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Commercial Arbitration 2017

Last verified on Monday 14th August 2017

Ecuador

Javier Robalino, Daniel Robalino, Juan Carlos Darquea and Maria Borja
Ferrere

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
    1. Yes, Ecuador is party to the 1958 United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards. Ecuador made a reservation for which the New York Convention only applies to arbitral awards on commercial matters; hence, civil, labour or other matters are not covered.

  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
    1. Ecuador is signatory of the main international instruments regarding arbitration, including: the 1928 Havana Convention on Private International Law, the 1975 Inter-American Convention on International Commercial Arbitration (Panama Convention); and the 1979 Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards. Ecuador is not signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, since in July 2009 the country denounced the Convention. The withdrawal became effective as of January 2010.

  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
    1. The Arbitration and Mediation Law (AML) enacted in 1997 and codified in 2006 governs the arbitration proceedings seated in Ecuador. The same set of laws covers domestic and international arbitrations. The AML took some of the legal provisions of the UNCITRAL Model law; however, it has several variations such as the conduct of the arbitral proceedings, the annulment grounds. Additionally, the General Organic Procedural Code (COGEP) enacted in May 2015, which became fully effective as of May 2016, provides a set of new parameters for the recognition (homologation) and enforcement of foreign arbitral awards. This Code provides a procedure of homologation prior to the enforcement of the foreign arbitral awards that was not envisaged in the AML.

  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
    1. Article 39 of the AML law specifies that only trade unions, chambers of commerce, or non-profit organisations can organise arbitration and mediation centres, with the approval of the Judiciary Council. Currently, several chambers of commerce provide international arbitration services, including lists of foreign arbitrators to serve in such proceedings. The most relevant bodies to international arbitration, based on Ecuadorian jurisdiction, are the Arbitration and Mediation Centre of the Quito Chamber of Commerce, and the Arbitration and Mediation Centre of Ecuadorian-American Chamber of Commerce; both based in Quito. The second one also acts as the representative of the National Section of the Inter-American Commercial Arbitration Commission in Ecuador.

  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
    1. Article 39 of the AML provides that only trade unions, chambers of commerce or non-profit organisations can establish arbitration and mediation centres (arbitral institutions); hence, foreign arbitral providers cannot operate cases of domestic proceedings. However, in the case of independent (not institutional) international arbitration, foreign arbitral providers may operate. Nonetheless, this may result in an inconvenient when enforcing the award. Additionally, the COGEP provides that all arbitral providers shall be register and approved by the Judiciary Council (competent body for control and supervision of the judicial branch).

  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
    1. AML, as a general principle, prevents judicial interference on arbitration, except for the cases of interim relief, exequatur (in the case of foreign awards) and enforcement of awards. Hence, there is not a specialist arbitration court. It is important to mention that currently, Ecuadorian courts are not familiarised with enforcement of foreign arbitral awards, since the new procedure for the recognition and enforcement recently became effective as of May 2016. 

    Agreement to arbitrate

  7. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
    1. It has been determined that, among the requirements for validity of the arbitration agreement, the agreement must be in writing. However, a written document is not only one duly signed by the parties, but it is also one “… resulting from an exchange of letters or other written communications evidencing the parties’ will to submit to arbitration”. Hence, the lawmaker’s intention was to record the parties’ unequivocal desire to resort to arbitration, no matter if their consent is expressed in one act or in several simultaneous or consecutive acts. Furthermore, in the case of a compromise to arbitrate, article 6 of the AML requires that it must be made “… in a document stating the name of the parties and an unequivocal definition of the legal transaction to which it refers”. Finally, when the dispute involves civil indemnities for felonies or unintentional tort, that is, for extra-contractual liability, “the arbitration agreement must refer to the facts with which the arbitration will deal.” In addition, if the arbitration agreement is within the context of public contracting (which involves governmental institutions), the Constitution, the AML, the Organic Law for Public Procurement, and the Organic Law for the Office of the Attorney General set forth the following additional requirements for local and international arbitration:

      (a) the “favourable opinion of attorney general of the state” must be issued previously; and

      (b) the “express authorisation of the highest authority of the respective institution” must be obtained.

      An arbitration agreement may only cover future disputes in a relation to a specific contract. Parties may not agree to submit any future controversy to arbitration.

  8. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
    1. According to Ecuadorian law, it is possible to submit to arbitration only matters on which it is possible to reach a compromise.

      Article 190 of the Constitution imposes a parameter to define arbitrability of disputes in Ecuador, hence, arbitration and alternative procedures for dispute resolution “… shall be applied pursuant to the law in such matters where, due to their nature, it is possible to compromise”. This precept is also included in article 1 of the AML.

