Dispute resolution by Carzua

Dispute Resolution in 49 jurisdictions worldwide

2014

Contributing editor: Simon Bushell Published by Getting the Deal Through in association with: Anderson Mo¯ ri & Tomotsune Andreas Neocleous & Co LLC Aramis Batliner Gasser Bharucha & Partners Braddell Brothers LLP Cárdenas & Cárdenas Abogados Charles Adams Ritchie & Duckworth Cruz Marcelo & Tenefrancia Dillon Eustace DJBW ELIG, Attorneys-at-Law Galadari Advocates & Legal Consultants Gan Partnership GRATA Law Firm GSK Stockmann + Kollegen Hoet Peláez Castillo & Duque Ivanyan & Partners King & Wood Mallesons Latham & Watkins Liedekerke Wolters Waelbroeck Kirkpatrick López & Associates Law Firm Lund Elmer Sandager MacRoberts LLP Miller, Canfield, Paddock and Stone PLC Moraes Pitombo Advogados Moravcˇevic´ Vojnovic´ i Partneri in cooperation with Schönherr Motieka & Audzevic˘ius MS Consultores Munari Cavani Nagy és Trócsányi Ügyvédi Iroda Niedermann Rechtsanwälte Norton Rose Fulbright Odvetniki Šelih & partnerji, o.p., d.o.o. Polenak Law Firm Richards, Layton & Finger PA Schulte Roth & Zabel LLP Soemadipradja & Taher, Advocates Sofunde, Osakwe, Ogundipe & Belgore Specht Böhm SRS – Sociedade Rebelo de Sousa & Advogados Associados, RL Tilleke & Gibbins TroyGould PC Vasil Kisil & Partners Werksmans Attorneys Woods LLP Zamfirescu Racoti & Partners Attorneys at Law

CONTENTS

Dispute Resolution 2014 Contributing editor: Simon Bushell Latham & Watkins Getting the Deal Through is delighted to publish the twelfth edition of Dispute Resolution, a volume in our series of annual reports, which provide international analysis in key areas of law and policy for corporate counsel, cross-border legal practitioners and business people. Following the format adopted throughout the series, the same key questions are answered by leading practitioners in each of the 49 jurisdictions featured. New jurisdictions this year include Ecuador, Hong Kong, Indonesia, Kazakhstan, the Philippines, Portugal and the United Arab Emirates. Every effort has been made to ensure that matters of concern to readers are covered. However, specific legal advice should always be sought from experienced local advisers. Getting the Deal Through publications are updated annually in print. Please ensure you are referring to the latest print edition or to the online version at www.gettingthedealthrough.com. Getting the Deal Through gratefully acknowledges the efforts of all the contributors to this volume, who were chosen for their recognised expertise. We would also like to extend special thanks to contributing editor Simon Bushell of Latham & Watkins for his continued assistance with this volume.

Introduction 3

Denmark 53

Simon Bushell Latham & Watkins

Morten Schwartz Nielsen and David Frølich Lund Elmer Sandager

Austria 5

Dominican Republic

Erhard Böhm and Paul Proksch Specht Böhm

Enmanuel Montás and Yanna Montás MS Consultores

Belgium 12

Ecuador 64

Joe Sepulchre, Hakim Boularbah and Charlotte Marquet Liedekerke Wolters Waelbroeck Kirkpatrick

Ariel López Jumbo, Daniela Buraye and Paulette Toro López & Associates Law Firm

Brazil 22

England & Wales

João Fabio Azevedo e Azeredo, Renato Duarte Franco de Moraes, Mariel Linda Safdie and Mariana Siqueira Freire Moraes Pitombo Advogados

Simon Bushell and Matthew Evans Latham & Watkins

Canada – Quebec

France 77 26

James A Woods, Christopher L Richter and Marie-Louise Delisle Woods LLP Cayman Islands

David W Collier Charles Adams Ritchie & Duckworth China 37 Huang Tao King & Wood Mallesons Colombia 43 Alberto Zuleta-Londoño and Juan Camilo Jiménez-Valencia Cárdenas & Cárdenas Abogados Cyprus 47 Panayiotis Neocleous and Costas Stamatiou Andreas Neocleous & Co LLC

