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By Victorino J. Tejera-Pιrez in
collaboration with Tom C.
Lσpez
Chapter I
General Provisions
Article 1. - This Act applies to commercial arbitration, provided that it does
not contradict any multilateral or bilateral treaty in effect.
Article 2. Arbitration may be institutional or independent. Institutional
arbitration is conducted through the arbitration centers referred
to herein, or those created under other laws. Independent
arbitration is any such regulated by the parties without the
participation of the arbitration centers.
Article 3. Any dispute with settlement as
an option, arising between people with the capability to settle,
may be submitted to arbitration.
The following are exceptions:
a. Disputes
contrary to public policy or involving crimes or misdemeanors,
except with respect to the civil liability quantification, insofar
as it has not been set forth by a final binding judgement;
b.
Disputes directly concerning the sovereign activities
or
functions of the State or governmental persons or entities;
c.
Disputes involving the civil status or capacity of persons;
d.
Disputes regarding property or rights of legally disabled persons,
without prior judicial authorization; and
e.
Disputes on which a final binding judgement has been pronounced,
except the pecuniary consequences arising from its enforcement
insofar as they exclusively concern the parties to the proceedings
and have not been determined by a final binding judgement.
Article 4.
Should one of the parties of an arbitration agreement be a
corporation in which the Republic, the States, the Municipalities
and the Autonomous Agencies hold a participation equal to
or higher than fifty percent
(50%) of its equity or a corporation in which the aforesaid
persons hold a participation equal to or higher than fifty percent
(50%) of its equity, the agreement requires
approval from the appropriate corporate entity and the written
authorization from the directive Minister to be valid. The
arbitration agreement shall specify the type of arbitration and
the number of Arbitrators, in no case to be lower than three (3).
Article 5.
An "arbitration agreement" is an agreement by which
the parties submit to arbitration all or certain disputes which
have arisen or which may arise between them with respect to a
defined legal relationship whether contractual or not. An
arbitration agreement may be in the form of an arbitration clause
in a contract or in the form of a separate agreement.
Under the arbitration agreement the parties bind
themselves to submit their disputes to the resolution of
Arbitrators and therefore waive their right to judicial relief.
Arbitration agreements exclude remedy from ordinary jurisdiction.
Article 6.
The arbitration agreement must be established
in writing in any document or set of documents attesting to
the will of the parties to bind themselves to arbitration.
Reference made in an agreement to a document containing an
arbitration clause shall constitute an arbitration agreement,
provided that such agreement is established
in writing and the reference is such as to make that clause
part of the agreement.
For adhesion contracts,
the will to submit to arbitration shall be done in the form of an
express and independent declaration.
Article 7.
The arbitral tribunal may rule over its
own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement. For such
purposes, an arbitration clause forming part of a contract shall
be treated as an agreement independent of the terms of the
contract. A decision by the arbitral tribunal that the contract is
null and void shall not affect the validity of the arbitration
clause.
Article 8.
Arbitration may be conducted at law or in equity. The former
must respect legal provisions when
issuing the awards. The latter shall proceed freely, according to
the convenience and interests of the parties, mainly with regard
to equity. Should the parties fail to indicate the type of
arbitration, the Arbitrators will be deemed Arbitrators at law.
Arbitrators shall always bear in mind the terms of the contract and
commercial usage and custom.
Article 9.
The parties are free to agree on the place of arbitration.
Failing such agreement, the place of arbitration shall be
determined by the arbitral tribunal taking into account the
circumstances of the case, including the convenience of the
parties. The arbitral tribunal may nevertheless meet, except as
otherwise agreed by the parties, at any place deemed appropriate
to deliberate, hear depositions from witnesses, experts or the
parties, or to examine merchandises, other goods or documents.
Article 10. The parties are free to agree on the language or
languages to be used in the arbitral proceedings. Failing such
agreement, the tribunal shall determine the language or languages
that are to be used. This agreement, unless otherwise specified
therein, shall apply to any written statement by a party, any
hearing or award, decision or other communication issued by the
arbitration tribunal.
The arbitral tribunal may declare that
any documentary evidence be accompanied by a translation
into the language or languages agreed upon by the parties or
determined by the arbitral tribunal.
