Sustains Lisa's incompetence exception, refers dividend prescription claim to equity arbitration
Oct 15 2019
11th Civil Court
Pollo Rey, S.A. filed an ordinary action for extinctive prescription against Lisa, S.A. seeking a declaration that Lisa's right to collect dividends decreed at the Annual Ordinary General Assembly of Shareholders of May 24, 2012 had been extinguished. Lisa filed five preliminary exceptions. The Eleventh Circuit Civil Court of First Instance sustained the incompetence exception based on the arbitration clause in Pollo Rey's articles of incorporation and declined to rule on the remaining four. The parties were directed to equity arbitration.
Pollo Rey brought suit alleging that Lisa failed to collect dividends corresponding to the profits for the period from January 1 to December 31, 2011, as well as accumulated profits, decreed at the May 24, 2012 shareholder assembly, and that the right to collect had prescribed after more than five years under Article 1508 of the Civil Code. Pollo Rey submitted as documentary evidence a January 11, 2018 certification from the Chairman of the Board of Directors regarding the assembly minutes, an accounting certification of the payable account, and a February 28, 2017 letter from Lisa's attorney requesting dividend payment.
Lisa filed five preliminary exceptions through her special judicial representative Andrea Del Rosario Vides López:
Incompetence. Lisa argued that, as an entity incorporated under the laws of Panama, the Guatemalan court lacked jurisdiction by reason of domicile under Article 12 of the Code of Civil and Commercial Procedure. Additionally, Lisa invoked the twenty-fifth clause of Pollo Rey's articles of incorporation, which provides that disputes between the company and its shareholders shall be resolved through equity arbitration before the Conflict Resolution Commission of the Chamber of Industry of Guatemala.
Defective complaint. Lisa argued that Pollo Rey failed to specify the amount of the obligation it sought to prescribe, did not submit the administration's reports on profits, and did not establish compliance with the assembly convocation and quorum requirements. Lisa emphasized that the sixteenth clause of the articles of incorporation assigns to the Board of Directors the obligation to determine the date and form of dividend payment, and that Pollo Rey submitted no evidence that the Board had set those terms, making it impossible to determine when the prescription period began to run.
Lack of standing in the plaintiff. Lisa argued that Pollo Rey's judicial mandate requires prior written authorization from the Board of Directors for acts of disposition, and that an extinctive prescription action over dividends constitutes an act of disposition that suppresses a shareholder's rights. Lisa maintained that, under Article 137 of the Commercial Code, only the General Assembly of Shareholders has the authority to agree to suppress rights conferred on a shareholder, and only with the affected shareholder's consent.
Failure to fulfill a condition. Lisa argued that Pollo Rey breached its obligation to convert bearer shares to registered shares and deliver the corresponding certificates to Lisa under the Extinction of Domain Law, and that until those conditions were met, the prescription period had not begun to run.
Failure to fulfill the time requirement. Lisa maintained that prescription was interrupted on two grounds. First, the 2011 resolution excluding Lisa as a shareholder instructed the administration to liquidate Lisa's corresponding share, expressly recognizing Lisa's rights without alleging prescription, constituting tacit acknowledgment under Article 1506(2) of the Civil Code. Second, Pollo Rey and other Avícola Group entities obtained precautionary attachments on Lisa's dividends, preventing Lisa from collecting them, and were now seeking to declare prescribed a right whose exercise they themselves had blocked.
Pollo Rey, through its representative Alberto Antonio Morales Velasco, opposed all five exceptions, arguing in summary that the payment obligation was performable in Guatemala, the complaint met all legal requirements, its representative had sufficient authority, share conversion did not condition dividend collection, and none of the statutory grounds for interrupting prescription applied because Lisa never filed a judicial demand for payment or executed precautionary measures in its capacity as creditor.
The court focused its analysis on the incompetence exception. It evaluated the copy of public deed number 23, executed on January 31, 2000 by notary Héctor Rene López Sandoval, containing Pollo Rey's corporate charter. The court accorded it full evidentiary value under Article 186 of the Code of Civil and Commercial Procedure, as it had not been challenged for nullity or falsity.
The court verified that the twenty-fifth clause provides that disputes between the company and its shareholders arising from or relating to the corporate charter, corporate provisions, or corporate activities shall be resolved through equity arbitration. The court determined that the dispute arises from Pollo Rey's corporate activities, as the lawsuit seeks extinction by prescription of the obligation to pay dividends, and that the arbitration clause therefore applies.
The court invoked the principle of pacta sunt servanda (Article 1519 of the Civil Code) and Article 11(1) of Decree 67-95 (Arbitration Law), which bars courts from hearing disputes subject to an arbitration agreement when a party invokes the incompetence exception. The court cited Constitutional Court decisions in cases 1792-2005 and 3348-2016 in support of its ruling.
Having sustained the incompetence exception, the court declined to rule on the remaining four exceptions, in accordance with Article 121 of the Code of Civil and Commercial Procedure.
Pollo Rey's action sought to declare prescribed Lisa's right to collect dividends that Pollo Rey itself, as part of the Avícola Group, had recognized when it resolved to exclude Lisa as a shareholder in 2011 and instructed the administration to liquidate Lisa's corresponding share. Lisa alleged that Avícola Group entities obtained attachments on Lisa's dividends, preventing collection, and simultaneously brought this prescription action to extinguish the very obligation they blocked. The court did not analyze these arguments, resolving the dispute solely on jurisdictional grounds, but Lisa's allegations regarding attachments, tacit acknowledgment of the debt, and interruption of prescription remain judicially unresolved and are relevant to the broader litigation picture.