Arbitration

Last verified on Tuesday 8th June 2021

Arbitration: Peru

Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Lava Cavassa Abogados

Legislation

1. Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?

Peru

Legislative Decree No. 1071 – the Peruvian Arbitration Act – governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts and international commercial arbitration proceedings. The Peruvian Arbitration Act applies to both domestic and international arbitrations having their seat within Peruvian territory, granting arbitration one and the same treatment with only a few provisions specific to international arbitration.

Also, Peru is a party to (i) the Convention on the recognition and enforcement of foreign arbitral awards (the New York Convention) since 24 May 1988 pursuant to Resolution No. 24810, (ii) the Inter-American Convention on International Commercial Arbitration (the Panama Convention) since 7 November 1988 pursuant to Resolution No. 24924 and (iii) the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (the Montevideo Convention) since 26 March 1980 pursuant to Legislative Decree No. 22953. Should any of these conventions apply to a particular case, then the provisions of the Peruvian Arbitration Act shall apply in default.

Arbitral awards issued outside the Peruvian territory shall be recognised and enforced in Peru in accordance with the above-mentioned instruments. Recognition will require an exequatur judicial proceeding. Unless the parties agree otherwise, the Convention most favourable to the party seeking the recognition and enforcement of a foreign award shall apply.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

2. Has the UNCITRAL model arbitration law been adopted in your jurisdiction?

Peru

Yes, Legislative Decree No. 1071 is based on the UNCITRAL Model Arbitration Law, with some modifications.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Conventions

3. Is your jurisdiction a party to both the New York Convention and the Panama Convention? Is it a party to any other conventions or treaties governing international commercial arbitration agreements, awards or proceedings?

Peru

Yes, Peru is a party to both the New York Convention and the Panama Convention. 

Peru is also a party to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (the Montevideo Convention).

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

4. Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?

Peru

Yes, Peru is a party to the ICSID Convention since 8 September 1993. It was approved by Legislative Resolution 26210, dated 2 July 1993. There have been no steps taken to renounce the Convention or withdraw from ICSID.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

5. Is your jurisdiction a party to other conventions that directly affect the enforceability of arbitration agreements, rights or awards?

Peru

No, it is not.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Commercial arbitral agreements and arbitrability

6. Some jurisdictions have permitted parties to compel resolution of a dispute by means of arbitration only if the agreement to arbitrate was entered into after a dispute has arisen. Is a pre-dispute arbitration clause to resolve international commercial disputes by arbitration enforceable?

Peru

According to section 13 of the Peruvian Arbitration Act, an arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes that have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Thus, a pre-dispute arbitration clause to resolve international commercial disputes by arbitration is enforceable. There is no need for a post-dispute compromise.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

7. What are the requirements for an enforceable arbitral agreement?

Peru

According to section 13 of the Peruvian Arbitration Act, the arbitration agreement shall be in writing. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of an independent agreement.

An arbitration agreement is in writing if its content is evidenced in any form whatsoever, whether through certain activities or through any other means. Also, an arbitration agreement is in writing if it is contained in an exchange of emails, telegrams, telex or telefax, among other means, provided that the information is accessible for further consultation.

Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other. 

The reference in a contract to a document containing an arbitration clause is an arbitration agreement in writing provided that the reference is such as to make that clause part of the contract.

When facing an international arbitration, an arbitration agreement shall be valid and a dispute capable of being submitted to arbitration when meeting the requirements set forth by the law chosen by the parties to govern the arbitration agreement or by the law applicable to the substance of dispute or by Peruvian law.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

8. Is there subject matter that is not legally subject to arbitration in the context of an international business transaction?

Peru

According to section 2 of the Peruvian Arbitration Act, disputes on subject matter freely disposable by the parties according to law are capable of being submitted to arbitration, as well as those permitted by law or by international treaties or agreements.

When one of the parties in international arbitration is a state or a company or entity controlled by a state, such party shall not invoke its own privileges to avoid duties arising out of the arbitration agreement.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

9. Are there any limits to the ability of a state or an instrumentality of the state to enter into an agreement to arbitrate in your jurisdiction? If so, under what circumstances may the state or its instrumentalities enter into such an agreement? Please describe the requirements that must be met for the state to enter into a binding arbitration agreement.

