URUGUAY Law and Practice Contributed by: Leonardo Melos, Bergstein Abogados
In the event that the parties have failed to agree on a certain “applicable law”, the court will apply the sub - stantive law it deems most adequate to the dispute; in addition, the court will apply to the dispute the con - tract terms and the uses and customs of international trade that are applicable to the case. Although this legal provision does not diverge from the various arbi - tration regulations, in this connection, Article 28 No 2 of the UNCITRAL Model Law establishes that “failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules [that] it considers applicable”. In Uruguayan law, the arbitral tribunal is entitled to apply the substantive law as it sees fit. Arbitration agreements are favoured by local courts and regularly enforced in application of Article 494 of the CPC. However, as case law has concluded that arbitration is an exception to the ordinary jurisdic - tion of the local courts, rulings have established that the subject matter of the dispute should be clearly included in the arbitration agreement. That is to say, if the arbitration agreement is not clearly written, local courts would feel inclined to assume jurisdiction. 3.4 Validity The AICA establishes in Article 16 that, even if the contract into which the arbitration clause or agree - ment is inserted is considered null and void, this does not determine that the arbitration clause or agreement will be considered invalid. Therefore, the principle of separability is applied to arbitration clauses in Uru - guay. Similar considerations should be made in con - nection with local arbitration regulated under the CPC.
Arbitrators may be challenged by the parties on the grounds that their impartiality or independence could be compromised. It is possible to also challenge the appointment of an arbitrator if they lack sufficient cre - dentials in accordance with the qualifications agreed by the parties. In addition, it is not possible for a party to challenge an arbitrator appointed by the same party unless the grounds for such a challenge were only known by the appointing party after the appointment. The parties are not allowed to challenge an arbitrator by reason of nationality or background. Finally, in arbi - trations in which a state or a public entity is a party, the status as a public official of an arbitrator appointed by that party does not necessarily constitute grounds for challenge. 4.2 Default Procedures Parties are free to choose the method for selecting arbitrators. Nevertheless, if the parties fail to establish such a method of appointment, the AICA provides a default procedure. In arbitration proceedings with three arbitrators, each party appoints an arbitrator and these two arbitrators appoint the third one. If a party fails to appoint the arbitrator within 30 days of the writ - ten request from the other party to do so, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment will be made – at the request of one of the parties – by the competent court without delay. In arbitration proceed - ings with a sole arbitrator, if the parties cannot agree on the appointment of the arbitrator, the arbitrator will be appointed by the competent court at the request of any of the parties. 4.3 Court Intervention In an appointment procedure previously agreed by the parties, either party may request the competent court to take the necessary measures to enforce the procedure if: • a party does not act in accordance with the provi - sions of the arbitration agreement; • the parties or two arbitrators cannot reach an agreement in accordance with the aforementioned procedure; or • a third party, including an arbitral institution, fails to comply with the function conferred in said proce - dure.
4. The Arbitral Tribunal 4.1 Limits on Selection
The parties are free to determine the number of arbi - trators and respective qualifications of the arbitral tri - bunal to be appointed. However, once someone is approached by a party to become an arbitrator, they have a duty to disclose any circumstance that could give rise to a challenge to their impartiality or inde - pendence. In cases where they disclose a circum - stance that impairs them from accepting the appoint - ment, parties should appoint a replacement arbitrator.
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