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Ecuador

Last Verified on Thursday 25th July 2019

    Legislation

    • Ecuador

      The Arbitration and Mediation Law, the New York Convention and the Panama Convention. According to the Arbitration and Mediation Law, an arbitration will be considered international when the parties have expressly agreed to it and any of the following conditions are met: (i) if parties have their domiciles in different states at the time they agree to arbitration; (ii) when the place of substantial performance of obligations or the place to which the arbitration has its closest relation, is located in a state different from the one where any of the parties are domiciled; and (iii) when arbitration is related to an international commercial operation, subject to transaction and does not affect or injure national or collective interests. 

      The enforcement of international awards is governed by article 42 of the Arbitration and Mediation Law.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law is modelled on the UNCITRAL model arbitration law. It has adopted several of its dispositions but it has also departed in some areas (eg, mandatory bifurcation of proceedings, opt-in confidentiality, grounds for challenge the impartiality and independence of arbitrators, default ex aequo et bono arbitration, grounds for annulment).

      Last verified on Thursday 25th July 2019

  • Conventions

  • Commercial arbitral agreements and arbitrability

    • Ecuador

      Pursuant to article 6 of the Arbitration and Mediation Law, a pre-dispute arbitration clause to resolve international commercial disputes by arbitration and an arbitration clause contained in a separate agreement to resolve international commercial disputes arising under some other commercial agreement are fully enforceable. There is no need for a post-dispute compromise.

      Last verified on Thursday 25th July 2019

    • Ecuador

      Article 5 the Arbitration and Mediation Law provides that, in order to be enforceable, an arbitral agreement shall be in writing. If the agreement is not written in the contract but in a separate document, the name of the parties and the transaction or contract covered by the agreement shall be determined. When the dispute involves civil indemnities for tort, the arbitration agreement must refer to the facts with which the arbitration will deal.

      Last verified on Thursday 25th July 2019

    • Ecuador

      Article 190 of the Ecuadorian Constitution requires a prior authorisation from the Attorney General of Ecuador for an instrumentality of the state to enter into an arbitration agreement. Additionally, pursuant to article 4 of the Arbitration and Mediation Law, for an instrumentality of the state to enter into an arbitration agreement in public procurement the following conditions should be met: (i) the matter referred to by the arbitration agreement shall be of a contractual nature; (ii) the arbitration agreement shall provide the mechanism for the appointment of the arbitrators; and (iii) the arbitral agreement shall be signed by the legal representative of the instrumentality. 

      Last verified on Thursday 25th July 2019

    • Ecuador

      Pursuant to article 38 of the Arbitration and Mediation Law, party autonomy is complete granted to set all the terms of the arbitral agreement and rules that will govern the arbitral procedure. The Arbitration and Mediation Law does not have any limitation regarding the designation of arbitrators; the selection of an arbitral institution or the seat or the arbitration. However, the law regulates all these matters in case, the arbitral agreement or the parties were silent about them.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law is silent on this matter, nevertheless, scholars and case law has proposed that the arbitral agreement shall extend to those whose consent to arbitrate, according to good faith, can be determined by their active participation and in a determining manner in the negotiation, execution, performance or termination of the contract containing the arbitral agreement or to which the agreement is connected.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law is silent on this matter, nevertheless, scholars and case law have proposed that the arbitral agreement shall extend to those whose consent to arbitrate, according to good faith, can be determined by their active participation and in a determining manner in the negotiation, execution, performance or termination of the contract containing the arbitral agreement or to which the agreement is connected.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law is silent on this matter, nevertheless, scholars and case law has proposed that the arbitral agreement shall extend to those whose consent to arbitrate, according to good faith, can be determined by their active participation and in a determining manner in the negotiation, execution, performance or termination of the contract containing the arbitral agreement or to which the agreement is connected.

      Last verified on Thursday 25th July 2019

    • Ecuador

      According to article 43 (4) of the Organic Law for Consumer Defence, consumer disputes can be submitted to arbitration provided that the consumer has expressly consented to this.

      There is no a specific regulation governing the arbitrability of labour disputes. However, as mentioned, according to article 1 of the Arbitration and Mediation Law, only matters that can be subject to compromise may be submitted to arbitration.

      Last verified on Thursday 25th July 2019

    • Ecuador

      There are no provisions requiring a foreign institution to be licensed under local law in order to administer an arbitration seated in Ecuador. Furthermore, pursuant to article 41 of the Arbitration and Mediation Law, parties are free to choose the institutional rules that will govern their international arbitration.

      Last verified on Thursday 25th July 2019

  • Arbitral institutions and arbitrators

    • Ecuador

      The Arbitration and Mediation Law does not grant arbitrators with immunity. Per article 18 of the Arbitration and Mediation Law, arbitrators are liable for a negligent breach of their mandate. However, there is no limitation for parties to grant immunity to arbitrators or to modify the arbitrator’s standards of liability. 

