Case Law
Colombia / 19 December 2011 / Colombia, Corte Suprema de Justicia (Supreme Court of Justice) / Drummond Ltd v Ferrovias en Liquidacion, Ferrocariles Nacionales de Colombia S.A. (FENOCO) / 11001-0203-000-2008-01760-00
| Country | Colombia |
| Court | Colombia, Corte Suprema de Justicia (Supreme Court of Justice) |
| Date | 19 December 2011 |
| Parties | Drummond Ltd v Ferrovias en Liquidacion, Ferrocariles Nacionales de Colombia S.A. (FENOCO) |
| Case number | 11001-0203-000-2008-01760-00 |
| Applicable NYC Provisions | V | V(1) | V(1)(b) | V(2) | V(2)(a) | V(2)(b) |
| Source |
http://www.cortesuprema.gov.co (website of the Corte Suprema de Justicia) |
| Summary | On 13 September 1991, Drummond and Ferrovias entered into a contract for private transportation which contained an arbitration agreement providing for ICC arbitration in Paris. On 9 September 1999, Ferrovias and Fenoco concluded a concession contract. On 24 June 2003, an arbitral tribunal issued a partial arbitral award deciding on jurisdiction. On 25 July 2005, it issued another partial award and the final award was issued on 10 June 2006. Drummond sought to enforce the award in Colombia. Fenoco opposed enforcement on the grounds that the award dealt with rights over property located in Colombia, subject to the exclusive jurisdiction of Colombian Courts, that the award violated Colombian public policy, that the award dealt with a matter beyond the arbitration agreement and that the proceeding violated due process. The Corte Suprema de Justicia (Supreme Court) granted enforcement of the award. It first noted that both Colombia and France were parties to the NYC, which was thus applicable. It added that Article V NYC impedes the parties to raise grounds other than those contained in that Article. Regarding Fenoco's argument that the award related to rights over property located in Colombia, the Corte Suprema de Justicia rejected the argument, holding that it was not a ground for non enforcement as foreseen by the NYC. Regarding Fenoco's argument that the arbitral award violated Colombian public policy, the Corte Suprema de Justicia noted that 'public policy' within the meaning of the NYC cannot be the same as in a national context. Public policy under the NYC relates to fundamental principles such as good faith, prohibition of abuse of rights, and due process. As such, a violation of a mandatory rule of the State where enforcement is sought cannot in itself amount to a violation of public policy. In the present case, the Court held that no violation of the fundamental rules of Colombia had occurred. The arbitral tribunal had limited its orders to execute the contract at hand. On Fenoco's argument that the arbitral tribunal had issued fines in violation of public policy, the Court held that an act contrary to a rule of public law has to be of such magnitude as to impede the award's enforcement in Colombia. The Court held that this was not the case. Regarding Fenoco's argument that, in accordance with French law, arbitration with public entities is not permitted and therefore, the reciprocity requirement was not complied with, the Corte Suprema de Justicia noted that the reciprocity requirement had been complied with as both countries are parties to the NYC. Regarding Fenoco's argument that the arbitral award had dealt with a subject matter that falls under the exclusive jurisdiction of Colombian Courts and therefore the award's enforcement would be contrary to Article V(2)(a) NYC, the Court recalled that an arbitral tribunal has no jurisdiction to rule on the validity of an administrative act. But it noted that in the present case, the arbitral tribunal had dealt with a contractual dispute which was arbitrable. On Fenoco's argument that the award had been rendered in violation of due process (Article V(1)(b) NYC), the Corte Suprema de Justicia noted that service of process was intended to let the respondent know about the proceedings so that it can present its defense. However there is no formal requirement for service of process. The Corte Suprema de Justicia noted that Ferrovias participated to the arbitral proceeding and that Colombian minimum guarantees had been respected as Ferrovias had the opportunity to present its defense. It dismissed Fenoco’s arguments. |
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Attachment (1)
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