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The 2015 Peru chapter provided a detailed review of the 2008 Peruvian Arbitration Law (approved through Legislative Decree No. 1071 and hereinafter referred to as the Arbitration Law) which focused on the (limited) grounds for setting aside arbitral awards, as well as on the most recent developments in Peruvian arbitral practice. This year’s chapter will closely examine the Arbitration Law focusing on the provisions that may be applicable to arbitration procedures seated outside Peru.1
Article 1.2 of the Arbitration Law refers to the rules that may be applicable to arbitration procedures taking place outside Peru. Some of these rules are useful before or during the arbitral proceedings, that is, prior to the award (sections 1, 2, 3, 5 and 6 of article 8 together with articles 13, 14, 16, 45 and section 4 of article 48); while other rules will be useful once the award has been issued (articles 74, 75, 76, 77 and 78). Hence, this year’s chapter analyses the rules that could be applicable ‘before’ the tribunal issues a final award, as well as the rules that could be applicable ‘after’ an award is rendered, in the context of arbitration seated outside Peru.
Regarding the rules that may be applicable ‘before’ a final award is issued, the Arbitration Law includes provisions giving foreign tribunals or parties’ access to the Peruvian judiciary to uphold the agreement to arbitrate, provide assistance in the taking of evidence, or enforce provisional remedies, among others. As to the rules that may be applicable ‘after’ the tribunal renders an award, the Arbitration Law includes provisions concerning recognition and enforcement of foreign arbitral awards by local courts. On this matter, it is important to mention that Peru is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and to the 1975 Inter-American Convention on International Commercial Arbitration (Panama Convention).
Provisions applicable before an award is issued
Motion to dismiss on the grounds of an agreement to arbitrate – upholding the agreement to arbitrate abroad Pursuant to article 16 of the Arbitration Law, if a judicial claim has been filed and the claim relates to matters falling within the scope of an agreement to arbitrate, the court shall dismiss the claim and refer the parties to arbitration. This is the general rule for arbitral procedures seated in Peru. Pursuant to article 16.4, a similar rule is available if the arbitration is (or will be) seated abroad.
If the arbitral procedure has not yet begun and a judicial claim – over the same subject matter – is brought before Peruvian courts, the party seeking to uphold the agreement to arbitrate will have to file a motion to dismiss and provide evidence of the existence of the agreement to arbitrate. On the other hand, the party wishing to settle the dispute before the court (thus avoiding the arbitration procedure) will have to prove that the agreement to arbitrate is manifestly invalid.
Judges, therefore, lack the authority to determine if the subject matter falls within the scope of the agreement to arbitrate (which is consistent with the Kompetenz-kompetenz principle recognised in article 41 of the Arbitration Law). The court has limited discretion and shall endorse the agreement to arbitrate and refer parties to arbitration, unless the court finds that the agreement is manifestly invalid. To make such determination, the court will have to analyse the agreement to arbitrate under the rules applicable to the agreement or the rules applicable to the merits. Nonetheless, if the arbitration agreement meets the formal requirements set in the Arbitration Law (pursuant to article 13), Peruvian courts will then have the duty to grant the motion to dismiss, thus upholding the agreement to arbitrate abroad. This means that the formalities that must be met by the agreement pursuant to the Arbitration Law will also be relevant in the context of arbitration procedures seated outside Peru.
In the event that the arbitration procedure has already begun, and parties find themselves facing parallel procedures in which the arbitral procedure seats abroad, while the judicial procedure seats in Peru, Peruvian courts will dismiss the judicial claim. The only exception to this rule is that the party acting as claimant before the courts is able to prove that the subject matter manifestly violates international public policy.2
Article 16.4 of the Arbitration Law is consistent with article II.3 of the New York Convention as well as with article 8 of the United Nations Commission on International Trade Law (UNCITRAL) Model Law, but also sets a higher threshold in favour of the enforcement of the agreement to arbitrate. Neither the Convention nor the Model Law include an explicit provision stating that only in manifest cases of invalidity, the agreement to arbitrate will not be enforced. To prevent local courts from making a full review of the agreement to arbitrate the Arbitration Law makes explicit reference to the manifest nature of the invalidity, thus excluding the agreement’s ‘inoperativeness’ and ‘inability of being performed’ as grounds for refusing to enforce the arbitration agreement.3
Definition and form of the agreement to arbitrate
The form of the arbitral agreement set in the Arbitration Law is relevant in arbitration procedures seated outside Peru. As mentioned before, article 16.4 of the Arbitration Law establishes that if the agreement to arbitrate abroad meets the requirements set by: the law applicable to the arbitral agreement; or, the law applicable to the merits; or eventually, the Arbitration Law; Peruvian courts shall dismiss the claims brought before them.
