The “EACA Sideco” case, a new “Cartellone” case?

On June 12, 2007 the Federal Supreme Court of Justice issued a decision recognizing that the general waivers to challenge arbitral awards are not applicable in case of arbitrariness[1].

In 1994 the concessionaires for the construction of the Posadas (Argentina) – Encarnación (Paraguay) bridge filed an arbitration claim, before the Public Works Arbitration Panel, against the Federal State (Direccion Nacional de Vialidad) for the execution of Resolutions No 419/90 and No 650/90 from the Public Works and Services and Economy Ministries, which recognized claimants the right to collect certain credits from the State.

In such case, the Public Works Arbitration Panel rendered an award condemning the Federal State (Direccion Nacional de Vialidad) to pay the amounts claimed. Against such decision the State filed an extraordinary appeal, which was rejected. Defendants challenged the denial of the extraordinary appeal directly before the Supreme Court of Justice.

Without entering into the particularities of the case, it is to be noted that in the present case the Supreme Court recognized that the Public Works Arbitration Panel awards’ are subject to judiciary review in case of arbitrariness, even in the case that the possibility to challenge the award has been renounced by the parties in advance.

The Supreme Court’s majority based its decision in the previous “AION S.A.I.C. and Natelco S.A.I.C. vs. Empresa Nacional de Telecomunicaciones” case, resolved by same on August 29, 2000.

This doctrine of the Supreme Court recognizing that the general waivers to challenge arbitral awards of the Public Works Arbitration Panel are not applicable under certain circumstances has been also recognized in the “Cartellone” case[2]. In the latter case, the Supreme Court stated that, even in the case that the possibility to appeal has been renounced by the parties, the awards from the Public Works Arbitration Panel may be judiciary challenged when they are unconstitutional, illegal or unreasonable[3].

From an arbitral standpoint, the Supreme Court decision could be interpreted as having an adverse effect on arbitration, since it contraries the party autonomy and the finality of arbitral awards principles.

However, it should be noted that, as in the “Cartellone” case, the Supreme Court’s decision is referenced to a special arbitration procedure stated the in Public Works’ Law No 13,064. According to Ministries Fayt and Belluscio opinions, controversies under Public Work’s Law are not decided by a “real arbitration panel”.

According to these opinions, the Public Works Arbitration Panel is a jurisdictional administrative board, which decisions should be subject to judiciary review. The Supreme Court has repeatedly recognized that decisions from administrative tribunals should be subject to such review[4].

In this scenario, principles arising from the “EACA Sideco” and “Cartellone” case could only be applicable to awards rendered by the Public Works Arbitration Panel under Public Works’ Law No 13,064.

Since now, the Supreme Court has not extended these principles beyond the cited jurisdiction. In fact, for private institutional arbitrations the Supreme Court recently rendered a decision in which it ratified the validity of waivers to challenge arbitral awards[5].