Chapter II
Institutional
Arbitration
Article 11. Chambers of commerce and any other merchants
associations, existing international associations, organizations
relating to economic and industrial activities, organizations
whose purpose is related to the promotion of alternative dispute
resolution, universities and superior academic institutions and
any other associations and organizations created after this date
which establish arbitration as a
means for dispute resolution, may organize their own arbitration
centers. Centers created prior to the existence of this Law may
continue to function under its terms and must adjust their
regulations to the requirements hereof.
Article 12. Within institutional arbitration,
everything pertaining to the arbitration proceedings, including
notices, the establishment of the tribunal, challenge and
replacement of Arbitrators and the proceedings, shall be governed
in conformity with the provisions of the arbitration rules of the
arbitration center to which the parties have submitted themselves.
Article 13. All arbitration centers located in
Venezuela shall have their own rules. Such rules must contain:
a.
Procedure for appointing the Director of the center and
establishing the functions and powers pertaining to the position.
b
Arbitration proceedings norms.
c.
Procedure for preparing the lists of Arbitrators, to be reviewed
and updated at least once per year; the requirements that such
Arbitrators must meet; the grounds for exclusion from the list;
registration formalities and appointment procedures.
d.
Fees for Arbitrators and fees of administrative expenses,
revisable and renewable every year.
e.
Administrative norms applicable to the center; and
f.
Any other necessary norm for the functioning of the center.
Article 14. All arbitration centers must have a permanent
headquarters, equipped with the necessary elements to support the
arbitration tribunals. They must also have a list of at least
twenty (20) Arbitrators.
Chapter III
Independent
Arbitration
Article 15. Should the parties fail to establish their own
procedural norms for conducting independent arbitration, the rules
established herein shall apply. Furthermore, such rules may be
applied to institutional arbitration if so agreed by the parties.
Article 16. The parties shall determine the number of
Arbitrators, to be uneven in every case. Failing such
determination, the number of Arbitrators shall be three (3).
Article 17. The parties must jointly appoint the
Arbitrators or delegate their appointment to a third party.
Failing such agreement on the appointment of the
Arbitrators, each party shall elect one Arbitrator and the two
Arbitrators thus appointed shall appoin the third, who will be the
President of the arbitration tribunal.
Should one of the parties be reluctant to appoint his or her
respective arbitrator, or should the two appointed Arbitrators
fail to agree to appoint a third arbitrator, they may require the
competent First Instance Judge to appoint the missing arbitrator.
Failing an agreement in a sole-arbitrator arbitration, the
arbitrator shall be appointed, upon request of a party, by the
competent First Instance Judge.
Article 18. The Arbitrators must communicate in writing
to those appointing them whether or not they accept the position,
within ten (10) business days of notification. Silence from the
Arbitrators must be deemed as refusal of the appointment.
Arbitrators who either refuse
appointment, resign, pass away, are disabled or challenged, shall
be replaced according to the rules applicable for their
appointment.
Chapter IV
Arbitration
Proceedings
Article 19. Upon the Arbitrators acceptance of their
appointments, the arbitration tribunal shall be established and
the parties shall be notified of such establishment. The fees of
the members of the arbitral tribunal and the amount deemed
necessary for operating expenses shall be set at the establishment
proceedings. The parties may file a plea to object to any of these
amounts within five (5) business days of the notice of the order
setting them. Such pleas must indicate the amounts deemed fair.
Should the majority of the Arbitrators reject the objection, the
arbitral tribunal shall cease functions.
Article 20. Upon stipulation of expenses and fees, each
party shall deposit its share within the next ten (10) days. The
deposit is to be made to the order of the President of the
arbitral tribunal who shall open a special account for such
purpose.
Should one party pay its share and the other fail to do so, the
party that allocated its share may pay the share assigned
to the other party within fifteen (15) business days.
The arbitration tribunal shall set in the award the costs of the
arbitration and also indicate which party shall cover such costs
and in what proportion.
Should the term for making the full deposit expire
without the aforementioned deposit
being made, the arbitral tribunal may rule its functions
concluded, freeing the parties to resort to the judges of the
Republic or to reinitiate arbitration proceedings.
Article 21. Upon deposit of the expenses and fees, each
of the Arbitrators shall receive a share not higher than the half
part of the corresponding fees, and the balance shall be deposited
in the account opened for such purposes. The President of the
arbitral tribunal shall distribute the balance upon conclusion of
the arbitration at the will of the parties, or upon enforcement of
the arbitral award or the order clarifying, revising or
complementing it.
