Commercial Arbitration: Ecuador

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Ecuador

Yes. Ecuador is party to the 1958 United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards. It is noteworthy that Ecuador made a reservation limiting the New York Convention´s application to arbitral awards on commercial matters only.

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Ecuador

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. It is noteworthy to mention that Ecuador is a signatory to the Inter-American Convention on Rogatory Letters of 1975 and the Treaty of Montevideo of 1980, on the Latin-American Integration Association for economic cooperation.

Although Ecuador denounced the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) in July 2009, said instrument has been non-effective since January 2017. However, Ecuador re-joined the ICSID Convention in June 2021, ratifying it on 16 July 2021, depositing the instrument before the World Bank on 16 July 2021, and ultimately enacting it in the Supplement of the Official Gazette No. 549 on 30 September 2021.

3. 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?

Ecuador

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 encompass  domestic and international arbitration.

The AML is mostly inspired by the 1985 UNCITRAL Model Law; however, it has some variations, such as features in reconducting arbitral proceedings.

On 26 August 2021, the Arbitration and Mediation Law Regulations (AML Regulations) were enacted. The AML Regulations are coherent with certain features of the UNCITRAL Model Law, especially regarding the enforcement of arbitral awards, as will be further addressed below.

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Ecuador

Article 39 of the AML provides that only trade unions, chambers of commerce and non-profit organisations can establish arbitration and mediation centres with prior approval of the Judiciary Council. Currently, certain chambers of commerce provide arbitration services in cross-border transactions, state contracts and relevant disputes applying international arbitration rules – mainly UNCITRAL and ICC – and have lists of foreign arbitrators to serve in such proceedings. The most relevant bodies based in Ecuador are the arbitration and mediation centres of the Quito and Guayaquil Chambers of Commerce, the Arbitration and Mediation Centre of the Ecuadorian–American Chamber of Commerce and CIAM (linked to the Quito Chamber of Industries). The Arbitration and Mediation Centre of the Ecuadorian–American Chamber of Commerce also acts as the National Section of the Inter-American Commercial Arbitration Commission in Ecuador (CIAC).

Arbitration and mediation centres have their own rules and, typically, provide for the arbitration centre to act as appointing authority.

5. Can foreign arbitral providers operate in your jurisdiction?

Ecuador

As mentioned in question 4, article 39 of the AML provides that only trade unions, chambers of commerce and non-profit organisations can establish arbitration and mediation centres (arbitral institutions) in Ecuador. Hence, foreign arbitral providers that do not comply with said requirements cannot operate in Ecuador or oversee domestic proceedings. Additionally, the General Organic Procedural Code (COGEP) states that all arbitral providers shall be registered and approved by the Judiciary Council (competent body for control and supervision of the Judicial Branch). Having said that, there is no limitation to conduct international ad-hoc or administered arbitration, with the corresponding seat in Ecuador, under any international arbitration rules and/or manage any of the well-known international arbitration institutions.

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Ecuador

In general, the AML prevents judicial interference in arbitration, except for cases of interim relief, annulment of awards and enforcement of awards. Hence, there is no special arbitration court. The legislation also recognises international arbitration and the pro arbitri principle. Furthermore, the AML Regulations provide that no state entity can interfere with any arbitration center’s autonomy and function.

One of the subjects of debate on the cooperation between the ordinary jurisdiction and the arbitral forum, until recently, was the enforcement of foreign awards. The COGEP, enacted in May 2015, which became fully effective as of May 2016, provided that prior to enforcement, an award had to be recognised and homologated before Ecuadorian courts, triggering a conflict vis-à-vis the AML, which does not require such homologation. This changed with the enactment of the Organic Law for the Productive Promotion, Investment Attraction, Employment Generation, Stability and Fiscal Equilibrium (Law for the Productive Promotion) in August 2018, which amended the COGEP and hence eliminated any reference to a homologation proceeding prior to the enforcement of arbitral awards, ratifying the AML’s criteria.

