Measures taken by the Ministry of Justice and Law with regard to the Health Emergency 

29/03/2020

The Ministry of Justice and Law through Decree 491 of March 28, 2020, adopted the following decisions during the Health Emergency period:

• The Notification or communication of administrative acts will be done by electronic means.
• Except there is a special rule, all requests must be resolved within the 30 days after receipt.The resolution of (i) documents and information requests must be resolved within the 20 days after receipt; (ii) consultation requests must be resolved within the 35 days after receipt.
• The administrative authorities may suspend, through an administrative act, the proceedings of the administrative or jurisdictional actions, except those related to fundamental rights.
• To modify the term contained in articles 20 and 21, Law 640, 2001, this will correspond to 5 months for the processing of extrajudicial conciliations in civil, family, commercial and administrative litigation matters in charge of the General Attorney of the Nation.
• The arbitration, extrajudicial conciliation, friendly composition and insolvency of a natural non-commercial person proceedings will be carried out through the use of technologies.
• In arbitration, the term provided in article 10, Law 1563, 2012, for the extension of the process will be modified to 8 months; and the term to request the suspension of the process provided in article 11, Law 1563, 2012 may not exceed 150 days.
• The arbitral tribunals may not suspend the proceedings, unless there is a technical impossibility to held the proceedings online and one of the parties requests it to the Tribunal.
• In insolvency proceedings of a natural non-commercial person, the period provided for the debt negotiation procedure is suspended and the conciliator is empowered to suspend the proceedings.
• During the Health Emergency, the prescription or expiration terms of the actions will be not activated.

Suspension of legal proceedings due to COVID-19

25/03/2020

The Superior Judicial Council, through the Agreements PCSJA20-11526, PCSJA20-11527 and PCSJA20-11528 of March 22 2020, decided:

1. To extend the suspension of legal proceedings from April 4 to April 12, 2020. Including the exceptions previously provided: (i) the habeas corpus actions and the legal actions for the protection of fundamental rights, prioritizing the actions related with the fundamental rights to life, to health and to freedom, for the actions proceedings the email and the technology tools will be used; (ii) the proceedings with a person deprived of liberty conducted by the guarantees control courts; (iii) the hearings scheduled by the criminal courts of knowledge with a person deprived of liberty, only if the hearing can be carried out by virtual means. 

2. To exempt from the suspension of legal proceedings, adopted through Agreements PCSJA20-11517 and PCSJA20-11521 of March 2020, the actions carried out by the Constitutional Court related with the decrees issued by the President in performance of the functions conferred in article 215, Political Constitution of Colombia, in accordance with the State of Economic, Social and Ecological Emergency declaration.

Also, Decree 469 of March 23, 2020 issued by the Ministry of Justice and Law provided that the Complete Chamber of the Constitutional Court may lift the suspension of the legal proceedings ordered by the Superior Judiciary Council when it becomes necessary for the performance of the Court´s  constitutional functions. 

3. To exempt from the suspension of legal proceedings, adopted through Agreements PCSJA20-11517, 11521 and 11526 of March 2020 the actions carried out by the State Council and the Administrative Tribunals concerning the immediate control of legality on the general measures issued based on the administrative function and as a development of the legislative decrees related with the State of Exception, as established in article 20 Law 137, 1997. and the Articles 111, numeral 8, 136 and 151, numeral 14, Code of Administrative Procedure and Administrative Litigation. 

The Superintendence of Companies, through the Resolution 100-001026 of March 24, 2020, suspended the proceedings carried out by the headquarters of Bogotá and the Regional Intendancies from March 25 to March 31, 2020. There will be no public attention by the Judicial Support Group at any of the headquarters.

Commercial lease contingencies – COVID-19

23/03/2020

We analyze the possible effects of the pandemic context caused by the COVID-19, particularly the ones related with the commercial lease agreements affected by the pandemic or the governmental measures related to it. 

Firstly, there is a factual distinction between the pandemic, as a generalized and continuous fact, against the specific situations that occur as a consequence of it –governmental orders, facts of nature or third parties- that prevent from the performance of contractual obligations. In particular, this newsletter analyzes the implications of the pandemic context that is taking place in Colombia against the essential obligations agreed in commercial lease contracts that link lessors and lessees of warehouses or other types of property, that are necessary for the companies production process. 

In general, there are two possible legal remedies applicable to this situation: 

Force majeure or fortuitous event: 

According to Colombian law, force majeure corresponds to an unforeseen event that cannot be resisted, in this sense, it is an event that must generally fulfill three characteristics: (i) be irresistible, (ii) be unpredictable, (iii) be external or oblivious to the debtor. Also, it is possible that the contracts include force majeure clauses that address situations related with the sanitary emergency generated by the COVID-19 and establish the consequences of a force majeure event. 

