Litigation

Litigation: Ecuador

Roberto Molina Ruales and Juan Pablo Álava Loor

Coronel & Pérez

All questions

1. Outline the court system in your jurisdiction.

Ecuador

The judicial system in Ecuador is divided into judicial units or judges (first instance), provincial courts (second instance) and national court of justice (court of cassation for the control of legality of second instance decisions). In turn, these different levels of courts are distributed according to the different areas of law (civil, family, labour or criminal).

References: General Organic Code of Processes (COGEP) and Organic Code of the Judiciary (COFJ).

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

2. What remedies are available to a local entity or resident that is in a dispute with a foreign entity? Do the laws provide foreign entities the same rights afforded to local entities? Are there laws requiring foreign entities to post a bond or other security before they can defend a suit?

Ecuador

There is no special treatment or remedy for a local entity or resident in disputes with foreign entities. In general terms, Ecuadorians and foreigners have the same rights in Ecuador. There are no restrictions or burdens for a foreigner to defend or sue in the Ecuadorian judicial system.

References: Constitution of Ecuador, article 9; COFJ, article 151.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

3. What is the process by which a foreign entity may challenge the jurisdiction or venue of the; court where litigation is filed? What factors are considered when a court evaluates whether; to exercise jurisdiction over a foreign entity?

Ecuador

Ecuadorian judges must hear all cases brought before them regardless of the nature or the quality of the parties thereto, whether Ecuadorians or foreigners, without prejudice to the provisions of the Constitution, treaties and international conventions in force. Cases of immunity from jurisdiction and enforcement established by the rules of public international law are excepted.

Challenge to the jurisdiction or venue must be included in the answer to the complaint.

The lack of jurisdiction must be challenged by alleging the nullity of the process. This allegation must be resolved in the second stage of the preliminary hearing.

The lack of venue must be challenged by alleging it as a defence of previous resolution. This allegation must be resolved in the first stage of the preliminary hearing.

References: COFJ, article 151; COGEP, articles. 107(1), 110(1), 153(1), 294 (1), 294(2), 295(1).

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

4. What is the most common type of litigation encountered in your jurisdiction by foreign entities?

Ecuador

The most common type of litigation by foreign entities in Ecuador are mainly commercial or contentious-administrative matters (disputes with the state and public institutions).

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

5. How frequently do parties pursue criminal actions in the context of commercial disputes? May criminal trial evidence be adduced in follow-on civil litigation? May civil cases be brought concurrently or after criminal litigation?

Ecuador

It is not common that parties pursue criminal actions in the context of commercial disputes. If criminal trial evidence is not classified by legal disposition, it could be adduced in follow-on civil litigation. Should a case encompass civil and criminal elements, in general, both kinds of litigations could be brought concurrently. However, there are cases in which a criminal trial decision is a requirement to proceed with the civil action, and vice versa.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

6. Is there a right to a trial by jury in a commercial dispute?

Ecuador

There are no trials by jury in commercial litigation in Ecuador.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

7. Do courts require or strongly encourage mediation or other alternative dispute resolution methods before or during a litigation proceeding?

Ecuador

Yes, indeed, conciliation or settlement can take place at any stage of the trial. Moreover, the judge, sua sponte or at any party request, can order the controversy to be sent to a mediation centre so that the parties seek an arrangement.

Reference: COGEP, article 233s, 234 and 294.6; COFJ, article 130(11).

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

8. Will choice of law and choice of forum provisions in a contract be recognised? Must these provisions meet certain requirements or formalities to be enforceable?

Ecuador

Choice of law and choice of forum provisions in a contract are recognised. Such provisions do not have to meet any requirements or formalities. However, it is worth to be pointed out that it is not common to litigate in Ecuador based on foreign law. In any case, foreign law must be proved.

References: COGEP, article 162.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

9. Does your jurisdiction have a specific arbitration law? Are arbitration awards enforced by the courts? May courts enjoin/prohibit arbitration proceedings in matters that are also pending in a court proceeding?

