Arbitration Law in Honduras

Arbitration Law in Honduras

Honduras has developed a legal framework that recognizes arbitration as an effective means of resolving disputes, particularly in commercial and civil matters. Arbitration in Honduras is governed by the Arbitration Law and is influenced by international principles, especially with respect to international arbitration and the recognition of foreign arbitral awards.

1. Legal Framework for Arbitration in Honduras

The primary law governing arbitration in Honduras is the Arbitration Law (Ley de Arbitraje), which was enacted in 1997. This law sets out the framework for both domestic and international arbitration and reflects principles consistent with international standards.

Arbitration Law (1997): This law governs arbitration in Honduras and provides a legal framework for both commercial and civil disputes. It aligns closely with the UNCITRAL Model Law and sets out the procedures for the conduct of arbitration.

International Treaties: Honduras is a signatory to the New York Convention (1958) on the Recognition and Enforcement of Foreign Arbitral Awards, which facilitates the recognition and enforcement of foreign arbitral awards in Honduras. This is a key element for international arbitration cases.

Civil Code: The Honduran Civil Code may also apply in cases where arbitration is not explicitly defined, particularly with respect to contractual relationships and enforcement of agreements.

2. Arbitration Agreement

Form and Requirements: Arbitration agreements in Honduras must be in writing and clearly state the parties' intention to submit their dispute to arbitration. This could be in the form of a clause within a contract or a separate agreement.

Scope: Arbitration agreements in Honduras typically apply to commercial and civil disputes. However, certain matters, such as those involving family law, criminal law, or public policy, cannot be arbitrated.

Enforceability: Arbitration agreements are enforceable under the Arbitration Law. If one party refuses to comply with the arbitration agreement, the other party may seek the intervention of the courts to compel arbitration.

3. Appointment of Arbitrators

Number of Arbitrators: The parties are free to decide the number of arbitrators, which is typically one or three. The number should be odd to avoid ties in decision-making.

Qualifications: The qualifications of arbitrators are usually determined by the agreement of the parties. Arbitrators must be impartial and independent. The Arbitration Law specifies that arbitrators must be neutral and independent.

Appointment Process: If the parties cannot agree on the selection of an arbitrator, the court may appoint an arbitrator or a panel of arbitrators. Typically, this is only necessary when the parties have not designated an appointment method in their agreement.

4. Arbitration Procedure

Flexibility: Arbitration in Honduras is intended to be flexible, and parties can agree on the rules governing the procedure. If the parties do not agree, the arbitrators have the discretion to determine the procedures to be followed.

Arbitration Venue: The parties can agree on the venue of arbitration, which may be located in Honduras or abroad. The venue is often determined by the parties’ commercial relationship or the nature of the dispute.

Language: The language of arbitration is determined by the agreement between the parties. If not specified, the arbitrators will choose the language based on the circumstances of the case.

Interim Measures: Arbitrators have the authority to grant interim measures to protect the rights of the parties during the course of arbitration. This could include measures such as freezing assets or preserving evidence.

5. Role of Courts in Arbitration

Judicial Support: Honduran courts are supportive of arbitration and provide judicial assistance when needed. This includes enforcing arbitration agreements, appointing arbitrators, and overseeing the enforcement of arbitral awards.

Compelling Arbitration: If one party refuses to arbitrate in accordance with an arbitration agreement, the other party may petition the court to compel arbitration.

Setting Aside Awards: Courts in Honduras have the power to set aside an arbitral award, but this is typically limited to specific grounds, such as:

  • Lack of jurisdiction of the arbitrators.
  • Serious procedural errors.
  • Violations of public policy.

Public Policy Exception: Like many other countries, Honduras recognizes the public policy exception in arbitration. If an award violates the public policy of Honduras, it may be set aside or refused recognition.

6. Enforcement of Arbitral Awards

Domestic Awards: Awards rendered within Honduras are enforceable through the court system. Once an award is issued, the party seeking enforcement can request the court to recognize the award and have it converted into a judgment of the court, making it enforceable as a domestic court ruling.

Foreign Awards: As a signatory to the New York Convention, Honduras enforces foreign arbitral awards. A party seeking to enforce a foreign arbitral award must present the award to the local courts, which will recognize and enforce the award unless it violates Honduran public policy or falls under any of the limited exceptions set forth in the Convention.

7. Confidentiality

Arbitration proceedings in Honduras are generally considered confidential, and the details of the proceedings, as well as the arbitral award, are not disclosed to the public unless the parties agree otherwise. This is consistent with international arbitration norms, ensuring that sensitive business information is protected during the arbitration process.

  • Exceptions: In certain cases, confidentiality may be waived, particularly if enforcement or judicial intervention is necessary.

8. Arbitration Institutions

Local Arbitration Institutions: Honduras does not have a large number of domestic arbitration institutions, but there are a few institutions that offer arbitration services, particularly for commercial disputes.

  • Centro de Arbitraje y Mediación de la Cámara de Comercio e Industria de Cortés (CAMCIC): This is one of the key arbitration institutions in Honduras and provides arbitration services for both local and international disputes.

International Institutions: Many businesses and individuals in Honduras may also choose to use international arbitration institutions for resolving disputes, especially those involving cross-border transactions. These include:

  • International Chamber of Commerce (ICC)
  • London Court of International Arbitration (LCIA)
  • American Arbitration Association (AAA)
  • International Centre for Dispute Resolution (ICDR)

9. Challenges and Opportunities

Awareness and Capacity: One of the challenges in Honduras is the lack of awareness about arbitration as a dispute resolution mechanism. More education and training for legal professionals, businesspeople, and institutions would help improve the use of arbitration in the country.

Infrastructure: The infrastructure for arbitration is still developing, and there is a need for more specialized arbitration institutions within Honduras to handle growing commercial disputes, especially those involving international elements.

Economic Growth: As Honduras continues to grow as an economic hub in the region, especially in sectors such as agriculture, manufacturing, and foreign investment, the demand for effective dispute resolution mechanisms like arbitration is expected to increase.

10. Conclusion

Honduras has a relatively modern arbitration system governed by the Arbitration Law of 1997, which is consistent with international standards, including the New York Convention on the recognition and enforcement of arbitral awards. The legal framework offers flexibility for both domestic and international arbitration and provides support through the judicial system for enforcing arbitration agreements and awards.

Although the country’s arbitration infrastructure is still evolving, there are growing opportunities for the use of arbitration, particularly in commercial and cross-border disputes. The increasing role of arbitration institutions and international treaties in Honduras will likely lead to greater development of this dispute resolution mechanism in the future.

LEAVE A COMMENT

0 comments