Article 22. - If the arbitration agreement fails to set the
term of duration of the process, it shall be of six (6) months
from the establishment of the arbitral tribunal. Such term may be
extended once or several times by the arbitration tribunal, either
sua sponte or at the request of the parties or of their empowered
attorneys. The days during which for legal reasons the proceedings
are interrupted or suspended shall be added to the mentioned term.
Article 23. The arbitral tribunal shall notify the parties of
the first procedural hearing ten (10) business days in advance,
providing the date, time and place
where it is to be held. Such determination shall be notified
through written communication to the parties or their empowered
attorneys.
Article 24. At the first hearing, the document
containing the arbitration agreement and the terms of reference
shall be read, and the claims of the parties shall be expressed
along with a reasonable estimate of their amounts. The parties may
present , with their allegations, any and every document that they
consider relevant or refer to the documents or other evidence that
they are to file.
Article 25.
The arbitral tribunal may rule on its own jurisdiction,
including any objections with respect to the existence or validity
of the arbitration agreement. The plea for
lack of appropriate jurisdiction of the arbitral tribunal
must be filed within five (5) business days of the first
procedural hearing.
The Parties shall not be precluded from raising such a plea by the
mere fact that they have participated in the appointment or
appointed an arbitrator. In any event, the arbitral tribunal may
hear a plea raised after the set term if the reason for the delay
is deemed justified.
Article 26. Unless otherwise agreed by the parties, the
arbitral tribunal may order any interim measures of protection it
may consider necessary with respect to subject
matter of the dispute. The arbitral tribunal may require the
requesting party to provide appropriate securities.
Article 27. The arbitral tribunal shall hold the
hearings that it considers necessary, with or without the
participation of the parties, and shall decide whether to hold
hearings for the presentation of evidence or for oral argument or
whether the proceedings shall be conducted on the basis of
documents and other materials submitted. No incidental proceedings
will be permissible in arbitration proceedings. The Arbitrators
must rule upon impediments and challenges, the challenging of
witnesses and objections to expert opinions, and upon any other
matters of similar nature that may arise. Pending opposition
proceedings shall not prevent the continuation of the arbitration
proceedings.
Article 28. The arbitral tribunal or a party with the approval
of the arbitral tribunal may request assistance of a competent
Court of First Instance in taking necessary evidence and in order
to enforce the requested interim measures of protection. The First
Instance Court shall respond to such a request within the scope of
its jurisdiction and in conformity with applicable norms.
Article 29. The arbitration proceedings shall end with
the issuing of an award. It is to
be issued in writing and shall be signed by the arbitrator or
Arbitrators constituting the arbitral tribunal. In arbitration
proceedings with more than one arbitrator, the signatures
of the majority shall suffice, provided however that the reason
for any omitted signature or of any dissenting opinion is stated.
Article 30. Unless the parties have agreed otherwise,
the award shall state the reasons upon which it is based, and it
shall state its date and the place of arbitration. The award will
be deemed as to have been rendered at that place.
Article 31. After the award is rendered, the arbitral
tribunal shall notify each party by delivering a copy thereof
signed by the Arbitrators, and it shall be binding.
Article 32. The arbitration award may be clarified,
corrected or complemented by the arbitral tribunal either sua
sponte or at the request of one of the parties, within fifteen
(15) business days of issuance of the award.
Article 33. The arbitral tribunal shall cease functions:
1.
When the corresponding expenses or fees established herein are not
deposited within the established time.
2,
At the will of the parties
3.
Upon issuance of the final award, or any providence correcting or
complementing it.
4.
Upon expiration of the term established for the proceedings or any
extension thereof.
Article 34. Upon conclusion of the proceedings, the
President of the arbitral tribunal shall cancel the expenses, pay
the arbiters the balance of their fees, pay any pending expenses
and return the balance to the parties following
previously reasoned calculation.
Chapter V
Recusal
or Disqualification of Arbitrators
Article 35.
The Arbitrators may be disqualified by the parties or may
recuse themselves in accordance with the motives of
disqualification or recusal stated in the Code of Civil Procedure.
