regulation (EC) 44/2001 and the Brussels and Lugano II conventions, when applicable.

Furthermore, for judgments specifically issued by an extra-EU member state court, there are a number of bilateral conventions relating to the recognition and enforcement of judgments in civil matters.

As for international arbitration awards, in 1969 Italy signed the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. As a consequence, Italy recognises foreign arbitral awards as binding and enforces them in accordance with Italian procedural law under the conditions laid down in the New York Convention.

Therefore, in order for a foreign arbitration award to be enforced in Italy, it must be filed with the Court of Appeal of the place of residence of the other party (if it is in Italy) or with the Court of Appeal in Rome (if the other party resides abroad). In this case, the Court of Appeal will only check that the formal requirements of the award are respected, without entering in the merits of the dispute. The court will then issue an enforcement order, where the award becomes equivalent to a judgment capable of enforcement.

Enforcement of Italian judgments and arbitration awards in other jurisdictions

The possibility to enforce Italian judgments and arbitral awards may vary based on the jurisdiction.

In particular, Italian judgments are enforceable abroad pursuant to the Brussels I bis EU Regulation, and to the Lugano Convention, when applicable.

As mentioned above, Italy is also party to the 1958 New York Convention, which is based on the reciprocity principle for the recognition and enforcement of arbitration awards made in the territory of another contracting state. Therefore, an award rendered in Italy is enforceable in foreign jurisdictions that are party to the New York Convention.

Enforcement of foreign decisions and arbitral awards in Venezuela

21 Marzo 2017

  • Venezuela
  • Arbitrato
  • Contratti
  • Contenzioso

Some places are good to go to for arbitration, some places are better avoided. It is not this blog’s aim to hail the former and blame the latter but, rather, to outline why Switzerland certainly is a good choice when it comes to arbitration.

Arbitration clauses are sometimes called “Midnight Clauses”. They are called “Midnight Clauses” because they tend to be the very last clause that parties will negotiate on when trying to contractually finalize a business transaction. If the parties are looking for an excellent dispute resolution mechanism or are having last-minute difficulties in finding a suitable compromise, arbitration in Switzerland might be a valuable alternative. Why? There are a handful of unique selling propositions.

First of all, Switzerland has a long tradition of hosting international arbitrations of all kinds (both ad-hoc and institutional). The tradition dates back more than hundred years. As a consequence of this history and experience, you will find easy access to a great number of excellent legal practitioners, both counsel and arbitrators.

Second, Switzerland is politically neutral and is the seat of many international organizations (WTO, WIPO, IOC, etc.). This ensures an openness of mind to different cultures and values and makes Switzerland a great place for an international arbitration.

Third, Swiss substantive law offers a very liberal, clearly defined and predictable legal framework to its users. As a consequence, Arbitration in Switzerland is ideally combined with a choice of law clause in favour of Swiss substantive law.

Fourth and importantly, Switzerland offers both a very stable legal system and an excellent legal framework. Switzerland’s international arbitration law follows an efficient regime and is comprised of only 18 very concise articles. Furthermore, the Swiss judiciary applies a very arbitration-friendly approach in dealing with challenges of arbitral awards and only interferes in exceptional circumstances. There is only one challenge available and this challenge goes right to the Swiss Federal Supreme Court, Switzerland’s highest court. The Supreme Court will not review the merits of the award. It will, however, ensure that the most basic legal principles (public policy) are safe-guarded. Consequently, there are no cost-intense multi step annulment proceedings before state courts. Challenges are generally dealt with within six months.

Fifth, Switzerland offers great infrastructure both in terms of travelling access, hotels, security, court reporting and translation needs.

Last but not least, arbitration in Switzerland offers you great flexibility. You can arbitrate according to the arbitration rules of all of the major institutions, i.e., ICC, Swiss Chambers of Commerce, LCIA, SCC, DIS, AAA, SIAC, HIAC, CIETAC or under Ad-Hoc Rules and will find a suitable ground for your arbitration. For all of these reasons and many more, arbitral awards originating in Switzerland will profit from a great reputation and will be easily enforceable internationally in case of need.