Ecuador

Ecuador has an Arbitration and Mediation Act (LAM). This law recognises the enforceability of arbitration awards by the courts. Courts are not entitled to enjoin or prohibit arbitration proceedings in matters that are pending in a court proceeding.

References: COGEP, articles 102–106, 363.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

10. Do courts in your jurisdiction retain authority to grant interim measures in support of arbitration? Do domestic arbitration laws address the enforceability of emergency arbitrator relief?

Ecuador

In Ecuador, courts do not retain authority to grant interim measures in support of arbitration, but to enforce interim measures granted by arbitrators. Ecuadorian domestic arbitration does not provide for emergency arbitrators. 

References: Arbitration and Mediation Act, article 9.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

11. Is your country a signatory to any investor-protection treaties? Please comment on any recent investor-state cases to which your country is a party and the impact of its outcome.

Ecuador

Ecuador is a signatory of several investor-protection treaties. In a recent investor-state case, Ecuador was ordered to pay Perenco Ecuador Limited US$471.8 million due to the breach of the bilateral investor-protection treaty with France.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

12. Do the courts recognise attorney-client privilege? If so, is the privilege applicable to in-house lawyers?

Ecuador

Attorneys, included in-house lawyers, are prohibited by law to reveal secrets, documents and instructions received from their clients. Courts have no power to compel them to breach this obligation.

Reference: COFJ, article 335(1).

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

13. Are legal proceedings public? In other words, can the general public observe hearings and review the filings of the parties?

Ecuador

In general, legal proceedings are public in Ecuador. The public can observe hearings and access to the files. Just in some special cases, expressly provided by law, a proceeding can or must be treated with confidentiality.

Reference: COGEP, articles 7 and 8.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

14. May a defendant join other potentially liable parties to the existing lawsuit?

Ecuador

No, a defendant cannot join other potentially parties to the existing lawsuit.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

15. How may a party enforce a foreign judgment?

Ecuador

Previously to the enforcement of the foreign judgment, it must be homologated.

Homologation process begins with the filing of a petition before the Provincial Court where the defendant has his or her domicile to qualify the enforceability of the decision.

The defendant must be summoned and granted a five-weekday term to file his/her opposition to the homologation. If the case is complex, the Provincial Court shall call a hearing to decide at the end of it. This decision is not appealable.

Once the homologation is granted, the foreign decision can be enforced before the first instance judge of the defendant’s domicile.

References: COGEP, articles 102 to 105; COFJ, article 143.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

16. How is service of process effected? How long does it typically take?

Ecuador

Summoning may take place by handling a written notice to the defendant himself or herself, by leaving written notices in the defendant’s residence on different days, through consular officials, and in exceptional cases through the media.

The delivery of the written notices is in charge of specific employees of the judiciary.

The summoning to a defendant abroad must be performed by Ecuador consular agents.

When the defendant’s residence is impossible to be determined, the summoning must take place through the media. An abstract of the complaint and the initial judge’s decision must be published in a newspaper over three different days. However, depending on the specific circumstances of the defendant, the judge could decide that the summoning take place by radio announcements.

Summoning by written notices usually takes place within three to five months from the filing of the complaint.

References: COGEP, articles 53 to 55.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

17. How much time does a party have to answer a complaint? Can a party extend this time?

Ecuador

It depends on the type of trial. If it is an ordinary trial, the complaint must be answered within 30 weekdays of the summoning. In the case of other types of proceedings, except for those indicated immediately below, the answer must be submitted within 15 working days. If it is a matter of children and adolescents, untimely dismissal of a union leader or a pregnant or breastfeeding woman, the answer must be filed within 10 business days. In arbitration, the answer to the complaint must be filed within 10 workdays.

References: COGEP, articles 291, 333, 351 y 358; LAM, article 11.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

18. What types of pretrial proceedings are available in court? What kinds of dispositive motions can be filed before trial? Under what circumstances may a lawsuit be dismissed prior to trial?

Ecuador

There are two kinds of pretrial proceedings available in court: preparatory proceedings (aimed to prepare the complaint and anticipate the performance of urgent evidence which could get lost) and preventive measures (aimed to secure the property involved in the future trial or the collection of the credit).