Article 13.7 of the Arbitration Law – also applicable to arbitration procedures seated outside Peru – has a similar content. Indeed, pursuant to article 13.7, the agreement to arbitrate will be valid if it meets the requirements set by the law applicable to the agreement, by the law applicable to the merits; or by Peruvian (Arbitration) Law. The definition and form of the agreement to arbitrate set by the Arbitration Law is, therefore, relevant even when arbitration procedures take place outside Peru.
Article 13 of the Arbitration Law refers to the definition and form of the arbitration agreement. Said provision closely follows the definition made in article 7 (option I) of the UNCITRAL Model Law. Article 13.1 defines the arbitral agreement as the agreement in which the parties submit to arbitration all or certain disputes that have arisen or may arise between them with respect to a defined legal relationship, whether contractual or not.
As to the formalities of the arbitration agreement (which, as stated before, will be relevant in the event that an arbitration is seated abroad), article 13.2 states that the agreement shall be in writing and may be in the form of a clause included in a contract or in the form of a separate agreement. Article 13.3 states that an agreement will be deemed to be in ‘in writing’ if it is recorded in any way, even if the agreement or contract is concluded by performing conduct or by any other means. Moreover, article 13.4 states that the written nature of the agreement is met if an electronic communication is sent and the information contained therein is accessible for subsequent reference. An ‘electronic communication’ will be such communication made through data messages, and ‘data message’ refers to information sent, received or stored by electronic, magnetic, optical or similar means, including but not limited to electronic data interchange, electronic mail, telegram, telex or telecopy. Continuing with the formal aspect of the agreement to arbitrate, article 13.5 states that an arbitration agreement will be ‘in writing’ if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party, and not denied by the other. Finally, pursuant to article 13.6 the agreement will also be considered ‘in writing’ when a contract refers to any document containing an arbitration agreement, if the reference implies that clause is part of the contract.
Moreover, Peru has a regulation on the extension of the arbitration agreement to non-signatory parties. The implied consent to an arbitration agreement is regulated in the Arbitration Law. According to article 14, the arbitration agreement comprises all those whose consent to submit to arbitration is determined in good faith by their active and decisive participation in the negotiation, execution, performance or termination of the contract that contains the arbitration agreement, or to which the agreement is related. It also comprises all those who seek to obtain any rights or benefits from the contract, pursuant to its terms. This is important to determine who can be part of the arbitration agreement in accordance with the Arbitration Law. In other countries this point has been recognised by case law.
If an arbitral procedure is seated outside Peru, Peruvian courts should uphold the agreement to arbitrate if the formal requirements set in the Arbitration Law (described in the previous paragraph) are met. With this provision, if a party files a judicial claim before Peruvian courts, the party wishing to maintain the agreement to arbitrate abroad is allowed to argue the validity of the agreement under Peruvian Law (which is almost identical to Option I of article 7 of the UNCITRAL Model Law). This rule seeks to promote efficiency insofar as it would give the option to Peruvian courts to consider the validity of the agreement
under Peruvian law, and not under a foreign law that would be subject to proof and would lead to delays in the decision and further costs. This is because under Peruvian Law parties have
the burden of proving the existence and interpretation of foreign law.
Court assistance in taking of evidence – ‘Direct’ and ‘indirect’ assistance
In the context of arbitrations seated in Peru, the arbitral tribunal or a party (with the approval of the arbitral tribunal) may request assistance in taking evidence from a competent court. This rule is contained in article 45 of the Arbitration Law, which closely follows article 27 of the UNCITRAL Model Law. Article 45 of the Arbitration Law also extends to arbitration procedures seated abroad. If certain pieces of evidence are located in Peru, and the arbitration takes place abroad, the arbitral tribunal as well as the parties (authorised by the tribunal) can request the assistance of Peruvian courts to secure the taking of evidence.
Pursuant to article 45.2, judicial assistance by Peruvian courts in the taking of evidence can be performed directly or indirectly. Direct assistance in the taking of evidence means that the competent court, upon request of the foreign tribunal or party, may have broad discretion to take the evidence in the manner it deems more effective. Indirect assistance in the taking of evidence means that the competent court, upon request of the foreign tribunal or party, may adopt specific measures with the purpose of allowing the arbitral tribunal to take the evidence directly. In other words, under the second option, Peruvian courts would place the evidence at the tribunal’s disposal.