The Law for the Productive Promotion’s criterion was later ratified by the AML Regulations that expressly provide that no homologation procedure is necessary for the enforcement of international awards in Ecuador. Although there are still limited precedents regarding enforcement of international arbitration awards, the current framework provides sound tools for judges to proceed accordingly and allow direct enforcement of such awards.

7. 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?

Ecuador

Yes, an arbitration agreement can cover future disputes, this being the general rule.

As for the validity and enforcement of the agreement, under Ecuadorian law, there are two key criteria that must be satisfied for the agreement to be valid and enforceable: (i) that the matter on which arbitration is sought to be held can be settled without addressing matters of public policy; and (ii) that the agreement must be in writing. In this regard, the AML provides that the controversies that can be subject to arbitration must be “disputes susceptible of settlement” (non-official translations used here).

Moreover, article 5 of the AML, provides that: “[t]he arbitration agreement is the written agreement by virtue of which the parties decide to submit to arbitration all or certain disputes [that can be settled] which have arisen or may arise between them.” However, a written document signed by the parties is not the only valid form to execute a valid and enforceable arbitration agreement, “an exchange of letters or other written communications evidencing the parties’ will to submit to arbitration” is also a valid option to that effect. Hence, the lawmaker’s intention was to record the parties’ unequivocal desire to resort to arbitration, regardless of the fact that their consent is expressed in one act or in several consecutive expressions of will.

Furthermore, in the case of an agreement 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 to” (article 5 AML). 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” (article 5 AML). In addition, if the arbitration agreement falls within the context of public contracting or state contracts (which involves state instrumentalities, state-owned institutions, municipalities, and similar state organs), the Constitution, the AML, the Organic Law for Public Procurement, and the Organic Law of the Attorney General’s Office set forth the following additional requirements for local and international arbitration:

• the “favourable” opinion of the Attorney General's Office must have been issued prior to the execution of the arbitration agreement;
•  the highest authority of the institution must sign the arbitration agreement; and
• the arbitral process shall be in law (en derecho).

Another aspect to bear in mind is that, although the AML Regulations do not refer to the specific requirements for the validity of the arbitration agreement, aside from the ones mentioned in previous paragraphs, it has granted some flexibility to the arbitration agreement. For example, the Regulations provide that, when a public entity fails to respond within the term provided by the law to an arbitration offer made after a contract was concluded there is an understanding that the parties have agreed to arbitration.

8. Are any types of dispute non-arbitrable? If so, which?

Ecuador

According to Ecuadorian law, only matters in which it is possible to settle can be submitted to arbitration. This is well established and recognized in article 190 of the Constitution of Ecuador and article 1 of the AML.

The Ecuadorian Civil Code does not list matters that can be subject to a settlement 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 that already constitute res judicata. It is also important to note that within labour and minors laws, there are certain issues that cannot be settled. Moreover, regarding matters related to the state, tax issues cannot be submitted to arbitration. 

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

9. 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?

Ecuador

Although the AML did not include any provision regarding non-signatory parties, the AML Regulations recently included a specific provision in article 6 providing that the scope of the arbitration agreement also includes third parties whose consent to arbitration derives from "[t]heir active and determining participation in the negotiation, conclusion, execution or termination of the legal transaction comprising the arbitration agreement or to which the agreement is related". This has been understood as the express inclusion in the legislation of the theory of non-signatory third parties. However, it is important to note that even before the enactment of the AML Regulations, case law already recognised non-signatory parties in Ecuadorian arbitration.

10. 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?

Ecuador

The AML does not contain any relevant provisions in this regard. However, article 16 of the procedural code (COGEP), which may be considered applicable as a subsidiary law, includes four situations in which consolidation is possible: (i) when a judgment in one of the cases would cause res judicata regarding the other cases; (ii) when the object in dispute is also under analysis in an ongoing case; (iii) when 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. Is the "group of companies doctrine" recognised in your jurisdiction?