The preparatory proceedings are: exhibiting items and documents related to the future trial, recognition of private documents, appointment of guardians or curators, opening of safe boxes and security lockers in financial institutions, inspection of the things involved in the future trial if it could be altered or lost, and urgent testimonies (basically of old or ill people or those who are about to leave the country permanently or for a long period of time).

Preventive measures encompass seizure of property, asset retention and withholding of funds.

There are no dispositive motions that can be filed before trial.

In Ecuador, a lawsuit may be dismissed prior to trial under two circumstances: (i) if the caducity term to file the complaint has already elapsed; and, (ii) if the plaintiff does not complete or clarify the complaint within the term granted for that purpose.

References: COGEP, articles 120 to 122, 124.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

19. How long does it take to obtain a first-instance judgment in a typical commercial litigation case?

Ecuador

A first-instance judgment in a typical commercial litigation case is obtained in approximately eight to 12 months.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

20. Is a party required to submit all facts, arguments and supporting evidence with its initial pleading?

Ecuador

Yes, the parties are required to submit all facts, arguments and supporting evidence with its initial pleading.

References: COGEP, articles 142, 143, 151, 152, 154, 155.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

21. Does litigation provide a process for investigating claims or right to discovery of evidence prior to trial?

Ecuador

Litigation does not provide a specific right of discovery of evidence prior to trial. However, as stated in answering question number 18, one can ask for preparatory proceedings to prepare the future complaint an anticipate the performance of urgent evidence that could get lost.

References: COGEP, articles 120 to 122.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

22. Does litigation provide a process to subpoena or obtain documents or testimony from third parties?

Ecuador

Yes. Within the trial, when evidence necessary for the process is required that is not in the possession of the requiring party, the judge may order the possessor to hand it over. Likewise, the testimony of third parties may be ordered.

References: COGEP, articles 159, 174.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

23. Does the judge or opposing counsel examine witnesses?

Ecuador

The opposing party has the right to examine witnesses. The judge can ask for clarifications or amplifications.

References: COGEP, article 174, 178.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

24. How may evidence be challenged? Are there specific rules of evidence?

Ecuador

There are two kinds of challenges against evidence that can be argued: (i) those related to the admissibility of the evidence, based on its authenticity and its relation to the matter in discussion, namely pertinence, usefulness, and the aptitude of the intrinsic and particular content of the evidence to theoretically demonstrate the facts alleged in each case; and (ii) those related to the actual ability of the evidence to proof a certain fact, such as its sufficiency.

Our legal system contains specific rules of evidence, such as the following: documents must be filed in originals or certified copies, requisites that documents must meet in order to constitute valid evidence, specific forms to prove the marital status, among others.

References: COGEP, articles 160, 161 and 193 and following; Civil Code, article 332.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

25. Do courts typically allow hearings at or before a trial? At what stage may parties present expert witness testimony?

Ecuador

Courts do not allow hearings before a trial. At the trial, hearings are part of the proceedings. In ordinary trials there are two hearings: the preliminary hearing and the trial hearing. In summary trials there is only one hearing.

Expert reports must be attached to the complaint or to the answer to the complaint, as the case may be. Experts can be examined in the trial hearing of ordinary trials or in the only hearing in summary trials.

Reference: COGEP, article 142, 152, 177, 222, 224.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

26. What must be demonstrated to collect a debt based on a written instrument?

Ecuador

What must be demonstrated to collect a debt based on a written instrument depends on the type of such document.

If the document meets the requirements to be an enforceable title, it can be simply filed to be collected and the judge shall order its payment.

If the document is not an enforceable title, the plaintiff must prove the existence of the obligation and the judge has to declare it before commencing the collection process itself.

References: COGEP, articles 347 to 355.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

27. What remedies are available in your jurisdiction to a minority shareholder of a corporation in a dispute with the corporation or the majority shareholders?

