Joint statement of the AVDM and IIDM on judicial take over and arbitration, addressed to the supreme court of justice

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Ricardo Maldonado
PAE legal, Caracas
rmp@pae-legal.com

The members of the Venezuelan Maritime Law Association (AVDM), in Special Commission appointed via extraordinary meeting of the Executive Committee held on 23 April 2020, along with the members of the Venezuelan Chapter of the Iberoamerican Institute of Maritime Law (IIDM) through its Vice Presidency, jointly issue this statement in the following terms:

1. The ADVM and the IIDM-Venezuelan Chapter are union organisations devoted to studying, developing, updating and disseminating Maritime Law in Venezuela with the aim of defending and promoting Maritime Law institutions at both substantive and procedural levels. Naturally, this entails the defense of alternative dispute resolution mechanisms particularly regarding Commercial Arbitration, which is recognised in the Constitution of the Bolivarian Republic of Venezuela and the Commercial Arbitration Law.

2. In this sense, the above-mentioned Associations have analysed the content and scope of the interlocutory decision No.42, dated 20 February 2020, issued by the Constitutional Chamber of the Supreme Court of Justice, which granted the request of taking over the case (‘Avocamiento’, as known in Venezuelan Law) made before that Chamber, in the process contained in File #145-18 of the Arbitral Tribunal, duly established before the Conciliation and Arbitration Business Center (CEDCA), in the dispute between the companies ALIMENTOS POLAR COMERCIAL C.A and MODEXEL CONSULTORES E SERVICIOS S.A. (MODEXEL).

3. In the above-mentioned Avocamiento decision, the Constitutional Chamber orders CEDCA to forward the arbitration file identified with number 145-18 and suspends any procedural and enforcement acts of such dispute before CEDCA, until the merits of the matter are decided.

4. Nevertheless, the undersigned Associations observe with great concern the actions carried out by the Constitutional Chamber of the Supreme Court of Justice, without a final arbitration award having been issued, disregarding the constitutional and legal provisions that specifically regulate the interaction between the Judicial Power and the institution of arbitration in Venezuela.

5. According to Article 26 of the Constitution, every person has the right to access the bodies of administration of justice to assert their rights and interests, whether collective or diffuse, to the right to the effective protection of same and promptly obtaining any corresponding decisions.

6. The constitutional text also provides that effective judicial protection and access to justice must be free, accessible, impartial, suitable, transparent, autonomous, independent, responsible, equitable and expeditious, without undue delay, formalities or useless reinstatements.

7. On the other hand, Article 258 of the Constitution in accordance with the provisions of the Venezuelan Commercial Arbitration Law, establishes the arbitration procedure as an alternative mechanism of dispute resolution, granting at a constitutional level, the right for the parties to go before an arbitration seat to settle their controversies through an alternative process, that will end with an eventual arbitration award, which will be exclusive and excluding from ordinary jurisdiction, according to Article 5 of the Commercial Arbitration Law.

8. Additionally, against the arbitration awards issued by an arbitration process in Venezuela or abroad, the Venezuelan legal system provides an exceptionally and extraordinary appeal for annulment established in Article 43 of the aforementioned Commercial Arbitration Law, which can only be exercised on the grounds expressly stated in that Law, such as substantive defects in the process or in the appointment of arbitrators; or for the defenselessness of one of the parties, or if it concerns public matters, among others. The object of said regulation is to protect the autonomy and independence of the arbitration procedure in Venezuela, according to the Constitution and the Law.

9. Indeed, the Supreme Court of Justice in its different Chambers has repeatedly recognised and defended the institution of arbitration. Thus, the Political- Administrative Chamber in judgment number 812-2009 has highlighted the exceptional nature of the revision of awards and the non-interference or interruption against it, on the contrary ratifying the cooperation of the Courts with arbitration in order to guarantee the effective judicial protection stipulated in our Constitution.

10. In addition to the above and particularly in terms of maritime arbitration, the Constitutional Chamber itself, by judgment number 1067 dated 3 November 2010 (in the Astivenca matter) confirmed the functional and teleological unity of the activities carried out by the courts of the Republic and the arbitration system – (See judgements of this Chamber numbers 1.139/00 and 1.541/08) – denying any conception that assumes a vision of incompatibility between ‘jurisdiction’ andarbitration. In this sense, the applicable legal system is characterised by the necessary collaboration between arbitration and the judicial bodies as integral parts of the justice system, whose ultimate objective must be the achievement of a just society in accordance with Articles 3, 26 and 253 of the Constitution of the Bolivarian Republic of Venezuela; in such a way that being consistent with this vision, it cannot then be maintained that arbitration is, purely in concept, an‘exception’.

11. For the reasons stated above, the undersigned Associations consider that the aforementioned interlocutory decision No. 42 dated 20 February 2020 issued by the Constitutional Chamber, violates the constitutional, legal and jurisprudential principles of the Venezuelan legal system.

12. In fact, such decision of the Constitutional Chamber, disregards the aforementioned provisions of the Commercial Arbitration Law, specifically violating the exceptional way of jurisdictional control over an arbitration process, which would correspond to the respective Superior Court after the affected party files the respective appeal for annulment against the arbitration award issued by the arbitrators.

13. Additionally, with that decision the autonomy and independence of the jurisdiction of CEDCA as the Institutional Arbitration Tribunal is clearly unrecognised, and the constitutional right of the parties to settle their disputes through arbitration is violated, nullifying the powers of the arbitrators legally constituted.

14. The above implies a rupture in the coexistence and cooperation between the power of the State to administer justice and the institution of arbitration, established in the Constitution and the laws of the Republic, violating the right to effective judicial protection and the right to defense.

15. Based on the aforementioned reasons and given the importance of the institution of arbitration in the maritime, port and insurance areas, as an alternative means to settle disputes arising from a commercial relationship, the undersigned Associations are very concerned about such decision of the Constitutional Chamber, due to the negative impact that, legally and commercially, this precedent would have on national and international maritime arbitration, generating distrust and insecurity in the institution in Venezuela.

16. We urge the Constitutional Chamber of the Supreme Court of Justice at the corresponding stage of the process, to acknowledge the jurisdictional powers of the arbitrators in the form and conditions provided in the Constitution and laws, and even in the repeated jurisprudence of said Supreme Court, thus guaranteeing the constitutional right to effective judicial protection, the right to defense and access to justice for its citizens.

17. Finally, we fully endorse the statement dated 27 March 2020 issued by the Venezuelan Arbitration Association, through which it referred to the issue raised hereby.

Caracas, April 29, 2020.

Dr. José Alfredo Sabatino Pizzolante - President

Venezuelan Maritime Law Association

[Asociación Venezolana de Derecho Marítimo] (AVDM)

Dra. María Grazia Blanco – Vice President of the Venezuelan Chapter

Iberoamerican Institute of Maritime Law

[Instituto Iberoamericano de Derecho Marítimo] (IIDM)

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