Ecuador

No. The “group of companies” doctrine is not expressly recognised in Ecuadorian legislation. However, as previously mentioned, the AML Regulations now unequivocally recognise the theory of non-signatories as party to the arbitration agreement. In this same sense, case law has already recognised the group of companies’ doctrine.

In this sense, it is important to note that article 6 of the AML Regulations provides that the scope of an arbitration agreement reaches those whose consent to submit to arbitration is derived, according to the precepts of good faith, of their active and decisive participation in the negotiation, celebration, execution or termination of the legal business that includes the arbitration agreement or to which the agreement is related to.

Also, the aforementioned article provides that said effects may reach those who intend to derive rights or benefits from the legal business, according to their terms, such as successors, assignees, among others. Finally, said article also provides that the scope of the arbitration agreement reaches the agencies of the administrations that originated the administrative action.

12. Are arbitration clauses considered separable from the main contract?

Ecuador

The AML recognises the principle of separability of the arbitration clause in article 5 of the AML, which provides that the annulment of the contract does not affect the arbitration clause, which means that the arbitration clause is deemed an independent contract separate from the main contract. This provision is often incorporated in arbitration clauses.

13. 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?

Ecuador

The competence-competence principle is fully applicable in Ecuador and is consistently followed by local courts. Article 22 of the AML determines that the first step an arbitral tribunal must accomplish once it has been constituted is to decide on its own jurisdiction. So, a party in an arbitration cannot ask the courts to determine an issue related to the tribunal’s jurisdiction and competence.

Regardless of the legal framework, in limited occasions, Ecuadorian courts have ruled over jurisdiction in contractual disputes with arbitration clauses. Fortunately, these are isolated cases.

14. 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?

Ecuador

Yes, it is fundamental to avoid non-effective clauses that do not satisfy the formal requirements

According to article 4 of the AML, natural or legal persons who have the legal capacity to commit may submit matters to arbitration if they meet the legal requirements provided to that effect. It is important to note that the arbitration agreement must refer to a dispute that can be settled. In general terms, as per article 5 of the AML the arbitration agreement must be in writing and, if it refers to a contractual matter to which the agreement is not incorporated in the contract, the agreement must be included in a document that expresses the name of the parties and the unequivocal determination of the matter it refers to. When the agreement to arbitrate refers to civil compensation, the agreement must refer to the facts to be dealt with in the arbitration.

Furthermore, article 4 of the AML provides specific and additional requirements that public entities must fulfill to submit disputes to arbitration. As stated above, public entities must: (i) conclude an arbitration agreement prior to the emergence of the dispute, in the event that the agreement is to be signed once the controversy has arisen, the Attorney General of the state must be consulted; (ii) the legal issue to which the agreement refers must be of a contractual nature; (iii) the arbitration agreement must include the form of appointment of the arbitrators; and, (iv) the arbitration agreement, through which the public sector institution waives ordinary jurisdiction, must be signed by the person authorised thereto.

Although the AML Regulations do not refer to the specific requirements for the validity of the arbitration agreement, it introduced some flexibility to the arbitration agreement by further developing the AML in the following aspects: (i) when the parties have not established the arbitration institution or the rules governing it, it will be understood that the arbitration is administered by the arbitration and mediation center closest to the place where the contract was concluded, or the residence of the plaintiff, ; and (ii) that in contracts with the state, the execution of an arbitration agreement may be requested after the contract has been signed. If the public entity fails to respond to such request in the term provided by law, there is an understanding that the parties have agreed to arbitration.

15. 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?

Ecuador

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. In fact, ad hoc international arbitration has been a major milestone in Ecuador. In recent years, the number of ad hoc cases within the Ecuadorian forum has increased, being carried out not only under the UNCITRAL Rules, but also under the ICC or CIAL Rules. The latter most likely correlates with the above-mentioned Law for the Productive Promotion, which in 2018 required the Ecuadorian state to “agree to national or international arbitration to resolve disputes generated through investment contracts”.