      Last verified on Thursday 25th July 2019

    • Ecuador

      According to article 76(7)(k) of the Ecuadorian Constitution, "to be judged by an independent, impartial and competent judge" is a substantial part of due process and therefore is applicable to arbitration. For this reason, article 19 of the Arbitration and Mediation Law compels the arbitrator to reveal any reasons that might disqualify him or her from performing his or her functions owing to absence of such qualities. 

      Last verified on Thursday 25th July 2019

    • Ecuador

      No, according to article 21 of the Arbitration and Mediation Law, courts do not have jurisdiction to decide on a request to disqualify an arbitrator. Pursuant to the same article, a request to disqualify an arbitrator will be decided by the arbitrators not comprised by the challenge, and in the case of a sole arbitrator or when the entire tribunal is challenged, in the case of institutional arbitration, the request to disqualify will be resolved by the director of the centre, and in case of ad hoc arbitration, by the director of the closest centre of arbitration.

      Last verified on Thursday 25th July 2019

  • Arbitral proceedings

    • Ecuador

      No, international arbitrations can be conducted in any language. In domestic proceedings, an arbitration has to be conducted in Spanish, however, parties may agree that, alongside with Spanish, the arbitration could be conducted in another language as well.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law is silent when it comes to consolidation of multiple arbitral proceedings, therefore, it will ultimately depend on the arbitration rules chosen by the parties. Relevant case law (proceedings 042-09 and 045-09 CAM CCQ) has proposed at least three requirements, ie, (i) compatibility of arbitral agreements, (ii) the opportunity of all parties to participate in the constitution of the Arbitral Tribunal, (iii) that all parties had consented on the consolidation.

      Last verified on Thursday 25th July 2019

    • Ecuador

      The Arbitration and Mediation Law does not regulate the taking of evidence in arbitral proceedings, therefore, it will depend on the rules adopted by the parties and the arbitral tribunal in this regard. Nonetheless, in general, there is an increasing tendency to adopt the IBA Rules on the Taking of Evidence in International Arbitration, notwithstanding the fact that there is still a great number of arbitrators who resort to Ecuadorian law for the purposes of document production. It is worth noting that, under Ecuadorian law, there are no consequences for parties’ representatives if that party fails to comply with an order to produce a document or when it conceals or destroys documents pertaining to that arbitration.

      Last verified on Thursday 25th July 2019

    • Ecuador

      Contrary to international practice, according to article 34 of the Arbitration and Mediation Law, arbitral proceedings are public unless parties agree otherwise. When confidentiality has been agreed, it obliges the arbitral institution, the tribunal, parties and their representatives.

      Last verified on Thursday 25th July 2019

    • Ecuador

      Regardless of the nationality or jurisdiction of the counsel, there are no mandatory national rules of professional ethics that apply to counsel in an international arbitration. As reference, an arbitral tribunal could resort to soft law or to the ethical rules applicable to the court’s litigation.

      Last verified on Thursday 25th July 2019

  • Court support for arbitration

    • Ecuador

      Pursuant to article 22 of the Arbitration and Mediation Law, arbitral tribunals have the power to decide over their own jurisdiction. This is principle is reaffirmed by article 7 of the Arbitration and Mediation Law whereby domestic courts are precluded to hear claims where arbitration has been agreed. Furthermore, according to the same article, in case of doubt, courts must decline their jurisdiction in favour of arbitration. These principles have been consistently followed by domestic courts, especially after the landmark case Faisal Misle v INGESA SA (decided by the Constitutional Court).

      Last verified on Thursday 25th July 2019

    • Ecuador

      Article 9 of the Arbitration and Mediation Law grants an arbitral tribunal the power to issue orders granting interim reliefs. If the parties expressly agree on it, arbitral tribunals can directly request the assistance of public entities and officials for the purpose of enforcing an order granting interim relief. If there is not such agreement, parties must resort to domestic courts and request the enforcement of the order granting provisional relief.

      Last verified on Thursday 25th July 2019

    • Ecuador

      Pursuant to articles 120 to 123 of the Organic Code of General Procedures, a party can request the assistance of courts in order to obtain evidence before the commencement of an arbitration procedure. The scope of evidence that can be requested is broad, ranging from urgent witness statements, production of documents to site or object inspections.

      Last verified on Thursday 25th July 2019

    • Ecuador

      It might be possible to argue that anti-suit injunctions against any jurisdictional proceeding or arbitral proceedings are not available in Ecuador since these proceedings are jurisdictional in nature and, therefore, no constitutional recourse other than an Extraordinary Action of Protection could be filed ex post. 

