In July, San Jose, Costa Rica and Monterrey, Mexico hosted the latest #YoungITATalks forum, which was also carried via videoconference. Panelists from all over Central America and Mexico gathered to discuss and share current trends in their respective countries regarding the recognition, enforcement, and annulment of arbitral awards.
The in-person panels were held at the headquarters of the Costa Rican—American Chamber of Commerce’s International Center for Conciliation and Arbitration (CICA-AmCham) in San Jose and the Hogan Lovells office in Monterrey; speakers from El Salvador, Guatemala, Nicaragua, and Honduras also participated in the event through the webinar.
A common topic during both sessions was the relevance of the amparo action available in certain jurisdictions that may interfere with procedures related to the recognition, enforcement or annulment of arbitral awards. The speakers discussed how, according to their own experience, this constitutional remedy has become a relevant point to reflect upon when applying for the recognition and enforcement of an award, but most importantly when litigating an annulment request.
The Amparo in Latin America
As a brief background, in Latin America, the commonly called amparo1Gloria Orrego Hoyos, UPDATE: The Amparo Context in Latin American Jurisdiction: An Approach to an Empowering Action, GLOBALEX (2017), https://www.nyulawglobal.org/globalex/Amparo1.html.1 is a means of protection against any violation of a person’s (natural or legal) constitutional rights, regardless of whether the entity causing such violation is a public authority or a private party. In essence, the amparo’s purpose is the direct protection of human rights.
This constitutional remedy was first established in Mexico at the end of the nineteenth century and, since then, it has been adopted by several Latin American countries, including those located in Central America.2Cecilia Flores, Does the New Amparo Law Threatens Arbitration in Mexico?, KLUWER ARB. BLOG (2015), http://arbitrationblog.kluwerarbitration.com/2015/10/24/does-the-new-amparo-law-threatens-arbitration-in-mexico/.2 The reason behind the adoption and similarity of the amparo in these countries is based on their constitutions; all of them having a federal instrument that provide an extensive and detailed declaration of human rights. The amparo is there to guarantee the protection of those rights.
In the majority of the participants’ countries, to challenge an unfavorable arbitral award or to request the enforcement and recognition of a favorable award, the interested party has to apply for such action from the competent judicial authorities. After such processes, many Central American countries’—and Mexico’s—legislations provide the amparo as a means to challenge the judicial determinations rendered therein. By the amparo the parties may allege a violation of their constitutional rights. Some of those allegations may be based on a lack of legal grounds for the ruling court’s decision or any other violation to their due process, as these rights are protected by these countries’ constitutions.
This constitutional remedy creates obstacles to the purposes of the arbitration proceeding. It forces the litigants to go through two additional judicial instances, delaying the process. That is, for the award to be reviewed or enforced, it must go through the enforcement or vacatur judicial processes and, later, be reviewed in a constitutional proceeding (through an amparo action brought against the judicial resolution). These two instances have a direct impact on the proceeding’s timeframe and create a risk of an undesirable modification to the substance of the award by judicial authorities.
Notwithstanding these considerations, all speakers agreed that the arbitration scene is substantially improving in Central America and Mexico, noting that the scope of the amparo action is being limited or even declared inadmissible in many jurisdictions.
For example, the Guatemalan Constitutional Courts’ recent holdings tend to narrow the amparo’s scope. According to Sosa, these tendencies need to continue in order for Guatemala to become a competitive regional arbitral seat.3Iosif Alexander Sosa, Arbitration in Guatemala: The Admissibility of the Amparo Action Regarding Judicial Assistance on Jurisdictional Matters, Kluwer Arb. Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/12/arbitration-in-guatemala-the-admissibility-of-the-amparo-action-regarding-judicial-assistance-on-jurisdictional-matters/.3
Mexico’s and Honduras’ recent reforms are also an example of countries making their constitutional remedies less threatening for arbitration. For Mexico, the viable remedy against the annulment´s resolution is now an amparo directo. As for Honduras, the annulment process may be solved before another Arbitral Tribunal, therefore, its resolution is not subject to this remedy.
Although the amparo may never be completely eliminated from these countries, recent efforts made by the courts and legislators regarding its proceeding, aim for a faster and more efficient mean of protection.
At the #YoungITATalks, among other matters, the speakers from Mexico, Honduras, Costa Rica, and El Salvador had interesting insights regarding the amparo procedures in their countries.
Changes in Mexico's Constitutional Remedies
Mexican legislation regulates two different amparo proceedings. On one hand, the amparo directo—a single instance procedure initiated either before the Supreme Court or the Collegiate Circuit Courts—which is only admissible against the final resolution in a judicial process; one that ends a trial. On the other hand, the amparo indirecto is a slower proceeding—subject to two levels of review, brought before a District Court Judge to challenge an unconstitutional or unlawful act generally committed by a non-judicial government official.
As part of the 2013 reform to Mexico’s Amparo Law, an amparo indirecto may be filed against private institutions or individuals when they execute acts equivalent to those from an authority. However, Carlos Leal-Isla shared that there have been several dissenting criteria determining that this constitutional remedy cannot be brought against an arbitral award itself. Nevertheless, an amparo can be filed against the resolution rendered by the judge in the enforcement proceeding or in the annulment special procedure. A notable comment concerning this remedy is that the available proceeding against such resolution is now the amparo directo.
