Validity of arbitration clauses in corporate matters

Tribunal “C” of the Commercial Court of Appeals (in re “Orcajada Broisson, María F vs. Savi, Sergio O.”) reversed a lower court decision which had rejected a defense opposed by the defendant based on the lack of jurisdiction of that lower court due to the existence of an arbitration clause. Thereby, the Court of Appeals construed that the conflict should be resolved by an arbitration panel in accordance with the arbitration clause included in the company by-laws.

The plaintiff requested a specific performance consisting in the transfer of certain corporate shares that he had acquired from the defendant, by means of exercising the right of first refusal included in the company by-laws.

The defendant answered the plaintiff’s claim by opposing lack of jurisdiction of the local judicial court. The defendant considered that the controversy should be decided by an arbitration panel in accordance with the arbitration clause included in the company by-laws.

Currently, the Tribunals of the Commercial Court of Appeals have different interpretations and opinions regarding the power of arbitrators to decide conflicts between partners derived from corporate matters.

Tribunal “D” of the Commercial Court of Appeals in re “Expreso Albión SRL vs. Mercado de Redesco, Rosa” and “Atorrasagasti, María C. vs. Atorrasagasti, Bargués, Piazza y Cía SRL” stated that “Arbitral jurisdiction is exceptional, and the validity of the arbitration clauses incorporated in companies by-laws should be construed restrictively”. The same line of reasoning was followed by Tribunal “E” of the Commercial Court of Appeals in re “Nova Pharma Corp. S.A. vs. 3M de Argentina S.A.”. In both cases the Commercial Court of Appeals rejected the lack of jurisdiction opposed by the defendants, stating that the conflicts arising between partners cannot be resolved through arbitration. However, it should be noted that in re “Expreso Albión SRL vs. Mercado de Redesco, Rosa”, Dr. Edgardo M. Alberti (former member of Tribunal “C” of the Commercial Court of Appeals) disagreed with the other members of the tribunal, when he considered that an arbitration clause included in the company by-laws should be binding and validly enforced.

In the present case (“Orcajada Broisson, María F. vs. Savi, Sergio O.”), Tribunal “C” of the Commercial Court of Appeals accepted the principle of admissibility of the arbitration clause in commercial matters and thus accepted the lack of jurisdiction opposed by the defendant.

This new tendency, which accepts arbitration in corporate matters and shareholders disputes, is acknowledged by Resolution No 4/2001 of the Public Registry of Commerce of the City of Buenos Aires in the following terms: “The Public Registry of Commerce shall admit the inclusion of jurisdictional (arbitration) clauses in limited liability corporations by-laws, in stock company by-laws which are under its control, and in joint venture contracts governed by Law No 19,550”.

In addition, Decree No 677/2001 of Transparency of Capital Markets stipulates the creation of arbitral panels to decide (i) conflicts arising from open market transactions, (ii) conflicts between shareholders of open corporations, and (iii) conflicts derived from Law No. 19,550 in open corporations.