Judicial control of the motivation of the arbitral award

05/08/2018

The Superior Court of Justice of Lima has argued in a great majority of cases, that there is no judicial nullification of an award due to an error of motivation, since this supposes a new evaluation of the judicial Court, which is not consistent with the regulation of the Peruvian Arbitration Law (See Legislative Decree 1071).

Article 62-2 of said decree establishes, within the framework of the annulment of the arbitral award that it is forbidden under responsibility to rule on the merits of the controversy or on the content of the decision or to qualify the criteria, motivations or interpretations exposed by the arbitral tribunal.

However, on rare occasions, the Court of Lima has not been consistent with this treatment. We will refer two of those cases and an additional one in which, effectively, it avoids to pronounce on the motivations adopted by an arbitral tribunal (the sentences can be read by consulting: https://jurisprudencia.pj.gob.pe/jurisprudenciaweb/faces/page /research-search-specialized-superior.xhtml).

Case one:

In file No. 106-2016, the First Commercial Court of Lima, on 2/9/17, published a sentence announcing that the duty of written motivation is unquestionable in any area, including arbitration, which means that the Judge must show the method he used to arrive at his final decision.

In this case, the Regional Government of San Martín requested the annulment of the arbitral award in a dispute with the Rioja Consortium. The arbitral tribunal had declared all the claims raised by the consortium, linked to extensions of time in the preparation of a technical file, on 24/11/15. The Government alleged that in the award the arbitral tribuna made decisions "without due motivation", which the Judicial Chamber granted.

The arbitral tribunal mentioned in the award that in response to the requests for extensions of the consortium, the state entity responded extemporaneously, which found flaws in the response of the entity and at the same time there was a lack of pronouncement. However, at the discretion of the Judicial Chamber, the arbitral tribunal did not state reasons regarding any of those aspects.

Such claims were dismissed by the Judicial Chamber, because they suppose motivations of the arbitral tribunal that can not be reviewed judicially.

On the other hand, the Chamber held that the claim of the plaintiff on the existence of 128 days of extension of the deadline was not proven, since the respective contracts were not validly incorporated into the arbitration process. Nor was evidence included in the amount requested for general expenses, which the plaintiff estimated at 2 million 460 thousand soles.

In this regard, said that the duty of motivation facilitates a "... approximate tracking on what were the external motivations, and internally possible, that led to choose, among the various decision options presented, in order to look not only for success but also show that the judge has the genuine purpose of outlawing arbitrariness. "

The Chamber argued that the arbitral tribunal, protected by the principle of presumption of truth, gave probative value to contractual documents that were provided extemporaneously in the arbitration process, without specifically indicating what they were and the reasons why they had probative value. Nor did it indicate any evidentiary reasoning regarding the verification of the amount of the extensions requested.

As we can see, in this judgment the Judicial Chamber adopts the criterion of intense revision of the "standard of proof". It does not agree with the valuation on the contracts made by the arbitral tribunal and does not consider sufficient the accreditation of the amount of the general expenses claimed. He argues that the motivation must show both the method and the internal and external motivations of the judge in order to seek the success of the decision.

All this is directly opposed to what is ordered in the Arbitration Law, not only with respect to the exclusivity of the court to establish the motivations and interpretations that justify the award, but especially with regard to the evaluation of the probative activity. Indeed, the article 43-1 of the law states: "The arbitral tribunal has the power to determine exclusively the admission, relevance, conduct and value of the evidence ..."