Free Trade Area of the Americas - FTAA


Trade Negotiations

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1. International Agreements

a. Is the jurisdiction a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (New York Convention). If so, are there any reservations? Name the domestic law that implements these commitments.

Convention on the Recognition and Implementation of Foreign Arbitral Awards, signed on 10 June 1958 and ratified on 26 February 1998. Under our legislation, we do not need any instrument to implement commitments. The Convention, following its entry into force, became a Law of the Republic.

b. Is the jurisdiction a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, done at Washington on 18 March 1965 (ICSID Convention)? Is there a domestic implementing law? Is the jurisdiction a party to any bilateral investment treaties providing for settlement of investment disputes between a state and a national of another state?

Convention on the Settlement of Investment Disputes between States and Nationals from other States, signed on 9 June 1982, ratified on 6 March 1984 and entered into force on 5 April 1984. Under our legislation, there is no need for an instrument to implement commitments. The Convention, following its entry into force, became a Law of the Republic. Every bilateral investment treaty signed and ratified by El Salvador provides for mechanisms for settlement of investment disputes between the State and a national of another State. The process is generally referred to ICSID or UNCITRAL.

c. Is the jurisdiction a party to the Inter-American Convention on International Commercial Arbitration, signed in Panama on 30 January 1975 (Panama Convention)? Is there a domestic implementing law?

Inter-American Convention on International Commercial Arbitration signed on 30 January 1975, ratified on 27 June 1980 and deposited on 11 August 1980. Under our legislation, we do not need any instrument to implement commitments. The Convention, following its entry into force, became a Law of the Republic.

d. Is the jurisdiction a party to any other international agreement related to international commercial arbitration?

We are not a party to any other international agreement related to international commercial arbitration.

2. Arbitration

a. What is the source of law for international commercial arbitration within your jurisdiction? Please cite.

I. The Constitution of the Republic of El Salvador

“Article 23: Freedom of contract, according to law, is guaranteed. No person who is free to manage his assets may be deprived of the right to resolve his civil or commercial matters through settlement or arbitration. For those who do not have the freedom to manage their own assets, the law shall determine the cases where they may do so and the requirements.”

“Article 146: No treaty may be entered into or notified, nor concessions granted that harm or alter, in any way, the form of government, or that injures or undermines the territorial integrity, sovereignty and independence of the Republic or the rights and basic freedoms of the individual.

The provisions of the above article apply to international treaties or contracts with governments or national or international enterprises in which the state of El Salvador enters into and submits itself to the authority of a tribunal of a foreign state.

Whether it be in treaties or contracts, the above does not prevent the state of El Salvador, in case of dispute, from submitting the ruling to arbitration or to an international tribunal.”

II. Commercial Code

“Article 66, paragraph 1: In the articles of incorporation of a partnership, the partners shall determine if the disputes arising between them in the interpretation of their partnership agreement or partnership business, the disputes shall be resolved by the courts or by arbitrators. If there is no provision in this area, it is understood that the partners shall accept to submit said disputes to arbitration.”

“Article 67: Should the partners decide not to follow the normal judicial process, they shall stipulate in the articles of incorporation whether the arbitrators settling the disputes are de jure or ex aequo et bono and make the respective appointments.

If the above provision is not in the instrument, it shall be understood that the partners shall opt for a ruling by two ex aequo et bono arbitrators.”

“Article 1004: The arbitration provision is valid for the parties who commit themselves to an arbitral award for all or some of the disputes that may have arisen or may arise between them, in reference to a commercial type business, despite the fact that it is not a notary recorded instrument.”

III. Code of Civil Procedure

“Article 56: Arbitration proceedings are submitted to arbitral judges whose appointment and tenure depend exclusively on the will and discretion of the parties.”

b. Does the law contain different rules for domestic and international arbitration?

There are significant differences. Our Commercial Code dates back to 1970 and therefore, the regulations contained therein on arbitration are not the ones being currently applied. Here are a few examples: our legislation does not create an independent body to administer arbitration. It only regulates how the process will be carried out. There are no lists of arbitrators. Their appointment does not follow a specific process, but rather depends on the agreement reached by the parties for this purpose; however, there does exist the possibility that the commercial judge may intervene, for example to set time limits for the appointment of arbitrators and, even, if the time limit has lapsed and the parties have not appointed them, the judge may do so.