      The Ecuadorian Civil Code does not list the matters that can be the object of a compromise, but excludes those that cannot be: (i) criminal matters; (ii) marital status of persons; (iii) the right to receive alimonies; (iv) inexistent rights or rights of others; (v) agreements obtained through fraud or violence; and (vi) matters already resolved through a judgment passed with authority of res judicata of which the parties had no knowledge at the time of the compromise. It is also important to notice that within labour matters, there are certain issues that cannot be compromised, specifically those related to labour rights. Moreover, regarding arbitration with the state, tax issues cannot be submitted to arbitration. 

      However, considering the principle of competence–competence, the tribunal decides if the dispute may or may not be arbitrated, thus, decides on its own competence and jurisdiction.

  9. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
    1. AML does not include any provision regarding non-signatory parties, nor the procedure for its participation in arbitration. However, arbitral tribunals have had some favourable opinions to include third parties in an arbitration procedure when they have had a relevant participation in the performance of the contract where the dispute took place. Even the State has alleged during arbitral proceedings, the possibility of including non-signatory parties in determined cases.

  10. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
    1. The AML does not contain any relevant provisions in this regard. However, article 16 of the COGEP, which is applicable as a subsidiary law, includes four situations in which consolidation is possible: (i) a judgment in one of the cases would produce res judicata; (ii) the object in dispute is also under dispute in a previous case; (iii) there are separate procedures with the same parties, object and actions; and (iv) if the matter under dispute would be divided if it would be solved in different proceedings. Theoretically, these rules could also be applied in arbitration procedures.

  11. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?

    1. No. The “group of companies” doctrine is not expressly recognised in Ecuador. Also, as previously mentioned, regarding domestic arbitration, is not applicable since the arbitration agreement is only valid between the parties. On international arbitrations, related to commercial and investment disputes, the aforesaid doctrine has been recognised and applied by tribunals in which Ecuador (or a public entity) is a party, or in which a national corporation has been involved.

  12. 12.Separability
    Are arbitration clauses considered separable from the main contract?
    1. The AML expressly considers the arbitration clause independent from the main contract (article 5 of the AML, and this provision is often incorporated in arbitration clauses).

  13. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
    1. The competence-competence is fully applicable in Ecuador and is consistently followed by local courts. Article 22 of the AML determines that the first thing an arbitral tribunal must do once it has been composed is to determine its own jurisdiction.

  14. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
    1. Yes, it is fundamental to avoid non-effective clauses for lack of formal requirement (please see question 7). 

  15. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
    1. Institutional international arbitration is more common than ad hoc international arbitration regarding commercial disputes. UNCITRAL rules are commonly used in ad hoc proceedings, but also in some institutional arbitrations in which the State is a party.

  16. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
    1. Multi-party arbitration agreements must fulfil the same legal requirements as a bilateral agreement. See question 7. 

    Commencing the arbitration

  17. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
    1. Arbitration commences with the submission of the claim before the director of the arbitration centre. After the notice of arbitration has been served to the respondent, the respondent has ten days to present the statement of reply. However, the parties can arrange its own proceeding, in the arbitration agreement, stipulating the periods of time for the issuance of the award (ie, fast-track arbitration).

    Choice of law

  18. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
    1. The AML does not provide the arbitral tribunal with guidance as to which substantive law to apply to the merits of the dispute. But, if the applicable law is unclear in the arbitration agreement, the AML sets Ecuadorian law as the applicable law. If the parties fail to establish that the arbitration shall be in law, the arbitral tribunal must rule in equity.

    Appointing the tribunal

  19. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
    1. The parties are free to nominate the arbitrators in the arbitration agreement, but if the arbitration (domestic) is to be ruled in law, then the arbitrators must be lawyers accredited in Ecuador.

  20. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
    1. Ecuadorian law does not hold a specific requirement as to the citizenship of arbitrators in international arbitrations seated in Ecuador. Several arbitration institutions, such as the Arbitration Center of the Quito Chamber of Commerce, have foreign nationals in the list of arbitrators. Depending on the nationality of the arbitrator, some immigration requirements (ie, visa application) may be applicable. Arbitration fees earned by foreign arbitrators for services rendered in connection with arbitrations seated in Ecuador are subject to two taxes: income tax and overseas remittance tax equivalent to 5 per cent. If payments are made locally taxes will apply.