Getting the Deal Through

Aurélien Condomines, Benjamin May and Nicolas Morelli Aramis Germany 82 Karl von Hase GSK Stockmann + Kollegen Hong Kong

Simon Powell, Eleanor Lam and Viola Jing Latham & Watkins Hungary 94 Zoltán Csehi Nagy és Trócsányi Ügyvédi Iroda India 100 Vivek Vashi and Zeus Dhanbhoora Bharucha & Partners Indonesia 108 Nira Nazarudin, Robert Reid and Winotia Ratna Soemadipradja & Taher, Advocates

London June 2014

Publisher Gideon Roberton gideon.roberton@lbresearch.com Subscriptions Rachel Nurse subscriptions@gettingthedealthrough.com Business development managers George Ingledew george.ingledew@lbresearch.com Alan Lee alan.lee@lbresearch.com Dan White dan.white@lbresearch.com

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Law Business Research Published by Law Business Research Ltd 87 Lancaster Road London, W11 1QQ, UK Tel: +44 20 7908 1188 Fax: +44 20 7229 6910 © Law Business Research Ltd 2014 No photocopying: copyright licences do not apply. First published 2003 Twelfth edition ISSN 1741-0630

The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. This information is not intended to create, nor does receipt of it constitute, a lawyer– client relationship. The publishers and authors accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of June 2014, be advised that this is a developing area. Printed and distributed by Encompass Print Solutions Tel: 0844 2480 112

CONTENTS Ireland 115

Portugal 183

Turkey 250

John O’Riordan and Sarah Berkery Dillon Eustace

Maria José de Tavares and Catarina Matos da Cunha SRS – Sociedade Rebelo de Sousa & Advogados Associados, RL

Gönenç Gürkaynak and Ays¸ın Obruk ELIG, Attorneys-at-Law

Italy 121 Raffaele Cavani, Bruna Alessandra Fossati and Paolo Preda Munari Cavani Japan 128 Tetsuro Motoyoshi and Akira Tanaka Anderson Mo ¯ri & Tomotsune Kazakhstan 133 Bakhyt Tukulov and Andrey Reshetnikov GRATA Law Firm Liechtenstein 138 Johannes Gasser and Benedikt König Batliner Gasser Lithuania 144 Ram¯unas Audzevi˘cius Motieka & Audzevic˘ius Macedonia 151 Tatjana Popovski Buloski and Aleksandar Dimic Polenak Law Firm Malaysia 157 Foo Joon Liang Gan Partnership Nigeria 165 Babajide O Ogundipe and Lateef O Akangbe Sofunde, Osakwe, Ogundipe & Belgore Philippines 170 Simeon V Marcelo Cruz Marcelo & Tenefrancia Poland 177 Anna Herman DJBW

Romania 188 Cosmin Vasile Zamfirescu Racoti & Partners Attorneys at Law

Oleksiy Filatov and Pavlo Byelousov Vasil Kisil & Partners United Arab Emirates

Russia 193 Sergey Chuprygin Ivanyan & Partners

Julie Hamilton and Susan Hill MacRoberts LLP

Matija Vojnović and Nataša Lalatović Moravcˇević Vojnović i Partneri in cooperation with Schönherr Singapore 215 Edmund J Kronenburg and Tan Kok Peng Braddell Brothers LLP Slovenia 222 Gregor Simoniti and Luka Grasselli Odvetniki Šelih & partnerji, o.p., d.o.o.