This is an important change in the arbitration scene in Mexico. The amparo indirecto is, by essence, a slower proceeding to that of the amparo directo because its decision can be appealed to a higher court. This modification was the result of the 2011 reform to the Code of Commerce. That reform abolished the ancillary procedure of annulment in favor of a new annulment special procedure; making its resolution the end of the trial, thus, making the amparo directo the only remedy available.
No Amparo Against the Annulment Resolution in Honduras
Unlike Mexico’s, the amparo action in Honduras can only be filed against resolutions issued by public officials or state authorities. Such proceeding can be initiated before the Supreme Court, before the Appellate Circuit Courts, or before the Specialized Courts depending on the alleged violations. The decision rendered in the amparo proceeding does not admit any other remedy.
Regarding the arbitration scene in his country, especially the annulment process against arbitral awards, Roberto Williams commented that, to avoid the obstructions of amparo, this process may be brought before another Arbitral Tribunal. This second Tribunal is normally administered by the same Center as the one that administered the original proceeding. This second arbitration is available if previously agreed upon by the parties. The benefits of considering this option is that any resolution issued by the aforementioned Arbitral Tribunal—according to the applicable legislation and recent jurisprudence—is immune to the amparo action since it is not rendered by public officials or state authorities.
The particularity of the amparo in Costa Rica: The Costa Rican amparo is different from other constitutional remedies in the region. In Costa Rica, there is no need to previously exhaust the corresponding judicial remedies. This characteristic grants the user the possibility to proceed directly before the Constitutional Court against any unconstitutional act held by an administrative authority or private party. However, this constitutional remedy is not admissible against judicial decisions.
In the arbitration scene, the Constitutional Court has held that the amparo action is inadmissible against the arbitration proceedings and its awards. The reasoning behind such holding is that the special laws on the subject contain the necessary remedies against those proceedings or awards. This was also commented by Christian Díaz, stating that, making the amparo unavailable, the Court has made its stand to not intervene in the arbitration procedure.
The Particularity of the Amparo in Costa Rica
The Costa Rican amparo is different from other constitutional remedies in the region. In Costa Rica there is no need to previously exhaust the corresponding judicial remedies. This characteristic grants the user the possibility to proceed directly before the Constitutional Court against any unconstitutional act held by an administrative authority or private party. However, this constitutional remedy is not admissible against judicial decisions.
In the arbitration scene, the Constitutional Court has held that the amparo action is inadmissible against the arbitration proceedings and its awards. The reasoning behind such holding is that the special laws on the subject contain the necessary remedies against those proceedings or awards.1See Pablo Rey Vallejo, El Arbitraje y los Ordenamientos Jurídicos en Latinoamérica: Un Estudio sobre Formalización y Judialización, Universitas (2013), http://www.corteidh.or.cr/tablas/r32022.pdf.1 Christian Díaz also discussed this topic by stating that making the amparo unavailable, the Court has made its stand to not intervene in the arbitration procedure.
The Effectiveness of the Amparo in El Salvador Against Arbitral Awards
Under Salvadoran legislation, an amparo can be filed against acts or omissions of public or private entities that violate or restrict someone’s constitutional rights. According to article 81 of El Salvador´s Law of Constitutional Proceedings,1D. Leg. No 2996, Ley de Procedimientos Constitucionales, 186 D. Off. 15, Jan. 22, 1960.1 the resolution rendered in the amparo proceeding is final and does not admit any kind of appeal, just like Mexico’s amparo directo.
There is, however, still a dissenting criterion regarding the faculties of the Judicial Courts to dive in and analyze a constitutional transgression in an arbitral award; especially when it comes to awards issued abroad. Humberto Sáenz commented on the matter describing the situation as a problem—or rather a challenge—that El Salvador must face. However, his country is adapting in order to become a more arbitration friendly jurisdiction.2Manuela de la Helguera, El Salvador, Towards An Arbitration Friendly Jurisdiction, Kluwer Arb. Blog (2013), http://arbitrationblog.kluwerarbitration.com/2013/07/24/el-salvador-towards-an-arbitration-friendly-jurisdiction/.2
Regarding the effectiveness of the amparo against the recognition of an award, Mr. Sáenz noted that, even after being granted the constitutional protection and prevented its recognition in El Salvador, the opposing party may still go to a foreign jurisdiction and request recognition and enforcement under their legislation. Where, as he explained, the judicial authority could ignore the amparo’s protection, since the New York Convention3Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, art. I.1, I.2, 1155 U.N.T.S. 331, 7 I.L.M. 1046.3 does not bind the authorities to recognize a foreign judicial resolution issued in relation to such arbitral award.
The insights shared in this #YoungITATalks suggest that, indeed, when applying in this region for the recognition, enforcement, or annulment of arbitral awards, it is very important to consider the amparo action available in each jurisdiction. However, as described, the recent changes in the region’s legislation regarding the amparo proceeding and the latest precedents issued by the judicial authorities on the matter reveal a pro-arbitration tendency, which is undoubtedly a promising sign for the arbitration scene in Central America and Mexico.