Venezuelan Arbitration Law

1. General Comments.

Arbitration in Venezuela is governed by the rules of the Law of Commercial Arbitration (Ley de Arbitraje Comercial, referred to as the «Arbitration Law») passed on April 7, 1998. The Venezuelan Arbitration Law is basically a combination of the UNCITRAL Model Law of Arbitration (text in: and the arbitration provisions in the Colombian Commercial Code. Prior to the passing of the Arbitration Law, enforcement against a reluctant party of an agreement to arbitrate had to go through the Venezuelan courts, which under the Code of Civil Procedure had jurisdiction to decide the validity of the arbitration clause.

2. Binding Nature of the Agreement to Arbitrate.

The agreement to submit disputes to arbitration (arbitration clause) must be in writing and signed by the parties (Arbitration Law, Article 6). In the case of standard model contracts and contracts of adhesion, the intention to submit disputes to arbitration must be express and independent, that is, it must be included in a separate special clause. With the passing of the law on the Transmission of Electronic Messages (2001), an electronic contract is considered an agreement in writing (the principle of functional equivalency) and if the contract contains an arbitration clause, this clause is binding.

3. Kompetenz-Kompetenz.

Under the Arbitration Law, the arbitral tribunal has the power to decide its own jurisdiction (this is basically an incorporation of the principle of Kompetenz-Kompetenz) (Arbitration Law, Article 7). A recent decision of the Venezuela Supreme Court (see comments later in section 12) confirmed the Kompetenz-Kompetenz principle and overruled a previous holding of the court that had limited the power of the arbitrators to make a decision regarding their jurisdiction for arbitrations taking place in Venezuela.

4. Arbitration with Public Entities.

In the case of agreements with public-owned entities, that is, entities in which, directly or indirectly, the Republic of Venezuela or a Municipality or State hold an interest of 50% or more, the agreement to submit to arbitration must be approved in writing by the Minister controlling the specific public corporation. Care should be taken with this provision in the Arbitration Law (Arbitration Law, Article 4). Any contract entered into with a public entity should include express evidence that the public entity has the necessary approval to submit disputes to arbitration.

5. Language; Arbitration Procedures.

The parties are free to set both the place and the language of the arbitration. The place and the language can be set in the Arbitration Clause or in the Terms of Reference.

Parties can establish the procedural rules to be applied to a particular arbitration. In the case of an institutional arbitration, the procedural rules of the institution may be applied (see below). For arbitration taking place in Venezuela, the arbitrators must formally accept their appointments (Acta de Constitución del Tribunal), and awards must be rendered within six months from the date of acceptance.

Arbitrators have the power to request interim measures. Though injunctions are not recognized under Venezuelan Law, other types of interim measures prior to entering the award, including measures to protect the assets of one of the parties, can be decided on by the arbitrators. The courts must enforce interim measures approved by the arbitrators.

A 2010 decision (Astivenca vs. Oceanlink Offshore III AS case) of the Venezuelan Supreme Court (see comments later in section 12) ratified the power of arbitrators to order interim measures and established that before the beginning of the arbitration procedure, regular courts have jurisdiction to rule and order these measures, unless the rules of the arbitration center that has jurisdiction on the case provide for the constitution of an emergency arbitral tribunal to decide solely on the interim measures requested.

6. Choice of law; Application of the Unidroit Principles.

The arbitrators must apply the law chosen by the parties. They also must take into account commercial usages (Arbitration Law, Article 8). In the case of international commercial contracts governed by Venezuelan law the arbitrators must also take into account general principles of international commercial law recognized by international organizations (Venezuelan Private International Law Act (1998) Article 30; also Inter-American Convention on the Law Applicable to International Contracts, ratified by Venezuela in 1995, Article 9). Principles of international commercial law include the Unidroit Principles of International Commercial Contracts (Unidroit) adopted in 1994, amended in 2004 and in 2010 (for a full text of the Principles see: ). The Unidroit Principles have been used frequently in international arbitration awards and are important in international commercial arbitrations where the substantive law is Venezuelan law.

7. The Award.

Arbitration awards must be in writing and signed by a majority of the arbitral tribunal. The award must indicate the date and place of arbitration. The place of arbitration is presumed to be the place where the award was rendered (Arbitration Law, Article 30). Arbitration awards are binding even if a dissenting arbitrator does not sign the award, as long as the award is signed by a majority of the arbitrators. The award must, however, explain why a signature of one of the arbitrators is missing. The award must also make available any dissenting opinion (Arbitration Law, Article 29). According to the Arbitration Law the award must be reasoned (motivated). This means that under Venezuelan law the arbitrators have an obligation to give the reasons for their award.

8. Challenging the Award.

There is no appeal in the case of arbitration. An arbitration award can only be set aside by a challenge to the award. The challenge must be filed within five days from the date the award was notified to the party presenting the challenge (Arbitration Law, Article 43) The reasons for the setting aside of an award are specifically spelled out in the Arbitration Law (Article 44). These, in turn, are taken with modifications from the UNCITRAL Model Law.

