In 1997 a Dutch arbitration court rendered an award in a dispute between a Dutch plaintiff and a Chilean defendant. The Dutch company requested that the Chilean Supreme Court enforce the arbitration award in Chile, omitting certain formal requirements in the request. The Supreme Court refused the request because of the omission. In 1999 the Dutch company again requested that the Supreme Court enforce the contentious award.
The defendant based his defence on the bases that (i) the Supreme Court had already issued a final decision on the matter; thus, a second review of the case would violate the double jeopardy principle and (ii) there had been a breach of the service of process rules, since the notice of the filing of the complaint had been made through a simple certified letter rather than being given in person.
In reaching its decision, the Supreme Court considered the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which the Netherlands and Chile are parties.
The Supreme Court stated that, although a resolution had already been rendered in the matter, it was necessary to determine the reasons for the rejection of the first claim. The court stated that, pursuant to Article 4(1)(b) of the New York Convention, a petitioner is required to present translated copies of the disputed agreements in Spanish. The plaintiff had not fulfilled this requirement. However, the court found that this was not a formal requirement.
With respect to res judicata (the defendant's first ground of defence), the court stated that, under domestic law, such a defence can be proffered if the court of first instance had rejected a claim on the merits. However, in this case the initial request had been rejected due to non-compliance with a formal requirement and without any discussion on the merits. Therefore, no defence of res judicata was available and the petitioner was entitled to request the enforceability of the award for a second time.
With respect to the defendant's second defence, the court analyzed the arbitration clause of the contract and concluded that the parties had complied with the standards of the Netherlands Dry Fruits, Species and Similar Products Trade Association, according to which a notice by certified letter is valid. Therefore, the Chilean company could not claim the application of the Civil Procedure Code for service of process, since those rules had not been accepted by the parties.
Thus, the Supreme Court dismissed the defendant's arguments and ordered the enforcement of the arbitral award.
For further information on this topic please contact Marcelo Armas at Philippi, Yrarrazaval Pulido & Brunner by telephone (+56 2364 3700) or by fax (+56 2364 3796) or by e-mail ([email protected]).
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