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FTAA - NEGOTIATING GROUP ON DISPUTE SETTLEMENT

QUESTIONNAIRE

PARAGUAY

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.

Yes, Paraguay acceded to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958). It was incorporated into domestic legislation through Law 948 of 9 September 1996 without reservation. Date of deposit: 8 October 1997.

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 an 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?

Yes, Paraguay is a party to the ICSID Convention, which was signed in 1965 and ratified by Law 944 of 1982.

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?

Yes, Paraguay is a party to the 1975 Inter-American Convention on International Commercial Arbitration, ratified by Law 611 of 1976.

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

1. Paraguay is a member of the Multilateral Investment Guarantee Agreement (MIGA). The agreement was signed on 13 September 1991 and ratified by Law 124/91.

2. On 24 April 2002, Law 1879/02, On Arbitration and Mediation, which adheres to the principles of the UNCITRAL Law, was passed.

3. American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards signed by Paraguay on 8 May 1979 and ratified by Law 889 of 1981.

 

2. Arbitration

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

The sources of law for commercial arbitration in Paraguay are:

1. The National Constitution
2. Treaties signed and duly ratified by Paraguay (see above),
3. From our corpus of laws, we would mention:

· Law 1879/02 "On Arbitration and Mediation"
·
Law 117/92 “On Investment,”
·
Law 879/81 “Judicial Structure Code,”
·
The basic laws of the different public entities authorizing or not authorizing them to resort to commercial arbitration in matters pertaining to private law.

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

Paraguay’s arbitration legislation does not include a specific law that regulates international arbitration, but the “UNCITRAL Model Law on International Commercial Arbitration” (United Nations Document A/40/17 Annex I), approved by the United Nations Commission on International Trade Law on 21 June 1985, is applied.

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

There are a few limitations. Article 2 of Law 1879/02 states: "Art. 2.- Object of arbitration. All settleable or patrimonial matters may be subject to arbitration provided that no final, non-appealable, enforceable judgement has been issued on the matter. Matters requiring the intervention of the Public Prosecutor’s office may not be submitted to arbitration.

The State, decentralized entities, autarchic entities and public sector companies, as well as municipalities, may submit their disputes with national or foreign private individuals to arbitration, provided that said disputes are derived from legal proceedings or contracts governed by private law".

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

Law 1879/02 consecrates the principle of the will being autonomous. As far as proceedings are concerned, Article 22, Determination of the Proceeding, states: "Subject to the provisions of this law, the parties shall be free to agree to the procedure that is to be followed by the arbitral tribunal in the performance of its duties. In the absence of such an agreement, the arbitral tribunal may, subject to the provisions set forth in this law and upon notification of the parties, direct the arbitration in the way it deems appropriate. The power hereby conferred upon the court of arbitration includes the power to determine the admissibility, relevance, and materiality of evidence."

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

The role of the ordinary courts is to support the arbitral tribunal before, during and after the arbitration process.

The law establishes:

Art. 9: Authority to perform certain assistance and supervisory functions during arbitration processes. "When judicial intervention is required, the judge on duty at the Civil and Commercial Courts of First Instance in the place in which the arbitration process is being carried out shall preside.

When the place of arbitration is located outside the national territory, the judge on duty at the Civil and Commercial Courts of First Instance in the domicile of the person whose property is attached, or in the absence of the latter, in the location of the assets, shall preside over the recognition and enforcement of the arbitral award."

Art. 11: Arbitration agreements and complaints regarding the merits of the case before a judge. "The judge before whom a suit is brought on a matter subject to an arbitration agreement shall refer the parties to arbitration should any one of them so request upon the presentation of the first writ on the merits of the case, unless said agreement is shown to be null, ineffective, or impossible to execute.

If the legal action mentioned in the preceding paragraph has been filed, the arbitration proceedings may nevertheless be started or carried out, and an arbitral award may be issued, while the matter is still pending the judge's decision, provided that the parties abandon the suit prior to the arbitral award being issued."