Peru

No, there are no limits to the ability of the Peruvian state or an instrumentality of the state to enter into an agreement to arbitrate. In fact, according to section 4 of the Peruvian Arbitration Act the state can submit to national arbitration disputes arising from contracts signed with nationals or foreigners domiciled in the country. Also, the state can submit to international arbitration, in or out of the country, any contract contracts signed with nationals or foreigners domiciled in the country.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

10. Does the law specify whether an arbitration will be in equity or under law if the parties do not expressly specify the nature of the arbitration in the agreement?

Peru

Yes, it does. In accordance with section 57 of the Peruvian Arbitration Act, disputes in domestic and international arbitration must be resolved under law, unless the parties expressly authorise the arbitral tribunal to decide in equity.

Section 7 of the Peruvian Arbitration Act specifies that when Peruvian State takes place in the arbitration, this must be under the law, except in cases involving projects developed through Public-Private Associations, to the extent that controversies are technical in nature and may be appropriately addressed in equity.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

11. How does the law limit party autonomy with respect to the terms of an arbitral agreement?

Peru

According to section 2 of the Peruvian Arbitration Act, parties can submit to arbitration all or certain disputes that have arisen or that may arise between them in respect of a defined legal relationship, whether contractual or not, as well as those authoris ed by law or international treaties or agreements.

Also, disputes on subject matter freely disposable by the parties according to law are capable of being submitted to arbitration, as well as those permitted by law or by international treaties or agreements.

Parties are free to agree on the mechanism for the appointment of, and challenge to the arbitrators, the rules governing the arbitral proceedings, the seat and language of the arbitration, the treatment of recalcitrant parties, among other aspects. In these cases, the Peruvian Arbitration Act sets a bundle of rules applicable only in the absence of provisions agreed upon by the parties or established by the relevant rules selected by them. 

As per section 23 of the Peruvian Arbitration Act, parties are free to agree on the mechanism for the appointment of arbitrators or to submit to the rules of any given arbitral institution, provided that equal treatment between the parties is not affected.  

According to section 7 of the Peruvian Arbitration Act, for the Peruvian state, to submit a controversy to arbitration, it must necessarily be before any given arbitral institutional as a general rule. However, ad hoc arbitration may be agreed upon by the Peruvian state when the amount of the dispute does not exceed 44,000 soles.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

12. Under what circumstances does the law allow a non-signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

Peru

The incorporation of third parties to arbitration in the Peruvian legal system finds its normative basis in section 14 of the Peruvian Arbitration Act, which allows extending the arbitration agreement to those whose consent to submit to arbitration, according to good faith, is determined by its active and decisive participation in the negotiation, celebration, execution or termination of the contract comprising the arbitration agreement or to which the agreement is related. The said provision establishes the possibility of extending the arbitration agreement to those who wish to derive rights or benefits from the contract.

The extension of the arbitration agreement is justified to the extent that the effects of the award, as a res judicata, may affect, benefit or impair the rights of third parties that are bound by the object or the controversial matter of the arbitration. To that extent, not only the participation of this third party in the contract is decisive in demonstrating its intention to submit to arbitration, but also the role it has with respect to the contract and the effects derived from the dispute.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

13. Under what circumstances does the law allow a signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that did not sign the arbitral agreement?

Peru

See question 12.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

14. Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it in a court of law by a signatory of the arbitral agreement?

Peru

The non-signatory to the arbitral agreement should file a defence that an arbitration agreement is to be enforced. For further reference see question 12.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

15. Is there any law in your jurisdiction specifically governing the arbitrability of consumer or labour disputes?

Peru

Consumer arbitration is governed by Act No. 29571, Consumer Protection and Defense Code, which implemented the Consumer Arbitration System to provide consumers with an alternative dispute resolution meeting the characteristics of simplicity, speed, gratuity, and binding nature. Likewise, through Supreme Decree No. 046-2011-PCM, Regulations of the Consumer Arbitration System were approved, and then subsequently amended by Supreme Decree No. 049-2016-PCM. Regulations were subsequently modified to grant the parties greater freedom to choose the corresponding arbitrator, to simplify the arbitration proceedings, and to rule the mechanism for appointing arbitrators and adhesion of suppliers in a single regulation. Currently, Supreme Decree No. 103-2019-PCM is in force.