Des Williams Werksmans Attorneys

United States – Delaware

Marco Niedermann, Robin Grand, Nicolas Herzog and Niccolò Gozzi Niedermann Rechtsanwälte

281

Samuel A Nolen and Robert W Whetzel Richards, Layton & Finger PA United States – Michigan

287

Frederick A Acomb Miller, Canfield, Paddock and Stone PLC 293

Robert M Abrahams, Robert J Ward and Caitlyn Slovacek Schulte Roth & Zabel LLP United States – Texas

Switzerland 237

275

Peter S Selvin TroyGould PC

United States – New York

231

269

Robert M Abrahams, Robert J Ward and Caitlyn Slovacek Schulte Roth & Zabel LLP United States – California

Serbia 209

264

Faridah Sarah Galadari Advocates & Legal Consultants United States – Federal Law

Scotland 203

South Africa

Ukraine 257

299

William D Wood, Kevin O’Gorman and Matthew A Dekovich Norton Rose Fulbright Venezuela 307

Thailand 244

Carlos Dominguez Hoet Peláez Castillo & Duque

Thawat Damsa-ard and Noppramart Thammateeradaycho Tilleke & Gibbins

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Ecuador Ariel López Jumbo, Daniela Buraye, Paulette Toro and Gina Ludeña López & Associates Law Firm

Litigation 1 What is the structure of the civil court system?

Ecuador’s judicial system consists of courts, administrative bodies, autonomous bodies and subsidiary bodies. The jurisdictional bodies are responsible for administering justice, and in civil matters are composed as follows: • the National Court of Justice, composed of a specialised civil courtroom; • the provincial courts of justice, formed by three judges; and • courts integrated by a civil judge. Which court will hear a case depends on subject matter and territorial jurisdiction. Cases are assigned to courts by draw. 2 What is the role of the judge and the jury in civil proceedings?

The judge is vested with powers granted by the state to administer and render justice. His or her authority is manifested in directing proceedings, making rulings and running the procedure. There are no juries in Ecuador’s judicial system. 3 What are the time limits for bringing civil claims?

Under the Civil Code, the time for bringing civil claims through an enforcement procedure is five years. In an ordinary procedure, such time is 10 years. In other special cases, the limitation periods are mandated by law. Deadlines cannot be suspended by mutual agreement of the parties, except for those cases expressly stated in the Civil Procedure Code. 4 Are there any pre-action considerations the parties should take into account?

The following actions can be ordered as preparatory measures or as evidence: • judicial sworn statements; • display of the disputed item; • display and acknowledgement of documents; • summary information for express cases; • judicial inspection; and • preventative judicial orders such as sequestration, retention and restraint on alienation. Books, titles, deeds, bonds, bills, and generally any other documents, can also be ordered as preparatory measures. 5 How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement?

Once a request for an action is accepted by the judge as being clear, accurate and complete, the civil proceedings commence. The judge

will request that the qualification order, along with the claim copy, be served on the defendant at his or her domicile as cited in the direction or, if such defendant’s home address is not known, through the press. 6 What is the typical procedure and timetable for a civil claim?

A civil claim procedure must comply with the formal requirements set out in article 67 of the Civil Procedure Code: • a judge must be appointed; • the legal status of the applicant and the identity of the defendant must be established; and • the factual and legal bases that support and sustain the claims must be established. Such facts must conform to the legal standard. In addition, the application must be accompanied by the documents mentioned in article 68 of the Civil Procedure Code: proof of the power to intervene in court if a party (eg, a person unable to attend due to a disability or other reason, or a company) is represented by a proxy; and any preparatory documents and other documents required by law for the case. The demand may be filed at any time within the hours of operation of the court system. The action is not prescribed by the lapse of time. 7 Can the parties control the procedure and the timetable?

No. Dates for proceedings shall be determined by the judge, except in cases mentioned by judicial order. The parties may be present at any time to conduct appropriate diligence. However, hearings can be deferred only once at the request of both parties for a term not exceeding five days. The procedure cannot be controlled by the parties, and must conform to what is determined by the law. As such, the judge alone is in charge of ensuring that all procedural steps are fulfilled in accordance with the law. 8 Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

Upon receipt of evidence during the process, the court is responsible for its safekeeping; however, there is no legal provision that mentions safeguarding such evidence prior to trial. The parties have no obligation to share relevant documents or to preserve evidence. The parties only have to exhibit documents when the judge requests such exhibition by judicial order. 9 Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

Counsel’s advice to their clients is not part of the judicial process; as such, this is not known by the other party, unless such legal advice has been written down and presented during the process. Under Getting the Deal Through – Dispute Resolution 2014

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the Constitution, evidence obtained in an improper manner will be deemed invalid. Privileged documents may be introduced into the procedure through a judicial intervention; however, the parties to the trial must maintain confidentiality about the contents of such documents.

