COLOMBIA Law and Practice Contributed by: Juan Mendoza, Manuela Hernández Contreras, Andres Parra and Daniel Munera, DRET
DRET Legal Cra 11 # 94 A 03 – Ofc 701 Bogotá, Colombia Tel: +57 3102 133 683 Email: manuela.hernandez@dret.legal Web: www.dret.legal
1. General 1.1 Prevalence of Arbitration
Defining “International” Under Law 1563: a Three- Part Test Colombian parties overwhelmingly encounter interna - tional arbitration through the underlying contract itself, not as a route to later enforce awards issued else - where. Unlike the approach some UNCITRAL Model Law jurisdictions take, Law 1563 does not let parties simply agree that a dispute will be treated as interna - tional. Instead, internationality is judged against three objective criteria set out in Article 62: • The parties are domiciled in different states – the most frequently invoked criterion. • A substantial part of the obligations is to be per - formed outside the state of the parties’ domicile, or the dispute’s subject matter is more closely con - nected to another state. • The dispute affects the interests of international trade. Law 1563 largely adopts the first two criteria from the Model Law’s own definition of internationality, while the third criterion localises, within Colombian arbitra - tion law, a standard historically associated with the French system’s protection of international commerce. This third criterion thus operates as a safeguard for international trade itself: even where both parties are domiciled in Colombia, a dispute may still qualify as international if its underlying transaction affects the flow of international commerce. In practice, this means purely domestic contracts are arbitrated under the national regime, while contracts with a genuine international element – most often a foreign-domiciled counterparty – fall under the international one instead.
International arbitration in Colombia has moved well past its early, occasional use and is now a consoli - dated, growing method for resolving both commercial and investment disputes. That shift dates back to Law 1563 of 2012, which adopted the UNCITRAL Model Law and gave Colombia a modern, predictable arbi - tration framework that domestic and foreign parties alike have come to trust. Why Domestic Parties are Choosing Arbitration Domestic parties themselves are increasingly choos - ing arbitration over litigation for reasons that go beyond simply avoiding Colombia’s overloaded court system, such as the following: • Institutional administration : Arbitration provides parties with a structured, professionally adminis - tered process from the outset, rather than one built case by case. • Speed : Arbitration moves faster than litigation in local courts, with defined procedural timelines that ordinary litigation – unlike a process spread across multiple levels of appeal – rarely offers. • Expertise : Arbitration allows parties to select decision-makers with real subject-matter exper - tise – placing a specialist in energy, construction or corporate law on the tribunal, rather than leaving a technically complex dispute to a generalist judge.
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