      Last verified on Thursday 25th July 2019

    • Ecuador

      Yes, arbitral tribunals are empowered to award attorneys’ fees to the prevailing party. The common practice in Ecuador is to award attorneys’ fees only if the counterparty has litigated in bad faith or if it has unjustifiably delayed the course of the proceedings.

      Last verified on Thursday 25th July 2019

  • Awards - content

    • Ecuador

      There are two means whereby a party could challenge an arbitral award (ie, an annulment procedure before a provincial court, and an Acción Extraordinaria de Protección) before the Constitutional Court.

      Pursuant to article 31 of the Arbitration and Mediation Law, a party might request a provincial court to annul an award on the following grounds:

      • failure to (i) serve the claim to the defendant in a process heard and terminated ex parte, and (ii) to notify a party with a tribunal’s procedural order, provided that, in both cases, it had led to the breach of that party’s right of defence;
      • failure to take evidence despite the existence of facts that must be justified; or
      • extra or ultra petitum award.

      Notwithstanding the foregoing, some provincial courts have also accepted, as grounds for annulment of an arbitral awards, that an arbitral tribunal has (i) failed to state reasons of the award or (ii) that it has breached a party’s right of defence.

      According to article 94 of the Ecuadorian Constitution, a party may file a constitutional injunction known as Acción extraordinaria de protección, by means of which the Constitutional Court could vacate an arbitral award if it verifies that a constitutional right was violated in the proceedings. 

      Last verified on Thursday 25th July 2019

    • Ecuador

      Some scholars and practitioners have argued that if there is “lack of reasonableness” that equates to the failure to state reasons, an award con be challenged before the Constitutional Court by means of an Acción extraordinaria de protección. As stated before, it is worth to mention that some provincial courts have admitted the failure to state reasons as a ground for annulment.

      Last verified on Thursday 25th July 2019

    • Ecuador

      A party has 10 days from the leave for enforcement to file an annulment request. If a party intends to challenge an award by means of an Acción extraordinaria de protección, it has to file a request within 20 days of the issuance of the award. It is worth noting that an Acción extraordinaria de protección could also be filed against a decision on annulment of an arbitral award.

      Last verified on Thursday 25th July 2019

  • Awards enforcement

    • Ecuador

      In August 2018, Ecuador enacted a law tending to attract foreign investments, the Organic Law for Productive Development, Attraction of Investments, Generation of Employment, and Stability and Fiscal Equilibrium. This law eliminated the homologation procedure for international arbitration awards required in the Organic Code of General Procedures and restored the validity of the enforcement of international commercial arbitration awards provided in article 42 of the Arbitration and Mediation Law. 

      The Arbitration and Mediation Law assimilates international arbitral awards to domestic arbitral awards. The final paragraph of its article 42 states that “awards rendered in an international arbitration proceeding shall have the same effects and shall be enforced in the same manner as awards issued in a local arbitration proceeding,” which, pursuant to article 32 of the Arbitration and Mediation Law, are enforced in the same way as final judgments rendered by local courts. This is done through the so-called judicial order for enforcement without delay (immediate execution). The request of execution might be rendered to a court of first instance; the latter will appoint an expert to liquidate the capital, interest and costs in a reasonable period of time granted. Once the court has the final liquidation of damages, it will order its execution. The defendant has some specific causes to oppose the execution – all of them basically referred to scenarios of payment of the obligation.

      Last verified on Thursday 25th July 2019

    • Ecuador

      As mentioned before, the Organic Code of General Procedures entered into force on 22 May 2016, therefore we are not in a position to assess the length of the recognition and enforcement procedure. Nevertheless, the homologation of a foreign judgment may take one up to two years.

      Last verified on Thursday 25th July 2019

    • Ecuador

      As mentioned before, the procedure of enforcement has recently re-established in August 2018, therefore we are not in a position to assess the effectiveness of the recognition and enforcement procedure, since there is no much experience about this matter.

      Last verified on Thursday 25th July 2019

  • The outlook

    • Ecuador

      In the past two years, the backlash against investment arbitration seems to have vanished. Recently, Ecuadorian politics have tended to be directed at attracting foreign investment to the country. In this regard, Ecuador will continue negotiating international trade agreements with strategic countries and entering into investment contracts with foreign investors. These instruments are expected to include protections and guarantees for foreign investments based on international standards. However, commercial arbitration, both domestic and international, has experienced a considerable growth in recent years. This development has come along with an increasing sophistication in the forum. Both arbitrators and practitioners have adopted international standards and practices, reducing the gap and marking a path to convergency between domestic and international arbitration. It is advisable for all foreign clients contemplating entering into a business deal with an Ecuadorian company or the Ecuadorian government to incorporate an arbitration agreement into their contracts.

      Last verified on Thursday 25th July 2019

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