9. Recognition and enforcement of Foreign Awards.

Venezuela ratified the New York Convention (see later section 11). The Arbitration Law, following the UNCITRAL Model, further establishes a procedure for the recognition and enforcement of foreign awards. An award is a foreign award if it has been rendered outside of Venezuela and the place of arbitration was outside of Venezuela. Foreign arbitration awards on commercial matters can be enforced by a simple application made before the competent court in the jurisdiction where the award is being enforced (Arbitration Law, Article 48). The grounds for refusal of recognition and enforcement of an award in the Arbitration Law (Article 49) are copied, albeit in a different order, from the UNCITRAL model law (UNCITRAL, Article 36). Prior to the passing of the Arbitration Law, in order to enforce a foreign arbitration award into Venezuela, an application had to be made for an exequatur, which is a cumbersome procedure before the Venezuelan Supreme Court. An exequatur is no longer needed. As a signatory to the New York Convention (see later section 11) Venezuela must recognize foreign awards without reviewing the merits.

10. Institutional Arbitration.

The Arbitration Law, following the Colombian model, allows both institutional and ad-hoc arbitration. Institutional arbitration is defined as an arbitration that takes place before any recognized arbitration center. This makes the submission of arbitration to traditional international centers such as the ICC and the AAA binding. Furthermore, it allows the creation of institutional arbitration in Venezuela. At the present time, institutional arbitration services are being offered by the Caracas Chamber of Commerce through the Caracas Chamber of Commerce Arbitration Center (Centro de Arbitraje y Conciliación de la Cámara de Comercio de Caracas), and the arbitration center of the Venezuelan-American Chamber of Commerce (Venamcham). There are also regional centers in Maracaibo, Puerto La Cruz and Puerto Ordaz.

With the enactment of the Arbitration Law, international institutional arbitration, such as ICC arbitration and AAA arbitration, can now take place in Venezuela with no formalities required before the Venezuelan courts.

11. Other Arbitration Conventions and Treaties.

Venezuela is a party to the Inter-American Convention on the Validity of Foreign Judgments and Awards (effective 1985); the Panama Convention of 1975 (effective 1985); the New York Convention of 1958 (adopted in 1994), and the Washington Convention on Investment Disputes also called Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) (adopted in 1995). However, the ICSID Convention was denounced on January 24, 2012. Pursuant to Article 71 of such convention, the denunciation became effective six months after the notice.(see also: Investment Treaties and ICSID Jurisdiction).

12. Recent Decisions regarding Jurisdiction.

A decision regarding jurisdiction was rendered by the Constitutional Chamber of the Venezuelan Supreme Court on November 3, 2010, as a consequence of a constitutional review requested by Astilleros de Venezuela C.A- Astivenca (Astivenca vs. Oceanlink Offshore III AS ) (decision number 1067/2010). The decision in Astivenca vs. Oceanlink Offshore III AS ratified the Kompetenz-Kompetenz principle. The Court held that arbitrators are empowered to rule on their on own jurisdiction, even regarding questions of the validity and existence of the arbitration agreement. Further, it decided that regular courts could only make a preliminary review of the arbitration agreement, which includes verifying that the arbitration agreement is written and excludes any analysis regarding validity of the consent given by the parties. The decision in Astivenca vs. Oceanlink Offshore III AS also refers to the waiver of the agreement to submit to arbitration, interim measures, the principle of cooperation and subsidiary between the judicial activity and arbitration, separability of the arbitration agreement, among others. In a recent decision (decision number 1784/ 2011, case Distribuidora Juan Dios de Atacho C.A. Vs Diageo de Venezuela) the holding confirmed the criteria regarding the Kompetenz-Kompetenz principle included in the decision of the Astivenca vs. Oceanlink Offshore III AS case.

Prior to the decision in Astivenca vs. Oceanlink Offshore III AS (2010) the Venezuelan Supreme Court had shown a reluctance to recognize the Kompetenz-Kompetenz principle. Most of the cases challenging jurisdiction that went before the court were initiated by one of the parties filing of a motion for a constitutional stay («amparo»). A constitutional stay (amparo) is a request to have a court stop a procedure because it violates some constitutional right of either the plaintiff or the defendant. A simple argument in the case of arbitration is that the jurisdiction of the arbitral tribunal violated the constitutional right of the defendant to be tried in by his natural judges (peers). Once a request for a stay is filed, if the first instance or Superior Court denies the application for a stay, the party goes before the Supreme Court. In some cases, the party that is not interested in the arbitration simply files a claim before an ordinary court ignoring the arbitration clause. The Supreme Court then analyzed the arbitration clause and effectively gets involved in the determination of the jurisdiction.

It seems that since the decision in Astivenca vs. Oceanlink Offshore III AS the use of constitutional stay to by-pass the Kompetenz-Kompetenz principle will no longer be allowed. Nevertheless, the issue is not definitively solved and we will wait for a future decision to end the practice of applying for constitutional stay.

13. Relevant Decisions Regarding Arbitration.

On October 17, 2008 the Constitutional Chamber of the Venezuelan Supreme Court issued decision number 1541-2008 as a consequence of a request of interpretation of Article 258 of the Venezuelan Constitution made by the Attorney General. This decision established the scope of Article 22 of the Investments Promotion and Protection Act and recognized arbitration as a part of the Venezuelan justice system, among others.

May 31, 2022