The proof of a force majeure event can release the parties of liability for the non-performance of their obligations or, according to the case, motivate the suspension of the contract. 

The contractual review due to an unforeseen event: 

Another option the parties can rely on is article 868, Commercial Code, the above to request the review of the contract, when the occurrence of these extraordinary circumstances does not turn the performance of the obligations impossible, but do exacerbate its compliance in an excessively onerous way. For the review to be appropriate, the first thing to be proven is that the contract is adjusted to those that according to article 868 may be reviewed: commutative contracts with successive execution. Once analyzed the nature of the contract, the party seeking the review must prove: (i) that the obligation has become excessively onerous, (ii) that the circumstances related to the review are unpredictable and extraordinary. For both the onerousness and unpredictability analysis, it is essential to observe the risks allocation agreed between the parties and to demonstrate how the situation generated by COVID-19 exceeds the limits of any previously planned allocation of risks. 

This second alternative in principle creates a right to review the terms and conditions of the contract in the head of the party affected by the supervening modification of the contractual bases.

Relevant questions regarding the commercial leases:

To identify which remedy may be the most appropriate in each contract, we recommend you review the following questions: 

1. Which role do you play in the lease? (Lessor, lessee, sub-lessee, co-debtor, guarantor, guaranteed creditor, among others)

2. In general, which economic and practical effects have been the ones caused by the emergency or government measures on the performance of the contract? (Is it possible to open the commercial premises? The operation can continue but in a reduced way? Is it possible but more onerous?) 

3. From the role that you have in the contract, which are the emergency or government measures effects on your specific obligations? 

• If you are the lessor: can you guarantee the use and enjoyment of the property for the agreed destination in favor of the lessee? 

• If you are the lessee: Can you use and enjoy the property for the agreed destination? Can you pay the price? Is possible, but more onerous, use/enjoy the property and pay the price? 

4. If the commercial premises opening is restricted by the governmental measures: 

• Review whether the contract provides for this assumption as a force majeure event in favor of one or both parties or as a basis for the suspension of the contract. 

• Review whether risks arising from the performance impossibility of all the obligations or some of it was assigned in the contract. 

• The lessor must evaluate whether his obligation to guarantee the use and enjoyment of the property has become impossible. In such case, you may be facing a force majeure event that prevents the execution of the contract. 

• The lessee must evaluate whether, in the contract, the payment of the rent fee is associated with the property´s use for the agreed destination. In such case, you may be facing a force majeure event. 

• In the case of a force majeure event, the consequence as a general rule is to excuse for the non-performance of obligations. As a general rule, for the contract to be suspended, there must be a contractual clause that provides for this effect or, in a few cases, it may arise from the essential nature of the obligation that becomes impossible. 

5. If the commercial premises opening is not restricted or some of the obligations have not become impossible: 

• Review which one was the risk allocation agreed in the contract as this one, in principle, should prevail. 

• Establish whether the situation generated by COVID-19 has made the performance of any contractual obligation excessively onerous. The excessive onerousness should be reviewed based on the original distribution of assignments between the parties. 

• Determine if the circumstances that led to the excessive onerousness are unpredictable and extraordinary. While the pandemic itself may be, the analysis should consider the risks originally assigned in the contract – for example, whether the currency risk was assigned, or the volatility risk, among others. 

• Even under a contractual risk allocation, it may be established (and it should be demonstrated) that the new extraordinary circumstances have altered the contractual balance in an (i) unforeseen and (ii) disproportionate way in relation to the initial forecasts. 

6. We recommend you, in any case, to inform the other party about the circumstances that have affected the performance of the contract, either making it impossible or excessively onerous. 

• In the force majeure event, it should be specified which one is the irresistible, unpredictable and foreign event to the debtor that prevents the execution of the obligations. If the suspension proceeds, it should be announced. 

• In the case of contractual review, the procedure established in the contract should be followed. If it does not exist, and if the parties do not reach an agreement regarding the contractual review, the party seeking the disproportion would have to request the review before a judge or arbitral tribunal, in a case-by-case analysis the option of not complying with the contract may be considered, adducing the lack of foresight as justification. 

The Dispute Resolution & Investment Protection Practice is constantly following the issues related to COVID-19, if have any doubts or concerns, please do not hesitate to contact us.

Arbitration proceedings online – CAC

20/03/2020

The Center of Arbitration and Conciliation of the Chamber of Commerce of Bogotá (hereafter “CAC”), through the Circular 002 of March 20, 2020 informed about how arbitration proceedings will be conducted online:

Administrative phase:

1. The file of statements of claim and documents will be only attended online.
2. The designation meetings will be done through Cisco, notwithstanding that other platforms can be used, and its schedule will be in charge of the CAC lawyer. To ensure that the parties are duly informed of the hearing, the CAC will send the summons through email and certified mail. 