Article 45.3 states that Peruvian courts lack the authority to establish the admissibility on the merits of the taking of evidence. The only grounds which may allow the courts to deny assistance are the request is contrary to public policy or the request is contrary to express prohibitive laws.
Enforcement of provisional/interim remedies issued by an arbitral tribunal seated abroad
Availability of provisional/interim relief before and after the arbitral tribunal is constituted
This section will cover two scenarios: a first scenario in which arbitral tribunals grant interim relief (after the constitution of the tribunal seating abroad, during the arbitral proceedings) and, a second scenario in which Peruvian courts grant interim relief (before the constitution of the tribunal to be seated abroad, and the procedure is yet to be initiated).
Availability of interim relief granted by foreign arbitral tribunals
Article 48.4 of the Arbitration Law expressly states that measures granted by arbitral tribunals seated abroad shall be recognised and enforced by Peruvian courts. The measure will be enforced upon application and Peruvian courts lack discretion to review the merits of the decision.4 Peruvian courts, however, have the discretion to require the party that seeks the enforcement of the measure, to provide appropriate security if the arbitral tribunal has not ruled on this issue or when such security is necessary to protect the rights of third parties potentially affected by the interim measure.5
As to the formalities, the party who is seeking recognition and enforcement of the interim measure rendered by a foreign arbitral tribunal has the duty to submit an original or a duly authenticated copy of the decision (under the laws of the country in which the decision is issued).6 According to article 9.3 if the decision is drafted in a language other than Spanish, the party will have to submit a translated version of the decision. The judicial authority may request an official translation of the document only if necessary.7
The grounds for recognition and enforcement of a foreign decision on interim measures by Peruvian courts are the same as those applicable for the recognition and enforcement of foreign arbitral awards.
Availability of interim relief granted by local courts
Pursuant to article 47.4 of the Arbitration Law (applicable to arbitration procedures seated in Peru), it is possible to obtain interim relief from the courts prior to the constitution of the arbitral tribunal. Indeed, article 47.4 of the Arbitration Law – consistent with articles 9 and 17 J of the UNCITRAL Model Law – states that it is compatible with an arbitration agreement: for a party to request the courts for an interim measure before the beginning of an arbitration procedure; and for the courts to grant such measure.
The rule contained in article 47.4 is not included, however, amongst the list of articles that, according to article 1.2 of the Arbitration Law, are applicable to arbitration proceedings seated abroad. This may lead to the interpretation that in the context of arbitration procedures to be seated abroad, it would not be possible to request Peruvian courts for an interim measure before the arbitral tribunal is constituted, and the procedure is yet to be commenced. In other words, interim relief would only be available during the course of the proceedings taking place abroad, if the arbitral tribunal grants it. Said interpretation, however, has not been generally adopted by Peruvian courts.
Some trial courts have interpreted that it is indeed possible to obtain interim measures (for example, attachments over assets located in Peru) before the beginning of an arbitration procedure that will seat abroad. This means that Peruvian courts make no distinction between the interim relief that may be available to parties in an arbitration seated in Peru and an arbitration procedure seated abroad. If the court grants interim relief and the tribunal is later constituted (parties have the burden of making this information available), the court will forward the relevant documents to the arbitral tribunal, and the tribunal will then decide to ratify or reverse the decision.
Through this interpretation, Peruvian courts attempt to promote efficiency by allowing the requesting party to obtain temporary protection – during the period in which arbitrators are being appointed – from situations that may likely cause current
or imminent harm affecting the requesting party, the arbitral process itself, or both. This interpretation allows the preservation of assets that may be required to satisfy the award or securing evidence that may assist the tribunal to better adjudicate the dispute.
Other relevant provisions
Article 8 of the Arbitration Law refers to the competent judicial authorities in charge of: upholding the agreement to arbitrate abroad; providing judicial assistance in the taking of evidence located in Peru; or recognising interim measures issued by a foreign arbitral tribunal. In these cases, the civil judge specialised on commercial matters will have jurisdiction. In the absence of a civil judge specialised on commercial matters, the civil judge of the place in which the provisional remedy will be executed or the civil judge of the place in which the provisional remedy will display its effects; will have jurisdiction.
