Source: http://www.inhouselawyer.co.uk/practice-areas/international-arbitration-4th-edition/ecuador-international-arbitration-4th-edition/
Timestamp: 2020-02-25 14:24:59
Document Index: 283788715

Matched Legal Cases: ['Art. 5', 'Art. 16', 'Art. 7', 'in dubio', 'Art. 32', 'Art. 363', 'Art. 32', 'Art. 42', 'Art. 30', 'Art. 31', 'Art. 30', 'Art. 31', 'Art. 32']

Ecuador: International Arbitration (4th edition)
This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in Ecuador.
Besides the NYC, Ecuador is a party to the Inter-American Convention of International Commercial Arbitration of Panama of 1975, in force since 1991.
There are none. Since many years ago there has been initiatives to reform the LAM, however none of those have been taken seriously by Ecuadorian legislators, leaving these only in the academic discussion forums.
Ecuador has several arbitration centers with great reputation and experience, such as the Arbitration and Mediation Center of the Chamber of Commerce of Quito, Arbitration and Mediation Center of the Ecuadorian-American Chamber of Commerce in Quito and the Arbitration and Mediation Center of the Chamber of Commerce of Guayaquil.
Regulations of these centers have been constantly updated with the latest arbitration trends. For example, the inclusion of the mission record in the Regulations of the Arbitration and Mediation Center of the Chamber of Commerce of Guayaquil, among others. However, issues like non-signatory parties, third party funding or soft law application are not regulated yet. We know the arbitration centers are discussing and willing to introduce these reforms, for that reason it is possible that some changes are announced in the near future.
Yes, according with the third paragraph of Art. 5 the LAM, the annulment of the contract shall not affect the validity of the arbitration agreement.
No. The LAM does not provide requirements for the selection of a tribunal. In accordance with Art. 16 of the LAM, the parties have absolute freedom to appoint arbitrators, who may be on the center’s arbitrators list or not.
Under Ecuadorian legislation there is no possibility for the state or a state entity to allege state immunity. If the state or a state entity agreed to arbitration, then it must appear in the arbitration.
Regarding enforcement of national or foreign awards against the state or state entities, there are certain legal provisions that would allow the state or state entity to invoke immunity, to safeguard public assets or to allow the proper functioning of the state.
There is no legal norm in Ecuador that empowers local courts to force the parties to compel to arbitration. However, Art. 7 of the LAM provides the pro arbitri principle by which judges must inhibit to accept claims subject to an arbitration agreement. Such rule also provides the in dubio pro arbitri principle in favor of the arbitration agreement, so the judges must order to arbitrate the dispute.
In the cases in which the claimant has requested as part of his petition interests regarding his claims, as well as the costs of the arbitration, there is no doubt that said interests and costs can be ordered by the arbitral tribunal in its award. However, in the cases where the claimant has not expressly requested them, there has been an open debate as to whether or not the tribunal should order them in the award, since there have been cases in which their order has been considered as extra petita, by the judiciary and ultimately causing the annulment of the award.
Regarding local awards, Art. 32 of the LAM provides that they have the effect of a final enforceable sentence and with res judicata effect, which will be executed in the same way as the sentences of last resort, following the enforcement proceeding, without the execution judge allowed to accept any exception, except for those that may arise after the issuance of the award. Additionally, according to the LAM, Art. 363 of the COGEP, arbitration awards constitute executive titles, so their execution is direct without the need for a prior recognition process. Therefore, in Ecuador an arbitral award has the same enforcement power as a judicial sentence, it does not need any further recognition prior to its execution.
As set forth in the following question, arbitration awards do not need any recognition prior to be enforced. Therefore, estimated duration of judicial enforcement is the same as if it was a domestic judicial sentence, which regularly speaking take from 2 to 6 months, depending on the complexities of each case among other factors
Art. 32 provides that any of the parties may request to judges to execute the award, so it is considered that only the parties of the arbitration may request the execution of the award.
