Legislative and case law developments confirm Argentina’s potential as a prominent arbitral seat

Introduction

Argentina continues to evolve as a jurisdiction for international commercial arbitration. Developments in recent years in the legislative, judicial and practical fields confirm the country’s potential as one of the most prominent arbitral seats in Latin America.

In the past decade, Argentina has thoroughly modernised its arbitration legislation. In August 2015, a new Civil and Commercial Code came into force (the New Code), which contains a chapter regulating arbitration agreements applicable to domestic arbitration.^[2]The International Commercial Arbitration Law (ICAL)^[3]was enacted in July 2018, embracing the modern notions of arbitration.^[4]Local courts have generally interpreted and applied this new regime in a pro-arbitration fashion.

These recent developments contribute to Argentina’s growth as an arbitral forum by granting more certainty to, and judicial security for, the parties involved.

In this chapter, we introduce the legal framework currently in force in Argentina, and discuss its evolution through legal scholars’ opinions and case law.

Legal arbitration framework in Argentina

Argentina is a federal republic, organised under a federal constitution.^[5]The federal state has exclusive power to enact federal regulation on substantive matters (such as interprovincial trade and codes on civil and commercial matters), which are applicable throughout the country, while each provincial state may enact its own laws or regulations on procedural matters.^[6]The relevance of this distinction is linked to the different levels of arbitration law found in international, national and provincial law, both substantive and procedural. These are summarised below.

Treaty law is considered to be part of Argentine law,^[7] and to hold a higher hierarchy than federal law,^[7] and to hold a higher hierarchy than federal law,^[8] which in turn has a higher hierarchy than provincial law.^[9]Argentina is a party to multiple regional and global treaties governing arbitration matters, including the Inter-American Convention on International Commercial Arbitration (the Panama Convention) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). ^[10]

Federal arbitration law is issued by the National Congress for application in the entire republic. In respect of the New Code, it was decided that arbitration provisions would be articulated as substantive (and not procedural) law, by including a chapter titled ‘The arbitration contract’. This legislative choice considered the contractual nature of arbitration as an expression of private autonomy in civil and commercial matters.^[11] ICAL can be considered as part of the powers of Congress to legislate on commerce with foreign nations.^[11] ICAL can be considered as part of the powers of Congress to legislate on commerce with foreign nations.^[12] However, both the New Code and ICAL also contain provisions of a procedural nature. The regulation of procedural matters by the National Congress is considered constitutional when that mechanism is necessary to guarantee the exercising of rights derived from substantive law.^[13]Finally, there are other specific federal regulations that contemplate arbitration as a mechanism for resolving conflicts. ^[14]

Federal procedural law is contained in the National Code of Civil Procedure (the Procedural Code) and must be applied in the context of judicial proceedings in the City of Buenos Aires and in federal courts throughout the country. The Procedural Code does not regulate arbitration proceedings but does regulate the legal action to constitute an arbitral tribunal, and it organises the recourses and actions against the award, as well as its enforcement in the domestic arena.^[15]

The interaction between ICAL and federal procedural law is observed in Article 107 of ICAL, which repeals Article 519 bis of the Procedural Code, which formerly regulated the enforcement of awards rendered by ‘foreign arbitral tribunals’.^[16]The enforcement of awards rendered in commercial international proceedings under ICAL is now regulated in Articles 102 to 106, without prejudice of arbitration treaties to which Argentina is a party (as stated in ICAL, Article 1). Provincial procedural law is potentially applicable when arbitration proceedings are seated in the different provinces and when the case does not involve federal matters.

Summary of Argentine international and domestic commercial arbitration law

With the enactment of the New Code and ICAL, Argentina has modernised its arbitration legislation. From a monist country based on an antiquated system, the country has moved towards a dualist approach to arbitration, in which international and domestic arbitrations are regulated by different laws. We summarise below the main features of ICAL and the New Code.

