A step backwards in terms of correct case law

On February 28, 2008, Division D of the Commercial Courts of Appeals (Division D) upheld the decision of first instance, rendered in re: “Rivadeneira, Hugo Germán c. ABN Amro Bank N.A. y otros s. ordinario”[1] that had rejected the lack of jurisdiction objection filed by defendants due to the existence of an arbitral clause agreed by the parties.[2]

On upholding the decision, Division D argued that “arbitral clauses, constituting a waiver of the general principle that parties are subject to judicial jurisdiction for the settlement of any disputes, should be interpreted in a restricted manner”, both with respect to matters over which arbitral tribunals may have jurisdiction and as regards what parties might conceivably understand or were able to understand when agreeing the arbitral clause.

Moreover, Division D upheld the decision that the admissibility of arbitral clauses is limited to disputes dealing with the interpretation of contractual clauses or matters of fact, “excluding those events regarding matters of Law or legal enforcement, which are exclusively restricted to judicial jurisdiction.”  

Although to some extent Division D admitted that arbitral clauses are contractual agreements to which parties shall be subject as they are to the Law itself, the Division declared that such clause must be interpreted having regard to Article 1198 of the Civil Code.

Consequently, it declared that due to the “unusual economic cataclysm which occurred [in Argentina] after the signing of the contract” (referring to what was agreed by the parties in 1999) it could not be considered that “the parties had decided to subject legal interpretation, other economic emergency dispositions and the calculation of damages to arbitral jurisdiction”. It concluded that “there were not enough elements to enable the Tribunal to hold assertively, categorically and firmly that the parties had freely subjected an absolutely new matter to arbitral jurisdiction that had significantly shaken up the economic scheme of the contract”.

Independently of this decision that fell into line with the position assumed by some provincial tribunals[3] and moved away from other judicial rulings[4], such diversity of criteria in case law creates -inevitably- doubts regarding the validity of arbitral clauses agreed upon; which matters might be subject to arbitration; what is the real degree of autonomy of the parties; what might be interpreted by arbitral tribunals with equivalent jurisdiction to judicial ones; and the role that an unforeseeable contractual future context might have in the validity of arbitral clauses previously agreed by the parties.

Due to the uncertainty over the so-called context scenarios created by Division D’s decision which apparently “sets no clear limit and scope as to arbitral clauses”, it would be appropriate for the Commercial Court of Appeals to determine its legal opinion, with a reversal of contradictory doctrine established by its Divisions or for the Supreme Court of Justice to resolve this dilemma – due to the Rivadeneira decision - for commercial arbitration.

In our opinion, the decision adopted in this case constitutes a step backwards in terms of correct case law.