Colombia: Litigation

The main dispute resolution methods in Colombia are (i) litigation before the Colombian judges and (ii) alternative dispute resolution methods, known in Colombia as “MASC”, for its acronym in Spanish.

The most used alternative dispute resolution methods in Colombia are arbitration, conciliation, mediation and the amicable composition (better known in Colombia as the “amigable composición”).

Additionally, the parties in a litigation are entitled to, priorly or during a current litigation, directly settle their disputes by means of an agreement.

The answer depends on the judge before which the respective litigation is initiated and conducted.

(i) If it is before a judge of the ordinary jurisdiction, in civil and commercial matters, the procedural statute that applies is Law 1564 of 2012 (General Procedure Code).

(ii) If it is before a contentious-administrative judge, the procedural statute that applies is Law 1437 of 2011, modified by Law 2080 of 2021.

(iii) If the dispute is to be settled by arbitration with seat in Colombia, the applicable procedural statute is Law 1563 of 2012, which regulates the procedural aspects of national and international arbitration in Colombia.

It is important to mention that due to the pandemic generated by COVID-19, the National Government issued Decree 806 of 2020, which contains exceptional and transitory procedural rules applicable to litigation of any nature, including arbitration, which aims to allow adequate functioning of the justice administration in times of pandemic. This Decree is mandatory until January 4th, 2022, but it is possible that it may be adopted as permanent legislation in the future.

In Colombia, the ordinary jurisdiction has a pyramidal structure, which can be categorized as follows: (i) at the highest level is the Supreme Court of Justice, (ii) it is followed by the Superior Courts of the Judicial Districts, (iii) in one step below are the Circuit Judges and (iv) finally, there are the Municipal Judges. In some Judicial Districts, known for their high demand in litigation services, there are Small Claims Judges in addition to the Municipal Judges.

It is important to mention that the Supreme Court of Justice is not properly an appeals court or a third instance. On the contrary, the Supreme Court of Justice solely is competent to emit judgements pertaining extraordinary judicial resources (i.e. cassation).

In this context, appeals are processed before the superior judicial district courts or before the circuit judges, depending on the case.

Finally, it is important to state that, there are some administrative authorities that have specific jurisdictional functions regarding certain subjects (i.e. Superintendence of Companies regarding corporate litigation). These authorities are equivalent to Circuit or Municipal Judges according to the claim’s nature and amount.

According to article 121 of Law 1564 of 2012, the maximum term in which judges must issue the judgement that solve a dispute in the first instance is one year.

However, even though article 121 of Law 1564 of 2012 establishes sanctions for judges that exceed the time described above, it is common that these terms are not fully complied with by the judges, among other reasons, due to the large number of cases that each of them has.

In standard court proceedings, before trial there is a written stage in which the parties in litigation expose their claims, arguments, and evidentiary petitions. In an average proceeding, this written stage may take from a year to a year in a half. The Parties may submit additional claims that may delay this written stage (i.e. third party procedures).

According to article 3 of Law 1564 of 2012, in Colombia the general rule is that hearings are held in public, unless the law establishes that it must be held in private.

Regarding the documents that are presented to the court, in accordance with article 123 of Law 1564 of 2012, it must be concluded that they are not available to the general public as they cannot be examined by everyone.

The documents filed at court may be examined by (i) the parties and their attorneys, (ii) any attorney registered in Colombia, even if he or she is not the attorney of any of the parties, (iii) by public officials who must examine the file due to their functions, (iv) by judicial assistants, (v) by people who intend to review the file for academic or scientific purposes, which must be authorized by the judge and (vi) by law students who are in their internship stage, known in Colombia as “Consultorio Jurídico”.

The general limitation period in Colombia is 10 years, which is applicable to civil and commercial matters. For collection proceedings, the limitation period is 5 years.

However, there are laws that establish special limitation periods for certain subjects, such as insurance law, consumer law, unfair competition, claims arising from non-payment of negotiable instruments, claims against the state, corporate litigation, among others.

As a prerequisite for filing a claim before a judge, it is necessary for the interested party to go through an out-of-court conciliation procedure., as a general rule.

Additionally, pursuant the Decree 806 of 2020, before submitting the lawsuit before the judge (or simultaneously with the submission), the plaintiff must send a copy of it to the defendant.