Argentine regulation for international commercial arbitration: ICAL

International arbitration proceedings that can be characterised as ‘commercial’ and ‘international’ are governed by ICAL exclusively.^[17] ICAL is substantially based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (the Model Law), as amended in 2006,^[17] ICAL is substantially based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (the Model Law), as amended in 2006,^[18] with some adaptations, aiming to make the text coherent with the rest of the Argentine legal system. ^[19]

ICAL adopts the main principles of modern comparative legislation that regulate international arbitration. Throughout its 109 articles, the law regulates, among other aspects:

• the arbitration agreement;
• the agreement’s form and autonomy;
• the constitution and competence of the arbitral tribunal;
• the issuance of precautionary measures and preliminary orders;
• the arbitration procedure;
• interaction with judicial courts in evidentiary issues;
• the rendering of the arbitral award;
• requests for correction and interpretation of the award;
• termination of the proceedings;
• recourses against the arbitral award; and
• provisions applicable to the recognition and enforcement of awards.^[20]

As regards ICAL’s scope of application, it shall apply only when the seat of an international arbitration is in Argentina, except for, among other things, the enforcement of interim measures and the recognition and enforcement of awards in Argentina; in these cases, ICAL applies even when the arbitral tribunal is seated outside Argentina.^[21]

Furthermore, following the Model Law, internationality of an arbitration under ICAL is provided for in the following scenarios:

• the parties’ places of business are located in different countries;
• the place of arbitration is in a different location from the parties’ places of business;
• the place of performance of a substantial part of the obligations is in a different location from the parties’ places of business; or
• the place with which the arbitration is most closely connected is in a different location from the parties’ places of business.^[22]

Thus, the international character of an arbitration is defined in ICAL in connection with the parties’ domiciles, the place of the arbitration, the place of performance of a substantial part of the obligations in question or the place with the closest connection to the litigation.

However, unlike in the Model Law, ICAL does not grant internationality solely by the parties’ agreement that ‘the subject matter of the arbitration agreement relates to more than one country’.^[23]To qualify an arbitration as international, ICAL requires that the case presents an objective international element in accordance with the parameters described above.

This approach by ICAL is consistent with Article 2605 of the New Code on international jurisdiction, which provides that ‘in patrimonial and international matters, the parties are allowed to extend jurisdiction to judges or arbitrators outside the Republic, except when the Argentine judges have exclusive jurisdiction or the extension is forbidden by law’. The rule of Article 2605 was stated in Article 1 of the Procedural Code,^[24] which was interpreted as defining internationality as the connection to multiple juridical national systems able to cause an international jurisdiction conflict based on objective circumstances. ^[25]

Based on the interaction between these provisions in ICAL and the New Code, legal scholars have differing views on the possibility of parties ‘internationalising’ their case. Commentators such as commercial judge Maria Uzal conclude that ICAL allows the possibility of internationalising a case by party agreement in foreign domestic cases only (i.e., arbitrations between foreign parties that agree on fixing the seat of arbitration in Argentina).^[26]In turn, former Supreme Court judge Antonio Boggiano considers that if, in practice, Argentine parties decide to internationalise their dispute by choosing a foreign arbitral seat, it is most likely that the arbitral tribunal will not decline its jurisdiction by applying the limitation provided in Article 2605 of the New Code, and, therefore, that the tribunal would render its award, which would most likely be enforceable in Argentina, unless there were other grounds to deny its enforcement.^[27]As case law on this matter is not yet developed, the issue remains unsettled and should be analysed on a case-by-case basis.

In turn, arbitrator Roque Caivano^[28]posits that the Argentine legislator has preferred to maintain an objective criterion to determine an arbitration’s internationality and acknowledges that an award rendered by an arbitral tribunal seated outside Argentina in a purely ‘Argentine’ case would likely not be enforced in the country. Judge Uzal agrees with this interpretation.^[29]However, Mr Caivano proposes that neither these circumstances nor the omission of Article 1.3.c of the Model Law in ICAL prevents parties from choosing a foreign seat, as the validity of the award will be determined by the law of the seat, not Argentine law.

