ECUADOR Law and Practice Contributed by: Jorge Sicouret Lynch, María Celeste Alvarado, Julia Rovello and Mateo Viteri, Coronel & Pérez
own rules regarding the confidentiality of ADR pro- ceedings. 4.6 Costs The parties are free to agree on the allocation of costs arising from ADR mechanisms. In the absence of such an agreement, they shall be subject to the rules established by the arbitration and mediation centres to which they resort. In Ecuador, the principal arbi- tration and mediation centres’ regulations generally provide that the party initiating the ADR mechanism shall bear the corresponding costs. 4.7 Courts and ADR Under Ecuadorian law, courts are required to respect the ADR mechanisms chosen by the parties. Accord- ingly, once the existence of an ADR agreement entered by the parties is verified in a dispute, the judge must decline jurisdiction and refer the parties to the agreed- upon ADR mechanism. In Resolution No 12-2017, the National Court of Jus- tice clarified that the existence of an ADR mechanism constitutes a non-curable prior exception. If upheld, it must be resolved by means of a final ruling, resulting in the termination of the judicial proceeding. Conse- quently, judges are required to recuse themselves and refrain from analysing the merits of the dispute where an ADR agreement exists. Furthermore, the Ecuadorian legal system recognis- es that once a dispute has been resolved through an ADR mechanism, ordinary courts must respect that outcome and refrain from hearing new claims on the same matter and recognise the res judicata effects of the agreement, thereby avoiding a violation of the principle of non bis in idem and ensuring legal cer- tainty.
If no legal fee has been expressly stipulated, the judge will regulate the fee, considering certain rules set forth in the law. 5.2 Third-Party Funding Ecuadorian legal provisions or regulations do not address third-party fundings. In this regard, pursuant to Article 1465 of the Ecuadorian Civil Code, in gen- eral, payment of obligations by third parties is allowed. 5.3 Contingency Fee Arrangement There is no specific legal provision governing con- tingency fee arrangements in this jurisdiction. How- ever, they are available pursuant to the principle of the autonomy of the parties’ will. In practice, Ecuadorian attorneys enter contingency fee arrangements (for example: success fees, percentage of recovery, etc). 5.4 Insurance Insurance coverage is available in Ecuador for litiga- tion, arbitration and other ADR proceedings. Such policies typically cover the costs and expenses associated with legal defence, including legal fees and related disbursements, incurred in civil, arbitral, criminal or administrative proceedings arising from a company’s commercial or operational activities. 5.5 Costs Regarding recovery of dispute resolution costs, the general rule is that the allocation of legal costs can be agreed by the parties. If no such agreement exists, a party may only be required to pay all the legal costs when a party litigates in an abusive, mali- cious, reckless manner, or with procedural disloyalty. In such cases, the party shall be ordered to pay the State and the opposing party, where applicable, the expenses incurred, including all judicial costs arising from the proceedings, among others, attorneys’ fees of the opposing party’s counsel, expert witness fees, the cost of required publications, and the payment for copies, certifications, or other documents. The legal costs described may be claimed from the opposing party in the following cases: • when a party requests a hearing from the judge or the judge orders one and the party fails to appear;
5. Costs, Fees and Funding 5.1 Legal Fees
In accordance with the principle of party autonomy and the Federation of Ecuadorian Attorneys Act, the legal fees can be agreed upon the client and their attorney.
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