No. Regarding foreign awards, Art. 42 of the LAM provides that the awards issued in international arbitrations will have the same effects and will be executed in the same way as the awards issued in domestic arbitration, so that they do not need to go through a process of recognition prior to its execution. Although the use of the term “international arbitration” has raised certain concerns about which awards are considered “international”, in practice it has been unquestionably accepted that this term includes both, those made in international arbitrations, as well as those awards considered “foreign awards” although not issued within an international arbitration process, such as awards issued in foreign domestic arbitration processes (which in Ecuador would be considered “foreign awards”). Therefore, foreign or international awards can be executed just like national arbitration awards. In addition, it should be pointed out that Ecuador is a party to the NYC, so if someone wishes to request recognition of a foreign award, prior to its execution, the NYC will apply.
No, Ecuadorian law does not provide for limitation on remedies that could be granted through an arbitration award. It could be said that the remedies considered as “injunctive relief remedies” may encounter some difficulty in being executed since Ecuadorian law does not expressly provide for all of which is considered as such in other jurisdictions.
According to Art. 30 of the LAM, arbitration awards are final and are not subject to any appeal. Only clarification and extension (if the award lacks to refer to a particular petition of the claim) of the arbitration award may be requested. However, arbitral awards are subject to judicial control through a separate independent judicial action against it: the annulment action. According to Art. 31 of the LAM, the only grounds for annulment of an arbitration award are the following:
a) It has not been legally summons with the statement of claim and the arbitration has proceed and ended in default. It will be necessary that the lack of summons has prevented the defendant from making its defense or enforcing its rights and, additionally, that the defendant claims for such omission at the time of intervening in the dispute;
b) One of the parties has not been notified with the tribunal’s orders and this fact prevents or limits the right of defense of such party;
c) When it has not been convened, the summons has not been notified, or after the summons evidence have not been practiced, despite the existence of facts that must be justified;
d) The award refers to issues not submitted to arbitration or granted beyond what is claimed; or,
e) When the procedures established by the LAM or agreed by the parties to designate arbitrators have been violated.
The annulment action should be brought before the arbitral tribunal but will be try and resolved by the President of the Provincial Court of Justice (second level judge), within a period of ten days from the date the award was executed. Once the annulment action is filed, the arbitral tribunal, within three days, will send the process to the President of the Provincial Court of Justice, who will resolve the annulment action within thirty days from the date it knowledges the case. The annulment action filed outside the indicated term will be deemed not filed and will not be accepted. It should be mentioned that, in practice, the deadlines provided in this article of the LAM are not met and the annulment action process could take between 5 and 8 months.
Whoever files the annulment action, may request the arbitral tribunal to suspend the execution of the award, rendering sufficient warranty about the estimated damages that the delay in the execution of the award may cause to the other party. The arbitral tribunal, within three days, must set the amount of the bond. The bond must be presented within the next three days. Additionally, since the enter in force of the Constitution in 2008, it would be possible to file an extraordinary protection action for the violation of constitutional rights that could occur through the award, which is brought before the Court Constitutional of Ecuador.
In national arbitration there is no possibility of successfully claiming sovereign immunity, since, as established in Article 32 of the LAM, the execution judge cannot accept any exception against the award execution.
In international arbitration, because international awards are executed in the same way as national awards, there would also be no exception against the execution of said international award. However Ecuadorian constitution has a peculiar provision according to which the state may not conclude treaties or international instruments whereby the Ecuadorian government cedes sovereign jurisdiction to international arbitration bodies (other than regional Latinamerican, or party-designated jurisdictional bodies) to settle contractual or commercial-nature disputes between the state and private individuals or entities.
Art. 30 (referring to the right of clarification and extension of the award), Art. 31 (referring to the annulment action against the award) and Art. 32 (referring to the execution of the award) of the LAM refer exclusively to the parties, so it is widely accepted that only the parties could ask for the annulment of the award. As we said before, there is no award recognition process prior to its execution.
No. Within local or national arbitration, there has been no significant legal or regulatory progress on this issue. However, we must mention that the Civil Code includes the figure of the transfer of litigious rights under which it would be possible to assign rights subject to arbitration to third parties outside the contractual relationship subject to the dispute.
No. Fortunately corruption does not reach arbitration in Ecuador.
Francisco Larrea Naranjo, Director
Marcelo Xavier Torres Bejarano, Partner