If the judge issues a writ of execution or a judgment that the debtor does not comply with, the judge, on the request of a party, may take actions against the debtor’s property, including seizure, sequestration or holding, to cancel the debt. Alternatively, insolvency or bankruptcy proceedings can be instigated against the debtor.

10 Do parties exchange written evidence from witnesses and experts prior to trial?

15 Are court hearings held in public? Are court documents available to the public?

No; all evidence is presented at trial. Article 119 of the Civil Procedure Code provides that the parties are entitled to have knowledge of all of the evidence submitted or requested during the term of the trial and prior to judgment. According to article 120 of the Civil Procedure Code, in addition to the evidence being public, any judgment shall be public, as justice should be seen to be done.

In Ecuador, court hearings are public, as required by the ‘Principles of the Administration of Justice’ section of the Constitution, except in cases expressly stipulated by law. Any interested citizen can attend court hearings, except hearings involving minors, which will be held privately with the participation of only the involved parties, their legal representatives and attorneys. Hearings will be transcribed and recorded in the case file, along with any witness statements. These transcripts will be available to the public, except for those relating to proceedings closed to the public.

11 How is evidence presented at trial? Do witnesses and experts give oral evidence?

Evidence may be submitted directly through the intervention of the judge and judicial inspection, or indirectly by public or private documents, and the examination of witnesses’ testimony or expert reports. Witnesses testify orally to the facts relating to the subject of the proceedings; their testimony must be recorded in the case file. Experts do not give oral statements, but deliver their written reports directly to the judge. Such reports will subsequently be released to the parties to the proceedings. 12 What interim remedies are available?

Regarding judgments in civil enforcement proceedings, in its application, the plaintiff may request preventive measures and measures to ensure credit recovery or obligations if it fears that the debtor is without sufficient assets to settle his or her obligations. The measures that can be requested are a prohibition to alienate, a writ of sequestration and a garnishee order. On 8 May 1979, the member countries of the Organization of American States signed the Inter-American Convention on Execution of Preventive Measures. The Convention indicates that in any civil, commercial, labour or criminal proceedings regarding civil damages, in order to ensure the safety of persons or property, the courts of the parties to the Convention must comply with the precautionary measures that are ordered by the judges or courts of another state party through letters rogatory to consular or diplomatic agents of any other state party.

16 Does the court have power to order costs?

Yes; the judge evaluates the procedural costs, including attorneys’ fees, expert fees and legal expenses. To be declared legal, costs must be requested by the party. 17 Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using thirdparty funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

According to the Law of the Ecuador Lawyers Federation, professional attorneys’ fees shall be stipulated freely and voluntarily between a lawyer and his or her client. Fees may be agreed verbally or in writing. Where the fees between attorney and client have not been stipulated, the judge may fix such under a procedure established by the Civil Procedure Code, and taking the provisions of the Law of the Ecuador Lawyers Federation into account. In Ecuador, there is no legal provision governing third-party financing; any agreement of this type must be extrajudicial; as such, a judge of such process cannot guarantee a third party’s rights. 18 Is insurance available to cover all or part of a party’s legal costs?

No. 13 What substantive remedies are available?

Ecuadorean law does not provide for substantive remedies; Ecuador’s legal system does not follow the common law trend, and accordingly does not include tort law. However, the Civil Code establishes a ‘damages’ concept: if a person inflicts damage on another party, such person is obliged to compensate the other party’s economic damages. 14 What means of enforcement are available?