16. 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.

Ecuador

Multi-party arbitration agreements must fulfil the same legal requirements as a bilateral agreement.

According to article 4 of the AML, natural or legal persons who have the legal capacity to commit may submit to arbitration if they meet the legal requirements provided to that effect. It is important to note that the arbitration agreement must refer to a dispute that can be settled. In general terms, as per article 5 of the AML, the arbitration agreement must be in writing and, if it refers to a business to which the agreement is not incorporated in its text, it must be recorded in a document that expresses the name of the parties and the unequivocal determination of the matter referred to. When the agreement to arbitrate refers to civil compensation then the agreement must refer to the facts on which the arbitration will deal.

Furthermore, article 4 of the AML provides specific and additional requirements that public entities must fulfil to submit disputes to arbitration. That said, public entities must:

• conclude an arbitration agreement prior to the rise of the dispute, in the event that the agreement is to be signed once the controversy has arisen, the Attorney General of the state must be consulted, said decision will be mandatory;
• the legal relationship to which the agreement refers must be of a contractual nature;
• the arbitration agreement must include the form of appointment of the arbitrators; and
• the arbitration agreement, through which the public sector institution waives ordinary jurisdiction, must be signed by the person authorised to contract on behalf of said institution.

However, in the case of multiparty arbitration agreements with the state, it must be noted that Resolution No. 122 issued by the State Attorney General’s Office provides that the Attorney General of the state’s authorisation is mandatory for public entities to submit to arbitration in matters that pertain to public contracting and international arbitration, and once the dispute has arisen. One must bear in mind that the failure to comply with said requirements will result in the nullity of the arbitration agreement.

17. 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?

Ecuador

Arbitrations commence with the submission of the claim before the director of the relevant arbitration centre. There is no prior request for arbitration or notice of arbitration contemplated in Ecuadorian legislation. The AML establishes a bifurcated process dividing jurisdiction from the merits (article 22). However, the parties can arrange their own proceeding in the arbitration agreement, stipulating the periods of time for the issuance of the award (ie, fast-track arbitration).

In general terms, the statute of limitation applicable for arbitration is 10 years. After the claim is served to the respondent, the respondent has 10 days to present the statement of reply.

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

Ecuador

The AML does not provide the arbitral tribunal with guidance as to which substantive law to apply to the merits of the dispute, yet articles 41 and 42 of the AML provide that arbitration shall be regulated by international treaties, in absence of law, of if this is unclear.

19. Does the law of your jurisdiction place any limitations in respect of a party's choice of arbitrator?

Ecuador

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.

20. 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?

Ecuador

Ecuadorian law does not hold a specific requirement as to the nationality of arbitrators in international arbitrations seated in Ecuador. Several arbitration institutions, such as the Arbitration Centre of the Quito Chamber of Commerce, have non-nationals in the list of arbitrators. Depending on the nationality of the arbitrator, some immigration requirements (ie, visa) 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 (when applicable). If payments are made locally taxes will apply.

21. 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?

Ecuador

The AML allows the parties to directly appoint the arbitrators. Nevertheless, if the parties do not nominate arbitrators, then the AML provides a mandatory proceeding:

• 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: and
• 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 provided by the centre).

However, the AML allows the parties, by mutual agreement, to appoint arbitrators from outside the list submitted by the arbitration centre. In the case of ad hoc arbitration, the parties shall appoint the arbitrators according to the procedure stated in the arbitration agreement. If the parties do not agree on the appointment of all the arbitrators, those appointed, once in office, shall appoint the missing ones.

To avoid the mentioned mandatory proceeding, it is common that arbitration clauses incorporate a selection mechanism of the arbitrator or the tribunal.

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

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Ecuador

As a general rule, arbitrators are not afforded immunity. The exception are the arbitrations administered by the Permanent Court of Arbitration (CPA). As background, in October 2022, Ecuador and the CPA entered into a Host Country Agreement, where Ecuador granted arbitral tribunals and CPA officials some immunities.

