About the executive arbitration process

Recently, the Congress of the Republic processed a bill, which was eventually shelved, which had the purpose of creating "in our legislation the Executive Arbitration Agreement [and] its special procedure", with which it would have been possible to carry out executive arbitration proceedings in Colombia. This possibility has been discussed in our country since the 1990s, giving rise to positions that argue the legal unfeasibility of creating and advancing this type of process, on the grounds that it involves the use of force and that this should be reserved to the State, and others that advocate its implementation without further limits, in order to speed up the processing of proceedings for the enforcement of obligations, entrusting them to private parties. On this occasion, we will present the problem involved in the analyzed issue, we will review the recent evolution of its treatment in Colombia and, finally, we will conclude with the reasons why this institution should be implemented.

According to Article 1 of the Arbitration Statute, "arbitration is an alternative dispute resolution mechanism [to the judicial process] whereby the parties [entrust] arbitrators with the settlement of a dispute". It is well known that the advantages of arbitration over judicial proceedings are the speed of the process and the specialized knowledge of the arbitrators in relation to the subject matter of the dispute, while the disadvantage is the high transaction costs, which, in a way, are compensated by the prompt definition of the conflict, a vital issue in commerce, under the understanding that time is money. Now, traditionally, arbitration has been used for the resolution of disputes in which the existence or entity of a right is disputed, i.e., for knowledge processes, and not to process the execution or effectiveness of certain and indisputable rights, i.e., for executive processes.

In Colombia, Article 116 of the Constitution recognizes the possibility of resorting to arbitration as a dispute resolution mechanism, while delegating to the law the determination of its conditions, stating that "individuals may be temporarily vested with the function of administering justice in the capacity of (...) arbitrators authorized by the parties to render judgments at law or in equity, under the terms determined by law" [Bold and underline]. For its part, the Arbitration Statute, i.e., the law that determines the conditions for arbitration in Colombia, provides that "the enforcement of the award [, i.e., of the judgment issued by the arbitrators in the framework of a process of knowledge,] shall be heard by the ordinary or contentious-administrative courts, as the case may be". This provision has led part of the doctrine to argue that, if arbitrators cannot take cognizance of the enforcement of obligations created by their own decisions, much less can they take cognizance of obligations created by third parties and contained in other vehicles.

Initially, in Ruling T - 057 of February 20, 1995, the Constitutional Court concluded that it was not possible to entrust the execution of obligations to private parties as arbitrators. To reach this point, the Court indicated that "peace and public order are endangered if private parties (...) are directly attributed the power to [use force to enforce obligations]". It also considered that arbitration was a mechanism for resolving conflicts or disputes and that, in the executive process, there were not properly differences between the parties, but rather a failure to comply. Finally, the Court stated that to be able to agree on enforceable arbitration clauses was as much as to encourage the abuse of a dominant position through their unthinking and unquestionable inclusion in contracts of adhesion.

Subsequently, in Ruling C - 294 of July 26, 1995, the Constitutional Court analyzed the constitutionality of the second paragraph of the second article of Decree 2651 of 1991. To this end, the Court asked itself the question whether "does the Constitution exclude from the matters on which arbitrators may administer justice, all those that may eventually give rise to an enforcement process? To answer this question, the Court argued that Article 116 of the Constitution only imposed three limitations to arbitration, namely: "The first, that private persons may only be invested with the function of administering justice, as (...) arbitrators, temporarily. (...) The second, already mentioned, that it is the parties who empower the arbitrators to rule (...). And the last, that the arbitrators administer justice 'under the terms determined by law. In this sense, the Court concluded that "it is not admissible to argue that the matters that are or could be heard in the enforcement process are excluded from the arbitration process", but that it would be up to the legislator to establish the forms of the arbitration enforcement trial and, in this way, to create it.

To auction mortgaged real estate since such prerogatives are concentrated in the State authority and derive from the rule of the political organization as such" [Bold and underline]. However, this dissent is not binding, so we must abide by the criterion established in the previously mentioned Ruling C - 294 of 1995.

In view of this situation, we believe that the Colombian legislature would do well to enable the figure of executive arbitration and regulate the procedure for its processing. This empowerment would be in the interest of the individuals interested in the enforcement of the obligation against which they freely make an arbitration agreement, speeding up said procedure, and at the same time it would help to decongest the judicial offices.