In judgments ordering an obligation for payment of principal and interest, the judge shall determine the amount to be paid by a writ of execution, which cannot be ambiguous or imprecise, as the defendant must know the exact nature and amount of the obligation he or she must fulfil. Should the judgment be for delivery of a specific object, the debtor must deliver such object to a bailiff appointed by the judge who, if appropriate, will deliver the object to the creditor. In judgments involving a boundary dispute, the judgment shall be entered in the Registry of Property as a title. A judgment of interdiction will be recorded and published as a temporary act of interdiction. Foreign judgments will be enforced if they do not contradict Ecuadorean public law, or any law or treaty currently in force.

19 May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

Yes; the principle of ‘judicial economy’ allows this, as minimising judicial activity and costs for the parties is the best possible outcome. At the same time, the ‘concentration principle’, mentioned in the Organic Code of the Judicial Function, brings together all or a majority of the issues debated to decide them with the minimum number of actions and measures. Thus, the process avoids consideration of any ancillary matters that would distract from those matters involved in the main action. Furthermore, under the Constitution, every citizen individually or collectively can demand the recognition of his or her rights, as well as present constitutional actions; it grants the possibility that a group of people can claim in an action against the defendant any common rights and interests that have been affected. The Labour Code recognises labour disputes such as strike actions by employees of a company, and how these events can lead to a collective action. In civil cases, the parties to the process shall appoint a common procurator to represent them.

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20 On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

Parties can appeal before a superior court for the opening of a new instance for the revocation or modification of the decree, order or judgment of a lower court of an already decided issue. Whenever such decree, order or judgment is not enforceable, it is possible to propose an appeal, as provided under the rules of the Civil Procedure Code. Parties can appeal judgments, orders and decrees with the force of law (article 326 of the Civil Procedure Code). However, those judgments, orders and decrees that do not cause irreparable harm – not even the costs and fines – are not appealable. The appeal shall be filed within three days after the last notice of appeal (article 324 of the Civil Procedure Code). The appeal may be lodged by any of the parties at trial, and those parties who have an immediate and direct interest in the litigation. When several people are interested, an appeal filed by any one of them shall not affect the others. If one party appeals, other parties may join the appeal. The appeal can be granted with suspensive effect, which implies that the contested decision is suspended until the appeal is resolved; with devolution effect, under which the contested ruling is within the jurisdiction of the court, and the progress of the cause, or the execution of the decree, order or judgment, is not suspended; or both. There is further an extraordinary remedy of cassation, which is regulated by the Cassation Law, to ensure the legality of judgments and, only in certain circumstances, to verify violations of the law. Finally, there is also a complaint motion, which can be filed if the court or tribunal hearing a case denied the remedy of appeal or cassation (articles 365 and 366 of the Civil Procedure Code). 21 What procedures exist for recognition and enforcement of foreign judgments?

The Civil Procedure Code (article 414) provides the requirements for the appropriate recognition and enforcement of foreign judgments. Foreign judgments will recognised and enforced if they do not contravene Ecuadorean public policy or national laws, and if they are in accordance with any relevant treaties and international conventions. Approval is achieved through an ordinary trial performed before the court of the domicile of the defendant in agreement with articles 24 and 26 of the Civil Procedure Code before execution is admitted. The Organic Code of the Judicial Function (article 143) also mentions this procedure, to be granted by the provincial court by reason of the subject matter of the defendant, and the execution thereof shall be by a competent judge at the domicile of the first-level defendant. Ecuador has signed and ratified several international treaties for the recognition and enforcement of foreign judgments, including the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards and the Bustamante Code. These conventions generally provide that the requirements for the execution of judgments and arbitral awards are as follows: the international jurisdiction of the court that rendered the judgment; the defendant was notified that the judgment is characterised as executory; and the judgment is duly authenticated and translated, and is not contrary to the public policy of the country in which it will be enforced. 22 Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

The Civil Procedure Code (article 188) provides that public documents issued in a foreign state, if they are authenticated, should be recognised in Ecuador in the same manner as they would be in the state where they were issued. Article 190 further states that a prosecution executed outside Ecuador, in accordance with the laws or practices of the respective country, will be recognised in Ecuador.

