ECUADOR Law and Practice Contributed by: Jorge Sicouret Lynch, María Celeste Alvarado, Julia Rovello and Mateo Viteri, Coronel & Pérez
3.3 Advantages of Arbitration The main perceived advantages of arbitration in Ecua- dor include procedural flexibility and relative speed. Arbitration allows the parties substantial autonomy to shape key aspects of the proceedings, including whether the tribunal will decide the dispute in law or in equity, whether the arbitration will be institutional or ad hoc, and, to a significant extent, the procedural framework applicable to the dispute. The Arbitration and Mediation Act (“Arbitration Act”) expressly permits the parties to agree on whether the arbitral tribunal will decide according to legal princi- ples or equity and provides that arbitration may be administered by an arbitral institution or conducted independently. Domestic arbitration is also designed to proceed efficiently: once the substantiation hear- ing has been held and the tribunal has declared itself competent, it must render its award within 150 days, which may be extended once for an additional period of the same length, where necessary. Arbitral awards are not subject to appeal and have the effect of a final and binding judgment. In addi- tion, confidentiality is available where the parties have expressly agreed to it, which is often regarded as a further advantage in commercial disputes. 3.4 Disadvantages of Arbitration The principal perceived disadvantage of arbitration in Ecuador is cost. Arbitral institutions are required to maintain rules governing arbitrators’ fees, secretarial expenses, and administrative charges, which can be significant in complex or high-value disputes. In addi- tion, the institutional rules of most arbitration centres require the advance payment of arbitral costs, which may represent a substantial upfront financial commit- ment for the parties. 3.5 Arbitral Institutions Among the most renowned and commonly used arbitral institutions in Ecuador are the Arbitration and Mediation Centre of the Quito Chamber of Com - merce, the Arbitration and Conciliation Centre of the Guayaquil Chamber of Commerce, the Arbitration and Mediation Centre of the Ecuadorian-American Chamber of Commerce (AmCham Quito), and the International Arbitration and Mediation Centre (CIAM)
duced in the proceedings. Generally, compensation is available where a party has suffered personal injury or property damage, or where a debtor has breached a contract. Damages are compensatory only: they must reflect actual loss that is the immediate and direct consequence of the harmful act or breach, and puni- tive damages are not recognised. Recoverable dam- ages typically include both actual loss and loss of profit. In the absence of fraud or wilful misconduct, the debtor is liable only for losses that were foreseen, or could reasonably have been foreseen, at the time of contracting; otherwise, the debtor may be liable even for unforeseeable losses. Where the obligation is to pay money, default generally gives rise to inter- est under the Civil Code. These substantive standards apply whether the dispute is resolved by a court or an arbitral tribunal, where Ecuadorian law governs the merits. Arbitration is a well-established dispute resolution mechanism in Ecuador. It is expressly recognised by the Constitution, and the Council of the Judiciary maintains an official nationwide registry of approved arbitration centres. In practice, arbitration is most commonly used for commercial and contractual dis- putes in high-value business disputes. 3.2 Restrictions on Use of Arbitration Under Ecuadorian law, only disputes involving rights that are capable of settlement may be referred to arbitration. As a result, non-disposable matters that cannot legally be settled by the parties fall outside the scope of arbitration. There are also specific restric- tions for public-sector entities: the arbitration agree- ment must generally be entered into before the dis- pute arises; if it is signed after the dispute has arisen, authorisation of the Attorney General is mandatory, and the underlying legal relationship must be contrac- tual. In public procurement, the Constitution requires arbitration in law and a prior favourable opinion of the Attorney General, in accordance with the law. 3. Arbitration 3.1 Prevalence
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