The consequence of non-compliance of any of these prerequisites is that the claim will be ultimately rejected by the judge.

However, there are some cases in which these requisites are not mandatory to submit a lawsuit:

• The out-of-court conciliation is not mandatory when i) the plaintiff does not know the legal address of the defendant, ii) the plaintiff and the defendant are not allowed to settle their dispute out of court, and iii) the claim is accompanied by preliminary injunctions.
• The remission of the lawsuit to the defendant prior to or simultaneously with its submission before the judge is not mandatory when i) the plaintiff does not know the legal address of the defendant, and ii) the claim is accompanied by preliminary injunctions.

Finally, there are some specific cases in which the plaintiff must incur in additional pre-action requirements (i.e. in consumer claims it is mandatory that the plaintiff had already filed a direct claim against the defendant prior to the submission of the lawsuit).

Once the lawsuit is filed, the judge has 30 days to decide if it meets the admissibility requirements set forth in Law 1564 of 2012.

As stated before, according to Decree 806 of 2020, the plaintiff must send a copy of the lawsuit and its annexes to the defendant, simultaneously with or before the filing of the lawsuit.

In Colombia, in most cases, it is mandatory to serve the defendant and it must be conducted by the interested party.

Once the plaintiff files the claim, the court must decide if it has jurisdiction to hear the dispute based on (i) the amount of the controversy, (ii) the nature of the matter, (iii) the legal address of the defendants or the place where the events occurred and (iv) the nature of the parties.

In most cases, the court will examinate these aspects to determine if it has jurisdiction over a claim.

The governing law clauses are not usually enforced by the Colombian judges. Therefore, to determine the applicable Law, the court must apply the corresponding Colombian Legislation regarding the Conflict of Law. There is an exception, regarding the agreements in which international commercial arbitration is convened. In this scenario, the parties may agree which is the Governing Law.

One of the most used Conflict of Law disposition in Colombia in commercial litigation states that any agreement executed in Colombia, even if it is undersigned abroad, must be subjected to Colombian Law.

In Colombia there are different circumstances in which it is possible to solve a claim without a full trial.

First, the law establishes the mechanisms of extraordinary termination of the proceeding. These are the settlement agreement and the withdrawal.

By means of the settlement agreement the parties agree on the total or partial termination of the process or the settlement regarding the differences that arose between them. The settlement agreement requires judicial approval once the litigation has started (The parties may sign a settlement agreement before any formal litigation).

The withdrawal refers to the plaintiff’s decision to waive its claims in whole or in part. The withdrawal requires judicial authorization.

The withdrawal may also be declared by the judge without no petition from the parties. This occurs when the plaintiff does not comply with the procedural charges that are required by the judge or when the process remains inactive for more than 1 year.

The conciliation may end an ongoing process by agreement between the parties.

Likewise, the judge must anticipate its final decision when (i) the parties request it by mutual agreement, (ii) when there is no further evidence to be practiced in order to emit a decision and (iii) in the events regulated in paragraph 3 of article 278 of Law 1564 of 2012.

In Colombia, there are different types of precautionary measures that are admissible. Law 1564 of 2012 classifies them in two main categories.

In first place, there are those expressly regulated in the Law, and therefore, called “named injunctions”. Within this first group is the seizure of assets, as well as a precautionary measure called in the Colombian legal system as “registration of the lawsuit”.

Secondly, there are those not regulated in the Law, and therefore, called “unnamed injunctions”.

Unlike the first ones, unnamed precautionary measures have an open nature since they are not listed in the law. These are defined as “Any other measure that the judge finds reasonable for the protection of the right object of the litigation, to prevent its infringement or to avoid the consequences derived from it, to prevent the damages, to stop those that may have been caused or to ensure the effectiveness of the claim”. These unnamed injunctions are flexible in order to accommodate to the specific circumstances of each case.

(i) The plaintiff must present jointly with the lawsuit all the documents that he/she intends to assert as evidence within the process.

However, there are other opportunities for the plaintiff to provide evidence. The plaintiff may reform the lawsuit. In this case, new evidence may be provided. Likewise, after the defendant presents his/her statement, the plaintiff has an additional term to provide further evidence.

(ii) The defendant must provide, with the answer to the lawsuit, all the documents that he/she intends to assert as evidence within the process.

However, there are other opportunities for the defendant to provide evidence. If the defendant decides to sue in a counterclaim, it is also possible for the defendant to provide additional documents.

Likewise, if the plaintiff reforms the lawsuit, the defendant, can provide new evidence with the answer to the counterclaim.

Once this written stage is concluded, the parties are not allowed to submit additional documents.

Generally, the parties must disclose all the documents that must be used in the trial and that are related to the dispute. Each party is also entitled to request the other one to submit certain documents. Unfounded opposition to provide documents will lead the judge to draw negative inferences against the party who opposed providing the documents.

It is even possible that the parties may request the judge to order third parties to provide evidence to be used in the trial.

Only the information and documents expressly established by the Constitution or the law are confidential and must not be disclosed. However, even regarding these documents, it is possible that the judge may order their partial exhibition if they are relevant to solve the controversy.

The witnesses must give oral evidence held in a public hearing before a judge, and they may be cross-examined by the parties. Even though in Colombia the legislation allows the parties to conduct evidentiary proceedings by mutual agreement, it is not common that the parties conduct depositions, and they are not likely to be admitted by the Colombian Judges.

At the opportunities to request evidence and submit documents, the plaintiff and defendant must enunciate the name and address of the witnesses that will declare before the judge. The parties must indicate the identification of the witnesses who will testify at trial and the specific subject of their witness.

At the hearing, the witness will be questioned by the judge, by the party who requested the evidence and then by the other party. The parties are entitled, if they deem it necessary, to a second round of questions, for clarification or refutation purposes.

Additionally, at the hearing, the witness may recognize and provide documents related to his/her statement.

Expert evidence is allowed in the Colombian jurisdiction. In accordance with Law 1564 of 2012, the experts are appointed by the party that requested this evidentiary proceeding, which must bear the necessary expenses to perform the expert evidence.

Notwithstanding which party appointed the expert, both parties have the duty to collaborate with the expert, to deliver the data and the allow access to the necessary places to carry out the expert evidence. If any of the parties does not do so, the judge will sanction such conduct with fines and will draw up an inference against the unwilling party to cooperate.

The party that did not requested the expert evidence may contend it by i) cross-examining the expert in a public hearing and/or ii) by appointing an expert on its own that submit another opinion regarding the same subject.

If the expert is cross-examined, then the same rules of the witness cross-examination are applicable.

In litigation before the ordinary jurisdiction, final and provisional decisions can be appealed depending on the amount of the dispute. In arbitration, interim decisions may only be revoked by the arbitrators and the parties are not entitled to appeal the final decision.

The appeal is only admissible in those proceedings known in Colombia as minor and major claim amount proceedings. Appeal is not admissible in the minimum amount proceedings.

The appeal must be filed before the judge who issued the decision, but the competent judge or court to resolve the appeal is the superior of the judicial authority that issued the appealed decision.

The appeal must be filed within 3 days after notification of the decision that will be the subject of the appeal. However, if the decision is issued at a hearing, the appeal must be filed immediately as soon as the decision is rendered. This rule applies for final and interim decisions.

Usually, the superior court may take from 3 to 6 months to issue a decision regarding interim decisions. Appeals regarding final decisions may take a year.

The enforcement of judgments issued by foreign judges is governed by articles 605, 606 and 607 of Law 1564 of 2012 (“exequatur”).

For a foreign judgment to be enforced in Colombia, the interested party must file a lawsuit before the Supreme Court of Justice annexing the required documents and summoning the affected party.

For the execution of foreign judgments in Colombia, the petitioner must prove i) that the country in which the judgment was issued would recognize a Colombian ruling ii) that the foreign ruling does not infringe Colombian International Public Policy iii) that the affected party by the ruling was entitled to defend itself in the foreign process, among other circumstances that may be required by the judge

Then, the person affected with the decision will have a term of 5 days to answer the claim.

After that, a hearing will be held, in which the evidentiary proceeding will be conducted, the closing statements of the parties will be heard, and a final decision will be issued by the court.

The enforcement of foreign arbitral awards is governed by articles 111 to 116 of Law 1563 of 2012, which contain a similar procedure to the one established to enforce foreign judgments. However some of the requirements established for the enforcement of foreign judgments are not mandatory for international awards (i.e. legislative and diplomatic reciprocity).

