Uruguay

Recognition and Enforcement of International Arbitration Awards in Uruguay

There are no specific provisions on the recognition and enforcement of international arbitral awards in Uruguay. Domestic procedural law states that the rules governing enforcement of foreign judicial decisions shall apply, as appropriate. Recognition and enforcement of international awards require proceedings before the Supreme Court of Justice. In conducting these proceedings, the Supreme Court has followed domestic rules and has also strictly adhered to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Different effects of international awards in Uruguay

According to local procedural law, parties may seek recognition of the effectiveness of an international award in a local proceeding already underway, or recognition and enforcement of an international award in Uruguay.

The possibility of filing for recognition of effectiveness of an international award applies to judicial or administrative proceedings pending before a Uruguayan court or agency. An example would be when a res judicata motion to dismiss based on the arbitral decision is brought in a local proceeding.

Uruguayan procedural law does not specifically regulate the possibility of requesting mere recognition of a foreign decision, as opposed to recognition and enforcement. Proceedings before the Supreme Court of Justice are specifically geared to enforcement of awards.

Although no 'recognition only' procedure is expressly provided for, and there is no case law on this matter, the Supreme Court has made a distinction between recognition and enforcement, and has commented that more and more countries and treaties differentiate between the two.¹

In addition, a reasonable interpretation of the law indicates that recognition can be sought because:

• the law acknowledges that recognition and enforcement are two different concepts;²
• there is a legal provision regulating the procedure for recognition of foreign decisions when imperative or evidentiary effects are sought in a pending proceeding or in an administrative matter (as explained above);³ and
• the General Code of Procedure allows lawsuits petitioning for declaration of a right. By analogy, a party may seek recognition of an international award to the same effect.⁴

If a 'recognition only' procedure is initiated, the question is which court is competent. It could be a court of first instance, depending on the subject matter of the award (eg, a civil court in the case of commercial matters). Or it could be the Supreme Court of Justice on the basis that it is competent to review international awards in exequatur proceedings, and that exequatur proceedings require specific analysis and recognition of the award.

The second alternative seems to be more appropriate because if a court other than the Supreme Court of Justice were to decide the matter, the Supreme Court would have to review it a second time if enforcement is requested later. And the two courts could potentially reach different conclusions. It is logical, and more practical, to afford the Supreme Court the opportunity to decide on its own competence to judge the matter.

Requirements for enforcement of international awards

A party seeking recognition and enforcement of an international award must submit the following documents:

• the original award or a certified copy thereof;
• the original arbitration agreement or a certified copy thereof; and
• documents showing that the defendant was legally summonsed or served notice of the arbitration process abroad.⁵ The Supreme Court admits the award as evidence of this provided it relates details as to notification.

The documents need to be legalised (unless sent to Uruguay by diplomatic means, or by competent administrative authorities). All documents must be translated into Spanish, but with very extensive documents it is possible to translate only the part pertinent to the proceedings (article IV.2 of the New York Convention and articles 72.3, 539.1, 2 and 3, and 543 of the General Code of Procedure).

Scope of Supreme Court's control

The Supreme Court has stated that, pursuant to treaties and local procedural laws, the Court must verify some basic requirements upon deciding whether or not to enforce an international award:⁶

• that the parties agreed to submit to arbitration freely and in writing;
• that the arbitral tribunal was constituted in accordance with said agreement and the award is about a dispute in connection with the agreement;
• that the party against whom the award is enforced was served notice of the arbitration and afforded the opportunity to defend itself and produce evidence;
• that the award is final, that is, not subject to appeal or challenges, and has not been suspended or annulled by a competent authority;
• that the award does not contradict Uruguayan public order

Arbitration agreement

In the context of the New York Convention, the Supreme Court requires evidence that there is an arbitration agreement in writing between the parties. In a recent ruling, the Court refused to enforce an international award because the party against whom the award was intended to be enforced had not signed the document containing the arbitration clause.⁷ The defendant contested enforcement of the award, arguing that there had only been negotiations, that it had not agreed on a contract, and that enforcement was contradictory to the award.

The Supreme Court also looks at whether the subject matter of the arbitration agreement, and of the award, is arbitrable under Uruguayan law. The Court sometimes analyses this issue independently, while in other cases it does so in the context of the public order examination. Under local law,⁸ the Court has established that matters that can be settled can also be the subject of arbitration. In line with this, the Supreme Court and other courts have accepted arbitration of labour disputes.⁹

Due process analysis

It is not necessary for the defendant to have appeared in the arbitration proceeding, but only to have been assured the possibility of appearing. The Supreme Court has accordingly ruled for recognition and enforcement of decisions handed down in cases of non-appearance.¹⁰

The award must be final. This requirement implies that the decision cannot be modified by appeal in the country in which it was handed down. Although the petitioner for enforcement needs not submit evidence, the defendant may argue upon responding that the decision is not final. The Supreme Court found that this requirement is not met in cases of foreign judicial decisions that could be enforced provisionally¹¹ in the country of origin but still subject to appeal there. The Court could be expected to rule similarly in the case of international arbitration awards under the New York Convention.

If the defendant opposes enforcement on such grounds, the petitioner may accredit compliance by any means of evidence, including an affidavit by attorneys practising in the place of arbitration. If the Supreme Court finds that compliance with this requirement has not been duly accredited, it will grant a maximum of 90 days to cure.¹² Uruguayan law does not provide for any other reason to stay enforcement proceedings.

It is not possible to obtain recognition or enforcement of an arbitral award that has been set aside if the party against whom it is to be enforced proves that it was set aside or suspended by a competent authority in the country in which, or under whose law, such decision was handed down (article 541.2 of the General Code of Procedure).