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Ecuador

Usually, arbitration institutions collect the arbitrator’s fees when the claim is submitted.

24. 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?

Ecuador

Article 21 of the AML states that the grounds on which judges may be challenged are also applied to arbitrators. Article 22 of the COGEP includes the following grounds to challenge a judge or arbitrator:

• being a party in the process;
• being the spouse of one of the parties or their attorney;
• being a relative up to the fourth degree of consanguinity or second degree of affinity of one of the parties, of its legal representative, agent, attorney or the judge that issued the resolution that is challenged through of the means of recourse;
• to have known or issued a decision in another instance and in the same process, regarding the subject matter that is addressed, or another related to it;
• delaying unjustifiably the dispatch of matters within its jurisdiction;
• to have been a legal representative, agent, attorney, attorney-in-fact of any of the parties in the process currently submitted to him or intervened in it as mediator.
• having expressed opinion or advice regarding the process that comes to their knowledge;
• if the judge, his or her spouse or any relative up to the fourth degree of consanguinity or second affinity has or has had a judicial process with any of the parties. when the process was initiated by one of the parties, it must have been before the instance in which the challenge is attempted;
• having received from any party rights, contributions, goods, values or services.
• having any obligations with any of the parties or their attorneys;
• having a close friendship or manifest enmity with any of the parties or their attorneys; and
• to have personal interest in the process because it is their business or their spouse’s, or their relatives within the fourth degree of consanguinity or second of affinity.

The AML (article 21) foresees a specific procedure for challenging arbitrators; however, it does not involve courts. In the case of institutional arbitration, the director of the arbitration centre must resolve the challenge; 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 residence of the plaintiff, if there is only one arbitrator, or if all the arbitrators are being challenged.

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.

25. 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?

Ecuador

Article 9 of the AML gives tribunals wide powers to grant interim relief. In accordance with this provision, parties can include in the arbitral agreement a provision by which the tribunal can request the assistance of public officials (any type of public entity) to enforce interim relief, without the assistance of a court. If the possibility to request such assistance is not included in the arbitral agreement, the party who requires interim relief will have to file a request before a court to enforce the relief ordered by the tribunal. Local courts will assist arbitral tribunals with their enforcement authority in such a situation.   

Under article 8 of the AML, 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 an argument will have to be resolved by the court as a preliminary ground for dismissal during the preliminary hearing.

Furthermore, article 8 of the AML Regulations provides that any arbitral tribunal may issue any precautionary measure they consider necessary for each case. For instance, a precautionary measure may be issued to:

• maintain or re-establish the status quo until settlement of the dispute;
• prevent the continuation of any current damage, or the materialisation of imminent damage or the impairment of the arbitration procedure;
• preserve goods that are subject of the process or in general, the assets of the debtor or the creditor;
• preserve evidence that may be relevant to resolve the dispute and guarantee compliance with the obligations subject to arbitration; and
• preserve the jurisdiction of the arbitral tribunal.

Another aspect to bear in mind is that article 8 of the AML Regulations contemplates the possibility to request the adoption of precautionary measures before the arbitral tribunal is constituted. Said measures can be adopted from the ones contemplated in the General Code of Procedures (COGEP) or the ones listed in the former paragraph. In this case, an emergency arbitrator or a civil judge will have jurisdiction to resolve the address the request, without it constituting any form of waiver of the arbitration agreement. The request will follow the same procedure that the General Code of Procedures provides for processing the request for interim relief.

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

Ecuador

Yes, in the case of annulment action presented against arbitration awards, if one party requests to suspend the award enforcement.

27. 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)?

Ecuador

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 or her from performing his or her functions due to absence of such qualities.

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

Ecuador

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 and facts. However, the respondent would not be able to submit evidence.

29. 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?