Arbitrators appointed by agreement between the parties can only be
disqualified on grounds subsequent to their appointment. Those
appointed by the appropriate Judge or by a third party, may be
disqualified within five (5) business days following the notice of
the establishment of the arbitral tribunal in accordance with the
procedures set herein.
Article 36. When grounds for recusal arise, the arbitrator
must notify the other Arbitrators and the parties, and shall in
the meantime refrain from accepting the appointment or from
continuing to hear the subject matter.
A party with a motive to disqualify any of the Arbitrators on
grounds unknown at the time of the establishment of the arbitral
tribunal, must express such motive within five (5) business days
upon detection of grounds by way of a brief submitted to the
arbitral tribunal. The challenged arbitrator shall be notified
about the brief and shall have five (5) business days to express
acceptance or objection.
Article 37. Should the arbitrator deny the
challenge or fail to express his or her opinion, the
remaining Arbitrators shall accept or reject the challenge by
reasoned opinion, and the parties shall be notified at the hearing
to be held for such purpose within five (5) business days of the
rejection of the challenge. A decision on the disqualification
must be reached in such hearing.
Upon accepting the grounds for
recusal or disqualification of an arbitrator, the remaining
Arbitrators shall declare him or her excluded from the arbitration
proceedings and inform the party who
appointed him or her, so that party may replace said arbitrator.
Should no appointment be made within five (5) business days of the
notice of acceptance of the grounds, the appropriate First
Instance Judge shall appoint a substitute at the request of the
remaining Arbitrators. The rulings of the appropriate Judge shall
be final.
Article 38. If a tie occurs, with
respect to the decision of the disqualification or recusal of one
of the Arbitrators, or if there is a sole arbitrator, the matter
shall be decided by the appropriate Judge
within the jurisdiction where the
arbitral tribunal is settled. No recourse is available against
such order.
Article 39. Should all the Arbitrators or the majority
of them recuse themselves or be disqualified, the arbitral
tribunal shall declare its functions concluded, allowing the
parties to resort to judgment by the Judges of the Republic or
reinitiate the arbitral proceedings.
Article 40. The arbitral proceedings shall be suspended upon
the event that one of the Arbitrators recuse themselves, accepts
disqualification, or the formalities pertaining to either are
commenced. The suspension shall continue until that incidental
issue is resolved. Such suspension must not affect the validity of
any previous action.
The arbitration proceedings shall be suspended as well, upon
incapacity or death of any of the Arbitrators, until a substitute
is appointed.
The time necessary to complete the proceedings pertaining to the
recusal or disqualification, the substitution of an arbitrator
recused or disqualified, or the replacement of an incapacitated or
deceased arbitrator, shall be deducted from
the term set for the Arbitrators to render the award.
Chapter VI
Duties
of the Arbitrators
Article 41.
It is the duty of the Arbitrators to attend all the hearings of
the arbitration proceedings, unless they provide just
cause. Should an arbitrator fail to attend two hearings
without justification, he or she must be removed from office and
shall reimburse the President of the arbitral tribunal, within the
following five (5) business days, a percentage of the fees which
the latter determines as sufficient for the services rendered. The
arbitral tribunal shall notify the appointing party of the removed
arbitrator, in order to find a substitute immediately.
Except as otherwise agreed by the tribunal, should an arbitrator
accumulate four (4) absences, although justified, he or she shall
be deemed disqualified and shall be removed from office. The
arbitral tribunal shall notify tha appointing party to find a
substitute. The removed arbitrator shall reimburse the President
of the arbitral tribunal, the percentage of fees that the latter
determines as sufficient for the services rendered.
Article 42.
Except as otherwise agreed by the parties, the Arbitrators
shall maintain the confidentiality of the motions of the parties,
of the evidence and of everything related to the arbitral
proceedings.
Chapter VII
Setting
Aside of the Award
Article 43. Recourse to a court against an arbitral award may
be made only by application for setting aside. It should be filed
in writing before the appropriate Superior
Court in the place of issuance of the award, within five (5)
business days following the notice of the award or of the act
correcting, clarifying or complementing it. The records of the
arbitral tribunal must be enclosed with the application filed.
Unless requested by the party, the application for setting aside the
arbitral award does not suspend its enforcement. Should it be
rquested, the Superior Court will decide the matter, subject to
the previous establishment of a security by such party in order to
ensure the enforcement of the award and to cover the eventual
damages should the application be rejected.