Providers or any corporation need to subscribe to the “System of Consumer Arbitration”, where they choose to submit any dispute to arbitration. When any given consumer requires to go to arbitration, only those providers having submitted to the System of Consumer Arbitration are bound to go to consumer arbitration. Otherwise, consumers cannot force providers to go to consumer arbitration. The administration of the Consumer Arbitration is organised through the Directorate of the National Authority of Consumer Protection, the Arbitration Boards of Consumption, and Arbitration Courts. 

On the other hand, Supreme Decree No. 010-2003-TR (Collective Labour Relations Act) and Supreme Decree No. 011-92-TR (Regulations on Collective Labour Relations) provide for arbitration in labour matters. The last amendment was given by Supreme Decree No. 009-2017-TR. Peruvian law sets forth the power to submit to arbitration in labour matters when (i) the parties do not agree on first collective bargaining or (ii) when during the collective bargaining acts of bad faith are evidenced that have the effect of delaying, hindering or preventing the parties from reaching an agreement. Each party must file an award project, and the Arbitral Tribunal can only choose one of those, in their full matter, without any changes.   

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

16. Does your jurisdiction provide for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

Peru

No, it does not. Peruvian law does not contain any statutory provisions on the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

17. Are contractual waivers precluding arbitration of claims on a class-wide basis enforceable? Under what circumstances have such waivers been upheld or set aside by the courts?

Peru

Peruvian law does not contain any statutory provisions on the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

18. If the parties’ contract is silent on the issue of class-action arbitration, is class-action arbitration allowed under the law of your jurisdiction?

Peru

Peruvian law does not contain any statutory provisions on the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

19. Are foreign arbitral institutions without a physical presence in your jurisdiction authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law to administer an arbitration seated there?

Peru

 Arbitral institutions, even if they are foreign institutions, do not need to be licensed under local law.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Arbitral institutions and arbitrators

20. Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution (such as the ICC, ICDR, LCIA or similar institutions) vulnerable to challenge because it was issued under the auspices of a foreign institution?

Peru

No, it is not. Section 63 of the Peruvian Arbitration Act sets forth a closed list of grounds for challenging an arbitral award, and there is no express reference about arbitration being sponsored by a foreign institution. For further reference see question 14.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

21. Does the law require that arbitrators in international arbitrations be nationals or residents of your jurisdiction?

Peru

No, it does not. Section 20 of the Peruvian Arbitration Act expressly states that no person shall be precluded by reason of his or her nationality from acting as an arbitrator unless otherwise agreed by the parties.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

22. Does your law require that arbitrators in international cases be lawyers?

Peru

No, it does not. According to sections 20 and 22 of the Peruvian Arbitration Act, there is no need to be a lawyer for being an arbitrator in international arbitration, except in national arbitration under law, where arbitrators do need to be lawyers, unless otherwise agreed on by the parties.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

23. Does your jurisdiction provide immunity from civil lawsuit to arbitrators serving in an arbitration with its legal seat in your jurisdiction? Under what circumstances does such immunity apply or not apply?

Peru

No, it does not. The Peruvian Arbitration Act does not give immunity to arbitrators. According to section 32 of the Peruvian Arbitration Act, arbitrators having accepted the appointment are bound to comply with the engagement, otherwise they are liable for any breach through wilful misconduct and gross negligence.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

24. Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?

Peru

According to section 6 of the Income Tax Act, approved by Supreme Decree No. 179-2004, Income Tax for non-domiciled taxpayers applies only to income obtained from Peruvian sources, including income obtained as a consequence of personal labour carried out within Peruvian territory. 

Thus, fees paid to arbitrators not domiciled in Peru for the services performed in an arbitration seated in Peru will be subject to 24 percent income tax provided that the service is rendered within Peruvian territory. Otherwise, should the service is not provided within Peruvian territory, the aforementioned fees will not be subject to income tax in Peru.

Also, considering that the services are performed in an independent professional manner, Value Added Tax shall not apply.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

25. Must arbitrators in international arbitrations be independent and impartial? What is the legal standard governing conflicts of interest and disclosure by arbitrators in international arbitrations?

Peru

Yes, they must. In accordance with section 28 of the Peruvian Arbitration Act, arbitrators must be and remain independent and impartial during the entire arbitration. When a person is approached in connection with his or her possible appointment as an arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as to impartiality or independence.

An arbitrator, from the time of his or her appointment, shall without delay disclose any new circumstances. Parties may request from arbitrators at any time during the arbitral proceedings any clarifications on their relationship with the other parties or their attorneys.