Art. 20: Power of the arbitral tribunal to order provisional precautionary measures. "… Prior to the establishment of the arbitral tribunal, the judge of the Civil and Commercial Courts of First Instance shall, upon request, decide upon provisional precautionary measures. The legally issued provisional precautionary measures shall expire within seven days of the establishment of the arbitral tribunal, and said tribunal may ratify, remove or modify them from the moment of its establishment. "

Before the process is initiated, the ordinary courts may intervene to guarantee rights, and to order interim relief measures. During proceedings, ordinary courts may also order the enforcement of interim relief measures issued by an arbitral tribunal or order the compulsory performance of specific tests. Once the process has been completed, the ordinary courts, at the request made of a party, may order enforcement of a judgment, whether judicial or arbitral, provided it is final and enforceable and that the period established for its fulfillment has expired (Art. 519 of the Code of Civil Procedure).

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

Yes, see above. Art. 20 in fine.

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

Inasmuch as it is a law on international arbitration, the law is not restrictive with respect to nationality requirements, etc., for participation as an appointed arbiter in an arbitration process.

In Article 13, Appointment of Arbiters, the law states: "For the appointment of arbiters, the following shall apply: a) except when there is an agreement to the contrary between the parties, neither nationality nor domicile shall be obstacles to the appointment of arbiters. In order to perform their function, foreign arbiters shall be admitted to the country as non-resident foreigners for a period of six months. Said period may be extended for similar lengths of time, and arbiters shall receive payment for their services…"

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

As far as language is concerned, the principle of the parties' autonomous will is applied. Art. 25, Language, states: "The parties may freely agree to the language or languages that are to be used in arbitral proceedings. In the absence of such an agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings…"

i. Does the law contain mandatory provisions for selecting a specific set of rules for arbitration proceedings?

The law establishes in Art. 32, Norms applicable to the merits of a case, that: “The arbitral tribunal shall decide the suit according to the legal norms chosen by the parties as applicable to the merits of the case. It shall be understood that any indication of the law or legal ordinances of a certain State shall refer, unless specifically stated otherwise, to the substantive law of that State and not to its norms for conflict of laws.
If the parties do not indicate the applicable law, the arbitral tribunal shall apply the law determined by the norms of conflict of laws that it considers applicable.
The arbitral tribunal shall decide in equity only if the parties have specifically authorized it to do so. In arbitration proceedings carried out 'in equity' or through friendly settlements, the arbiters are not obliged to settle the matter on the basis of the rules of law, but may do so in ‘good conscience’ or ‘according to their best knowledge and understanding’.
In all cases, the tribunal shall reach its decision in light of the stipulations of the corresponding contract and shall bear in mind the commercial usage applicable to the case.”

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

Conc. Art. 32 quoted ut supra.

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

National legislation protects the confidentiality of the arbitral proceedings and awards to the extent agreed by the parties.

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

Local courts may dismiss or refuse to enforce arbitral awards for the reasons stipulated in Art. 26 of Law 1879/02.

Reasons for denying the recognition or the enforcement of awards: “The recognition or enforcement of arbitral awards may only be refused, regardless of the State in which they have been issued, when:

a) the party against whom the finding was awarded proves before the judge that:

1. one of the parties in the arbitration agreement mentioned in article 10 was affected by some kind of incapacity, or that said agreement is not valid under the law to which the parties have subjected themselves, or if nothing to this effect is indicated, under the law of the State in which the award was issued.
2. it has not been duly notified of the appointment of an arbiter or the arbitral proceedings, or has not, for any reason, been able to exercise its rights.
3. the award refers to a dispute not provided for in the arbitration agreement or contains decisions that go beyond the terms of the arbitration agreement. Nevertheless, if the provisions of the award that refer to matters subject to arbitration can be separated from those that are not, the former may be recognized and enforced.
4. the composition of the arbitral tribunal does not adhere to the agreement entered into by the parties, or in the absence of such an agreement, are not in accordance with the law of the State in which the arbitration was carried out.
5. the award is still not obligatory for the parties or has been annulled or suspended by a judge of the State in which, or according to whose laws, the award has been issued.

b) the judge proves that, according to Paraguayan law, the matter under dispute is not subject to arbitration, or that the recognition or enforcement of the award would run counter to international public order or public order in Paraguay.”

