URUGUAY Law and Practice Contributed by: Leonardo Melos, Bergstein Abogados
Courts in Uruguay have shown a general reluctance to intervene in disputes that are subject to an arbi - tration agreement. In fact, case law tends to confirm the jurisdiction of the arbitral tribunal. In this connec - tion, it is worth mentioning that the Supreme Court of Justice ruled that there is no reason to exclude labour disputes from the arbitral jurisdiction (Ruling No 596/2017). Although the ruling of the Supreme Court of Justice was not unanimous, and there are recent conflicting decisions issued by the labour appellate courts, it reveals that Uruguayan courts favour arbi - tration as an alternative method to resolve disputes. The reverse side of this judicial policy is the severe analysis conducted by the local courts into those mat - ters that are excluded from arbitration or matters other than the specific matters the parties have agreed to be arbitrated in the arbitration agreement. 5.3 Timing of Challenge See 5.1 Challenges to Jurisdiction . 5.4 Standard of Judicial Review for Jurisdiction/Admissibility The standard of judicial review is a de novo analysis. Higher courts act as though they were considering the question for the first time, affording no deference to the decisions of the lower courts. 5.5 Breach of Arbitration Agreement Parties subject to an arbitration agreement are not prevented from pursuing an action with local courts. Local courts do not raise absence of jurisdiction ex officio; the defendant must raise the existence of an arbitration agreement and request a declaration of absence of jurisdiction. According to Article 475 of the CPC, if a party in a local arbitration fails to raise the absence of jurisdiction at the time of answering the complaint, it will be interpreted that the party has waived the arbitration clause. However, for interna - tional arbitration under the AICA, the court to which a dispute over a matter that is the subject of an arbi - tration agreement is submitted will refer the dispute to arbitration if so requested by any of the parties at the time of filing the first brief on the merits at the lat - est. The only exception is when it is proven that said agreement is null, ineffective, or impossible to enforce.
The fact that a party has commenced litigation with local courts does not suspend or prevent the initiation or continuation of the arbitration proceedings. 5.6 Jurisdiction Over Third Parties There are no specific regulations that allow a third party to join an existing arbitration. Given that local courts consider arbitration an exceptional jurisdiction, the absence of participation in the arbitration agree - ment will preclude a third party from participating in the proceedings. Participation of third parties is limited to the effect of interim measures and to the mandatory gathering of evidence. The only option for a third party to par - ticipate in an existing arbitration would be the explicit consent from the claimant and defendant in the course of the arbitration proceeding. Arbitral tribunals are allowed to award interim relief or preliminary measures. However, it is customary that the parties pursue interim relief with local courts. The practice of pursuing interim relief prior to arbitration with local courts is based on their powers to enforce the decision in a more expeditious manner. The lack of arbitrators’ power to enforce the decision as a conse - quence of the absence of coercive powers (so-called imperium) limits the ability to request interim measures from the arbitral tribunal. Having said that, according to Article 17 of the AICA and unless otherwise agreed by the parties, the arbi - tral tribunal may – at the request of one of the parties – order the adoption of precautionary measures that it deems necessary with regard to the subject mat - ter of the dispute. The arbitral tribunal may require the applicant to provide a performance bond to cover potential damages. 6. Preliminary and Interim Relief 6.1 Types of Relief Such precautionary measures ordered by an arbitral tribunal will be considered as binding between the parties. If the party subject to an interim measure does not comply with the arbitral tribunal interim award, it can be enforced by the competent local court.
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