As per section 21 of the Peruvian Arbitration Act, when the Peruvian State takes part in arbitration as a party, there is incompatibility when the purported arbitrator has previously intervened in the specific case, whether as an attorney for any of the parties or as an expert, or has personal, labor, economic, or financial interests that could be in conflict with the exercise of the arbitral role, such as attorneys, experts or professionals in other matters.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

26. Will courts entertain requests to disqualify an arbitrator before the conclusion of an award?

Peru

No, they will not.  Peruvian courts are not allowed to disqualify an arbitrator before the conclusion of an award. The procedure for challenging arbitrators is governed by section 29 of the Peruvian Arbitration Act. However, the parties are free to agree on specific proceedings for challenging arbitrators. Section 29 does not provide for the participation of courts in challenges to arbitrators. Decisions ruling on challenges to arbitrators are definitive and final. Should a challenge not be upheld, the challenging party may only question such a decision through an application for setting aside the arbitral award.

According to section 29 of the Peruvian Arbitration Act, when the Peruvian state takes part in arbitration as a party and a challenge is brought against an arbitrator, if the other party does not agree to the challenge, and if the challenged arbitrator denies the grounds for challenging, or omits to file his own statement or does not file his resignation, the challenge is to be resolved by the arbitral institution or by the relevant Chambers of Commerce. Any agreement providing for the possibility that the members of an arbitral tribunal resolve the challenge against the other arbitrator is null and void.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Arbitral proceedings

27. Discuss the public perception of the reliability of arbitration as a dispute resolution method in your jurisdiction.

Peru

Arbitration as an alternative method of dispute resolution has been widely developed and has received good acceptance by both the public and private sectors.  This mechanism, characterised by the specialisation of arbitrators and accordingly a reasonable degree of predictability, has become a suitable dispute resolution mechanism for transactions involving high economic amounts and cases of particular complexity or sophistication. Having said that, arbitration is not free from criticism, particularly considering recent cases of corruption and fraud involving private investors and State entities. However, we are confident that arbitration is flexible enough to adapt and find the tools necessary to face this problem and sort it out in the near future. After all, arbitration is consistently chosen by investors as the ideal mechanism for dispute resolution in comparison with the recourse to national courts.    

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

28. Does the law require that arbitral proceedings seated in your jurisdiction be held in a specific language?

Peru

No, it does not. According to section 36 of the Peruvian Arbitration Act, parties may freely agree on the language or languages to be used in arbitration proceedings.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

29. Can foreign lawyers serve as advocates in arbitral proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel?

Peru

Yes, they can. Foreign lawyers can serve as advocates in arbitral proceedings. In fact, according to section 37 of the Peruvian Arbitration Act, parties can be represented by lawyers, or by any other person with written authorisation, with no limitation whatsoever. There is no restriction for foreign lawyers to participate in the arbitration.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

30. Are the fees of foreign lawyers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?

Peru

Yes, they are. See question 24.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

31. In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings into a single proceeding?

Peru

As per section 39 of the Peruvian Arbitration Act, arbitral tribunals are not entitled to consolidate two or more arbitration proceedings or to order combined hearings, unless specifically agreed so by the parties. The most relevant arbitral institutions in Peru do provide for certain rules and requirements for consolidation to take place.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

32. Please describe common practice and usage in international arbitrations seated in your jurisdiction with respect to a party’s right to require an opposing party to produce documents pertinent to the dispute.

Peru

The Peruvian Arbitration Act has no specific rules about the right to require an opposing party to produce documents. However, it is common practice in international arbitrations seated in Peru to adopt the IBA Rules on the Taking of Evidence in International Arbitration.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

33. Does the law impose a duty of confidentiality in arbitration? If so, on whom?

Peru

According to section 51 of the Peruvian Arbitration Act, the arbitral tribunal, the secretary, the arbitral institutio, and, where appropriate, witnesses, experts and any other individuals involved in arbitration proceedings, are bound to keep confidentiality on the proceedings, including the award, as well as on any information they know through said proceedings unless the parties have agreed otherwise.

Also, this duty is assumed by the parties, their representatives, and attorneys, except when due to mandatory provisions it is necessary to disclose the arbitral proceedings or the arbitral award to protect or enforce any rights or to apply for setting aside or enforce the arbitral award.

