2008 Peruvian Arbitration Law

Peru enacted a new domestic arbitration statute in 2008. The law is fashioned after the Model Law of the United Nations Commission on International Trade Law (the "UNCITRAL Model Law").

Peru

Peru's new arbitration statute (Decreto Legislativo No. 1071) entered into force on September 1, 2008, replacing the country's prior 1996 General Arbitration Law (Ley No. 26572). However, Peru’s 1996 law was already a modern statute based on the 1985 UNCITRAL Model Law. Thus, rather than being entirely novel, the 2008 law builds upon Peru's experience with arbitration over the past decade, and also takes into account the 2006 amendments to the UNCITRAL Model Law. This section examines the main features of the new statute—some of which were already present in the 1996 law.

In accordance with Peru's international treaty obligations, Article 74 of the new law provides that foreign arbitral awards shall be recognized and enforced in accordance with: (1) the New York Convention, enacted by Peru in 1988; (2) the Inter-American Convention on International Commercial Arbitration (the "Panama Convention"), enacted by Peru in 1989; and (3) any other convention on recognition and enforcement of arbitral awards to which Peru is a party. In the case of discrepancies between these agreements, the new law seeks to enforce foreign awards to the maximum extent possible, providing that — except where the parties have otherwise agreed — "the applicable treaty shall be that most favorable to the party who seeks the recognition and enforcement of the foreign award."¹ Additionally, the new law contains a Complementary Provision (No. 14) expressly providing that the enforcement of awards rendered in investment treaty arbitrations administered by the International Centre for Settlement of Investment Disputes ("ICSID") shall be in accordance with the 1965 ICSID Convention.

Under Articles 76 and 77 of the new law, the recognition and enforcement of foreign arbitral awards in Peru is designed as a two-step process where courts first recognize an award in whole or in part and then order its enforcement. Article 75(2) and (3) of the statute closely follows the grounds for non-recognition contained in Article 36(1) of the UNCITRAL Model Law and Article V of the New York and Panama Conventions. Pursuant to its terms, Article 75 shall apply: (1) when there is no applicable international treaty; or (2) when there is an applicable international treaty but the law itself is more favorable to the party seeking recognition of the foreign arbitral award, taking into account the prescription periods provided under Peruvian law (Article 75(1)).

The 2008 law further affords parties to arbitration proceedings autonomy to determine issues such as the selection of arbitrators and the applicable procedural rules. In this respect, Article 23 allows the parties to determine the procedure for naming arbitrators, failing which such appointments shall be made in international cases by either the Chamber of Commerce located in the place of arbitration, or by the Lima Chamber of Commerce. Article 34 allows the parties to determine the procedural rules they wish to govern the arbitration. In the absence of such a determination or an otherwise applicable procedure, the arbitral tribunal shall determine the rules it deems most appropriate in light of the circumstances of the case.

Peru's new arbitration law also allows interim relief to be ordered judicially (Article 8(2)) or by the arbitral tribunal (Article 47). At the same time, the Peruvian statute contains detailed provisions in Article 47 clarifying that judicial measures should be sought before the arbitral tribunal is constituted. Indeed, once a tribunal exists, it has the discretion to "modify, substitute and leave in effect" such measures (Article 47(6)).

Other features of Peru's new arbitration statute include: (1) the ability of the arbitral tribunal to decide the controversy in either a single award or as many partial awards as it deems necessary (Article 54); and (2) the extension of the arbitration agreement to include non-parties who actively participate "in the negotiation, celebration, execution or termination" of the contract containing the arbitration agreement or to which the agreement is related, or who "derive rights or benefits" from the contract (Article 14). Finally, the new Peruvian law also adheres to the principle of kompetenz-kompetenz, providing that "[t]he arbitral tribunal is the only one competent to decide its own competency, including as to exceptions or objections to the arbitration relating to the inexistence, nullity, annulability, invalidity or inefficacy of the arbitration agreement…" (Article 41(1)).

In conclusion, the new arbitration law enacted in 2008 in Peru serves as a positive development for international arbitration in the jurisdiction.

¹ All quotations from Latin American arbitration laws contained in this article are free translations from the Spanish original.