Additionally, for the recognition of documents issued in another contracting state, the Bustamante Code requires: • that the subject matter of the contract or act is lawful in the country where the contract or act is issued; • that the parties have the legal capacity and ability to be bound by such contract or act in accordance with the law of their own country; • that all the formalities for granting the acts have been attended in the country where the contract or act has been verified; and • that the documents are legalised to fulfil the other requirements for authenticity in the place where such documents will be used. The Code also regulates the requirement by a state that judicial acts be taken in another state, which shall be done via a letter rogatory submitted through diplomatic channels. Arbitration 23 Is the arbitration law based on the UNCITRAL Model Law?

Yes, the Arbitration and Mediation Law is based on the UNCITRAL Model Law. In addition, the arbitration centres of the chambers of commerce have developed local rules of procedure that usually refer to the UNCITRAL Model Law. 24 What are the formal requirements for an enforceable arbitration agreement?

The arbitration agreement is a written agreement under which the parties decide to submit to arbitration all or certain disputes that have arisen or may arise between them in respect of a defined legal relationship, whether contractual or non-contractual (article 5 of the Arbitration and Mediation Law). It is a formal requirement that the arbitration agreement shall be in writing, and an arbitration clause should be included within the contract executed by the parties stating their intention to place any discrepancies that arise before an arbitral tribunal. In a noncontractual legal relationship or contract, any dispute that may arise from a susceptible transaction must be unambiguously determined. However, even if a contract does not provide for such clause, if a conflict arises, the parties may agree in a separate document or agreement to submit specific matters to the decision of arbitrators, as well as any differences regarding the unequivocal determination of the legal business concerned. Where there is doubt as to the possibility of a successful arbitration agreement due to a pathological clause, the principle of in dubio pro arbitri will apply. Additionally, under article 6 of the Arbitration and Mediation Law, the arbitration agreement provides that not only an arbitration clause included in the contract or appearing in a single document signed by the parties is valid; such clause, recorded in an exchange of letters or any other form of written communication that preserves the recorded documentary will of the parties to arbitrate, will also be valid. In practice, the requirement of written form is nothing but the means of providing proof that the arbitration agreement is certified by the parties. 25 If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

Under articles 16 and 17 of the Arbitration and Mediation Law, the appointment of the arbitrators may be achieved: • by agreement of the parties directly in the arbitration agreement (ad hoc independent arbitration); • by choosing the arbitrators from a list supplied by the arbitration institutions; and • by drawing by lot, when the parties designate several referees or cannot agree on the selection of the arbitrators. Getting the Deal Through – Dispute Resolution 2014

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Update and trends On 6 May 2013, President Rafael Correa decreed the creation of a Citizen’s Audit Commission to evaluate Ecuador’s bilateral investment treaties and other instruments related to international arbitration, and to examine deficiencies in investment arbitrations to the detriment of Ecuador. It will consist of representatives from the Secretary of Planning and Development, the Ministry of Foreign Relations, Commerce and Integration, the Secretary of Politics and the Presidency’s Legal Secretary. The Commission will initially function for an eight-month period. On 26 July 2011, the President called a temporary Judicial Council of Transition, and Ecuador’s judicial system has been in a process of transition since 2011. Within this transition period, the Council has appointed judges, associate judges and substitute judges to the National Court of Justice under mechanisms that have attracted criticism due to their lack of objectivity and transparency, despite the criteria of gender equality, regional balance, intercultural and multinational representation, and the academic preparation of each judge being implemented. The National Court of Justice has dispatched 7,364 cases that required urgent attention during the transition period. The Council has also implemented an electronic evaluation process server to speed up cases, and has trained court officials. During the transition process, the Council has appointed 1,430 judges, suspended 273 and dismissed 380 others.

