In this article, we will analyze the latest legislative developments related to dispute resolution by arbitration in Peru, as well as the amendments that were made to the Arbitration Law last year.
In early 2020, significant amendments were made to the Peruvian Arbitration Law. In particular, they relate to the settlement of a dispute via arbitration in Peru, where the conflicting parties are individuals, not legal entities.
Some of the most recent improvements include:
- Parties entering into a public procurement contract will agree on institutional rather than ad hoc arbitration;
- Investors will provide bail to obtain interim relief in the territory of the state;
- The specialized agency should decide on challenges to arbitrators;
- If the application is not submitted within 4 months, the case will be automatically closed;
- The case is made public after its completion;
- Except for the arbitration costs, the tribunals cannot impose any monetary sanctions;
- If the award is canceled at the enforcement stage, then it starts again at the stage of the proceedings, where the grounds for its cancellation originally arose. At this stage, the parties can demand the challenge of the arbitrators.
Peruvian arbitration law does not limit the right of the parties to choose arbitrators in any way. Moreover, the law also does not restrict the right of parties to choose an arbitration institution or ad hoc arbitration with a seat of arbitration in Peru or abroad. In other words, nothing prevents investors from appointing foreign arbitrators in proceedings with their participation. The only constraints that investors can face can be set at the level of individual arbitration institutions.
Here it is necessary to make an important reservation that the updated legislation that has recently entered into force is still subject to verification and possible revision in the Congress of the Republic of Peru.
Dispute resolution via arbitration in Peru: new arbitration rules
AmCham Peru became the first tribunal in the country to have a majority of women. Likewise, the arbitration institution recently added more women (both Peruvian and foreign) to its list of arbitrators. The purpose of this act is to ensure gender equality in the process of settling an international dispute by arbitration in Peru.
The institution has also made changes to its Arbitration Rules. The proceedings can now be considered remotely. According to experts, virtual arbitration will take less time than in person.
Dispute resolution via arbitration in Peru amid the coronavirus
Amid measures taken by the Peruvian authorities to withstand the impact of the pandemic, most arbitration institutions have suspended the physical settlement of disputes in Peru. Recommendations for conducting virtual trials in Peru have been published.
They stipulate that hearings must be held remotely using a platform provided by a designated arbitration institution. The Council encourages parties and arbitrators to amend the procedural rules in line with the updated provisions.
Today, there is a single rule that all applications are submitted in electronic form and dispute resolution by arbitration in Peru is carried out remotely in an interactive mode. The Rules provide the parties with the opportunity to file claims by filling out electronic forms, participate in video conferences etc.
The parties can send procedural documents and evidence in electronic form not only to the arbitrators, but also to each other, and this will be considered due notification. Representatives can protect the interests of their principals from their own office by connecting to the arbitrators tribunal via regular video communication.
Still, it is worth noting that there are both pros and cons to conducting arbitration proceedings in Peru online. Reducing the costs of conducting proceedings, increasing the speed of processing cases, as well as ensuring access to justice can be accompanied by technical failures, unauthorized access by third parties, difficulties in maintaining confidentiality, determining the location of the decision and its appeal. It is obvious that live communication with the court allows representatives to more effectively convey their position on the case but it is evident that they are hardly applicable in today’s situation.
The effectiveness of arbitration depends primarily on the arbitrators and the parties, and also partially on the arbitration institution. The role of the state in this matter is limited, as before, by the issues of improving the quality of arbitration legislation and judicial practice.
In connection with the COVID-19 pandemic, new provisions have been developed and introduced into practice that regulate the settlement of a dispute using arbitration in Peru remotely. Also, amendments were made to the rules for gender selection of an arbitrator.
For more detailed information, we offer advice on the initiation of arbitration proceedings in Peru from the specialists of our company.