Relevant aspects of the regulation to the Arbitration and Mediation Law

RELEVANT ASPECTS OF THE REGULATION TO THE ARBITRATION AND MEDIATION LAW

By: Carla Frías

On August 18, 2021, by means of Decree No. 165, the President of the Republic issued the Regulations to the Arbitration and Mediation Law. Since the enactment of the Arbitration Law more than 20 years ago, no regulations have been issued to develop the provisions contained in the law. Therefore, these rules constitute an important contribution to the practice of arbitration in Ecuador.

Among the most relevant contributions of the Regulations to the Arbitration and Mediation Law in the area of arbitration is the incorporation of arbitration principles and practices as sources of procedures. In this way, it is intended to limit the supplementary application of other supplementary rules.

Public sector entities may agree to international arbitration with seat abroad in the contracts they enter into, with the prior authorization of the Attorney General of the State, who will only observe that the arbitration agreement does not contravene, in matters of arbitration, the legislation of the place of the chosen seat.

State and public sector entities may submit to national or international arbitration before the dispute arises, after the dispute arises and when permitted by law or international treaties. If the State is bound to arbitration post-controversy, prior approval of the arbitration agreement by the Attorney General of the State shall be required.

The arbitration agreement extends to non-signatory third parties.

Liability is established for damages caused by arbitrators who fail to comply with their duties, due to fraud or gross negligence, as well as the liability of the arbitration institutions, directors and employees for acts performed in the exercise of their functions.

The arbitral tribunal may modify, suspend or revoke any interim measure of protection or preliminary order granted by the arbitrator, any judge or emergency arbitrator, on its own motion or at the request of a party.

During the proceedings of the nullity action, if confidential arbitration has been agreed upon, either party may request the President of the Provincial Court to take any necessary measures to preserve the confidentiality of sensitive information.

The expiration of the time limit for the award shall not imply the loss of the arbitrators’ competence to issue the final decision, but they shall be liable to the parties for such delay, in cases of gross negligence.

Arbitration principles and practices are incorporated in the resolution of nullity actions, as well as certain criteria to be observed during their resolution, such as the existence of a certain and irreparable damage. Abuse of rights in the exercise of the nullity action shall be punished in accordance with the provisions of Ecuadorian law.

Awards rendered in an international arbitration proceeding shall have the same effects and shall be enforced before the same judge and in the same manner as awards rendered in a domestic arbitration proceeding, without any prior homologation process being required.

In the chapter applicable to Mediation, it is determined that the State or a public sector entity may resolve any dispute over facts, acts or other administrative actions, leave without effect or modify acts of termination, expiration, penalties or fines, regardless of the administrative body issuing them.

The filing of the request for mediation shall interrupt the statute of limitations and the expiration of the statute of limitations.

The mediation acts that have an undetermined amount or are greater than twenty thousand dollars, will require authorization by the Attorney General’s Office of the State. However, it is necessary to emphasize that the Procurador exercises such competence only in cases where a transaction between the parties is verified.

Local and international mediation acts are executed before the civil judge of first instance of the domicile of the defendant or of the place where the assets are located. In turn, minutes signed under the United Nations Convention on International Settlement Agreements Resulting from Mediation shall have the same effects and shall be enforced before the same judge and in the same manner as a mediation certificate signed under the Arbitration and Mediation Law and these Rules.

One of the relevant and striking aspects of the regulation is that it grants total independence and autonomy to the Arbitration and Mediation Centers to dictate their regulations, service rates, fees, appoint and form lists of arbitrators and mediators. Additionally, it limits the intervention of the Judiciary Council in relation to its records and determines that the instructions issued by the public entity are mere suggestions.

The regulations recognize other methods of alternative dispute resolution based on agreement between the parties, either directly or by reference to a regulation. An example of another dispute resolution mechanism is the combined dispute boards used in macro government contracting. According to the regulations, the agreements or decisions in these proceedings will have the same jurisdictional effects, will have the same value and will be enforced in the same manner as final judgments through writs of execution.