It should be noted that when the dispute is to be decided according to law, the arbitrators should also be lawyers. The tribunal shall consist of three main referees and an alternate, who will immediately intervene in the process in the event of the failure, absence or permanent disability of a principal. Arbitrators must accept or reject their appointment within three days of being notified. If silent, they are deemed not to have accepted such appointment. After accepting their appointment, the arbitrators shall be convened by the director of the arbitration and mediation centre to take up their positions. The reasons to excuse arbitrators are the same as those stipulated for judges in the Civil Procedure Code (article 856). If the appointed arbitrators are found to meet any of the criteria to be disqualified from holding office, they shall be replaced following the appointment procedure laid down in article 16 of the Arbitration and Mediation Law. Arbitrators can be challenged under the procedure referred to in the Civil Procedure Code. During the process of objection, the jurisdiction of the arbitrator over the arbitration procedure will be suspended. 26 Does the domestic law contain substantive requirements for the procedure to be followed?

Yes. Arbitration begins with a request addressed to the director of the arbitration and mediation centre. The request must fulfil the requirements provided by article 10 of the Arbitration and Mediation Law, and must contain all supporting evidence as adduced in the demand. The director, after verification of all legal requirements, approves the demand to start the process and summons the other party. Once a claim or counterclaim is answered, the director or independent referees notify the parties of the date and time for the mediation hearing, which aims to help the parties reach an agreement before entering the arbitration process itself. Arbitration in accordance with the law has a maximum duration of 150 days from the hearing at which the arbitrators assume jurisdiction. Such term may be extended when strictly necessary for an equal period. 27 On what grounds can the court intervene during an arbitration?

The Arbitration and Mediation Law states that whenever the parties have submitted to arbitration by mutual agreement, the ordinary judges should refrain from considering any claim, apart from in some exceptional cases established by law. The parties may waive the arbitration agreement if one party goes to the competent judicial body and the other party does not preclude the existence of an arbitration

agreement when answering the complaint. Judges can intervene in the arbitration in the event that nothing is set out in the agreement regarding the enforcement of interim measures and the parties apply to a judge to order the execution of these measures. At the same time, for the enforcement of the arbitral award, the parties may ask the ordinary judges to order the enforcement of an award or suspend transactions whenever a party fails to comply with the award. If proceedings were first started before a competent court and an ordinary judge, the arbitration agreement cannot override the powers of the court unless the parties jointly request recourse to arbitration and the court’s case file. 28 Do arbitrators have powers to grant interim relief?

Article 9 of the Arbitration and Mediation Law contemplates the possibility for arbitrators to issue interim measures found under the rules of the Civil Procedure Code or deemed necessary for each case. In order to adopt such interim measures, the court may require guarantees from the party who requests them. However, the direct implementation of such measures by the arbitrators is only permitted if the parties have provided the arbitrators with the power to do so within the arbitration agreement; otherwise, a party will have to resort to the ordinary courts to exercise their jurisdiction and use legal force to fulfil the measures ordered by the arbitrators. It is noteworthy that either party may seek injunctive relief prior to arbitration before the ordinary courts without waiving this arbitration agreement. 29 When and in what form must the award be delivered?

Following a substantiation hearing and declaration of the arbitral tribunal jurisdiction, the tribunal will have a maximum term of 150 days to issue the award, either at law or in equity. This award should always be subject to a majority vote. It must contain a summary of the facts; an analysis of the procedural requirements, the legitimacy of the cause and interest to act; a legal review of the basis of the claim; and any filed objections. Finally, it should resolve the questions raised by the parties. The award shall be signed by all the arbitrators, even those who withhold their vote (article 26 of the Arbitration and Mediation Law). If any of the arbitrators is incapacitated or refuses to sign, the clerk shall enter and sign on his or her behalf; such non-signature on the part of an arbitrator is not a cause for the annulment of the decision. The tribunal sets and notifies the parties of the date and time at which the award will be read, and provides a written copy of the award to each party. 30 On what grounds can an award be appealed to the court?

Arbitral awards cannot be appealed under the law, but may be clarified or extended at the request of a party prior to the execution of the award and within a three-day period of the notification. Arbitral awards are not subject to any further remedy. The law supports requests for the annulment of the award action, which must be resolved within 30 days by the president of the provincial court, and exclusively on the grounds provided in article 31 of the Arbitration and Mediation Law. 31 What procedures exist for enforcement of foreign and domestic awards?

