In a new leading case on the subject of arbitration and public order in Paraguay, the Civil and Commercial Court of Appeals, Second Chamber of the Capital, upheld the validity of an ICC arbitration clause that Renault had agreed to with a distributor in Paraguay.
The Appeals Court overturned a lower court decision that had rejected the arbitration agreement providing for arbitration under International Chamber of Commerce (ICC) rules with seat in Asunción, Paraguay, as contrary to public order.
In the ruling on appeal the Court was categorical in confirming that the agreement is valid and enforceable. The choice of Paraguay as seat of arbitration guarantees application of national lex arbitri and judicial supervision, while the ICC rules operate as procedural requirements compatible with Paraguayan law. This decision definitively dismantles the argument that using international rules would violate local public order.
Moreover, the Court reaffirmed the Kompetenz-Kompetenz principle, establishing that arbitration should be set aside only when the clause is clearly and manifestly null, ineffective or unenforceable, which did not occur in this case. Consequently, the dispute was submitted to arbitration.
The FERRERE team representing Renault in the controversy noted that the ruling strengthens the resolution of complex disputes by arbitration in Paraguay, in step with the growth of investment and strategic projects for the country.