The successful party in a judicial proceeding can recover the costs associated with the litigation, including, among others, the fees of the experts, if it is proven that the expenses were incurred, that they were useful to the proceeding and if the judge finds them reasonable.

Regarding the fees paid to lawyers, they can be recovered up to the limit indicated in the rates previously established by the Colombian competent authority.

The foregoing is regulated from article 361 to article 366 Law 1564 of 2012.

In Colombia there are two types of collective redress, both established in the Constitution and regulated in Law 472 of 1998.

On one hand, there is the collective action, which is intended to protect collective rights or interests. This action does not entitle its plaintiffs to receive any monetary compensation for individual or collective damages, as it is intended as a measure to enforce rights that belong to the whole community (i.e. the right to essential services). It can be initiated by any person, non-governmental entities, and some public entities and officials. It is not necessary the representation by an attorney.

On the other hand, there is the class action, which aims to protect individual interests of multiple people that are affected by the same cause. For this reason, the lawsuit is submitted by several people who must have suffered individual damages.

Third parties can join ongoing proceedings, and their way of intervening is regulated in articles 60 to 72 of Law 1564 of 2012.

Usually, third parties are linked to the proceedings by request of the plaintiff or by the defendant in their corresponding opportunities to submit documents and present statements.

The usual purpose of binding the third party to the proceeding is to make it responsible for the payment of the sentence that will be made in the final decision, due to the existence of a prior relationship (legal or contractual) between the third party and one of the parties.

If a third party intends to join a proceeding it may request the judge to admit it as a supporting party, either to the defendant or the plaintiff. The third party may not be directly affected by the ruling, but it has to prove to have an interest in the decision.

Finally, consolidating two sets of proceedings is possible, if the formal requirements set forth in article 148 of Law 1564 of 2012 are met.

The financing of litigation by third parties is not regulated in the Colombian jurisdiction, so it is not expressly allowed or expressly prohibited.

In this sense, there are no known cases in which third party funders have been ordered to pay the costs incurred by the other party.

However, in Colombia the presence of funds that intend to become assignees of litigation rights are rising in Colombia, which may cause the necessity to establish specific legislation in Colombia regarding this matter.

The main positive impact of the COVID-19 pandemic on the litigation has been the transformation of the justice system, considering that, as a biosafety measure to prevent the spread of the virus, the Colombian Judicial Courts established a comprehensive digital system that facilitates the conduction of the proceedings. Consequently, judges and courts now hold remote hearings and receive electronic submissions.

The main negative impact of the COVID-19 pandemic on litigation has been procedural delays at the beginning of the pandemic while the aforementioned system was implemented, as to that date the courts and tribunals did not have the necessary tools to operate remotely.

The main advantage of international commercial arbitrations held in Colombia is that if the defendant has assets in Colombia, the execution of the decision (award) that solves the international commercial litigation will be easily enforced by the Colombian judges and authorities. This is of the upmost importance as, currently there are uprising international investments in Colombian assets and financing of Colombian operations. Both operations usually have Colombian debtors whose assets are located in Colombia.

The main disadvantage of international commercial arbitrations can be the delays of the proceedings.

In our opinion, during the next 5 years the most likely growth area for commercial disputes will be bankruptcy and restructuring proceedings, considering that the pandemic generated by COVID-19 caused huge losses to a significant number of companies.

Likewise, it is expected that there will be growth in commercial disputes of corporate litigation and litigation regarding international sale and purchase agreements over Colombian Companies, specially from the perspective of indemnities collection and material adverse effect clauses enforcement.

Previously, all judicial actions were carried out in person: the submission of lawsuits, briefs, appeals, the service of summons and the hearings.

Since Decree 806 of 2020, issued due to the pandemic generated by COVID-19, the technological mechanisms of Law 1564 of 2012 have been widely implemented and reinforced.

This has accelerated judicial proceedings, so in a 5-year period a positive impact on judicial decongestion can be expected.

Throughout these months of pandemic, information and communication technologies have become one of the most efficient tools for citizens and lawyers to have access to the justice administration.

The use of these technologies should be reinforced in the country’s judicial offices. In this way, in the future, all files should be completely digitized. We also hope that the hearings remain remote.