In accordance with section 51 of the Peruvian Arbitration Act, when the Peruvian state takes place as a party in the arbitration, the arbitration proceedings and the award are public once the arbitration process finalises. Rules of transparency and access to public information on governmental entities are to be observed.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

34. Does the law authorise third-party funding for international arbitration? Are there any ethical limitations imposed upon counsel to the parties that restricts the use of such funding?

Peru

The Peruvian Arbitration Act contains no express provisions on the possibility of third-party funding one of the parties in international arbitration. It is still not common practice in international arbitration in Peru. However, several objections have been raised. For instance, it is usually stated that third-party funding may provoke an unnecessary increase in the number of cases. Also, the lack of clear and express regulation may give rise to ethical implications on the client-attorney relationship, on the decision-making process along with the arbitration, on the confidentiality rules, and even on the impartiality or independence of the arbitrators. The most relevant arbitral institutions in Peru tend to adopt certain soft law provisions, such as the IBA Guidelines on Conflicts of Interest in International Arbitration, and thus certain ethical recommendations are incorporated.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

35. Are there any mandatory national rules of professional ethics that apply to counsel in an international arbitration in your jurisdiction? If so, are those rules applicable to counsel from another jurisdiction participating in an arbitration in your jurisdiction?

Peru

There are no mandatory national rules of professional ethics applying specifically to counsel in international arbitrations in Peruvian jurisdiction. However, it is common practice in international arbitrations to adopt the IBA Guidelines on Conflicts of Interest in International Arbitration. Also, Codes of Conduct or Codes of Ethics adopted by Peruvian arbitral institutions regularly apply.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

36. Are there any mandatory rules on oath or affirmation for witnesses testifying in an arbitration in your jurisdiction that have to be administered prior to their testimony? If so, what are they?

Peru

There are no mandatory rules about oaths or affirmation for witnesses.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Court support for arbitration

37. Are there restrictions in your jurisdiction on the interviewing of witnesses in anticipation of hearings or giving of testimony?

Peru

Traditionally an ethic standard was in force restricting the interviewing of witnesses in anticipation of hearings or giving of testimony in judicial proceedings. However, when we refer to arbitration (particularly international arbitration) there are no restrictions for the interviewing of witnesses. The common recourse to IBA Rules on the Taking of Evidence in International Arbitration has had a pivotal role in this aspect.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

38. Can arbitrators decide on their own jurisdiction? Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?

Peru

Section 41 of the Peruvian Arbitration Act expressly states that the arbitral tribunal is the only one entitled to rule on its own jurisdiction, including any objections with respect to the non-existence, nullity, invalidity or ineffectiveness of the arbitration agreement or allegations that the arbitration has not been agreed upon.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

39. Do the courts follow the principle of the independence and separability of the arbitration clause?

Peru

Yes, they do. The principle of the independence and separability of an arbitration clause is set in the very same section 41 of the Peruvian Arbitration Act. An arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null, non-existent, invalid, or ineffective shall not entail ipso jure the nullity, non-existence, invalidity, or ineffectiveness of the arbitration clause. This principle has been consistently followed by Peruvian courts.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

40. Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?

Peru

According to section 47 of the Peruvian Arbitration Act, arbitral tribunals are empowered to grant interim relief. The arbitral tribunal may require any party to provide appropriate security in connection to such measure. Nevertheless, if the arbitral tribunal is not yet appointed, the party needing interim relief has to appear before domestic courts, but once the arbitral tribunal is complete, the entire case is assumed by the arbitral tribunal. 

According to section 48 of the Peruvian Arbitration Act, the arbitral tribunal is empowered to enforce the interim relief against the other party, but if this party refuses to comply with the order, the arbitral tribunal can request participation of domestic courts. Domestic courts are not empowered to interpret the content or the scope of the interim relief. Interim relief granted by an arbitral tribunal seated outside Peruvian territory may be recognised and enforced within Peruvian territory.

As per section 8 of the Peruvian Arbitration Act, when the Peruvian state is the party affected with any interim measure, the other party has to submit a joint and several, unconditional and automatic banking security in favour of the public entity. The amount of the security is set by the court or by the arbitral tribunal granting the interim measure.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

41. Can arbitrators issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court lend its aid in enforcing such an order against a recalcitrant third party? Also, if arbitrators can issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them, are there any limitations to their doing so?

Peru

According to section 43 of the Peruvian Arbitration Act, arbitral tribunals are the only ones empowered to decide on the admission, relevance, production and value of the evidence, as they may deem appropriate. This includes the possibility of issuing orders, subpoenas or use legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them.