Ecuador

Our corporation law recognises the shareholders certain fundamental rights, among them, the right to challenge the resolutions of the general meeting of shareholders and other organs of the company.

Shareholders that represent at least 25 per cent of the equity can challenge the resolutions that (i) has not been adopted in compliance with the law and the bylaws, or (ii) harm, to the benefit of one or more shareholders, the interests of the company. In the case of a resolution contrary to the law, the shareholders may exercise a nullity action. Such actions shall be filed before the civil judge of the company's main domicile, who shall deal with them in a summary proceeding.

References: Companies Act, articles 215, 216, 249.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

28. What rights are available in the courts for someone holding a maritime lien interest in a vessel?

Ecuador

Security interest both in real property and personal property gives its holder the right to pursue the thing, regardless of who is in its possession, to get its compulsory sale in an auction to collect the debt with the results.

It must be pointed out that a security interest does not give the holder the right to directly get the ownership of the thing as payment of the debt. He or she, however, has the right to participate in the auction and submit a proposal. Additionally, if no offer is submitted, the holder of the security interest has the right to have the thing valued by an expert and to have the property assigned to him or her as payment for his/her credit.

These kinds of security interests are enforceable by means of an expedited procedure.

References: COGEP, article 363; Civil Code, articles 2299, 2326.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

29. What rights are available for a party holding a security interest in real property and personal property? Are there expedited proceedings to allow the recovery of property serving as security for debt obligations?

Ecuador

Security interest both in real property and personal property gives its holder the right to pursue the thing, regardless of who is in its possession, to get its compulsory sale in an auction to collect the debt with the results.

It must be pointed out that a security interest does not give the holder the right to directly get the ownership of the thing as payment of the debt. He or she, however, has the right to participate in the auction and submit a proposal. Additionally, if no offer is submitted, the holder of the security interest has the right to have the thing valued by an expert and to have the property assigned to him or her as payment for his or her credit.

These kinds of security interests are enforceable by means of an expedited procedure.

References: COGEP, article 363; Civil Code, articles 2299, 2326.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

30. Describe the types of employment disputes that frequently result in litigation.

Ecuador

The majority employment disputes by far that result in litigation are for untimely dismissal.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

31. Does your jurisdiction allow class actions or some form of collective litigation proceeding?

Ecuador

Class actions are not allowed in Ecuador. What exists is the possibility that various people claim in one complaint their individual rights, provided that the origin of such rights is the same, or when the judgment to be delivered in respect of one could affect the other.

Diffuse rights, such as the right to have a clean environment, can also be claimed by groups of people on behalf of the community.

References: COGEP, article 51.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

32. Do government-owned or controlled entities enjoy any privilege when they are engaged in commercial activity and involved in a commercial or administrative litigation?

Ecuador

Government-owned or controlled entities do not enjoy any privilege when they are engaged in commercial activity and involved in a commercial or administrative litigation.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

33. Do foreign states or entities controlled or owned by foreign states enjoy any privilege when they are engaged in commercial activity and involved in a commercial or administrative litigation in your jurisdiction (state immunity)?

Ecuador

Foreign states or entities controlled or owned by foreign states do not enjoy any privilege when they are involved in a commercial or administrative litigation in our jurisdiction.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

34. Is injunctive or other relief available on an emergency basis?

Ecuador

The only reliefs available are the preventive measures referred to in the answer to question 18.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

35. Is injunctive relief available as part of a final award? If so, in what types of cases do courts usually provide injunctive relief?

Ecuador

Injunctive reliefs are not available as part of the final award.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

36. What are the typical court fees and costs required to file a civil lawsuit? Is a bond required for a non-resident? What is the amount of the bond?

Ecuador

There are no costs or fees required to file a civil lawsuit. A bond is not required for a non-resident.

References: Constitution, articles 9, 75; COFJ, article 151.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

37. What types of damages are available? How are damages quantified? Are punitive damages available?

Ecuador

Damages are available for patrimonial harm and moral harm.

Damages for patrimonial harm are the equivalent to the actual detriment and the lost profit. They are quantified by an expert appointed by the court.