  21. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
    1. The AML allows the parties to self-determine how to select the arbitrators, and the number of members in the tribunal (one or three members). Nevertheless, if the parties do not nominate arbitrators then the AML provides a mandatory proceeding and:

      • the parties can mediate to select the tribunal;
      • in the absence of full agreement on the mediation, the director of the arbitration centre administering the proceeding shall send the parties a list of arbitrators to designate by common agreement within a period of three days;
      • if the parties fail to designate one or more arbitrators, the director of the arbitration centre shall appoint, acting as appointing authority, the tribunal through ballot (from the list of arbitrators submitted by the centre).

      However, the AML allows the parties, by mutual agreement, to appoint arbitrators from outside the list submitted by the arbitration centre, and in the case of independent arbitration, the parties shall appoint the arbitrators on the arbitration agreement.

      Courts do not play a role in the selection of the tribunal.

  22. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
    1. No, arbitrators are not afforded with immunity.

  23. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
    1. Usually, arbitration institutions collect the arbitrator’s fees when the claim is submitted.

    Challenges to arbitrators

  24. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
    1. Article 76(7)(k) of the Constitution of Ecuador provides that all persons are entitled “to be judged by an independent, impartial and competent judge …”. This rule represents one of the guarantees of the due process and is applicable to all judicial proceedings and alternative dispute resolution methods, such as arbitration. For this reason, article 19 of the AML compels the arbitrator to reveal any reasons that might disqualify him from performing his functions due to absence of such qualities.

      The AML (article 21) foresees a specific procedure for challenging arbitrators, but does not involve courts. In the case of institutional arbitration, the director of the arbitration centre must resolve the challenge, and in ad-hoc arbitration, the request must be resolved by the other members of the tribunal, or by the director of the closest arbitration centre to the domicile of the plaintiff.

      There are no specific rules or codes of conduct for arbitrators in the legislation. However, arbitration centres do follow IBA Guidelines on Conflicts of Interest in their internal rules of procedure. Also, the grounds set forth by the Organic General Code of Processes are subsidiary rules applied for the challenge of arbitrators.

    Interim relief

  25. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

    1. Article 9 of the AML gives tribunals wide powers to grant interim relief. In accordance with article 9, parties can include in the arbitral agreement a provision by which the tribunal can request the assistance of public officials (administrative and judicial employees; police) to enforce interim relief. If the possibility of interim relief is not included in the arbitral agreement, the party who requires interim relief will have to file a request before a court. Local courts will lend their enforcement authority to an arbitral tribunal in such situation.

      Under AML article 8, when a party files a lawsuit in local courts with disregard to an arbitral agreement, the defendant must file an answer to the claim alleging that there is a binding arbitral agreement. Such argument will have to be resolved by the court as a threshold matter, which will require both parties to submit evidence about the existence and application of the arbitral agreement to the dispute, without dealing with the merits of the case.

  26. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
    1. Yes, in case of annulment action presented against arbitration awards.

    Procedure

  27. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

    1. Article 76(7)(k) of the Constitution of Ecuador provides that all persons are entitled “to be judged by an independent, impartial and competent judge …”. This rule represents one of the guarantees of the due process and is applicable to all judicial proceedings and alternative dispute resolution methods, such as arbitration. For this reason, article 19 of the AML compels the arbitrator to reveal any reasons that might disqualify him from performing his functions due to absence of such qualities.

      The parties to arbitration are compelled to act in good faith and abusive claimants are condemned in costs and attorneys’ fees. 

  28. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
    1. If the respondent fails to participate in arbitration, article 14 of the AML provides that the proceeding shall continue and that the tribunal shall assume that the respondent has alleged the denial of all the claims. However, the respondent would not be able to submit evidences.

  29. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

    1. The types of evidence that are usually admitted are testimonies, documentary evidence, expert reports and inspections. Documentary evidence shall be submitted with the notice of arbitration and with the answer to the notice. Furthermore, pursuant to article 23 of the AML, arbitral tribunals have the power to request from the parties and from third parties all the evidence they deem necessary. If a third party does not want to deliver the requested evidence, the tribunal may request the assistance of the judicial police in application the COGEP provisions.

      The IBA Rules on the Taking of Evidence in International Commercial Arbitration are not commonly taken into account since the AML states that the COGEP is applied as a subsidiary code.

  30. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
    1. Usually, tribunals will have enough powers to obtain or order the parties to produce documents or submit evidence. However, tribunals may seek relief from courts to obtain evidence.

  31. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
    1. The prevailing practice fits the relevant law. The AML provides that the proceeding is oral, but only in the hearings. The parties have to produce each memorial statement (ie, of claim, of defence, joinder or rejoinder) and the tribunal produce in writing the correspondent procedural orders.

