Arbitrators' jurisdiction to declare the unconstitutionality of laws

On March 17, 2003, a decision was rendered in re "Otondo César A. and Others vs. Cortina Beruatto S.A. and others" by the judge in charge of the Commercial Court No 10. The plaintiff had requested the declaration of the judges' exclusive jurisdiction to judge the unconstitutionality of federal laws.

The Court stated that the arbitral clause included in the share purchase agreement entered into by plaintiffs and defendants grants the arbitrators the power to declare the unconstitutionality of the emergency federal laws when the arbitrators deem such declaration is necessary to solve the dispute.

Also, the decision stated that when the final arbitral award exceeds or does not fulfill the parties' interests such party could then request the nullity of the arbitral award according to Section 760 of the Civil and Commercial Procedural Code.

The plaintiffs appealed such decision, but it was confirmed by Tribunal E of the Commercial Court of Appeals on the same basis, ratifying the principle stated by the Buenos Aires Stock Exchange Permanent Arbitral Panel in re "IGT Argentina S.A. vs. Trillenium S.A." (arbitral award rendered on November 5, 2002) and "Cie RP SA vs. Grinbank Daniel" (arbitral award rendered on March 19, 2002) in which the panel had decided that it had jurisdiction to declare the unconstitutionality of the local laws in the first case, and the unconstitutionality of a contractual clause in the second case cited above.