Arbitration could be a strange world of wonders, but, on the other hand, if mastered professionally in the first place while planning and managing the process, arbitration could turn out to be a process that will be directed towards a winning strategy.

Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

1 – You must control your arbitral procedure – This may seem rather trivial. However, time and again, cases such as those this writer has scrutinized or managed indicate that when counsels who are aware of the “technicalities” and plan for them, they gain considerable advantages or at least control of the international arbitration.

2 – Precisely define your arbitration agreement/clauses – This essential cannot be emphasized enough, as to its importance and great impact over the arbitral process.  This preliminary phase of any arbitration process – which is always based upon some kind of consent granting the jurisdiction to an arbitral tribunal – is the key for safeguarding interests.

3 – Cautiously choose and define the seat of arbitration– The seat of arbitration is not “just” the venue where the arbitration will take place – it is the country whose courts will have jurisdiction over the matters surrounding, supporting and enforcing the arbitration procedure.

This might have crucial relevance, even for the validity of the arbitration agreement itself, since each country has its own internal arbitration laws regulating arbitration and, thus, might interpret validity or non-validity of an arbitration agreement irrespective of the law applying to the arbitration or the intent of the parties initially. For example, some countries may not enforce an arbitration without a signed arbitration agreement, whereas others, such as Israel, might acknowledge consent for arbitration without a written document.

The seat of arbitration may also have a great impact even over interim measures. It is crucial to review what kind of interim measures are possible or impossible according to the law of the seat of the arbitration – some cases revolve around interim measures without which the arbitration might be meaningless.

The seat of arbitration might also have a great impact in light of the public policy in the specific country  – which might not enable the validation or enforcement of an arbitral award counter to its public policy principles  – and thus make an arbitral award worthless.

4 – Definition of the possible remedies and the exclusion of others – This is another essential that, for some reason, in practice is often overlooked, despite the obvious advantage this might have over the scope of the arbitration. Parties to an arbitration agreement have the power not only to provide the matters that are subject to arbitration and the applicable law, but also to control their legal exposure in arbitration – and, in fact, minimize or maximize it – if they just give thought to remedy definitions, rather than leave it inattentively  hanging as a midnight clause.

For instance, a party might define that punitive or tort damages are included or excluded. Similarly, parties can provide to cap possible compensation (such as a certain value of the transaction), all in a manner so that the arbitration process can be navigated solely to what the parties, or any one of them, actually seek. This will contain and minimize the risk of the unexpected or unknown.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

For instance, parties sometimes provide that the tribunal will have the jurisdiction to render awards as to questions of interpretation of the contract and its terms – but such a provision may be found to not provide jurisdiction as to breach of the contract – this might turn out to be a substantial obstacle for the enforcing party.

5 – Determining the applicable law – This has great relevance and importance for obvious reasons – and yet many times parties are found to have agreed upon an applicable law – such as British or Swiss law – without actually looking into said law and its possible implications for the matter in the case in dispute. It is indeed worth the extra effort to consult with counsel acquainted with the proposed applicable law while presenting the scope of interests to be protected and any possible downsides in the transaction.

6 – Determining and controlling arbitration costs – International arbitration could be extremely costly, especially if parties have not provided in advance for the terms for conducting the process. Parties could and should consider controlling costs, inter alia,  by the following:

  • Providing for a sole arbitrator rather than a tribunal of three
  • Providing that the arbitration will be conducted by written submissions and affidavits only
  • Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
  • Providing in advance for short hearings and a limitation on the number of hearings
  • Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
  • Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

7 – Ensuring that enforcement is possible – An essential element to be reviewed in advance, even before engaging in an arbitration agreement, is the possibility of enforcing the arbitral award. In general, the New York Convention of 1958 provides sufficient reference for this consideration. This may not always be the case. Thus, a technical review of the convention is sufficient to ensure enforceability in a particular case or situation.