Section 44 of the Peruvian Arbitration Act states that arbitral tribunals are entitled to appoint experts on specific subject matters. Likewise, arbitral tribunals can request any of the parties to provide all the relevant information, documents, or objects for experts to produce their opinion.

In accordance with section 45 of the Peruvian Arbitration Act, arbitral tribunals may request from domestic courts support for the production of evidence. This support may consist of the production of the evidence before the court under its exclusive direction or the court making the relevant rulings needed for the evidence to be produced before the arbitral tribunal. Courts will comply with the request made by arbitral tribunals unless the request is contrary to public policy or mandatory statutory provisions.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

42. Can a party to an arbitration seek relief from the court to obtain evidence in aid of an international arbitration? What is the scope of such relief?

Peru

Section 47 of the Peruvian Arbitration Act states that in international arbitrations, parties may at any time during the arbitral proceedings request the relevant local courts the granting of interim relief as deemed appropriate, with previous authorisation of the arbitral tribunal.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

43. Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?

Peru

Yes, they can to the extent that the arbitral tribunal is not yet appointed. Please see our answers to questions 9 and 4.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

44. Have the courts issued injunctions enjoining arbitral proceedings from going forward?

Peru

According to the Peruvian Arbitration Act, courts cannot interferer with arbitral proceedings. As far as we know, there have been no injunctions issued by courts enjoining arbitral proceedings from going forward.

It is important to highlight the rules set by the Constitutional Tribunal on 21 September 2011 regarding the claim filed by Sociedad Minera de Responsabilidad Ltda Maria Julia against a judgment issued by the Third Civil Chamber of the Superior Court of Lima (case 00142-2011-PA/TC).

The Constitutional Tribunal set the following rules:

  • Application for setting aside the award as provided for in the Peruvian Arbitration Act is suitable for the protection of constitutional rights, so that amparo (constitutional claim) is not admissible, save for certain exceptions.
  • Even more, when talking about any of the parties not being duly notified with the appointment of an arbitrator or with arbitration proceedings, or not having to be able to assert their rights, amparo is not admissible.
  • Application for setting aside the award is also suitable for questioning the lack of arbitration agreement, so that amparo is not admissible.
  • Also, application for setting aside the award is suitable when talking about fundamental rights not capable of being disposed of, so that amparo is not admissible.
  • The filing of an amparo does not suspend nor does it interfere with the possibility of applying for setting aside the award.
  • Courts’ decisions on applications for setting aside awards may only be reviewed by virtue of amparo.

Amparo is indeed admissible and suitable in the following situations: 

  • When mandatory case law established by the Constitutional Tribunal is alleged to have been directly infringed.
  • When arbitrators’ decision in arbitral award does not apply certain statutory provision that has been declared constitutionally valid by the Constitutional Tribunal or by courts.
  • When amparo (constitutional claim) is filed by a third party not taking part in the arbitration agreement under the allegation of infringement of his constitutional rights by the arbitral award.

Arbitral awards may be totally or partially annulled under these grounds so that a new award is to be issued.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

45. Does the law provide that post-award interest accrues on an unpaid arbitral award?

Peru

Arbitral awards must include the definition and settlement of costs, penalties, interests, and any other amount involved in the dispute, in a manner clear and precise enough to allow further enforcement before courts. However, courts have usually faced the obstacle that arbitral tribunals have not settled the said amounts appropriately. Thus, conflict arises between the private autonomy of the parties who have vested on arbitrators and not on courts the final decision of the dispute and the possibility of courts guaranteeing the effectiveness of jurisdictional decisions.

Section 56 of the Peruvian Arbitration Act expressly excludes administrative fines or fines of the kind or any other concepts other than costs associated with the arbitration, when the Peruvian state takes part in arbitration as a party.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

46. Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?

Peru

Yes, according to section 73 of the Peruvian Arbitration Act, an arbitral tribunal is empowered to award attorneys’ fees to the prevailing party, unless the parties agree otherwise. An arbitral tribunal is also empowered to distribute attorneys’ fees pro-rata between the parties.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Awards - content

47. Is an arbitral tribunal empowered to award punitive or exemplary damages? Is the arbitral tribunal empowered to award interest?

