Constitutional Court upholds mandatory arbitration, denies Torre Nova amparo on dividend prescription
Sep 20 2022
Constitutional Court
The Constitutional Court, in its ruling of September 20, 2022, upheld the denial of the amparo filed by Inversiones Torre Nova, S.A. and determined that the ordinary action for extinctive prescription of the dividend payment obligation owed to Lisa, S.A. cannot proceed before the ordinary courts but must be resolved through equity arbitration pursuant to the arbitration clause in Torre Nova's articles of incorporation. The ruling closes the last available avenue of challenge for Torre Nova and confirms that the incompetence exception raised by Lisa was correctly upheld at every level.
Inversiones Torre Nova, S.A. filed an ordinary action for extinctive, negative, or liberatory prescription of the dividend payment obligation against Lisa, S.A. before the Eleventh Civil Court of First Instance of Guatemala City (Case No. 01161-2018-00566). Lisa raised preliminary exceptions of incompetence, defective complaint, lack of standing, failure of condition, and failure of term.
On December 3, 2019, the Court upheld the incompetence exception, declining to rule on the remaining exceptions. The Court found that, under clause twenty-five of public deed number 89 (executed on August 17, 1999 before notary Hector Rene Lopez Sandoval), disputes between the company and its shareholders arising from corporate activities were required to be resolved through equity arbitration.
Torre Nova appealed, and the First Civil and Commercial Court of Appeals, in its ruling of February 5, 2021, dismissed the appeal and confirmed the first-instance ruling. Torre Nova then filed an amparo before the Supreme Court of Justice, Chamber of Amparo and Impeachment, which on February 1, 2022 denied the constitutional protection as manifestly inadmissible.
Torre Nova alleged violation of its rights to equality and effective judicial protection, advancing two principal arguments. First, that Guatemalan courts were competent to hear the action against Lisa, S.A. (an entity incorporated in Panama) under Article 34 of the Judiciary Act, because the action was personal and derived from legal acts performed within Guatemalan territory. Second, that the extinctive prescription action sought the application of civil law and did not constitute a dispute arising from the corporate charter that should be resolved through arbitration.
On territorial competence. The Court acknowledged, citing its own precedent (Cases 1491-2003, 1061-2004, 3754-2010, and 2218-2014), that Guatemalan courts are competent to hear claims against Lisa, S.A. despite its incorporation in Panama, given that it has performed legal acts in Guatemalan territory under Article 34 of the Judiciary Act. However, the Court clarified that this issue was not the basis of the challenged ruling: the appellate court never analyzed territorial competence but instead ruled on the arbitration clause, rendering the grievance disconnected from the challenged act.
On the proper procedural vehicle. The Court determined that Torre Nova's claim is commercial in nature, involving commercial legal entities in a dispute over prescription of a dividend payment obligation arising from their commercial relationship. Citing its precedent of May 28, 2020 (Case 4181-2019), in a similar dispute between Escobio, S.A. and Lisa, S.A., the Court confirmed that Article 1039 of the Commercial Code provides that commercial actions must proceed through summary proceedings unless the parties have agreed to submit their disputes to arbitration.
The Court verified that clause twenty-five of Torre Nova's articles of incorporation expressly provides:
"Las diferencias que surjan entre la sociedad y los accionistas, o sólo entre éstos con motivo o que resulten de la escritura social o de las disposiciones o actividades sociales, que no puedan ser resueltas en forma directa, serán dirimidas en juicio arbitral de equidad, conforme a las normas y procedimientos de la Ley de Arbitraje, y de la Comisión de Resolución de Conflictos de la Cámara de Industria de Guatemala." (Page 21)
Accordingly, the Court concluded that the First Court of Appeals acted lawfully in upholding the incompetence exception, as the controversy must be resolved through arbitration pursuant to the corporate charter. The Court further noted that Torre Nova replicated in amparo the same arguments it raised before the ordinary courts, seeking to use the constitutional guarantee as a reviewing instance, which is impermissible under Article 211 of the Constitution.