There are instances in which legal or political considerations may preclude enforcement even when the target jurisdiction is part of the New York Convention. For instance: non-mutuality of enforcement among countries, an award that contradicts public policy of the target enforcement country, difficulties originating from conflicts of law – since the enforcing jurisdiction will usually apply its set of laws, rules and values.

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.

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.

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

Commercial disputes in Italy can be efficiently resolved by Italian courts (either through ordinary or summary proceedings) or, if agreed upon by the parties, through arbitration.

The court usually decides a case – in first instance – in about three to four years and – in second instance – in about four to five years, while the length of arbitration proceedings is generally shorter (about one year), since it depends on the parties’ terms of engagement and the governing arbitration rules.

That said, the costs of arbitration proceedings are higher than the costs required for court proceedings, while timing of arbitration proceedings are generally faster, especially if the arbitration is carried out under the rules of an arbitration institution (e.g. The Milan International Chamber of Arbitration).

Enforcement of foreign judgments and international arbitration awards

Foreign judgments are recognised and enforced in Italy through different procedures depending on whether the judgment was issued by a court of an EU member state or by an extra-EU member state court.

In particular, any judgment, decision and measure which meets certain requirements, issued by a court of an EU member state and enforceable in that state is automatically recognised in the Italian jurisdiction without any special procedure and/or any declaration of enforceability being required, pursuant to the Regulation (EU) no 1215/2012, Regulation (EC) 44/2001 and the Brussels and Lugano II conventions, when applicable.

Furthermore, for judgments specifically issued by an extra-EU member state court, there are a number of bilateral conventions relating to the recognition and enforcement of judgments in civil matters.

As for international arbitration awards, in 1969 Italy signed the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. As a consequence, Italy recognises foreign arbitral awards as binding and enforces them in accordance with Italian procedural law under the conditions laid down in the New York Convention.

Therefore, in order for a foreign arbitration award to be enforced in Italy, it must be filed with the Court of Appeal of the place of residence of the other party (if it is in Italy) or with the Court of Appeal in Rome (if the other party resides abroad). In this case, the Court of Appeal will only check that the formal requirements of the award are respected, without entering in the merits of the dispute. The court will then issue an enforcement order, where the award becomes equivalent to a judgment capable of enforcement.

Enforcement of Italian judgments and arbitration awards in other jurisdictions

The possibility to enforce Italian judgments and arbitral awards may vary based on the jurisdiction.

In particular, Italian judgments are enforceable abroad pursuant to the Brussels I bis EU Regulation, and to the Lugano Convention, when applicable.

As mentioned above, Italy is also party to the 1958 New York Convention, which is based on the reciprocity principle for the recognition and enforcement of arbitration awards made in the territory of another contracting state. Therefore, an award rendered in Italy is enforceable in foreign jurisdictions that are party to the New York Convention.

Foreign investments in Italy: Dispute resolution

15 Dicembre 2016

  • Italia
  • Arbitrato
  • Contenzioso

Some places are good to go to for arbitration, some places are better avoided. It is not this blog’s aim to hail the former and blame the latter but, rather, to outline why Switzerland certainly is a good choice when it comes to arbitration.

Arbitration clauses are sometimes called “Midnight Clauses”. They are called “Midnight Clauses” because they tend to be the very last clause that parties will negotiate on when trying to contractually finalize a business transaction. If the parties are looking for an excellent dispute resolution mechanism or are having last-minute difficulties in finding a suitable compromise, arbitration in Switzerland might be a valuable alternative. Why? There are a handful of unique selling propositions.

First of all, Switzerland has a long tradition of hosting international arbitrations of all kinds (both ad-hoc and institutional). The tradition dates back more than hundred years. As a consequence of this history and experience, you will find easy access to a great number of excellent legal practitioners, both counsel and arbitrators.

Second, Switzerland is politically neutral and is the seat of many international organizations (WTO, WIPO, IOC, etc.). This ensures an openness of mind to different cultures and values and makes Switzerland a great place for an international arbitration.

Third, Swiss substantive law offers a very liberal, clearly defined and predictable legal framework to its users. As a consequence, Arbitration in Switzerland is ideally combined with a choice of law clause in favour of Swiss substantive law.

