Arbitration Law in Peru
In Peru, arbitration is governed primarily by the Peruvian Arbitration Law (Law No. 26589), enacted in 1996, and later amended by Law No. 27,759 in 2002. This law is heavily influenced by the UNCITRAL Model Law on International Commercial Arbitration and is designed to provide a clear and efficient framework for arbitration, particularly for commercial and contractual disputes.
Key Features of Arbitration in Peru:
Arbitration Law No. 26589 (1996):
- The law is structured to cover both domestic and international arbitration, providing a comprehensive legal framework for arbitration proceedings.
- It applies to disputes related to contracts, commercial issues, and other civil matters where the parties have agreed to resolve disputes through arbitration.
Arbitration Agreements:
- Arbitration agreements are considered binding and enforceable under Peruvian law. The agreement to arbitrate can either be part of a contract (an arbitration clause) or entered into after the dispute arises.
- If a party tries to avoid arbitration despite having signed an agreement, the courts can enforce the arbitration clause, compelling the parties to proceed with arbitration.
- Choice of Arbitrators: The parties have the freedom to appoint one or more arbitrators, and they may do so by mutual agreement. If they cannot agree, the national courts may appoint an arbitrator.
Arbitration Procedure:
- The arbitration process is flexible, allowing the parties to agree on the procedures to be followed, including the venue, the language of arbitration, and the rules that will govern the arbitration.
- In the absence of agreement, the arbitrators or arbitral institution can decide on procedural matters.
- Peru recognizes both institutional and ad-hoc arbitration. Institutional arbitration is commonly used, with institutions like the Peruvian Arbitration Center (Centro de Arbitraje de la Cámara de Comercio de Lima) providing a structured environment for arbitration. Ad-hoc arbitration allows more flexibility but requires more active management by the parties or arbitrators.
Role of Arbitrators:
- Arbitrators must be impartial and independent. The law outlines the criteria for selecting arbitrators and ensures that they comply with the principles of fairness and neutrality.
- In Peru, arbitrators can be selected by the parties or appointed by an arbitration institution. The number of arbitrators usually depends on the agreement of the parties, though typically, an odd number is chosen (often three).
Recognition and Enforcement of Awards:
- Domestic Arbitration: Arbitral awards made in domestic arbitration are binding. If a party fails to comply with an award, the other party can request enforcement through the Peruvian courts.
- International Arbitration: Peru is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which means that foreign arbitral awards are recognized and enforceable in Peru, subject to certain conditions such as the award not being in conflict with Peru's public policy or the national legal system.
Role of Courts:
- The role of courts in arbitration is generally limited to enforcing arbitration agreements and awards, providing assistance with procedural matters (such as the appointment of arbitrators), and ensuring that the arbitration process follows the law.
- However, courts in Peru can intervene under specific circumstances, such as:
- When the arbitration agreement is deemed invalid.
- When an award is challenged, for example, on the grounds of procedural irregularities, lack of impartiality, or conflict with public policy.
- The courts can annul an arbitral award if it violates the principles of due process or public policy.
Public Policy Exception:
- As in many jurisdictions, Peruvian law includes a public policy exception for the recognition and enforcement of arbitral awards. If an arbitral award contradicts the public policy of Peru, the courts may refuse to recognize or enforce it.
- This typically involves issues such as awards that violate fundamental rights or conflict with the national legal system.
Confidentiality:
- The arbitration process in Peru is generally confidential, which is one of the advantages of arbitration over traditional litigation. The confidentiality of the proceedings ensures that sensitive business matters do not become public.
Advantages of Arbitration in Peru:
- Arbitration is often preferred for commercial disputes in Peru because it is faster, more flexible, and less costly compared to the court system.
- Peru’s legal framework provides certainty and reliability, especially in international trade and commercial agreements.
- The country’s arbitration laws are designed to promote international investment and trade, offering a neutral, efficient platform for resolving disputes.
Recent Developments:
- In recent years, Peru has taken steps to align its arbitration laws even more closely with international practices, making it an increasingly attractive jurisdiction for international arbitration.
- There have been efforts to streamline the arbitration process, improve the training and expertise of arbitrators, and further develop arbitration institutions to make them more competitive in the global market.
Summary:
Arbitration in Peru is governed by Law No. 26589 (1996), which provides a comprehensive and flexible framework for both domestic and international arbitration. Peru’s arbitration law aligns with international standards, especially the UNCITRAL Model Law, and is designed to promote fairness, efficiency, and flexibility in the resolution of commercial and civil disputes. The courts in Peru generally play a supportive role, ensuring that arbitration agreements and awards are enforced and that the process adheres to the law. Arbitration is favored for its speed, confidentiality, and cost-effectiveness, making it a popular alternative to litigation in Peru, particularly in commercial and international trade matters.
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