Article 44.
An arbitral award may be declared void only if:
a.
The party against whom it is invoked furnishes proof that at the
time of the arbitration agreement the opposing party was under some incapacity.
b.
The party against whom it is invoked was not given proper notice
of the appointment of an arbitrator, or of the arbitration
proceedings which require said notification, or was otherwise
unable to present his case;
c.
The composition of the arbitral tribunal or the arbitration
proceedings was not in accordance with the requirements of this
Act.
d.
The award deals with a dispute not contemplated by the arbitration
agreement, or contains decisions on matters beyond the scope of
the matters submitted to arbitration.
e.
The party against whom the award is invoked furnishes proof that
it has not yet become binding to the parties, or has been
previously set aside or suspended, pursuant to the terms of the
submission to arbitration.
f.
The Court hearing the application for setting aside the arbitral
award establishes that the subject matter of the dispute may not
be settled
by
arbitration according to this Act, or the subject matter
of
the award is in conflict with public policy.
Article 45. The Superior Court shall not hear the
application for setting aside when
filed beyond
the appropriate time established
for its exercise or when it is founded upon
grounds not corresponding with those herein.
The order, whereby the Superior Court accepts the application for
setting aside the award, must indicate the amount of the bond
which the applicant must post in order to secure
the outcome of the proceedings. The term to post the bond
shall be ten (10) days from the issuance of such order.
Should the bond not be posted or the request set aside the award not be
supported by argument, the Court will dimiss the case.
Article 46.
Should the application for setting aside the award not be granted, the case shall be
dismissed, the party requesting the award be set aside shall be
ordered
to
pay the legal costs, and the award shall be binding between the
parties.
Article 47. Upon receipt of the
application for setting aside and
the posting of the bond, the
Superior Court shall hear the argument to set aside pursuant to
the provisions of the Code of Civil Procedure for standard
proceedings.
Chapter VIII
Recognition
and Enforcement of Awards
Article 48. An arbitral award, regardless of the
country of its rendition, shall be recognized by the ordinary
jurisdiction as binding and unappealable, and upon application in
writing to the appropriate Court of
First Instance, shall be obliged to enforce
by the latter without need of an exequatur, pursuant to the rules
established by the Code of Civil Procedure regarding the mandatory
enforcement of judgements.
The party relying on an award or applying for its enforcement
shall supply a duly certified copy of it by the arbitral tribunal,
along with a translation into Spanish if necessary.
Article 49. - Recognition and enforcement of an arbitral
award, regardless of the country in
which it was rendered, may be refused only:
a.
If the party against whom it is invoked furnishes proof that at
the time of the arbitration agreement the other party was not
qualified.
b.
If the party against whom it is invoked was not given notice of
the appointment of an arbitrator, or of the arbitration
proceedings that require notification, or was otherwise unable to
present his case;
c
If the composition of the arbitral tribunal or the arbitration
proceedings were not in accordance with the requirements of the
law of the country where the arbitration took place.
d.
If the award deals with a dispute not contemplated by the
arbitration agreement, or contains decisions on matters beyond the
scope of the matters submitted to arbitration.
e.
If the party against whom the award is invoked furnishes proof
that it has not
yet
become binding on the parties, or has been previously declared
void or suspended by a competent authority, pursuant to the terms
of the submission to arbitrate.
f.
If the Court hearing the application for the recognition or
enforcement of the arbitral award, establishes that the subject
matter of the dispute is not arbitrable
under
the law, or the award is in conflict with public order.
g.If
the arbitration agreement is invalid under the laws that the
parties submitted it to.
Chapter
IX
Provisional
Norms
Article 50. Arbitration agreements to which any of the parties
is a corporation in which the Republic, the States, the
Municipalities and the Autonomous Agencies hold a participation
equal to or higher than fifty percent (50%) of its equity, or a
corporation in which the aforesaid persons hold a participation
equal to or higher than fifty percent (50%) of its equity, entered
into before the promulgation of this Act, shall not require
compliance with the requisites set forth in Article 4 in order to
be valid.
Given, signed and sealed in the Federal Legislative Palace, in
Caracas at the twenty fifth of march of One Thousand Ninety Eight.
Years 187 of Independence and 138 of Federation.
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