Once a national arbitral award is executed and has res judicata effect, it can be fulfilled in the same way as a judgment, following the path of urgency, without judicial approval. However, in the case of the failure of one party to behave as ordered in the judgment, enforcement of the award is always attributed to the judges of ordinary justice, because the arbitral tribunal has no power to enforce its own award. Either party may request the ordinary judges to enforce the award by filing a certified copy of the award or settlement act

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issued by the secretary or director of the arbitration and mediation centre, or the arbitrators who ordered the execution of the award, with the rationale for enforceability (article 32 of the Arbitration and Mediation Law). There is a distinction between international arbitration and foreign arbitration. In Ecuador, arbitration is international if the parties have so agreed and provided that any of the requirements under article 41 of the Arbitration Law are met. A foreign arbitration award is an award issued by a court headquartered outside the national territory. Ecuadorean law provides that awards rendered in international arbitration proceedings have the same effect and shall be executed in the same manner as dictated in national proceedings (article 42 of the Arbitration and Mediation Law). However, when the issue concerns the enforcement of an award made by a foreign court to have executive effectiveness in Ecuador, it is necessary that the award is recognised or approved by a judicial body subject to the regulations of international treaties signed and ratified by Ecuador, such as the Treaties of Montevideo, the Bustamante Code, the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) or the Panama Convention. Generally, any foreign judgments that meet the following requirements are regularly recognised: • the competence of the international judge who rendered the judgment; • a request has been made; • the judgment is enforceable in the country in which it was delivered; • it is duly authenticated; and • it does not contravene the public policy of Ecuador.

33 What types of ADR process are commonly used? Is a particular ADR process popular?

Our procedural legislation opens the possibility for a conflict to end by means other than judgment. Among the alternative methods of dispute resolution available are conciliation, consisting of a conciliation hearing for verbal summary trials, and before the Conciliation Board for all other trials; mediation, which is an assisted negotiation in which a neutral mediator seeks to bring the parties to a voluntary agreement to end the conflict between them without the need to resort to the courts; and arbitration, where the parties voluntarily resort to resolving their conflict, and a neutral arbitrator decides the dispute by issuing an award that is binding on the parties. 34 Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

Yes; in procedural matters, a conciliation hearing for verbal summary trials, and before the Conciliation Board for all other trials, is required to attempt to reach an agreement. Regarding arbitration, the Arbitration and Mediation Law states that, regardless of whether a demand or counterclaim has been answered, the director of the centre or independent arbitration arbitrators shall notify the parties of the date and time for a mediation hearing to take place to seek settlement between the parties. In the absence of an overall agreement at the hearing, the matter will proceed to an arbitration process. Miscellaneous

32 Can a successful party recover its costs?

The arbitrators are asked to deliver the award on the costs of the arbitration, including the fees and expenses of the parties’ lawyers or attorneys, and other costs incurred during the arbitration process. For the imposition of costs generally, arbitrators choose one of the following systems: first, they will consider the will of the parties on the matter of the payment of costs as established in the arbitration agreement; or, in the absence of such agreement, the arbitrators can decide that the litigants meet the expenses equally, unless they consider the existence of bad faith or recklessness on the part of one the litigants, in which case the provisions provided under article 283 of the Civil Procedure Code are applicable. According to doctrine, due to the rule of the overriding will of the parties to the arbitration, the criterion of recklessness cannot overcome the covenant upon payment of costs. In such event, the agreement shall be accepted by the individuals in the arbitration convention.

Ariel López Jumbo Daniela Buraye Paulette Toro

Alternative dispute resolution

35 Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

Yes, with respect to arbitration involving the government. On this subject, is worth noting that the Ecuadorian government allows arbitration to resolve disputes arising from contractual matters in which their institutions are involved. This option is based on article 190 of the Constitution. Prior to undertaking such arbitration process, the general procurator’s approval must be secured by the contracting public entity submitting the draft contract together with the proposed arbitration agreement. It is a requirement that the way in which the parties are to appoint the arbitrators is established, and that they shall make their decision solely on points of law.

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DISPUTE RESOLUTION 2014

ISSN 1741-0630