Fourth and importantly, Switzerland offers both a very stable legal system and an excellent legal framework. Switzerland’s international arbitration law follows an efficient regime and is comprised of only 18 very concise articles. Furthermore, the Swiss judiciary applies a very arbitration-friendly approach in dealing with challenges of arbitral awards and only interferes in exceptional circumstances. There is only one challenge available and this challenge goes right to the Swiss Federal Supreme Court, Switzerland’s highest court. The Supreme Court will not review the merits of the award. It will, however, ensure that the most basic legal principles (public policy) are safe-guarded. Consequently, there are no cost-intense multi step annulment proceedings before state courts. Challenges are generally dealt with within six months.

Fifth, Switzerland offers great infrastructure both in terms of travelling access, hotels, security, court reporting and translation needs.

Last but not least, arbitration in Switzerland offers you great flexibility. You can arbitrate according to the arbitration rules of all of the major institutions, i.e., ICC, Swiss Chambers of Commerce, LCIA, SCC, DIS, AAA, SIAC, HIAC, CIETAC or under Ad-Hoc Rules and will find a suitable ground for your arbitration. For all of these reasons and many more, arbitral awards originating in Switzerland will profit from a great reputation and will be easily enforceable internationally in case of need.

Arbitration could be a strange world of wonders, but, on the other hand, if mastered professionally in the first place while planning and managing the process, arbitration could turn out to be a process that will be directed towards a winning strategy.

Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

1 – You must control your arbitral procedure – This may seem rather trivial. However, time and again, cases such as those this writer has scrutinized or managed indicate that when counsels who are aware of the “technicalities” and plan for them, they gain considerable advantages or at least control of the international arbitration.

2 – Precisely define your arbitration agreement/clauses – This essential cannot be emphasized enough, as to its importance and great impact over the arbitral process.  This preliminary phase of any arbitration process – which is always based upon some kind of consent granting the jurisdiction to an arbitral tribunal – is the key for safeguarding interests.

3 – Cautiously choose and define the seat of arbitration– The seat of arbitration is not “just” the venue where the arbitration will take place – it is the country whose courts will have jurisdiction over the matters surrounding, supporting and enforcing the arbitration procedure.

This might have crucial relevance, even for the validity of the arbitration agreement itself, since each country has its own internal arbitration laws regulating arbitration and, thus, might interpret validity or non-validity of an arbitration agreement irrespective of the law applying to the arbitration or the intent of the parties initially. For example, some countries may not enforce an arbitration without a signed arbitration agreement, whereas others, such as Israel, might acknowledge consent for arbitration without a written document.

The seat of arbitration may also have a great impact even over interim measures. It is crucial to review what kind of interim measures are possible or impossible according to the law of the seat of the arbitration – some cases revolve around interim measures without which the arbitration might be meaningless.

The seat of arbitration might also have a great impact in light of the public policy in the specific country  – which might not enable the validation or enforcement of an arbitral award counter to its public policy principles  – and thus make an arbitral award worthless.

4 – Definition of the possible remedies and the exclusion of others – This is another essential that, for some reason, in practice is often overlooked, despite the obvious advantage this might have over the scope of the arbitration. Parties to an arbitration agreement have the power not only to provide the matters that are subject to arbitration and the applicable law, but also to control their legal exposure in arbitration – and, in fact, minimize or maximize it – if they just give thought to remedy definitions, rather than leave it inattentively  hanging as a midnight clause.

For instance, a party might define that punitive or tort damages are included or excluded. Similarly, parties can provide to cap possible compensation (such as a certain value of the transaction), all in a manner so that the arbitration process can be navigated solely to what the parties, or any one of them, actually seek. This will contain and minimize the risk of the unexpected or unknown.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

For instance, parties sometimes provide that the tribunal will have the jurisdiction to render awards as to questions of interpretation of the contract and its terms – but such a provision may be found to not provide jurisdiction as to breach of the contract – this might turn out to be a substantial obstacle for the enforcing party.

