- Supreme Court of Venezuela
- Bottling Companies v. Pepsi Cola Panamericana
ARBITRATION AGREEMENT - BETWEEN TWO VENEZUELAN COMPANIES
ARBITRATION CLAUSE - PARTIES OF THE SAME NATIONALITY - APPLICATION OF THE 1958 NEW YORK CONVENTION AND 1975 INTER-AMERICAN CONVENTION ON INTERNATIONAL COMMERCIAL ARBITRATION - BROAD
INTERPRETATION OF THE CONCEPT OF INTERNATIONALITY OF CONTRACT - REFERENCE BY COURT TO THE PREAMBLE (COMMENT 1) OF THE UNIDROIT PRINCIPLES
The case concerned a contract between two Venezuelan companies which stipulated that any disputes which might arise should be submitted to arbitration in New York under the ICC Arbitration Rules. When one of the parties invoked the arbitration clause, the other party objected that it was invalid and insisted that jurisdiction remained vested in the ordinary Venezuelan courts.
Confirming the decision of the Tribunal of Caracas, the Supreme Court of Venezuela rejected the argument and upheld the validity of the arbitration clause. Its decision was based on the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and on the 1975 Inter-American Convention on Commercial Arbitration, both of which had been ratified by Venezuela and expressly affirmed the binding nature of an agreement whereby parties to an international commercial contract decide to submit any dispute which might arise to arbitration.
While it was true that in the instant case the parties were both Venezuelan companies, in the Court's view, the application of the two Conventions was nevertheless justified as one of the companies was in fact a subsidiary of a United States company. In support of this broad interpretation of the concept of international contract in accordance with Article 1 of the 1975 Inter-American Convention on Commercial Arbitration, the Court referred, among others, to the Preamble, Comment 1 of the UNIDROIT Principles, which states that "[…] the concept of 'international' contracts should be given the broadest possible interpretation, so as to ultimately exclude only those situations where no international element at all is involved, i.e. where all the relevant elements of the contract in question are connected with one country only."
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Abstract published in English and French:
- Uniform Law Review / Revue de droit uniforme, 1998, 176 - 177}}