Uruguayan scholars have found that the Supreme Court may reject enforcement of an award that has been set aside, suspended or is not final, even if the party does not allege grounds, under the public order exception for refusing to enforce an award (article 539.1, 8 of the General Code of Procedure).

Public order analysis

The Supreme Court examines awards to verify whether they contradict Uruguayan public order. This is the only substantive control on the content of the award¹³ and it is applied restrictively. And if only part of the award is in contradiction, scholars state that it is possible to grant partial recognition and enforcement.

According to Uruguayan law, recognition and enforcement of a foreign award can be denied only if it plainly contradicts principles on which Uruguay 'bases its legal individuality'.¹⁴

The General Code of Procedure expressly requires that contradiction to international public order be 'manifest'.¹⁵ Scholars and case law unanimously establish that this circumstance is absolutely exceptional and shall be interpreted restrictively.

Moreover, Uruguay opposed the incorporation of this exception in the Inter-American Conventions, alleging that it 'would only contribute to the progress of public order and the progress of public order is equivalent to the setback of international law'.¹⁶

Scholars' work and judicial decisions have established that this expressly indicates that the violation of principles of international public order must be applied restrictively and with the limits established therein:

• the award must 'specifically' and 'in a serious and open manner' contradict principles of international public order. According to case law, the exception refers only to 'situations in which the violation is patent, evident, gross and incapable of admitting two interpretations';¹⁷
• the contradiction must affect essential principles of the Uruguayan legal system. The content of the award must plainly and seriously violate essential principles and rules, of a non-negotiable nature, in which Uruguay 'bases its legal individuality'.¹⁸ A mere difference in legislation is not sufficient; and
• the violation of the public order must be related to Uruguay. The exception cannot be admitted for defending the legal order of another jurisdiction.

Recognition and enforcement proceedings

Requests for recognition and enforcement must be made to the Supreme Court of Justice. The entity or person against whom recognition and enforcement are requested will be given 20 days notice of the proceeding. The defendant may challenge recognition based on the requirements mentioned above but cannot open up a discussion on the substance of the case.

The Supreme Court must hear the prosecutor's opinion before adopting a decision, but this opinion is not binding. The Supreme Court's ruling is final and cannot be appealed.

If recognition is admitted, the file will be sent to the competent Uruguayan court for enforcement against the defendant.

Confidentiality of proceedings

Proceedings for recognition and enforcement of awards are public, including all documents attached to the file (article 7 of the General Code of Procedure).

Upon ex parte request, the Supreme Court can order non-disclosure of the proceedings for well-founded reasons of 'security, morality or protection of the personality of the parties' (article 7 of the General Code of Procedure).

Proceeding features

No hearings are provided for in the recognition and enforcement of international awards (articles 537 to 543 of the General Code of Procedure).

If enforcement of the award is sought in proceedings underway in Uruguay, the award's validity and effectiveness could be discussed at hearings in such proceedings (article 540 of the General Code of Procedure). Hearings are public, but as explained above, upon ex parte request the court can order non-disclosure.

Judgments are published, but if the court ruled proceedings for recognition and enforcement confidential, the judgment will also be kept confidential (article 7 of the General Code of Procedure).

Partial awards and partial enforcement

There are no rules or decisions specifically prohibiting or limiting recognition and enforcement of interim or partial awards. In fact, the Inter-American Convention on International Commercial Arbitration provides for recognition and enforcement of interlocutory or partial foreign awards and can be applied by analogy to cases subject to the New York Convention.

Local scholars find that it is possible to obtain recognition and enforcement of only a part of an award if it is clearly separable from the rest.

There are no rules or decisions limiting recognition and enforcement to awards for monetary relief (article 541.1 of the General Code of Procedure). It is possible, given the Convention's pro-award spirit, the silence of the rules, and the restrictiveness of grounds under the New York Convention, to seek recognition and enforcement of awards for other than monetary relief.

Other aspects

The process for recognition and enforcement of arbitral awards does not involve any particular or more onerous costs than those involved in enforcement of local awards (articles 537 to 543 of the General Code of Procedure).

If attachment of assets is sought for enforcement, such properties must be identified (article 380.2 of the General Code of Procedure).

Notes
1. Supreme Court decision 196/97.
2. Article 538.2 of the General Code of Procedure.
3. Article 540 of the General Code of Procedure.
4. Article 11.3 of the General Code of Procedure.
5. Article IV.2 of the New York Convention and articles 539.2 and 543 of the General Code of Procedure.
6. Supreme Court decision 41/2004.
7. Supreme Court decision 85/2008.
8. Articles 476 of the General Code of Procedure and 2154 of the Civil Code.
9. Supreme Court decision 106/2006.
10. Supreme Court decision 196/97.
11. Supreme Court decisions 42/99 and 315/84.
12. Supreme Court decision 192/1997.
13. Article 539.1.8 of the General Code of Procedure.
14. Article 525.3 of the General Code of Procedure.
15. Article 539.1 of the General Code of Procedure.
16. Statement by the Uruguayan delegation in the First Inter-American Convention on International Private Law ('CIDIP-I').
17. Decision of the Civil Court of Appeal Term 6, Bermúdez, Mercante, Olagüe, published in La Justicia Uruguaya, Case 11354, Tome 100, 1990. See also Decision 161/03 of the Civil Court of Appeals Term 2, 161/03.
18. Article 523.3 of the Civil Code of Procedure and Statement of Uruguay upon ratifying the Inter-American Convention on Rules of International Private Law.