5 – Determining the applicable law – This has great relevance and importance for obvious reasons – and yet many times parties are found to have agreed upon an applicable law – such as British or Swiss law – without actually looking into said law and its possible implications for the matter in the case in dispute. It is indeed worth the extra effort to consult with counsel acquainted with the proposed applicable law while presenting the scope of interests to be protected and any possible downsides in the transaction.

6 – Determining and controlling arbitration costs – International arbitration could be extremely costly, especially if parties have not provided in advance for the terms for conducting the process. Parties could and should consider controlling costs, inter alia,  by the following:

  • Providing for a sole arbitrator rather than a tribunal of three
  • Providing that the arbitration will be conducted by written submissions and affidavits only
  • Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
  • Providing in advance for short hearings and a limitation on the number of hearings
  • Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
  • Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

7 – Ensuring that enforcement is possible – An essential element to be reviewed in advance, even before engaging in an arbitration agreement, is the possibility of enforcing the arbitral award. In general, the New York Convention of 1958 provides sufficient reference for this consideration. This may not always be the case. Thus, a technical review of the convention is sufficient to ensure enforceability in a particular case or situation.

There are instances in which legal or political considerations may preclude enforcement even when the target jurisdiction is part of the New York Convention. For instance: non-mutuality of enforcement among countries, an award that contradicts public policy of the target enforcement country, difficulties originating from conflicts of law – since the enforcing jurisdiction will usually apply its set of laws, rules and values.

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.

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.

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

Commercial disputes in Italy can be efficiently resolved by Italian courts (either through ordinary or summary proceedings) or, if agreed upon by the parties, through arbitration.

The court usually decides a case – in first instance – in about three to four years and – in second instance – in about four to five years, while the length of arbitration proceedings is generally shorter (about one year), since it depends on the parties’ terms of engagement and the governing arbitration rules.

That said, the costs of arbitration proceedings are higher than the costs required for court proceedings, while timing of arbitration proceedings are generally faster, especially if the arbitration is carried out under the rules of an arbitration institution (e.g. The Milan International Chamber of Arbitration).

Enforcement of foreign judgments and international arbitration awards

Foreign judgments are recognised and enforced in Italy through different procedures depending on whether the judgment was issued by a court of an EU member state or by an extra-EU member state court.

In particular, any judgment, decision and measure which meets certain requirements, issued by a court of an EU member state and enforceable in that state is automatically recognised in the Italian jurisdiction without any special procedure and/or any declaration of enforceability being required, pursuant to the Regulation (EU) no 1215/2012, Regulation (EC) 44/2001 and the Brussels and Lugano II conventions, when applicable.

Furthermore, for judgments specifically issued by an extra-EU member state court, there are a number of bilateral conventions relating to the recognition and enforcement of judgments in civil matters.

As for international arbitration awards, in 1969 Italy signed the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. As a consequence, Italy recognises foreign arbitral awards as binding and enforces them in accordance with Italian procedural law under the conditions laid down in the New York Convention.

Therefore, in order for a foreign arbitration award to be enforced in Italy, it must be filed with the Court of Appeal of the place of residence of the other party (if it is in Italy) or with the Court of Appeal in Rome (if the other party resides abroad). In this case, the Court of Appeal will only check that the formal requirements of the award are respected, without entering in the merits of the dispute. The court will then issue an enforcement order, where the award becomes equivalent to a judgment capable of enforcement.

Enforcement of Italian judgments and arbitration awards in other jurisdictions

The possibility to enforce Italian judgments and arbitral awards may vary based on the jurisdiction.

In particular, Italian judgments are enforceable abroad pursuant to the Brussels I bis EU Regulation, and to the Lugano Convention, when applicable.

As mentioned above, Italy is also party to the 1958 New York Convention, which is based on the reciprocity principle for the recognition and enforcement of arbitration awards made in the territory of another contracting state. Therefore, an award rendered in Italy is enforceable in foreign jurisdictions that are party to the New York Convention.

Roberto Luzi Crivellini

Aree di attività

  • Arbitrato
  • Distribuzione
  • Commercio internazionale
  • Contenzioso
  • Real estate
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