The possibility exists that the dispute may be heard by ex aequo et bono arbitrators, except when the arbitration provision designates de jure arbitrators.

c. Are there limitations on the types of disputes that may be arbitrated?

Arbiters or arbitrators cannot hear the following cases:
1. Taxation and public establishment cases, save for those arising from a contract where arbitration has been stipulated;
2. Public welfare cases;
3. Divorce cases;
4. Donations, gifts, bequests to provide support, housing or clothing;
5. Personal family belongings; and
6. Persons or legal entities that cannot represent themselves in legal procedures and cases.

d. Does the law specify rules for arbitration or do the parties have autonomy to set their rules?

There are clear rules set out in articles 68 to 72 and 1004 to 1012 of the Commercial Code, as well as in articles 12 to 20 of the Law on Commercial Procedure. However, the only area where the Parties have freedom is to decide whether the arbitrators shall be de jure or ex aequo et bono.

e. What is the role of the courts during an arbitration? May courts intervene prior to or during the arbitration process?

Commercial courts can intervene in the following situations:
1. To set a time limit for one of the Parties to appoint its arbitrator(s);
2. If the time limit has lapsed and no arbiter has been appointed, then the Judge may do so;
3. When one of the partners is “unfit”, the ruling shall be submitted for approval to the competent commercial judge, under penalty of nullification;
4. When an arbitration process is to be initiated, a request for arbitration must be filed with the competent judge hearing the case;
5. If the parties have reserved the right to appeal the award, the appeal shall be submitted to and heard by the judge who has issued the award.

f. Can the courts grant interim relief pending the outcome of an arbitration?

Knowing the ex aequo et bono arbitrators, we would consider that it would not be possible, since they settle disputes by not necessarily following the relevant law, but rather use the criteria of justice, truth, good faith, etc.

However, we believe that the de jure arbitrators could do so, provided the request closely follows the law and fulfills the specific requirements that the request must include. However, this has never occurred in our country.

g. Does the law require citizenship or a particular bar membership for participation in an arbitral proceeding, as arbiter or representative of a party?

De jure arbitrators act like judges and shall arrange their proceedings as well as their rulings, according to the valid applicable laws. The ex aequo et bono arbitrators shall proceed and rule, according to the dictates of their conscience, heeding only to truth and good faith.

De jure and ex aequo et bono arbitrators may be nationals or foreigners, at least twenty-one years old, residents of the Republic, knowing how to read and write. However, justices and judges of the courts of first instance cannot be arbitrators.

In reference to the limitations for representation by foreign lawyers or representatives of the parties, according to Article 99, numeral 1 of the Code of Civil Procedure, the power of attorney (anyone who can appear in court by his own right or as a legal representative, may also do so through an intermediary) cannot be held by those who are not certified lawyers.

In accordance with Articles 140 et seq of the Judicial Implementing Act, any national of El Salvador or of a Central American State who has received his degree abroad, shall have been admitted to the National University of El Salvador and provide proof of his identity prior to being certified.

In accordance with Article 87 of the Code of Civil Procedure, lawyers from other nations shall not exercise their profession in the Republic without first having been admitted to the university and being examined by the Supreme Court of Justice, except for existing applicable treaties granting such a right and with prior information on the person’s identity.

h. Does the law require that the proceedings be conducted in a particular language?

The Civil Code as well as the Commercial Code do not establish language requirements. However, in accordance with Article 62 of the Constitution of the Republic of El Salvador, the official language of the country is Spanish. Therefore, all proceedings within the country, whether they be administrative or judicial, shall be in Spanish. However, translators may be used for this purpose.

i. Does the law have mandatory choice of law provisions?

No. What the law provides for are types of arbitration and how they are conducted; i.e., procedures. However, there is no obligation to choose one type of arbitration or another.

j. Does the arbitration law prescribe rules for decision making by the arbiters and the form of an award?

In accordance with Articles 1011 and 1012 of the Commercial Code, the arbitral awards shall be decided by majority vote and shall address all the points in dispute submitted. Moreover, the award must contain the decision on the points that gave rise to the dispute, its omission shall nullify it; when it is a de jure arbitration, no procedural defect is permitted.

