Court of Appeals dismisses Torre Nova's appeal, confirms incompetence exception referring dividend prescription claim to equity arbitration
Feb 5 2021
Court of Appeals
The First Chamber of the Court of Appeals, Civil and Commercial Division, in a ruling dated February 5, 2021, dismissed the appeal filed by Inversiones Torre Nova, S.A. and confirmed the December 3, 2019 order by which the judge of the Eleventh Civil Court of First Instance upheld the preliminary exception of incompetence raised by Lisa, S.A. in the ordinary action for extinctive prescription of dividends (Case No. 01161-2018-00566). The Court condemned the appellant to costs. This ruling closed the ordinary judicial path for Torre Nova's attempt to extinguish by prescription Lisa's right to payment of decreed dividends, directing the dispute to equity arbitration under the corporate charter.
Inversiones Torre Nova, S.A. filed an ordinary action against Lisa, S.A. seeking a declaration of extinctive, negative, or liberatory prescription of the obligation to pay dividends decreed at the annual ordinary general shareholders' assembly held on May 24, 2012. Torre Nova alleged that the obligation had prescribed because five years elapsed without Lisa collecting the dividends.
Lisa, S.A. raised preliminary exceptions of incompetence, defective complaint, lack of standing in the plaintiff, failure to fulfill the condition to which the asserted right is subject, and failure to fulfill the term to which the asserted right is subject. The first-instance judge upheld the incompetence exception and abstained from ruling on the remaining exceptions, directing the parties to equity arbitration under clause twenty-five of Torre Nova's corporate charter.
Torre Nova raised two central grievances on appeal. First, that Guatemalan courts are competent to hear claims against Lisa, S.A. under Article 34 of the Judiciary Act, given that Lisa has performed juridical acts in Guatemalan territory despite being a Panamanian entity. Second, that the extinctive prescription claim is grounded in the Civil Code and does not constitute a "dispute" between shareholder and company under the corporate charter, and therefore arbitration is not warranted.
Lisa, S.A. clarified that the incompetence exception was raised on the basis of subject matter, not territory, contradicting Torre Nova's framing. Lisa invoked clause twenty-five of public deed number 89, executed on August 17, 1999 before notary Héctor René López Sandoval, which provides: differences arising between the company and shareholders, or among shareholders alone, arising from or relating to the corporate charter or corporate dispositions or activities, that cannot be resolved directly, shall be settled by equity arbitration under the Arbitration Law and the Conflict Resolution Commission of the Chamber of Industry of Guatemala.
Lisa argued that the dividend prescription dispute arises from Torre Nova's corporate activities, and that Article 1039 of the Commercial Code permits arbitration in commercial disputes when the parties have so agreed. Lisa invoked the principle of pacta sunt servanda (Article 1519, Civil Code) and Article 11 of Decree 67-95, which bars courts from hearing actions subject to arbitration when the interested party raises the incompetence exception.
The Court examined the nature of the preliminary exception of incompetence, citing Constitutional Court jurisprudence (Case No. 102-2012) on the classification of procedural and material preliminary exceptions, and the doctrine of competence and jurisdiction.
The Court analyzed the certified copy of public deed number 89 and determined it was correctly evaluated by the first-instance judge under Article 186 of the Code of Civil and Commercial Procedure. It verified that clause twenty-five effectively establishes equity arbitration as the mandatory mechanism for resolving disputes between the company and its shareholders.
The Court cited Constitutional Court jurisprudence (Case No. 387-2010) on the principle of party autonomy in arbitration, the nature of the arbitration agreement as a jurisdictional equivalent, and the displacement of judicial competence to the arbitrator when the parties have so agreed. The Court concluded that, since Lisa, S.A. became a shareholder of Torre Nova and the dispute arises from a potential extinctive prescription linked to dividend payments, the controversy falls within the scope of the corporate charter's arbitration clause.
"Todo lo anterior nos lleva a concluir que los agravios expresados en esta instancia por la parte recurrente no le son generados por la resolución recurrida, circunstancia por la cual se hace más que procedente, declarar sin lugar el recurso de apelación interpuesto y confirmar la resolución venida en grado." (Page 22)
Inversiones Torre Nova, S.A. filed a constitutional amparo against this ruling before the Supreme Court of Justice, Amparo and Preliminary Hearing Chamber, alleging violation of its rights to equality and effective judicial protection. The Supreme Court denied the amparo as manifestly inadmissible on February 1, 2022. Torre Nova appealed to the Constitutional Court, which, in its ruling of September 20, 2022, dismissed the appeal and confirmed the denial, holding that the extinctive prescription claim over dividends is commercial in nature and must be resolved through arbitration under the corporate charter's arbitration clause.