ICAL’s scope of application is also defined in connection with the ‘commercial’ nature of an arbitration. In this regard, Article 6 of ICAL states that ‘any legal relationship, contractual or non-contractual, of private law or governed predominantly by it in Argentine law’ shall be considered commercial. A juridical relationship will be commercial under ICAL’s terms if, while being arbitrable, it is not governed exclusively or predominantly by public law.^[30] In case of doubt, a broad interpretation in favour of ‘commerciality’ shall proceed. ^[31]

Additionally, ICAL refers the matter of arbitrability to the rules of the New Code, which provide that matters that refer to civil status or capacity, family affairs, the rights of consumers, contracts of adhesion (unless concluded by pari passu parties, as interpreted by case law) and those derived from labour relations, cannot be submitted to arbitration.

Last, international practitioners will find that ICAL contains certain provisions that innovate, complement or fill the gaps intentionally left in the Model Law’s regulation.^[32]In this regard, ICAL:

• expressly allows parties to agree on notifications through electronic means (Article 9);
• sets a period of 20 days within which parties can object to non-compliance with ICAL or the arbitration agreement before being deemed to have waived the right to object (Article 11);
• concentrates the judicial functions of ‘support’ in the first instance courts and those of ‘control’ in the Court of Appeals, both with competence in commercial matters of the seat of arbitration (Article 13);
• refers to the ‘seat’ of arbitration instead of the ‘place’ (Articles 65 and 66);
• states, when regulating the applicable law to the dispute, that, failing any designation by the parties, the arbitral tribunal shall apply ‘the rules of law that it deems appropriate’ (Article 80), instead of ‘the conflict of laws rules which it considers applicable’, as stated in the Model Law; and
• states that time frames under this law are calculated in natural days, but that if a period ends on a non-working day, it is extended until the next working day (Article 108).

ICAL has not been disruptive in its regulation but has generally embraced the text and spirit of the Model Law. Except for the adjustments mentioned above, and other minor modifications^[33]and additions addressed in the following sections, it is fair to call Argentina a ‘Model Law jurisdiction’, thanks to ICAL.

The New Code and the Procedural Code

Commercial domestic proceedings are governed by the New Code. Its regulation must be considered together with the Procedural Code,^[34]and local provincial procedural codes, when applicable.

The ‘Arbitration Contract’ chapter in the New Code was inspired by international sources such as the Model Law, the Civil Code of Quebec and the French Arbitration Law of 2011.^[35]Thus, the New Code embraced several universally accepted standards, such as the principle of Kompetenz-Kompetenz and the separability of the arbitration clause. However, this new corpus also included other questionable provisions, such as those relating to the scope of judicial review of awards.^[36]As we explain below, Argentine courts have so far construed these provisions in an arbitration-friendly fashion by way of, for example, limiting the grounds for review of arbitral awards.^[37]As this chapter focuses on Argentina as the seat of international arbitration, its scope does not extend to a detailed analysis of the legal framework applicable to domestic arbitration.

Regime applicable to arbitration involving the Argentine state

The rise in disputes involving states or state-owned entities is a notable phenomenon of modern international commercial arbitration.^[38]According to a statistical report by the International Chamber of Commerce (ICC), in 2021, approximately a fifth of new cases involved a state or state entity.^[39]In this context, certainty regarding rules applicable to state commercial arbitrations is significant for the development of any arbitral seat.

Historically, in Argentina, the participation of the state and its entities as a party in commercial arbitration has been subject to different interpretations. At present, the possibility is recognised in case law and in several specific regimes.^[40]However, the regimen applicable to these arbitrations is still a matter of debate.

On the one hand, public policy and public affairs were the subject of discussion in the Argentine Congress debates leading to the enactment of the New Code. This resulted in two provisions in the legislation: (1) that only matters of private law and in which public policy is not implicated can be subject to arbitration;^[41] and (2) the inapplicability of provisions concerning the arbitration contract in the New Code to disputes in which federal or provincial states are a party. ^[42]

On the other hand, because ICAL provides that only relationships governed predominantly by private law are considered ‘commercial’, it would, in principle, not apply to relations preponderantly governed by public law, irrespective of their commercial nature. Nonetheless, when dealing with the involvement of the Argentine state in arbitration, the possibility of unclear boundaries between public and private law may give rise to different interpretations.^[43] However, Supreme Court rulings and various laws recognise that the state or its entities may enter into an arbitration agreement if they are authorised to do so by statute. ^[44]