In accordance with Article 69 of the Code of Civil Procedure, de jure arbiters and ex aequo et bono arbitrators may only rule on the question and business at hand or on a particular point that was submitted. They shall not pronounce in any way on other than the business at hand or particular point, not even collaterally, under penalty of nullification of the part that was exceeded in the ruling.

k. Is the confidentiality of arbitral proceedings and awards protected by law?

Since we are referring to proceedings that concern solely and exclusively individual persons, and it being upon their request that the proceedings were initiated, it is understood that the judge must guarantee that the proceedings, information, documentation and the very award that is handed down must remain confidential.

l. On what grounds will the courts set aside or decline to enforce an award?

When one or more of the partners are unfit and the judge does not approve the award, the matter shall be settled through the courts.

m. What is the procedure for the enforcement of an award?

In accordance with Article 76 of the Code of Civil Procedure, once the ruling or the award has been handed down and approved, the case will go to the judge who heard it, if it has not been settled. The judge shall notify the parties, allow for recourse to appeal and nullification as permitted, award the party, based on res judicata, where appropriate, and shall enforce the award in accordance with the law.

n. Please list any institutions available within your jurisdiction that provide international commercial arbitration services. Provide Internet address where available.


3. Alternative Forms of Dispute Resolution (ADR)

a. Are other forms of alternative dispute resolution (mediation, conciliation) available for the resolution of commercial disputes within your jurisdiction?

In accordance with the Code of Civil Procedure, there are some preliminary actions that may be called upon, such as conciliation. The purpose of Articles 164 to 189 is to avoid litigation that someone wishes to instigate, by attempting to lead the parties to reconcile or compromise or to submit the matter in dispute to de jure or ex aequo et bono arbitrators.

b. Does the law or do the courts mandate or encourage the use of ADR in commercial disputes? Are there any legal impediments to using ADR for the resolution of commercial disputes?

The Code of Civil Procedure regulates conciliation. Nevertheless, its use is not mandatory. However, the decision reached through conciliation is mandatory. In accordance with Article 165 of the Code of Civil Procedure, the exceptions for the use of conciliation are the following:
1. For cases of interest to the Ministry of Finance and other legal entities;
2. For those who do not have the freedom to manage their assets;
3. For meeting of creditors and third parties;
4. For the part of an estate of which an heir has not taken possession
5. For restraining orders, separation of property and family estates;
6. For foreclosures arising from final judgments; and
7. For a defendant outside the Republic.

c. Can courts enforce agreements to mediate or use other forms of non-binding dispute resolution in commercial disputes?

When there is a prior agreement between the parties that sets out, in writing, that the disputes shall be settled by either conciliation or arbitration or by any other means, the relevant court can implement it. If the agreement does not set it out in writing, it is impossible for the courts to require the use of another form of dispute resolution.

Moreover, if conciliation has followed its course and the agreement is to settle the dispute through arbitration, for example, that agreement compels execution and must be irremissibly enforced by the judge with jurisdiction over the defendant (Article 179 of the Civil Procedure).

d. Are there any organizations that specialize in ADR for commercial disputes not already mentioned?

At present, we do not have national institutions specializing in ADR.

e. What rules govern confidentiality and admissibility of evidence in other proceedings?

There are no specific articles referring to confidentiality and the submission of evidence for conciliation. It is understood that the parties may submit evidence if they so wish and if the judge so allows in an oral hearing, since what is being sought is a balanced settlement for the parties in dispute. The evidence is then left for arbitration or for trial before a competent judge.

4. Legal Sources and References

In addition to the references above is there an authoritative Internet site containing up-to-date information on dispute resolution facilities available in this jurisdiction?

At present, we do not have an official or authorized web page that provides information on institutions and agencies versed in international commercial dispute settlement mechanisms.

What we do to find some foreign institutions is access the Internet web sites of the WTO and FTAA, or contact directly institutions, such as ICSID or ICC.

5. Bibliography

Please list a bibliography of references to arbitration and ADR in your jurisdiction.

Lantan, Harold. “MEDIACION: Cultura del diálogo”.

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