If the parties do not attend the meeting, it must be rescheduled and if one of the parties, despite having been duly informed, do not attend the designation meeting, the consequences will be the same as in the case of in-person meetings, depending on the dispositions of the arbitration clause. 

As a part of the meeting, a record of the meeting will be made. This record must include the online realization of it and the parties must approve its content through email. 

3. For the installation hearings preparation, a record of the case will be available online for the Tribunal and the day before the hearing a draft of its record will be sent. The CAC lawyer will schedule the meeting and inform the parties and the arbitrators through email and certified mail. 

During the hearing, the parties will be asked to prove their identity and once the hearing has been concluded, a record will be done by the ad hoc secretary, who must include the relevant information regarding the development of the hearing.  The hearing´s record must be sent to the Tribunal and the parties, the decisions contained in the record will be notified under the dispositions of article 23, Arbitration Statute. 

The statement of claim will be transferred to the counterparty through email and certified mail, following article 23, Arbitration Statute. 

Arbitration phase: 

1. The hearings will be coordinated by the secretary to the Arbitral Tribunal and the support assistant of the Center, the recording of the sessions and its transcription may be requested, the same way as it is usually done. 

2. The record of the case must be kept up-to-date and available online by the secretary, the digitization staff will remain available at the CAC’s headquarters until further notice. In the cases whose claims have been filed virtually, for now the only type of record that will be used is the electronic one.

Extension for the suspension of legal proceedings due to COVID-19

19/03/2020

• The Superior Judicial Council, through the Agreement PCSJA20-11520 of March 19, decided to extend the suspension of terms adopted in the Agreements PCSJA20-11517, PCSJA20-11518 and PCSJA20-11519 of March 2020, from March 21 to April 3, 2020, including the exceptions previously provided.
• During this period, magistrates, judges and judicial employees will work at home, unless that in an exceptional situation is required to attend the judicial offices to carry out specific activities.
• The Supreme Court of Justice, through the Agreement 1420 of March 19, 2020, decided to close its offices from March 19 to April 3, 2020. Additionally, the Court suspended the legal proceedings regarding constitutional actions, both habeas corpus and legal actions for the protection of fundamental rights, until April 3, 2020.

The Council of State suspended the terms in judicial and administrative matters

17/03/2020

In accordance with Circular 003 of 2020, the Council of State suspended the terms in judicial and administrative matters of its knowledge from March 17, 2020 until the April 3. Consequently, the facilities of the Council of State will be temporarily closed. 

Thus, the Council of State established that the public hearings scheduled will be suspended until there is no suspension of terms or the technological devices that allow the performance of the public hearings in accordance with the law are implemented. 

Additionally, the Council of State indicated that the closure of judicial offices will be determine in the inter-institutional commission that will take place on March 18.

Force majeure contingences – COVID-19

13/03/2020

In the extraordinary pandemic context that is currently taking place around the world, we are conscious of the different impacts that this situation would cause regarding the performance of contracts, particularly in the long-term contracts with successive execution. Therefore, it is important to emphasize on those contractual and legal provisions that would ensure a remedy for those affectations.

Firstly, attending the contractual provisions, the force majeure clauses may be applicable to the issues generated over COVID-19, the porpoise of those clauses is to excuse the parties from their obligations without being liable for damages, as long as the impossibility or impediment to fulfill the obligation is proven, due to an event of force majeure. According to colombian law, force majeure corresponds to an unforeseen event that cannot be resisted, in this sense, it is an event that must generally fulfill three characteristics: (i) be irresistible, (ii) be unpredictable, (iii) be external or oblivious to the debtor.

Now, regarding the legal field, the parties may take refuge in article 868, Commercial Code, to request the contract review, when these extraordinary circumstances turns the fulfillment of the obligation excessively onerous. For the review to be appropriate, the first thing to be proven is that the contract is adjusted to those that according to article 868 may be reviewed: commutative contracts with successive execution.

Once analyzed the nature of the contract, the party seeking the review must prove: (i) that the obligation has become excessively onerous, (ii) that the circumstances related to the review are unpredictable and extraordinary. For both the onerousness and unpredictability analysis, it is essential to observe the risks allocation agreed between the parties and to demonstrate how the situation generated by COVID-19 exceeds the limits of any previously planned allocation of risks.

If the parties do not reach an agreement regarding the economic balance of the contract, the party alleging the disequilibrium would have to request the review before a judge or an arbitral tribunal. Although, in a case-by-case analysis the option of not complying with the contract may be considered, adducing the lack of foresight as justification.

The Dispute Resolution & Investment Protection Practice is constantly following the issues related to COVID-19, if have any doubts or concerns, please do not hesitate to contact us.