Provisions applicable after the award is issued
Applicable rules to recognition and enforcement of foreign arbitral awards – treaties are the default rule
Article 74.1 of the Arbitration Law states that awards issued outside of Peruvian territory are considered foreign arbitral awards for the purposes of the law. It also states that foreign arbitral awards will be recognised and enforced according to the rules set: in the New York Convention, in the Panama Convention and under any other treaty dealing with the recognition and enforcement of arbitral awards.
Article 74.2 states that unless the parties have agreed otherwise, the applicable treaty will be the one most favourable to the party requesting the recognition and enforcement of the foreign arbitral award. Treaties are, therefore, the default source of law when it comes to recognising or enforcing foreign arbitral awards. Article 75 of the Arbitration Law will be applicable in the absence of a treaty or, if the provisions set in article 75 are more favourable to the recognition and enforcement of the foreign award, when compared to an applicable treaty.
It is important to consider that the Arbitration Law has recognised the most-favourable-right provision of article VII of the New York Convention, in article 78.1. According to this provision, the court is allowed to apply, the Arbitration Law in cases of recognition of arbitral awards if it is more friendly for the purposes of recognition.
Recognition of foreign arbitral awards under the Arbitration Law
Article 75 of the Arbitration Law does not allow Peruvian courts to review the merits of the award, and closely follows the grounds for refusal set in article V of the New York Convention.
Generally, foreign arbitral awards should be recognised in Peru. Pursuant to article 75, recognition of a foreign arbitral award may be refused only if the opposing party is able to provide proof of any of the following circumstances:
• The parties to the agreement were under some incapacity (according to the law applicable to them), or if said agreement is not valid (according to the law applicable to the agreement or, if no indication is made, to the law of the country in which the award was made).8
• The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the proceedings or was otherwise unable to present its case.9
• The award deals with a controversy not contemplated by or not falling within the scope of the arbitration agreement, or it contains decisions on matters beyond the scope of the agreement to arbitrate.10
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.11
• The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Article 75.8 states that if a request to set aside or suspend the award is filed before the competent courts of the country in which, or under the law of which, the award was issued; the Superior Court in charge of adjudicating the recognition request is entitled to delay its decision. Moreover, if the party seeking recognition so requires it, the court may order the opposing party to provide security.
According to article 75.3 (similar to article V.2 of the New York Convention), a court may refuse – ex officio – the recognition of a foreign arbitral award if the court finds that:
• the subject matter of the difference is not capable of settlement by arbitration under Peruvian law; or
• the award is contrary to international public policy.
It seems that in some cases this ex officio analysis by the courts may have been extended beyond of what it is established in the Arbitration Law. For instance, in Case 00161-2013-0-1817-SP-CO-0212 where the defendant had not opposed to the application for recognition by the claimant, the court analysed whether during the arbitral proceedings the former had been notified correctly. Unless the court was indeed ascertaining whether the award was not contrary to public policy (which was not explicitly said in the decision), the aforementioned analysis could have only been made if the defendant had raised the issue during the enforcement procedure.
Procedure – Recognition of foreign arbitration awards
Article 76 of the Arbitration Law deals with the procedural issues behind a request for recognition of a foreign arbitration award. The Superior Court (which in Peru has the function of a court of appeals) will have jurisdiction over the procedure, instead of a trial court.13
According to article 76.1 of the Arbitration Law the party seeking enforcement shall present with its claim an original or a copy of the award complying with the requirements of article 9. Article 9 for its part, requires that any foreign document shall be authenticated in conformity with the law of the country of origin of the document and shall be certificated by Peruvian diplomatic agents or similar.14 Furthermore, if the document is not in Spanish, a simple translation shall be provided unless the judicial authority considers that an official translation is necessary.
The party opposing recognition has 20 business days to object, and within 20 additional business days a hearing will take place to discuss the grounds for refusing recognition. The Superior Court then has the power to issue a ruling immediately after the hearing, or to do so within 20 business days after the hearing. In practice, courts usually take these additional 20 days to render a decision.
Unlike the procedure for seeking recognition and enforcement of foreign judgments (subject to several levels of review), the decisions made by the court in the context of a recognition request will only be subject to appeal if the Superior Court denies the request for recognition. In other words, if the Superior Court recognises the award, the decision will be final.
Procedure – Enforcement of foreign arbitration awards
Articles 77 and 68 of the Arbitration Law deal with the procedural issues behind the enforcement of a foreign arbitration award. If the award debtor does not fulfil the obligations contained in the award issued abroad, and Peruvian courts have recognised the award, the award creditor is entitled to file a claim seeking the enforcement of the arbitration award.