Peru

According to Peruvian laws, punitive and exemplary damages are not admitted. However, an arbitral tribunal is empowered to award interest, as long as the parties so request.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

48. What are the grounds for challenging or vacating an international award issued in an arbitration seated in your jurisdiction?

Peru

In accordance with section 63 of the Peruvian Arbitration Act, arbitration awards may only be vacated on the following grounds:

  • That the arbitration agreement is non-existent, void, voidable, invalid or ineffective.
  • That any of the parties have not been duly notified with the appointment of an arbitrator or with arbitration proceedings, or have not been able for any other reason to assert their rights.
  • That the composition of the arbitral tribunal or the arbitration proceedings have not conformed to the agreement to arbitrate or to the applicable arbitration rules.
  • That the arbitral tribunal has ruled on matters not submitted to its decision.
  • That the arbitral tribunal has ruled on matters that, according to law, are manifestly not capable of being arbitrated, in the case of national arbitration.
  • That according to Peruvian laws, the subject matter of the dispute cannot be arbitrated or the award is contrary to international public policy in the case of international arbitration. In international arbitration, this ground may be assessed ex officio by the Superior Court that is aware of the challenge to the award.
  • That the dispute has been decided outside the term agreed on by the parties, set in the arbitration rules or established by the arbitral tribunal.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

49. Is “lack of reasonableness”, manifest disregard or a mistake in the application of the substantive law to the dispute of an international award grounds to vacate it?

Peru

No, it is not. "Lack of reasonableness", manifest disregard or a mistake in the application of the substantive law to the dispute of an international award are not grounds to vacate the award. Please see question 47.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

50. Have international awards rendered in your jurisdiction been vacated on the grounds of "public policy"? If so, how has the "public policy" ground for vacating an award been interpreted in your jurisdiction?

Peru

Very few international awards have been vacated in recent years in Peru on the grounds of public policy so that it is not possible to deduce criteria or guidelines from the reasoning of courts.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

51. What is the period of time a party has to challenge such an award after its issuance?

Peru

In accordance with section 64 of the Peruvian Arbitration Act, the challenge shall be brought before the Superior Court within 20 working days counting from the notification of the award.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

52. Please describe any recent significant experiences or cases that illustrate the attitude of your courts towards the annulment of international awards rendered in your jurisdiction.

Peru

We have not been able to find different attitudes of Peruvian courts towards the annulment of international awards rendered in Peru as towards domestic awards, except that according to the Peruvian Arbitration Act, domestic awards may be vacated when the arbitral tribunal has ruled on matters that are manifestly not capable of being arbitrated, while international awards may be vacated when the subject matter of the dispute cannot be arbitrated or the award is contrary to international public policy.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

Awards enforcement

53. Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?

Peru

Yes, they do, although it should be noted that the rate of international awards vacated by Peruvian courts may be considered low, that is to say, maybe less than 20 per cent of the applications for setting aside the awards are upheld.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

54. May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?

Peru

The Peruvian Arbitration Act states in section 63 that the parties may waive the right to challenge an arbitral award before domestic courts or that the parties may restrict the scope of the review to specific grounds only if none of the parties is a Peruvian national nor has its domicile, habitual residence or place of main activities within Peruvian territory.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

55. Please describe the process for enforcing an arbitral award rendered in another jurisdiction.

Peru

Recognition of a foreign award is a necessary step prior to enforcement. As per section 76 of the Peruvian Arbitration Act, a party requesting recognition of a foreign award must appear in court submitting the original or a copy of the award, which requires to be certified according to the laws of the country where the award was issued and then certified by a Peruvian diplomatic agent or by the Peruvian Consulate. A Spanish translation is needed.

Once the application for recognition is admitted by the Superior Court, the other party shall have a 20 working-days term to submit its allegations. If the award has been challenged in the country of origin, the Superior Court may well postpone its decision on the recognition of the award and request the appropriate guarantees. Only if the Superior Court does not grant full or partial recognition of the award may the case be submitted to the Supreme Court through cassation. 

Recognition of foreign awards may only be refused on specific grounds set forth in section 75 of Peruvian Arbitration Act, namely, that a party to the arbitration agreement was under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or that the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his or her case; or that the award deals with a dispute not contemplated by the arbitration agreement or it contains decisions on matters beyond the scope of the submission to arbitration; or that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or that the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made; or that the subject matter of the dispute is not capable of settlement by arbitration under Peruvian law; or that the award would be contrary to international public policy.