Another particular aspect of arbitration with the state concerns the formation of the arbitral agreement. The main difference between arbitration involving private persons and arbitration involving the state lies in how the consent is formed for each to resort to arbitration. Briefly, the National Constitution establishes the competence of the Argentine Supreme Court and lower federal courts to hear cases in which the federal state is a party and that concern federal law affairs.^[45]However, the Argentine Supreme Court has consistently held that ‘there is no constitutional obstacle for the federal government to subject its controversies with private persons to arbitration, as long as a law so allows’. Thus, in principle, any arbitration agreement involving the state must be allowed by law.^[46]In line with our discussion above, commentators understand that for an arbitration agreement to provide for a foreign seat, it is required that the case has some objective international element.

Main topics of current law and practice in Argentina

Arbitration agreements

In international arbitration, ICAL adopted Option I of the Model Law to define arbitral agreements. A slight modification in terms of form was introduced by eliminating the final part of Article 7.3^[47] (resulting in the following text: ‘An arbitration agreement is in writing if its content is recorded in any form.’). ICAL’s favourable position towards arbitration in terms of arbitration agreements can be found in Article 106. According to this provision, Paragraph 2 of Article II of the New York Convention^[47] (resulting in the following text: ‘An arbitration agreement is in writing if its content is recorded in any form.’). ICAL’s favourable position towards arbitration in terms of arbitration agreements can be found in Article 106. According to this provision, Paragraph 2 of Article II of the New York Convention^[48] ‘must be interpreted and applied taking into account that the circumstances set forth in the Convention are not exhaustive’, following UNCITRAL’s recommendation. ^[49]

In domestic arbitration, the situation is not that straightforward, as limitations to matters on which parties can agree to arbitrate require interpretation from local doctrine and case law. Arbitrability remains governed by provisions of the New Code,^[50]namely Article 1649, which reads:

There is an arbitration contract when the parties decide to submit to the decision of one or more arbitrators all or some of the controversies that have arisen or may arise between them regarding a certain juridical relationship, contractual or not, under private law in which public policy is not involved.

This definition seems to exclude the possibility of arbitrating disputes involving matters of public policy and, therefore, has been widely criticised. However, the touchstone of arbitrability is, first, that ‘if the rights involved cannot be disposed of under law, the matter is not arbitrable’, and, second, that any matter is arbitrable unless ‘it falls under the specific prohibitions of the law’. This criterion arises from both Argentine doctrine^[51] and case law.^[51] and case law.^[52] In this context, the New Code excludes the possibility of agreeing arbitration for certain specific matters. The list includes disputes about civil status or persons’ capacity, family matters, consumer matters, labour matters and controversies stemming from ‘adhesion contracts’, whatever their object may be. ^[53]

The question of ‘adhesion contracts’ has triggered developments from Argentine authors and case law, resulting in two opposing criteria, which only time and further case law will clarify. On one side, the exclusion from arbitration of contracts involving standard terms has been regarded as incompatible with the ‘pro-arbitration’ spirit of the New Code.^[54] The National Chamber of Appeals in Commercial Matters (Chambers C and D) has stated that, unless the contract can be proven to be injurious and public interest is at risk, the arbitration clause in a standard term contract between businesspersons (in which disposable rights are agreed) is valid.^[54] The National Chamber of Appeals in Commercial Matters (Chambers C and D) has stated that, unless the contract can be proven to be injurious and public interest is at risk, the arbitration clause in a standard term contract between businesspersons (in which disposable rights are agreed) is valid.^[55] The contrary would be counter to the purpose of the rule, and state courts may not intervene to override an agreement when the contracting party cannot be deemed surprised by the incorporation of the arbitration clause in the contractual scheme.^[56]Local authors have also promoted this view.^[57]Chambers E and F, on the other hand, have declared that arbitration agreements are not operative in adhesion contracts, mainly based on the text of the New Code’s ruling. ^[58]