Ecuador

The types of evidence that are usually admitted are testimonies, documentary evidence, expert reports and inspections. Documentary evidence shall be submitted with the claim and with the answer to the claim. 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 fails to deliver the requested evidence, the tribunal may request the assistance of the judicial police in the application of the COGEP provisions.     

The application of the IBA Rules on the Taking of Evidence in International Commercial Arbitration is growing; however, many arbitrators prefer to apply the COGEP since AML states that the COGEP is a subsidiary code.

If the COGEP is applied, the rules for admission of evidence rely on the capacity of each evidence to be legal, relevant, useful, and conductive. Furthermore, in February 2023, the COGEP was amended and now the legislation is more flexible regarding the submission of evidence in electronic format.

Regarding the question about the Prague Rules, since the IBA Rules on the Taking of Evidence in International Commercial Arbitration have started to be applied by the parties and the Tribunals only recently, we consider that in the foreseeable future it is unlikely that the Prague Rules will replace, or will be used as an alternative to, the IBA Rules. However, the parties may agree to apply the Prague Rules, and even the Tribunal could decide that they are applicable.

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Ecuador

Usually, tribunals will have enough powers to obtain or order the parties to produce documents or submit evidence. However, parties may seek relief from courts to obtain evidence as a preliminary procedure.

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Ecuador

The prevailing practice in international arbitration is using a “Redfern Schedule”, as provided in the IBA Rules on the Taking of Evidence in International Commercial Arbitration.

In domestic arbitration, the prevailing practice is that the party who requests the production of a document must do so at the moment of submitting the claim or answering it, and the production shall follow the rules provided by the COGEP. Unlike the IBA Rules on the Taking of Evidence in International Commercial Arbitration, the COGEP does not permit the production of a category of documents. Nonetheless, using a “Redfern Schedule” is also a growing practice in domestic arbitration

32. Is it mandatory to have a final hearing on the merits?

Ecuador

No. The AML provides a bifurcated proceeding in which there is a hearing on jurisdiction (audiencia de sustanciación), a phase of evidence, and a hearing on the merits. The hearing on jurisdiction the Tribunal rules over its own jurisdiction as per the competence-competence principle. The hearing on the merits shall take place if the parties request it according to article 24 of AML.

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

Ecuador

Yes, article 35 of the AML states that hearings and procedural meetings may be conducted elsewhere, unless otherwise agreed by the parties.

34. Can the tribunal decide by majority?

Ecuador

Yes, as per article 26 of the AML, two-thirds of the tribunal can decide on the matter of the arbitration.

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Ecuador

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 start to run and in the enforcement proceedings the judge will order 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. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Ecuador

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 of common practice.

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Ecuador

The AML states a few formal requirements for an award to be valid:

• the award must be issued by majority vote;
• all the arbitrators shall sign the award, even those with dissenting opinion;
• dissenting opinions shall be attached to the award; and
• 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. 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?

Ecuador

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 addressed 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. As per article 30 of the AML, the time limit for requesting clarification or for any request is of three days since the notification of the award to the party.  

Additionally, in the same time limit, the tribunal can correct numeric or calculation mistakes.

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

Ecuador

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. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Ecuador

Yes, interest can be included in the costs sought in the claim until the sum is paid to the creditor. The award needs to establish the date from when the interests run 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.

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Ecuador

Awards cannot be appealed before courts, as expressly forbidden by article 30 of the AML, thus it is not possible to review the merits of the award.

42. Are there any other bases on which an award may be challenged, and if so what?

Ecuador

First, an award can be challenged by means of an annulment action. The grounds to request the annulment of an award are listed, expressly, in article 31 of the AML and includes the following procedural misdeeds:

• 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;
• failure to serve the court’s orders to the parties thus limiting or preventing their right of defence;
• failure to summon, notify or present evidence despite the existence of facts that must be justified;
• extra or ultra petita decision; and
• 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 becomes firm to file, before the same arbitral tribunal, a claim for annulment of the arbitral award. Within three days, the arbitration panel must deliver the proceeding to the president of the court of appeals 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 President of the court of appeals receives the annulment claim he or she must verify whether the action was brought within the time limit.

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

In addition, the Constitutional Court is competent to revise an award through an Extraordinary Action of Protection (EAP) when faced with constitutional rights’ violations. The competence of the Constitutional Court is exceptional and only applicable in relation to egregious violations of, for instance, due process. It is not possible to file an EAP based on the annulment grounds to set aside and award as described above (Judgment 323-13-EP/19 and 031-14-EP/19).     

43. 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?

Ecuador

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 claim.

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Ecuador

It is unlikely that an award that has been set aside by the courts in the seat of the arbitration could be enforced in Ecuador. In fact, we do not have knowledge of any case law thereabout. As previously mentioned, prior to 21 August 2018, article 104 of the COGEP provided that the competent judge shall analyse if the award was considered final according to the laws of the place where it was rendered. Therefore, prior to the aforementioned date, annulled foreign arbitral awards could not be recognised because they were not deemed as final.

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Ecuador

As mentioned before, the Law for Productive Promotion enacted in August 2018, amended and re-introduced article 42 of the AML that provides that arbitral awards shall have the same effects and shall be enforced in the same way as the domestic awards.

Therefore, domestic awards are enforced in the same way as judicial decisions. Further, article 15 of the AML Regulations specifically states that: “[a]wards rendered in an international arbitration proceeding, whether the seat of arbitration is within or outside the Ecuadorian territory, 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 the prior requirement of a homologation process.” This has been the spirit of AML since its enactment.

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Ecuador

The AML does not provide specific rules that apply to the enforcement of an award against a state or a state entity.

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 his or her official duties. Sovereign immunity is to be applied in accordance with sources of international law.

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Ecuador

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 counsel can obtain a copy of the arbitration file, or any information related to the proceeding or the award.

The confidentiality might be jeopardised in annulment procedures. Because of the publicity of judicial process, annulment actions are also public and as general rule, anyone could attend the hearings. Only article 11 of the AML Regulations grant some level of confidentiality, allowing parties to request the censure of sensible information and the restriction to the files.

48. 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)?

Ecuador

As previously mentioned, arbitration can be confidential if the parties agree so. 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 the case of an annulment action, the arbitral tribunal must send the entire arbitration file to the Provincial Court (including evidence and pleadings). In that case, the whole file becomes public.

Additionally, if a state entity is involved as a party in the arbitration, the procedure and all the evidence produced, and pleadings filed are public.

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Ecuador

Counsels and arbitrators are compelled to act under severe and high ethical standards 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. 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?

Ecuador

AML and centre regulations provide for an arbitral proceeding that defers from the traditional proceeding in international arbitration. Here, we present a snapshot of certain local arbitration features to be considered:

• In local arbitration, evidence has to be gathered and filed together with the arbitration claim at the beginning of the process.
• Also, in local arbitration, most – if not all – the centre’s costs have to be paid in advance at the beginning of the arbitration.
• Since the claim and the answer of the claim are filed at the beginning, even before there is a tribunal, there are no rounds of memorial.
• There is no possible bifurcation. The Tribunal will decide on its jurisdiction at the beginning of the arbitration.
• The AML provides for the tribunal to issue its award within a limited period of time (180 working days to be extended for an additional 150 days).
• Usually, the language used in proceedings held in Ecuador is Spanish. Furthermore, it is important to note that criminal actions have been raised against arbitrators for misconduct or prejudice in the arbitration proceedings.

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Ecuador

There is no specific regulation under Ecuadorian law either forbids or regulates the litigation funding. Therefore, and in accordance with the principle of party autonomy, there is no prohibition on third-party funding.

The author would like to thank the following for their contribution to previous year's chapters: Cristina Viteri Torres, Michelle Vasco Campoverde and Matthias Villavicencio Gomezjurado.