According to sections 68 and 77 of the Peruvian Arbitration Act, once the award has been granted full or partial recognition, the interested party may request the enforcement of the award before the courts. The relevant court shall issue a mandate for the other party to comply with the award within the following five working days. This mandate may only be contested if it is evidenced that the claimant’s interest has been satisfied or the award suspended as per section 66. Courts are forbidden to admit mechanisms aimed at hindering enforcement of the award.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

56. Assuming that the award is covered by a convention applicable in your jurisdiction, how long does it take to obtain an order of enforcement in the first instance? How long does it take for the enforcement process to run its full course through to the last instance?

Peru

We would reasonably expect to obtain recognition of a foreign award from one year to one year and a half considering Cassation before Supreme Court. Apart from that, it should be recalled that if the award has been challenged in the country of origin, the Superior Court may well postpone its decision. 

Now then, enforcement in the first instance might take from six to eight months, and might take from one year to one year and a half to run its full course through to the last instance.

Of course, it is extremely difficult to estimate the duration for the recognition and further enforcement of awards. Thus, this estimation shall be understood as a mere reference since duration may vary depending on circumstances such as the procedural role of the party against whom recognition and enforcement is brought, or the grounds invoked against recognition or enforcement, the excessive burden of judicial cases, et al.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

57. Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgment.

Peru

See question 55. We find no material differences between the proceedings to enforce arbitral awards rendered abroad and the proceedings to enforce foreign judgments.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

58. Please describe some significant recent experiences with the enforcement of foreign arbitral awards.

Peru

Experience shows that Peruvian courts have internalised adequately the framework set by the Peruvian Arbitration Act and International Conventions so that recognition and enforcement of foreign arbitral awards tend to conform to international standards allowing Peru to become a seat friendly to arbitration.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

The outlook

59. To what degree has “public policy” been a ground to refuse enforcement of an international award rendered abroad?

Peru

The concept of “public policy” has proven to be imprecise and to some extent obscure for Peruvian courts, more inclined to apply given statutory provisions than to create new standards and criteria on a case-by-case basis. 

In any case, the concept of “public policy” has not been widely invoked as a ground for refusing enforcement. More relevant is now the concept of imprecise or insufficient reasoning of arbitrators in the award, under the scope of “any of the parties not being able to assert their rights” (section 63.1.b of the Peruvian Arbitration Act). Commencing with the judgment issued by the Constitutional Tribunal in case 00728-2008-PHC-TC, courts have repeatedly construed new ground for not enforcing or setting aside arbitral awards as part of due process.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

60. Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?

Peru

As per section 75 of the Peruvian Arbitration Act, recognition of an arbitral award may be refused, at the request of the party against whom it is invoked, if that party furnishes proof that the award has been set aside or suspended by a court of the country in which, or under the law of which, that award was made. Thus, if the party against whom the award is invoked fails to prove that the award has been set aside or suspended, the award might well be enforced.

Also, it should be noted that, where a treaty exists, section 75 shall apply only to the extent more favorable to the recognition of the foreign award. Thus, it is in fact possible – according to section VII of the New York Convention – to grant recognition to an award that has been set aside in the seat of the arbitration if more favourable provisions are found in the country where recognition is sought.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

61. Has your jurisdiction refused to pay an international arbitral award issued against the state or an instrumentality of the state in your jurisdiction? If so, please provide a brief explanation.

Peru

According to our knowledge, Peru has honoured all international awards issued against the state or any state entity. 

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

62. What is your view of the future of international arbitration and is the trend positive in your jurisdiction? What advice do you have with respect to dispute resolution for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction?

Peru

Arbitration has become a pivotal tool in the structure of both domestic and international transactions, particularly those involving major projects or considerable amounts in every commercial activity or investment opportunity. Although it is not free from problems and challenges, it has proven to be more efficient than the recourse to state courts. Peruvian law has adapted adequately to this new environment and Peruvian arbitral institutions rapidly evolve incorporating international guidelines and principles. The trend for arbitration is certainly positive in the Peruvian system, but a new challenge has recently emerged, namely, the attitude and solutions expected of arbitration in the face of corruption and fraud.   

Our advice for foreign clients contemplating entering into business deals with Peruvian companies is usually to agree on arbitration under law seated in Peru and subject to Peruvian law under the administration of an arbitral institution.

Answer contributed by Claudio Lava Cavassa, David Vidal Panduro and Kristhian Quispe Neira

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