  32. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
    1. Yes, the AML provides that every proceeding shall have at least a hearing on jurisdiction and a hearing on the merits.

  33. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

    1. Yes, article 35 of the AML stipulates that the parties may select the place of arbitration and the place to held hearings and procedural meetings, but only if previously agreed in the arbitration agreement.

    Award

  34. 34.Majority decisions
    Can the tribunal decide by majority?
    1. Yes. Two-thirds of the tribunal can decide on the matter of arbitration.

  35. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
    1. If the award embodies a monetary obligation, post-award interest accrues until the sum is paid to the creditor. The award needs to establish the date when interest runs and in the enforcement proceedings the judge will make a liquidation of interests at the “legal rate determined by the Central Bank”, until payment is made. However, Ecuadorian legislation does not allow punitive damages or compound interest, thus domestic awards cannot grant such pleads.

  36. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
    1. Yes, arbitrators are allowed to issue dissenting opinions to the award. The dissenting opinion shall determine the reasons and argumentations of the dissenting arbitrator. This is common practice.

  37. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
    1. The AML states a few formal requirements for an award to be valid:

      a. the award must be issued by majority vote;

      b. all the arbitrators shall sign the award, but those with dissenting opinion;

      c. dissenting opinions shall be attached to the award; and

      d. the award and the dissenting opinion shall enclose a clear explanation of the deciding issue and the grounds or reasons for the decision.

      Moreover, arbitral awards must include all requirements of judicial rulings, set forth in article 95 of the COGEP. 

  38. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
    1. The AML allows the parties to request the clarification of the award on specific matters and they also can request the tribunal to resolve points of claim not satisfied in the award. In the first scenario the tribunal can interpret the award, and in the second the tribunal is empowered to extend the award. The time limit for requesting the clarification or any request is of three days since the notification of the award to the party.  

    Costs and interest

  39. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

    1. Even though the director of the arbitration centre decides on the costs and expenses of the tribunal once the claim is submitted, and these are borne by the plaintiff, the arbitral tribunal is empowered to award these costs in the final award. Usually attorney fees are granted if one of the parties litigated in bad faith or delayed the normal course of the proceedings.

  40. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
    1. Yes, interest can be included on the principal claim until the sum is paid to the creditor. The award needs to establish the date from when the interest runs and in the enforcement proceedings the judge will make a liquidation of interests at the “legal rate determined by the Central Bank” which is the 8 per cent approximately. Ecuadorian legislation does not allow compound interest.

    Challenging awards

  41. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
    1. Awards cannot be appealed before courts, as expressly forbidden by the AML, thus it is not possible to review the merits of the award.

  42. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
    1. Besides the legal grounds established in the international conventions, the AML established a list of grounds for requesting the annulment of an award. The grounds to request annulment of an award are listed, expressly, in article 31 of the AML and includes the following procedural misdeeds:

      (i) failure to serve the claim to the defendant in a process heard and terminated ex parte, provided that it limits that party’s right of defence;

      (ii) failure to serve the court’s orders to the parties thus limiting or preventing their right of defence;

      (iii) failure to summon, notify or present evidence despite the existence of facts that must be justified;

      (iv) extra or ultra petita decision; and

      (v) illegal constitution of the arbitration panel.

       It should be noted that the grounds for annulment are always restrictive and only refer to procedural irregularities (in procedendo errors), and not to substantive irregularities or errors in judicando. According to the AML a party has 10 days from the day that the award ought to be enforced, to file, before the same arbitral tribunal, the claim for annulment of the arbitral award. Within three days, the arbitration panel must deliver the proceeding to the president of the provincial court in the respective jurisdiction, who must adopt a decision within 30 days. Regarding the annulment procedure, the National Court of Justice recently issued Resolution No. 08-2017 effective as of March 2017. This resolution provides that once the provincial court receives the annulment claim it must:

      • verify that the action was submitted within the legal term, if not, the court will declare the same as inadmissible;
      • notify the other part with the annulment action, providing it a term of five days for answering; and
      • convene a single hearing for the resolution of the annulment claim, the hearing will take place within the 30 days after the court had knowledge of the action. The evidence announced in the claim and the reply will be evacuated in the hearing. After the hearing, the court must pronounce its decision orally and notify the reasoned decision in writing.  

      Additionally, whoever files an action for annulment may ask the tribunal to suspend the enforcement of the award by rendering a sufficient bond. Despite how brief the procedure for an action for annulment seems to be, the time frame is hardly ever met.