Damages for moral harm are determined by the judge in each case attending the gravity of the moral detriment suffered and the fault of the author.

Punitive damages are not available.

References: Civil Code, articles 1572, 2214, 2232.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

38. Is the losing party liable for the prevailing party?

Ecuador

The losing party is liable for the costs incurred in the trial by the prevailing party only if the former has litigated in bad faith. The qualification corresponds to the judge in the final decision.

Reference: COGEP, article 284.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

39. Will courts enforce a liquidated damages provision in a contract?

Ecuador

Liquidated damages provisions are judicially enforceable.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

40. Will courts enforce a force majeure provision in a contract? If not, are defences of impracticability and impossibility available?

Ecuador

Yes, courts will enforce force majeure provisions in contracts.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

41. Will courts enforce a material adverse change clause in a contract?

Ecuador

There are no specific legal provisions regarding this matter, but, provided that a material adverse clause does not violate the public order and concerns only the parties’ interests, it is judicially enforceable.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

42. What is the appeal process against trial court decisions?

Ecuador

Appeal is applicable only to challenge first instance judges’ decisions.

The appeal can be filed verbally in the hearing where the decision is verbally issued, or within the 10-weekday term following the notification of the written decision.

In case the appeal has been filed in the hearing, it must be substantiated by writing in the referred 10-weekday period.

The written appeal or the written substantiation of the verbal appeal must be notified to the counterparty, who can answer them within a ten-weekday term.

Once the file is sent to the appeal court, this must call a hearing, in which the decision must be issued.

References: COGEP, 256 to 260.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

43. How frequently do appellate courts reverse trial court decisions?

Ecuador

Trial courts final decisions are not frequently reversed by appellate courts.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

44. May the courts entertain challenges to administrative decisions made by federal or local governments? If so, how frequently do courts reverse administrative decisions in favour of a private party?

Ecuador

Administrative decisions can be challenged before the courts. It is not frequent that courts reverse such decisions in favour of a private party.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

45. How are trade secrets protected in judicial proceedings?

Ecuador

To protect trade secrets, courts are obliged to declare the trial as confidential.

Reference: COGEP, article 8.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

46. Are settlement agreements confidential? Must the parties’ settlement agreement be certified by the court?

Ecuador

Settlement agreements reached within the trial are confidential. They must be certified by the court.

Reference: COGEP, article 234.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

47. Who has the burden of proof at trial? What is the burden?

Ecuador

Each party has the burden of proving every of its assertions. The burden of proof is to provide sufficient the evidence for an assertion to be considered true.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

48. What are the most significant recent developments regarding judicial reform? Is any proposed legislation likely to affect the civil litigation market?

Ecuador

The latest developments regarding litigation is the 2019 COGEP’s amendment, aimed to perfect the process of appeal and to introduce new matters to be heard in a summary proceeding.

There is currently no proposed legislation likely to affect the civil litigation market.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

49. Describe any recent noteworthy litigation and arbitral cases.

Ecuador

There has been no recent noteworthy litigation and arbitral cases. However, it must be pointed out two significant 2019 decisions of the Constitutional Court in which important precisions have been made regarding the possibility to access to the Court with an Extraordinary Protection Action (AEP) related to nullity actions against arbitral awards.

An AEP is a constitutional action to challenge judicial decisions that have incurred in violation of constitutional rights.

The Constitutional Court has ruled that (i) ordinary judges can hear nullity actions against arbitral awards based only on the specific nullity causes included in the Arbitration and Mediation Act; (ii) the access to the Extraordinary Protection Action in such cases requires the previous exhaustion of the nullity action against the arbitral award; and, (iii) Extraordinary Protection Actions based on other causes of nullity of arbitral awards different to the ones included in the Arbitration and Mediation Act can be filed directly before the Constitutional Court without the exhaustion of the nullity action.

References: Constitutional Court, Decision No. 323-13-EP/19, Decision No. 31-14-EP/19.

Answer contributed by Roberto Molina Ruales and Juan Pablo Álava Loor

Get unlimited access to all Latin Lawyer content