In conclusion, a positive evolution can be identified in terms of the interpretation of arbitration agreements. In the past, the Argentine Supreme Court and lower courts were of the view that the arbitral jurisdiction is an exception to that of state courts, and that arbitration clauses should be interpreted restrictively.^[59] The matter is now regulated in Article 1656 of the New Code, which states that in case of doubt, one must resolve it in favour of the efficacy of the arbitration agreement.^[59] The matter is now regulated in Article 1656 of the New Code, which states that in case of doubt, one must resolve it in favour of the efficacy of the arbitration agreement.^[60] The National Chamber of Appeals in Commercial Matters has reaffirmed that principle.^[61]There is also the situation when a party attempts to bring a dispute to state courts despite having signed an arbitration clause, for which it must call the other party for mediation (as a mandatory requirement before filing a judicial suit). In this scenario, courts have stated that where the arbitration clause called for mediation, the defendants’ assistance in mediation does not imply a waiver to the arbitral jurisdiction, as this behaviour could be interpreted as confirming the arbitration clause.^[62]In the same vein, the Supreme Court established long ago that voluntary and prior submission of a dispute to an arbitral tribunal prevents the subsequent questioning of the agreed-upon jurisdictional competence. ^[63]

Arbitrators

Article 24 of ICAL adds a final provision that is not present in the Model Law, which expressly states that any arbitration clause placing a party in a privileged or favoured position relative to the appointment of arbitrators shall be null.^[64]This provision is an exception to the parties’ autonomy to agree on the proceeding for the appointment of arbitrators, aiming to preserve their equality.^[65]This equality would be affected, for instance, if the arbitration agreement provided that only one of the parties shall appoint the sole arbitrator.

ICAL also expands on the grounds to challenge arbitrators, listing two specific cases of possible lack of independence and impartiality^[66]that, if proven, are sufficient to constitute, by themselves, lack of independence and impartiality:

• the arbitrator (or members of the arbitrator’s firm) acts on behalf of one of the parties in any matter (whether related to the arbitration or not); and
• the arbitrator (or members of the arbitrator’s firm) acts on behalf of a third party in a case with the same cause or subject matter. Two cases will have the same cause or subject matter if:
  • they invoke the same event as a basis for their claim; or
  • there is a similarity in the type of ruling sought and the object, fact or legal relationship on which the ruling is to be made.^[67]

One notable case is the unfortunate precedent of Yacyretá.^[68]The joint venture Eriday had initiated an arbitration against the Entidad Binacional Yacyretá (EBY), an international entity formed by the states of Argentina and Paraguay, in relation to claims based on the construction of the Yacyretá dam. In this context, EBY filed a judicial suit before the Federal Contentious Administrative Court against the three members of the arbitral tribunal, seeking their resignation from the arbitration, and an anti-arbitration injunction to suspend the arbitration. The alleged grounds for its petitions were in respect of the issuance of the terms of reference, which EBY declined to sign as it disagreed with its terms, and the arbitrators’ lack of impartiality on the basis of prejudgment. In 2004, the Court granted EBY’s petition based on (1) the arbitral tribunal’s alleged refusal to consider EBY’s arguments for the terms of reference, and (2) the ICC’s refusal to remove the arbitrators. The arbitration has since been stayed on at least four occasions because of anti-arbitration injunctions issued by the judicial courts at the request of EBY, the last of which was in 2013. The arbitration remains suspended to date, as a result of multiple interim measures granted by the Argentine justice system at EBY’s request.

The courts’ attitude to arbitration in the Yacyretá case is a rare one that corresponds to an outdated view of arbitration. Beyond this case, it is the authors’ view that the current legislation and evolving jurisprudence should assist the development of arbitration and the tasks of arbitral tribunals, not least because both the Supreme Court and the lower courts can now apply a clear legal framework for arbitration, which (1) has contributed to their development into a more favourable view of arbitration, and (2) results in less uncalled-for judicial interference (see ‘Recognition, enforcement and annulment of awards’, below).^[69]

Institutional arbitration

Institutional arbitration is expressly provided for both in ICAL, as regulated in the Model Law, and in the New Code. Article 1657 of the New Code states that parties can require from an institution the appointment of arbitrators, as well as the administration of their arbitral proceedings. In the latter case, the arbitration rules of the institution will govern the proceeding and integrate the arbitration clause.

Argentina is a popular venue for institutional arbitration. At a domestic level, the most recognised local entities are the Commercial Mediation and Arbitration Centre of the Argentine Chamber of Commerce (CEMARC),^[70]the Business Centre of Mediation and Arbitration,^[71]the General Arbitration Tribunal of the Buenos Aires Stock Market, with its permanent tribunal,^[72]and the Arbitral Chamber of the Buenos Aires Grain Exchange.^[73]Although each has its own particularities, these institutions have a long tradition of providing arbitration users with a menu of options from which to choose who will locally administer their case.

However, the usual choice for complex commercial or cross-border disputes is the ICC. When the dispute involves a state, the Permanent Court of Arbitration (PCA), under the UNCITRAL Arbitration Rules, is a key player, given its seat agreement with the Argentine state.

Recognition, enforcement and annulment of awards

ICAL’s regime for annulment, recognition and enforcement of awards is substantially the same as in the Model Law. In this regard, Article 99 of ICAL establishes the same grounds for annulment of awards as those set forth in the Model Law, such as lack of a valid arbitration agreement, that the award deals with matters not covered by the submission to arbitration, non-arbitrability of the subject matter of the dispute, or violation of public policy; however, ICAL presents some departures from the original text for the purpose of adapting it to Argentine law, including the following.

• The parties cannot dispense with a reasoned award. The right to have awards set out the grounds for their issuance is part of the set of rights that constitute the constitutional guarantee of due process.^[74]
• An award can be declared null, or its recognition and enforcement be denied, not only when a party is incapable but also when its capacity is restricted.^[75]
• The permitted term for requesting the annulment of an award is shorter under ICAL than under the Model Law, namely 30 days rather than three months.^[76] For an award to be recognised or enforced in Argentina, if the original award is not filed, a certified copy must be obtained. ^[77]
• Furthermore, under ICAL, the ‘public policy exception’ to decline the recognition or enforcement of an award refers to international public policy and not domestic requirements.^[78]

Although ICAL is relatively new, Argentine courts have applied its principles to date according to international standards. As a general rule, the Argentine Supreme Court adopts a restrictive criterion for the judicial review of awards in the context of an annulment request, refusing to review its merits.^[79]Lower courts have also embraced a favourable view of arbitration. For instance, the National Chamber of Appeals in Commercial Matters has ruled that:

• the validity of an arbitral clause cannot be challenged in enforcement proceedings if the challenge was not introduced previously in a timely manner before the competent court of the jurisdiction of the arbitral seat;^[80]
• an annulment request must be grounded on the award’s legal deficiencies, not its sense of justice or substantive content;^[81]
• a recourse to annulment must not be used as an ‘elliptical’ way to review the merits of an award;^[82]
• if arbitral tribunals do not apply the law chosen by the parties, this could constitute grounds for annulment, but only if due process is affected and the arbitral tribunal’s disregard for the parties’ choice is manifest. An error of interpretation or application of the law does not meet this standard;^[83]and
• arbitrariness cannot be invoked as a basis or annulment, as that ground would imply a broad scope of review that is appropriate for an appeal and not the narrower review appropriate to a challenge to an award.^[84]

Similarly, this pro-arbitration tendency has also influenced the interpretation of the available recourses against a domestic award under the New Code. Article 1656 provides that parties cannot waive the ‘judicial challenge’ of the final award in the arbitration clause, when the award is ‘contrary to the legal order’. The text was originally included in the context of discussions concerning national sovereignty and the constitutional role of the judiciary.^[85] It generated a great deal of discussion locally regarding whether the provision referred to the impossibility of waiving an appeal of the final award (which would imply a plenary review by judicial courts of the arbitral tribunal’s decision) or a request for annulment when the grounds set forth in the law are met. ^[86]

Both Argentine authors and judges were clear in their interpretation of the provision: the only unwaivable challenge to an award is a request for annulment, and not appeal. Under the New Code (namely, for domestic arbitration), the rule is that awards can be appealed on the merits, but the parties can waive the recourse either through an express agreement or by choosing a set of arbitral rules that includes a waiver (the rule for international arbitration is the contrary – that awards cannot be appealed).^[87]

Thus, Article 1656 is interpreted as a formula composed of the following: (1) annulment cannot be waived; (2) an award is contrary to the legal order when it falls under one of the cases of nullity included in procedural codes, such as the existence of essential procedural defects during the arbitration; and (3) waiver of appeals is allowed in the New Code.^[88]

In 2004, the Argentine Supreme Court attempted to open a door to expand the grounds for the judicial review of awards^[89]with the much-debated Cartellone decision.^[90]This precedent is considered exceptional,^[91]as it has not generally been followed in subsequent case law,^[92]it did not take place in the context of an international arbitration and it was issued long before the enactment of the New Code and ICAL.

However, a point raised in Cartellone has continued to unfold in recent years, namely the possibility of annulling an award based on reasons of public policy, a discussion that is particularly relevant in the context of domestic awards as neither the New Code nor the Procedural Code, which regulate those arbitrations, includes this ground. In 2018, the Supreme Court substantially limited the scope of the Cartellone doctrine to cases of public policy violations, reinforcing once again that awards cannot be reviewed on their merits.^[93]It stated that the federal state’s petitions exceeded the annulment ground of Article 760 of the Procedural Code and did not prove that public policy was affected, concluding that the award in that case should be annulled.

In this context, in 2022, Chamber D of the Commercial Court of Appeals^[94]pointed out that only ICAL included a public policy ground for annulment (and not law for domestic cases), but that the Argentine Supreme Court had provided for this possibility in its 2018 decision.^[95]The 2022 case concerned the application of contractual penalties in a domestic arbitration, and Chamber D held that the reduction of contractual penalties is part of the Argentine public policy, which stands against usurious penalties. Finally, when drawing the line to find a public policy violation, it affirmed that the applicable bar is a high one: annulment based on reasons of public policy is exceptional, applying to extreme cases only, under minimalist criteria, and when a grave and notorious violation of public policy is found.^[96]In the aforementioned case, the annulment did not proceed.

On a final note, in the domestic context, in terms of annulment of awards, the New Code must be read as articulated with the Procedural Code, Articles 760 and 761. According to these rules, an award can be nullified:

• on the grounds of essential breach in the arbitral procedure;
• when the tribunal renders the award beyond the permitted term;
• if the points at dispute were exceeded; or
• in the presence of incompatible decisions in the operative part of the award.

The grounds contained in the relevant articles were explained in 2014 as follows.^[97]

• An essential breach of procedure (falta esencial del procedimiento) constitutes a breach of principles to the extent that a true non-existence of due process can be affirmed.
• When the award is rendered beyond term, it could entail the loss of arbitral jurisdiction.
• When the award exceeds the points at dispute, it constitutes a breach of the principle of congruence.
• When the resolutory part of the award displays incompatible decisions, this in turn renders the award ineffective.

As a result, even before the enactment of the New Code and ICAL, the Commercial Chamber of Appeals declared that an annulment request could not disguise a review of the merits of the award, as this would alter arbitration by depriving it of its benefits.

New regime for large investments in Argentina: relevant dispute resolution provisions

On 10 December 2023, a new administration took office in Argentina, led by President Javier Milei. Elected on the platform of economic liberalism, Milei assumed office with the aim of achieving ‘solid and sustainable growth over time’, advocating for the defence of private property, markets free of state intervention and promoting free competition.^[98]

The new administration has initiated steps to deregulate Argentina’s economic model, including the pushing of the Foundations and Starting Points for the Freedom of Argentines Bill, which includes the Incentive Regime for Large Investments (RIGI). At the time of writing, the Bill and the RIGI, which entered into force on 8 July 2024 as Law No. 27742, are being discussed in the National Congress.

The RIGI encourages large investments in strategic economic sectors (i.e., forestry, tourism, infrastructure, mining, technology, steel, energy, and oil and gas) by creating conditions of predictability and stability that allow for advancement of medium-term macroeconomic solutions. The new regime provides a comprehensive system of benefits, special tax treatment, incentives and guarantees considerably superior to previous incentive frameworks. As a rule, adherence to the RIGI would have to be structured through single project vehicles (SPVs).^[99] To be considered as a ‘large investment’, the project’s sponsor would have to certify the acquisition, production, construction or development of ‘computable assets’ that meet a minimum investment amount per project of US$200 million. ^[100]

The RIGI has relevant provisions on dispute resolution mechanisms for disputes that may arise between an SPV and the Argentine government. In this sense, it establishes a ‘tiered’ clause under which all disputes arising from the RIGI will be resolved by amicable negotiations or, if the dispute cannot be resolved within 60 calendar days, submitted to arbitration.

For the purposes of this type of arbitration, SPVs may choose among three arbitration rules: the PCA Rules, the ICC Rules or, notably, the International Centre for Settlement of Investment Disputes and its Additional Facility Arbitration Rules. The arbitral tribunal will be composed of three arbitrators who must not be Argentine nationals or nationals of the state of origin of the majority shareholder of the SPV. The seat of arbitration will be determined by the administering institution or by the arbitral tribunal, as determined by the applicable rules, and cannot be located in Argentina but must be located in another country that is party to the New York Convention.

Likewise, the RIGI vests the executive branch with the power to establish dispute resolution mechanisms with the SPVs, specific for each project, in the administrative act that approves the application for adhesion to the regime and the SPV’s investment plan.

Finally, the RIGI establishes that the rights acquired under this regime will be considered protected investments included in the meaning of the applicable bilateral investment treaties.

Developments in corporate arbitration

In the corporate world, although state justice continues to be of enormous importance, international experience shows that corporate arbitration has gained much strength, and all signs indicate that this trend will deepen in the coming years. Thus, arbitration has become an important means of resolving corporate disputes in various jurisdictions.^[101]

Corporate arbitration has several advantages over the use of state courts. First, submitting corporate disputes to ordinary state courts can take years and often disrupts the functioning of the corporate entity. Second, in contrast, corporate arbitration, being based on the will of the parties, tends to be less disruptive. Third, it also provides legal certainty through an efficient dispute resolution mechanism, potentially leading to new investments. Finally, the parties are free to appoint professionals in the field as arbitrators who may have subject matter expertise that judges may lack.

In Argentina, although corporate arbitration is not specifically addressed in Corporations Law No. 19,550, it does not explicitly prohibit partners or, potentially, third parties from submitting conflicts arising from corporate dynamics to arbitration. Therefore, corporate arbitration is a lawful practice under the Law, notwithstanding the fact that it is recognised in other national regulations.^[102]

In this context, in April 2024, CEMARC launched its new Corporate Arbitration Rules, as well as a model arbitration clause that companies may include in their by-laws or in any contract that they enter into, allowing for any issues arising within the company to be settled by arbitration.^[103]

With the launch of these new Rules, Argentina follows the footsteps of institutions in other jurisdictions such as Spain,^[104]Germany,^[105]Switzerland^[106]and Colombia,^[107]where corporate arbitration rules have been incorporated successfully.

The new CEMARC Corporate Arbitration Rules complement CEMARC’s Arbitration Rules by incorporating specific regulations on key aspects of corporate disputes. These include provisions on the specialism of arbitrators, consolidation, third-party intervention and the creation of expert panels.

This development leads Argentina towards being a more arbitration-friendly forum, in which corporate disputes can be solved in a more efficient manner by arbitrators who are specialised in their field.

Conclusion

Over the past decade, Argentina has demonstrated a consistent trajectory of change and growth, positioning itself as a prominent arbitral hub within the region.

Its legal framework, aligned with those of leading global jurisdictions, coupled with its recent legal developments, underscores the country’s evolving status as an international arbitral forum.

While it may not yet rival traditional seats such as Paris, London or New York, Argentina’s journey towards prominence underscores the proverb that good (and reliable) things take time.

Boasting a wide range of specialist lawyers and arbitrators, state-of-the-art infrastructure, experienced arbitral institutions, a pro-arbitration framework and a new administration that aims to attract foreign investment and international trade, Argentina is poised to emerge as a leading arbitration jurisdiction, regionally and globally.

Endnotes