According to article 8 of the Arbitration Law, the judge specialised in commercial matters, or failing the latter, the civil judge of the place of the arbitration or the place where the award should display its effects, is the competent judge to decide upon application for enforcement of an arbitral award.15 In this sense it is important for the claimant to distinguish between recognition and enforcement of awards. The Superior Court of Lima in a decision rendered on 29 March 2012 declared that the application for enforcement raised by the claimant before the aforementioned court was inadmissible since it is the judge specialised in commercial matters the competent one to decide upon enforcement of arbitral awards.16
The party applying for enforcement shall present before the court a copy of the arbitral award and any revision, interpretation, integration or exclusion of the latter rendered by the arbitral tribunal; as well as any enforcement measures taken by the arbitral tribunal.17 The judge will immediately order the debtor to satisfy the award within a five-business-day deadline.18
Within the same deadline, pursuant to article 68.3 of the Arbitration Law, the debtor can oppose to the enforcement by providing: evidence that the award is suspended; or evidence that the award is vacated; or, evidence that the award was satisfied. Additional arguments are not allowed.
According to article 68.3 of the Arbitration Law, if the trial court rules in favour of the opposing party, the decision can be subject to appeal, and the appeal will suspend the effects of the decision made by the trial court.
Peruvian Arbitration Law has a modern approximation on cross-border arbitration, specifically on arbitration procedures seated outside Peru. The rules applicable (before and after the award is rendered) protect the arbitration agreement, provide assistance in the taking of evidence and in the enforcement of provisional measures and allow the recognition and enforcement of foreign arbitral awards.
- Articulo 1.- Ámbito de Aplicación.
Las normas contenidas en los numerales 1, 2, 3, 5 y 6 del artículo 8, en los artículos 13, 14, 16, 45, numeral 4 del artículo 48, 74, 75, 76, 77 y 78 de este Decreto Legislativo, se aplicarán aun cuando el lugar del arbitraje se halle fuera del Perú.
Article 1 – Scope of Application.
The rules contained in sections 1, 2, 3, 5 and 6 of article 8, in articles 13, 14, 16, 45, section 4 of article 48, 74, 75, 76, 77 and 78 of this Legislative Decree, will be applicable even when the arbitration is seated outside Peru.
- Article 16.4 Arbitration Law.
- Pursuant to article II.3 of the New York Convention, the court of a contracting state will not refer the parties to arbitration if it finds that the agreement is ‘null and void’, but also, if it finds that the agreement is ‘inoperative’ or ‘incapable of being performed’. Under the Arbitration Law, only if the court finds that the agreement is manifestly ‘null and void’ the parties will not be referred to arbitration. Under the Arbitration Law, neither ‘inoperativeness’ nor ‘inability of being performed’ are grounds for not upholding the arbitration agreement.
- See article 48.4.a. Arbitration Law.
- See article 48.4.d. Arbitration Law.
- See article 48.4.b. Arbitration Law.
- See article 9 Arbitration Law.
- Article 75.4 Arbitration Law states that none of the circumstances reflected in article 75.2.a. will lead to refusing recognition of the award if the opposing party was also part of the arbitral procedure and failed to raise those objections or if the arbitration agreement is valid according to Peruvian law.
- Article 75.5 Arbitration Law states that none of the circumstances reflected in article 75.2.b. will lead to refusing recognition of the award, if the opposing party was also part of the arbitral procedure and failed to raise those objections.
- Article 75.6 Arbitration Law states that none of the circumstances of article 75.2.c. will lead to refusing recognition of the award if the matters submitted to arbitration are independent and separable from those not submitted. The result of this may be partial recognition and enforcement of the award.
- Article 75.7 Arbitration Law states that none of the circumstances stated established in article 75.2.d. will lead to refusing recognition of the award if the opposing party was also part of the arbitration procedure and failed to challenge the jurisdiction of the arbitral tribunal expressly based on the objections described above.
- See Decision No. 3, 4 March 2012 rendered by the Superior Court of Lima in Case No. 00161-2013-0-1817-SP-CO-02.
- See article 8.5 Arbitration Law.
- However, where the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (Apostille Convention) is applicable, the aforementioned requirement will be substituted by the apostille.
- See article 8.3 Arbitration Law in connection with articles 77 and 68.
- See Decision No. 1 rendered in ‘Expediente No. 00110-2011-0-1817-SP-CO-01’.
- See article 68.1 Arbitration Law.
- See Article 68.3 Arbitration Law. According to article 12 of the Arbitration Law, time limits fixed by days should be interpreted as referring to business days.