Subway International B.V. Sucursal del Perú v. Carlos Alonso Manrique Zuñiga

At a glance

Parties

Subway International B.V. Sucursal del Perú (applicant) v. Carlos Alonso Manrique Zuñiga (respondent)

Case no.

Expediente No. 00163-2018-0-1817-SP-CO-01

Court

First Civil Chamber specialized in Commercial Matters, Superior Court of Justice of Lima (Peru)

Judges

Rolando Alfonzo Martel Chang, Ana Marilu Prado Castañeda, José Clemente Escudero López (rapporteur)

Underlying award(s)

Final award of 16 May 2017 by sole arbitrator Roy L. De Barbieri, International Centre for Dispute Resolution (ICDR), New York

Treaty

New York Convention 1958; Peruvian Arbitration Law; Civil Code Article 2104

Sector

Restaurant franchising

Outcome

Recognition granted in full (23 July 2019). The ICDR final award has legal force and validity in Peru.

The dispute

On 12 September 2013 Subway International B.V. Sucursal del Perú granted Carlos Alonso Manrique Zuñiga a licence to use the SUBWAY System and run a Subway restaurant. He opened Restaurant #61399 on Avenida Paseo de la República in Miraflores, Lima. Subway said he failed to pay royalties, advertising fees and other invoices under clauses 2, 5 and 11 of the franchise contract, and that he did not cure these defaults after notices sent on 18 November 2015 and 20 February 2017. Subway started arbitration under the arbitration clause in clause 10 of the contract. An ICDR sole arbitrator in New York issued a final award on 16 May 2017. Subway then asked the Lima court to recognise the award in Peru. The respondent filed no answer.

Key holdings

1. Under Article 55 of the Constitution, the New York Convention forms part of Peruvian law. It applies to every recognition proceeding brought after it entered into force in 1988, whatever the date of the award. The Arbitration Law applies alongside it or fills gaps. Under Article 74(2) of the Arbitration Law, the treaty most favourable to the party seeking recognition prevails (the rule of maximum effectiveness). Third ground
2. Recognition (exequatur) does not review the merits. The court only checks the requirements of Peruvian law, namely Article 76 of the Arbitration Law and Article 2104 of the Civil Code. First and Fourth grounds
3. The award does not decide matters reserved exclusively to Peruvian courts under Article 2058 of the Civil Code. The arbitrator had jurisdiction under clause 10 of the franchise agreement. The proceedings followed that clause and the UNCITRAL Arbitration Rules, and the respondent was told in good time that the arbitration had started. Sixth ground
4. The award has res judicata effect: the award itself states that it is 'final and binding', and the respondent did not dispute this. Subway declared under oath that no earlier proceeding was pending and no conflicting judgment or award existed; the court accepted this because it was unchallenged. Sixth ground
5. Reciprocity is presumed. Under Article 838 of the Code of Civil Procedure, the party denying reciprocity must prove its absence. No one rebutted the presumption, so the requirement was met. Sixth ground
6. All requirements were met and the respondent did not oppose the request. The court therefore granted recognition of the final award of 16 May 2017 in full. Seventh ground; Decision

Procedural history

1. 12 September 2013Franchise contract signed. Clause 10 contains the arbitration agreement.
2. 23 September 2016The respondent receives Subway's notice to register the arbitration under clause 10.
3. 9 November 2016The ICDR appoints Roy L. De Barbieri as arbitrator.
4. 16 May 2017ICDR final award issued in New York.
5. 11 October 2018Resolution two: the Lima court admits the request for recognition and orders service on the respondent.
6. 31 May 2019Resolution three records that the respondent did not answer, although he was properly served.
7. 23 July 2019Resolution twelve: the court grants recognition of the award in full.

Tribunal, counsel and experts

Decided by

• Rolando Alfonzo Martel Chang Judge, First Civil Chamber specialized in Commercial Matters, Superior Court of Justice of Lima
• Ana Marilu Prado Castañeda Judge, First Civil Chamber specialized in Commercial Matters, Superior Court of Justice of Lima
• José Clemente Escudero López Judge, First Civil Chamber specialized in Commercial Matters, Superior Court of Justice of Lima (rapporteur)

Run a conflict check on these names →

Keywords

• Subway
• franchise agreement
• recognition of foreign arbitral award
• New York Convention
• exequatur
• ICDR
• UNCITRAL Arbitration Rules
• Peru
• Lima Superior Court
• Civil Code Article 2104
• Peruvian Arbitration Law Article 76
• reciprocity
• res judicata
• most favourable treaty
• royalties
• unopposed recognition

Summary generated with AI from the published documents — refer to the award for the authoritative text.