  43. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
    1. In Ecuador, awards can only be challenged through an annulment action, which is a statutory right of the parties. Hence, even if the parties expressly waive their right to challenge the award, courts will admit the annulment action.

    Enforcement in your jurisdiction

  44. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
    1. It is not likely that an award that has been set aside by the courts in the seat of the arbitration could be enforced in Ecuador because an homologation process must be followed before the enforcement. According to article 102 of the Code, the party that is interested in homologating a foreign arbitral award, must submit its claim before the competent Division of the Provincial Court (Appeal Court) of the domicile of the party against whom the award is invoked. Article 104 establishes that the judge, in a homologation procedure, shall analyse the following requirements:

      • the award must contain all legal formalities required for its authenticity in its place of origin;
      • the award must be considered final according to the laws of the place it was rendered, and the accompanying documents must be legalised;
      • the documents must be translated to Spanish, if applicable;  
      • the party who filed the request must demonstrate through documentation that the defendant was legally summoned and that due process was comply; and,
      • the claim must identify the place where the other party shall be notified.

      Since it the annulled decision is not final, the homologation (a sort of exequatur) could be rejected, and therefore, the award could not be enforced. 

  45. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
    1. Since the COGEP became effective as of May 2015 there are currently no trends regarding enforcement of foreign arbitral awards.  

  46. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
    1. The AML does not provide specific rules that apply to the enforcement of an award against a state or a state entity. However, in a recent case, the Supreme Court has affirmed that is not possible to enforce an award that seizes public funds banked in the Single Treasury Account (belonging to the Ecuadorian state and considered a public good). Following this line of thought, the Ecuadorian State is planning to enact a new law that regulates the enforcement of arbitral awards against the State or state entities, limiting the funds available to indemnify the Claimant to those established in the entity’s budget for that year.

      Furthermore, Ecuador is a signee of the Vienna Convention on Diplomatic Affairs; hence, foreign diplomats have immunity in criminal, civil and administrative jurisdiction. Immunity does not apply to claims related to commercial activities of the diplomat, performed in disregard of its official duties.

      We are not aware of a case in which a party has pleaded the Foreign Sovereigns Immunities Act. 

    Further considerations

  47. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
    1. Arbitrations can be confidential if the parties convey so in the arbitration agreement. Hence, article 34 of the AML states that only the parties and their counsels can obtain a copy of the arbitration file or any information related to the proceeding or the award.

      However, there are no express provisions on the AML regarding trade secrets or rules of privileges.

  48. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
    1. As previously mentioned, arbitrations can be confidential if the parties agreed. Furthermore, evidence produced and pleadings files are confidential and no one but the parties and their counsels can obtain access to this information. However, in case of an annulment action, the judge or court who resolves the action will be entitled to request the entire arbitration files (including evidence and pleadings).

  49. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
    1. Counsels and arbitrators are compelled to act under severe and high ethical standars contained in the Constitution, the AML and the Organic Code of the Judiciary. Also, arbitration centres do follow IBA Guidelines on Conflicts of Interest in their internal rules of procedure.

  50. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
    1. Usually the language used in proceedings held in Ecuador is Spanish. Furthermore, is important to note that criminal actions have been raised against arbitrators for misconduct or prejudice in the arbitration proceedings.

  51. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction?

    1. There is no specific regulation under Ecuadorian law that regulates the question of judicial or arbitral litigation funding. Therefore, and in accordance with the principle of party autonomy, there is no prohibition for third-party funding. Actually, third-party funding has taken place under Ecuadorian jurisdiction in the well-known case of Ecuador v Chevron, where Burford Capital financed the claim against the oil company. 

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
  7. Agreement to arbitrate

  8. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
  9. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  10. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
  11. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
  12. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?


  13. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  14. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
  15. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
  16. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
  17. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
  18. Commencing the arbitration

  19. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
  20. Choice of law

  21. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
  22. Appointing the tribunal

  23. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  24. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
  25. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
  26. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  27. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  28. Challenges to arbitrators

  29. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
  30. Interim relief

  31. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?


  32. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  33. Procedure

  34. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?


  35. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  36. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?


  37. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  38. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  39. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  40. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?


  41. Award

  42. 34.Majority decisions
    Can the tribunal decide by majority?
  43. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  44. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  45. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  46. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
  47. Costs and interest

  48. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?


  49. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  50. Challenging awards

  51. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  52. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  53. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
  54. Enforcement in your jurisdiction

  55. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
  56. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  57. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
  58. Further considerations

  59. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  60. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
  61. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  62. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
  63. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction?