Commercial Arbitration

Last verified on Wednesday 10th May 2023

Commercial Arbitration: Guatemala

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

Guatemala

Yes, Guatemala is party to the New York Convention since 1984. The Convention was ratified by Decree Number 9-84 of the Guatemalan Congress.

When ratifying the Convention, Guatemala formulated the reservations permitted by the Convention regarding reciprocity with the other states parties to the Convention and its application only in disputes arising from relations that are considered commercial under its domestic law.

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

Guatemala

Yes, Guatemala is party to the Panama Convention about International Commercial Arbitration. It was ratified by Decree No. 35-86 of the Guatemalan Congress.

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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?

Guatemala

Guatemala adopted the UNCITRAL Model Arbitration Law by Decree No. 67-95 of the Guatemalan Congress on 3 October 1995.

The Guatemalan Arbitration Law applies to national and international arbitration, whenever the seat of arbitration is Guatemala. Additionally, it is relevant to mention that it applies to all matters in which the parties are free to decide and not only to commercial disputes.

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

Guatemala

There are two relevant arbitration institutions in Guatemala: Dispute Resolution Commission of the Guatemalan Chamber of Industry (CRECIG) and Arbitration and Conciliation Center of the Guatemalan Chamber of Commerce (CENAC).

Both institutions may act as appointing authorities.

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5. Can foreign arbitral providers operate in your jurisdiction?

Guatemala

Yes, International Institutions may administer arbitrations in Guatemala and the contracting parties are free to agree that these institutions to administer an arbitration.

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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?

Guatemala

In Guatemala, there are no specialist arbitration courts.

Regarding familiarity with the law and support for the practice of international arbitration, Guatemalan courts have a general knowledge of the applicable rules and support the practice of international arbitration.

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Agreement to arbitrate

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?

Guatemala

According to article 10(1) of the Guatemalan Arbitration Law, the arbitration agreement shall be in writing and signed by the parties.

Likewise, the agreement to arbitrate could be in an exchange of letters, telex, telegrams and other means of telecommunications that provide a record of the agreement. The agreement to arbitrate may even be included in an exchange of statements of claim and defence, in which one party affirms the existence of an agreement and the other party does not deny it.

As for the possibility to cover future disputes, the agreement to arbitrate may well cover any future dispute as long as the parties have agreed to it, and it does not constitute non-arbitrable matters.

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

Guatemala

Yes, the article 3(3) of the Arbitration Law of Guatemala establishes that the following cases may not be subject to arbitrate:

  • Matters on which a judicial decision has been taken, except for the aspects derived from its enforcement.
  • Matters inseparably linked to other matters over which the parties do not have free disposal. For example, under Guatemalan law, the parties do not have free disposition in matters such as: civil status, validity or nullity of marriage or divorce, alimony, among others.
  • When the law expressly prohibits it or establishes a special procedure for certain cases (for example, a lawsuit for the division of common property has a specific procedure).

Likewise, the law expressly excludes its application to labour arbitration.

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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?

Guatemala

The Arbitration Law of Guatemala expressly prohibits joinder incidents.

As for a third-party notice, the law does not expressly regulate it. However, if in suing or answering the claim one of the parties considers the cause of the claim to be common with a third party, it may request its summons and the third party may be bound if does not deny the arbitration agreement.

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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?

Guatemala

The Guatemalan Arbitration Law does not contemplate consolidation of separate arbitration proceedings under one or more contracts. However, specific rules of an arbitration institution may contain provisions allowing for the consolidation of arbitrations. For example, article 27 BIS of the CENAC Rules of Arbitration allows it.

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

Guatemala

Guatemalan law does not foresee this scenario.

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

Guatemala

Yes, the Guatemalan Arbitration Law (articles 10(1) and 21(1)) recognises the arbitration agreement as an independent agreement from the other stipulations of the contract. Even the fact of declaring a contract null and void does not invalidate the arbitration agreement contained in the contract.  

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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?

Guatemala

Yes, the principle is recognised in article 21(1) of the Guatemalan Arbitration Law. If the arbitral tribunal rules on its own jurisdiction as a preliminary matter, either party may request a court of ordinary jurisdiction to resolve the issue and the tribunal’s decision shall not be subject to appeal.

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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?

Guatemala

There are no particular issues to note but it is suggested to verify that the matter to be submitted to arbitration does not fall under the assumptions of non-arbitrable disputes.

In addition, if the parties decide to have the arbitration administered by an institutional centre, we recommend checking the model clauses used by the arbitration institution.

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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?

Guatemala

In terms of international arbitration, institutional arbitration is more common than ad hoc arbitration. The parties are free to decide to which institution entrust the administration of the arbitration.

In ad hoc international arbitrations, we can affirm that UNCITRAL Rules are commonly used.

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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.

Guatemala

The Arbitration Law of Guatemala does not contemplate a multi-party arbitration agreement. However, regarding the appointment of arbitrators, the law allows the parties to determine the number of arbitrators, so when drafting a multi-party arbitration agreement, the parties would be free to dispose of this matter in the terms they deem best.  

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Commencing the arbitration

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?

Guatemala

According to article 28(1) of the Guatemalan Arbitration Law, the claimant must file its claim within the period agreed by the parties or as determined by the arbitral court.

In Guatemala, with some exceptions, the general rule is that the statute of limitations expires 5 years from the expiration of the obligation. In this regard, article 26(2) of the Guatemalan Arbitration Law provides that the filing of the claim interrupts the limitation period, but if the arbitration is institutional, the filing of the claim may take place at different stages. Therefore, the statute of limitations periods that the parties must be aware depends on the arbitration agreement.

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Choice of law

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?

Guatemala

According to article 36(1) of the Guatemalan Arbitration Law, the arbitral tribunal shall decide the dispute in accordance with the rules of law chosen by the parties as applicable. Any indication of the law or legal system of a given state shall be construed, unless otherwise expressed, as directly referring to the substantive law of that state and not to its rules of private international law.

In absence of party agreement regarding the applicable law to the substance of the dispute, the arbitral tribunal shall determine the applicable law, considering the characteristics and connections of the case.

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Appointing the tribunal

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

Guatemala

According to article 14 of the Guatemalan Arbitration Law, to be an arbitrator it is only necessary to be in full exercise of civil rights and not to have a direct relationship with the parties or the dispute that could cast doubt on his or her impartiality, unless the parties are aware of this circumstance and expressly waive it.

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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?

Guatemala

Yes, non-nationals can act as arbitrators in Guatemala without any immigration or other specific requirement. Article 14 (2) of the Guatemalan Arbitration Law even provides that the nationality of a person shall not be an obstacle to his or her acting as arbitrator, unless otherwise agreed.

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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?

Guatemala

Yes, in these cases the national courts exercise assistance functions.

First, in absence of party agreement regarding the number of arbitrators, the arbitral tribunal shall be composed of three arbitrators, in accordance with the article 13 of the Arbitration Law of Guatemala.  

Regarding the procedure for the appointment of arbitrators, article 15 of the Arbitration Law provides that the parties may freely agree on the procedure or submit it to the rules of the institution administering the arbitration. If the procedure agreed by the parties fails, either party may request a national court to take the necessary steps for the appointment.

In absence of agreement for appointment of arbitrators, the appointment shall be made as follows:

  • In a three-arbitrator arbitration, each party shall appoint one arbitrator and the two arbitrators designated shall appoint the third arbitrator. The three arbitrators shall decide who shall act as chairman and if no agreement is reached, the oldest shall act as chairman. If one of the parties fails to appoint the arbitrator within fifteen days of receipt of the other party’s request to do so, the appointment shall be made by a national court, at the request of the party (a judge of the civil court of first instance would be in charge in deciding on these matter).
  • In a single-arbitrator arbitration if the parties fail to agree on the appointment of the arbitrator within fifteen days after request for appointment has been made, the appointment shall be made by a national court, at the request of the party.

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

Guatemala

No, the Guatemalan Arbitration Law does not grant immunity to arbitrators. In Guatemala, the Criminal Code (article 464) even regulates that arbitrators can commit the crime of prevarication (issuing decisions contrary to the law or based on false facts, knowingly or through inexcusable negligence or ignorance).

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

Guatemala

Article 20 of the Guatemalan Arbitration Law entitles the arbitrators to demand from the parties an advance payment of the funds necessary for the arbitrators' remuneration and administration expenses. If the advance is not paid, the arbitral tribunal may order the suspension or termination of the arbitration.

The rules of the institutions also provide for the right to demand advances to ensure the payment of fees and expenses.

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Challenges to arbitrators

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?

Guatemala

According to article 16 (2) of the Guatemalan Arbitration Law, an arbitrator may only be challenged when circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or when he or she does not meet the qualifications agreed by the parties.

As to the manner of handling the challenge, article 17 of the Guatemalan Arbitration Law provides that the parties may agree on the procedure or refer to the rules of the institution administering the arbitration.

In absence of agreement, the following procedure must be followed:

  • The interested party must present the reason for the challenge within 15 days of becoming aware of the constitution of the arbitral tribunal. The arbitral tribunal shall decide on the challenge within 15 days from the date of its submission, by an absolute majority and without the participation of the challenged arbitrator, unless the challenged arbitrator withdraws from office, or the other party accepts to the challenge.
  • When only one arbitrator is appointed, the challenge shall be made to a national court exercising assistance functions.

Likewise, if the challenge fails in accordance with the procedure agreed by the parties or as provided by law, the party concerned may seek the judicial assistance of a national court, whose decision shall be final.

The IBA Guideline of Conflicts of Interest in International Arbitration will only be applicable whenever the parties agree so.

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Interim relief

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?

Guatemala

Guatemalan Arbitration Law allows parties to request any interim reliefs they deem appropriate to secure their rights. The arbitral tribunal may grant the interim relief once it is formed and it is addressed to the parties of the arbitration agreement (article 22).

If a party need an interim relief before the arbitral tribunal is formed, national courts may grant the interim relief without this constituting a waiver of the arbitration agreement (article 12 of the Guatemalan Arbitration Law). Additionally, if the interim relief is to be enforced by a third party over whom the arbitral tribunal does not have jurisdiction, a national court shall enforce the interim relief.

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

Guatemala

In Guatemala, the Arbitration Law does not foresee this situation. However, in practice, it is common to see this type of measures, especially because due to the broad powers granted by the Guatemalan Arbitration Law to request measures that guarantee the rights of the parties.

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Procedure

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)?

Guatemala

Yes, the arbitral tribunal must always conduct the arbitration under the principle of equal treatment of the parties guaranteed by article 23 of the Guatemalan Arbitration Law. Additionally, during the arbitration, the arbitral tribunal may not admit third-party proceedings request by parties, lis pendens or motions for joinder in accordance withto article 21(4) of the Arbitration Law.  

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

Guatemala

Unless otherwise agreed between the parties, according to article 32 (2) of the Guatemalan Arbitration Law, if the respondent fails to submit his statement of defence within the time limit, the arbitral tribunal shall continue the proceedings in default without such failure being deemed to constitute an acceptance of the claimant's allegations and render an award if absence continues during the whole proceedings.

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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?

Guatemala

According to article 29(1) of the Guatemalan Arbitration Law, unless otherwise agreed between the parties, the arbitral tribunal has the power to decide on the manner of presentation of evidence. The IBA Rules and the Prague Rules can serve as a guide but will not be binding unless the parties so agree.

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

Guatemala

Yes, according to article 34(1) of the Guatemalan Arbitration Law, the arbitral tribunal or a party with the approval of the arbitral tribunal, may request assistance from the courts in taking evidence.

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

Guatemala

The Guatemalan Arbitration Law does not expressly provide the form of presentation of documents in the arbitration process. However, the IBA Rules on the Taking of Evidence in International Commercial Arbitration can be used as a guide or even on a mandatory basis, if so agreed by the parties.

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

Guatemala

It is not mandatory, unless otherwise agreed by the parties. However, the Guatemalan Arbitration Law (article 29(1)) allows the arbitral tribunal to decide whether a hearing for closing arguments shall be held.

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

Guatemala

Yes, hearings and procedural meetings can be conducted in a different country, even if Guatemala is selected as the seat of arbitration.

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Award

34. Can the tribunal decide by majority?

Guatemala

Yes, according to article 38 of the Guatemalan Arbitration Law, when there is more than one arbitrator, any decision of the arbitral tribunal shall, unless otherwise agreed by the parties, be taken by a majority vote of all members. The same rule states that in the event of a tie, the Chairman’s vote shall be decisive.

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

Guatemala

No, unless the remedy or relief is contrary to the public policy of the state of Guatemala.

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36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Guatemala

Yes, according to article 40(1) of the Guatemalan Arbitration Law, whenever in arbitral proceedings where there is more than one arbitrator, any decision of the arbitral tribunal shall be taken by a majority vote of all members, and an arbitrator who does not agree with the majority decision may record his or her dissenting opinion.

Despite being empowered to issue dissenting opinion in Guatemala, it is not common in practice. 

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

Guatemala

According to article 40 of the Guatemalan Arbitration Law, the award shall be in writing and shall contain: (i) the signatures of the arbitrator or arbitrators. When there is more than one arbitrator, the signatures of the majority shall be sufficient; (ii) the reasons on which it is based, unless the parties have agreed that the award shall not be reasoned; (iii) place and date of issuance.

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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?

Guatemala

In Guatemala, the Arbitration Law does not establish a time limit within which the award must be rendered. Regarding interpretation and correction of an award, article 42 of the Guatemalan Arbitration Law provides that the application must be made within one month of receipt of the award, unless the parties have agreed otherwise.

However, it is important to mention that the rules of the two main arbitration institutions in Guatemala provide that the award must be rendered within six months of the end of the arbitration stages.

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Costs and interest

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

Guatemala

Yes, according to article 40 (5) of the Guatemalan Arbitration Law, when rendering the award the arbitral tribunal shall decide on the costs of the arbitration, which include the fees and expenses of the arbitrators, costs of notice and taking of evidence, and the costs of administration.

In Guatemala, the losing party is generally responsible for the payment of the costs. However, in the case of reciprocal expiry or if the arbitral tribunal considers that the litigation was in good faith, it may omit the award of costs.

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

Guatemala

In Guatemala, unless otherwise agreed by the parties, to obtain the payment of legal interest, the arbitral tribunal must expressly grant it in the award. If no specific rate has been agreed upon, the legal interest rate is used, which is equal to the weighted average of the lending rates of the banks in the system reduced by two percentage points, in accordance with the article 1947 of the Civil Code.  

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Challenging awards

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

Guatemala

The only remedy available under the Guatemalan Arbitration Law against an award is the challenge of revision (recurso de revision). This challenge is like the recourse under the UNCITRAL Model Law, with the difference that the decision on the challenge could modify the award and, in that case, the tribunal will make the pronouncement of the modifications it considers.

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

Guatemala

According to article 43(2), the grounds on which the award may be challenged are:

  • a party to the arbitration agreement was under some incapacity or the said agreement is not valid under the law to which the parties are subject;
  • the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings;
  • the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the Arbitration Law of Guatemala.
  • the subject-matter of the dispute is not capable of settlement by arbitration under Guatemalan law; and
  • the award conflicts with the public policy of the State of Guatemala.

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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?

Guatemala

In practice there are discussions about the validity of the waiver of the challenge of revision (which is the only one recognised in our legislation). Even in some cases the courts of appeals (which are the competent courts to decide this challenge) have taken the waiver as valid. However, we believe the waiver in such cases cannot be taken as valid in order to respect the right of defence of the parties.

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Enforcement in your jurisdiction

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

Guatemala

Article 47 of the Guatemalan Arbitration Law establishes grounds on which a court may refuse to recognise or enforce an arbitral award that has been rendered in another country, including, in such cases, when the award has been annulled by the country where the award was rendered.

There have been no cases in arbitral practice in Guatemala in which an award annulled by the country where it was rendered is enforced.  

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

Guatemala

Regarding the procedure, the Guatemalan Arbitration Law regulated a new procedure for the enforcement of awards. However, some national courts mistakenly continue to process the enforcement of awards according to the procedure previously regulated by the Guatemalan Code of Civil and Commercial Procedure, which is considered a bad practice.

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

Guatemala

In Guatemala, the Arbitration Law does not provide for a defence or exception based on state sovereignty at the enforcement stage. Therefore, its likelihood of success is considered low. 

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Further considerations

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

Guatemala

The Guatemalan Arbitration Law does not expressly provide for an obligation of confidentiality. However, the parties may agree to confidentiality in the arbitration agreement, in which case the obligation would be binding on the parties to the arbitration.

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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)?

Guatemala

The Guatemalan Arbitration Law does not expressly provide for an obligation of confidentiality. However, if the parties did agree to confidentiality in the arbitration agreement, evidence and other submissions to the proceedings would also be confidential.

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

Guatemala

In Guatemala, there is a code of ethics of the Guatemalan Bar Association that must be observed by lawyers in the exercise of their profession.

However, there is no specific code of ethics for arbitrators, but if the arbitrator is a lawyer, the code of ethics would be applicable to him or her.

The Arbitration Law only obliges arbitrators to act independently and impartially (article 15(5)).

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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?

Guatemala

Lawyers should be aware that Guatemala recognises the challenge of revision and that this allows for modifications to the award, unlike other countries that recognise the remedy of annulment. Arbitrators should be aware that they do not have immunity.

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

Guatemala

Third-party funding is not prohibited in Guatemala, and therefore, could be used if any party needs to resort to this financial option. Currently, there are no rules governing its use.

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