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

The procedure for the recognition and enforcement of an arbitral award is set forth in Art. 45, Recognition and enforcement of arbitral awards. "An arbitral award, regardless of the State in which it is issued, shall be recognized as binding, and upon the presentation of a written request to the competent judicial body, such awards shall be enforced according to the provisions of this chapter. If the party requesting the recognition and enforcement of the award so wishes, the judge on duty at the Civil and Commercial Courts of First Instance in the domicile of the person against whom the award is to be enforced, or in the absence thereof, where the assets involved are located, shall be deemed competent for this purpose.

The party invoking the award or requesting its enforcement must present the duly authenticated original of the award or a duly certified copy of the same, as well as the original document of the arbitration agreement referred to in article 10 or a duly certified copy of the same. If the award or agreement were not drafted in Spanish, the party invoking the award must present an official Spanish translation of the documents made by an official translator."

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

The arbitration institution known to the Ministry of Foreign Affairs of Paraguay is the CENTRO DE ARBITRAJE Y MEDIACION DE PARAGUAY de la CÁMARA Y BOLSA DE COMERCIO (CENTER FOR ARBITRATION AND MEDIATION OF PARAGUAY OF THE CHAMBER OF COMMERCE AND STOCK EXCHANGE), located at: Estrella 540, Asunción, Paraguay. Electronic mail: cacp@ccparaguay.com.py; secretaria@camparaguay.com. For additional information, please go to: www. camparaguay.com

 

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?

Yes. Since the entry into effect of Law 1879/02, users of the justice system have the following legal (conciliation, mediation, arbitration and judgment) entities at their disposal:

b) Law 1879, On Arbitration and Mediation, is the legal instrument that promotes the use of ADR in extra-judicial matters in various fields, including trade. Resolution 198/00 provides for the creation of the Mediation Service as a department of the Supreme Court of Justice. This service, which is offered through the Mediation Office of the Judicial Branch, promotes, through the Resolution, the use of mediation in cases involving a range of matters, mainly civil and commercial ones, which have been taken up as legal issues.

 

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?

Law 1879, On Arbitration and Mediation, is the legal instrument that promotes the use of ADR in extra-judicial matters in various fields, including trade. Resolution 198/00 provides for the creation of the Mediation Service as a department of the Supreme Court of Justice. This service, which is offered through the Mediation Office of the Judicial Branch, promotes, through the Resolution, the use of mediation in cases involving a range of matters, mainly civil and commercial ones, which have been taken up as legal issues.

 

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

No, mediation is only used on a voluntary basis. If the parties have agreed to a mediation clause in a contract and a dispute arises in respect of same, the Court, in response to the request of the parties, will order enforcement of the agreed clause before authorizing court action. The same applies in the case of an arbitration clause, in which case the legal authority will recognize the arbitration authority and decline to intervene.

 

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

Yes, such organizations do exist. Among these are: the CENTER FOR ARBITRATION AND MEDIATION OF PARAGUAY of the Chamber of Commerce and Stock Exchange of Asuncion and Services of Paraguay;“Nuestra Señora de Asuncion” Catholic University’s CENTER FOR MEDIATION; the Mediation Office of the Judicial Branch, and the Community Mediation Program run by INECIP.

 

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

The second section of chapter I of Law 1879/02 establishes confidentiality of mediation proceedings to the following extent: "Mediation shall be confidential. Those participating in a mediation procedure must show due reserve, and the forms of agreement proposed shall not affect any lawsuit, should one arise. The mediator may not be called as a witness or in any other form during any later proceeding between the same parties or regarding the same issue." Confidentiality is part of the procedure in the Arbitration and Mediation Centers and is regulated by the rules of each institution, as well as by the codes of ethics applicable to the professionals participating in the process. The parties may sign an agreement on confidentiality during an arbitration process.

 

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?

Paraguay does not have an official Internet site with information on Dispute Settlement Mediation and Conciliation institutions or organizations at the national level. The Internet site of Centro de Arbitraje y Conciliación de Paraguay is www.camparaguay.com. This center serves as the National Office for the Inter-American Convention on International Commercial Arbitration (Panama Convention) and is a member of the Secretariat of Mediation and Arbitration of the MERCOSUR Council of Chambers of Commerce.

 

5. Bibliography

Please list respected reference works relating to arbitration and ADR in your jurisdiction.

Most of the bibliography on arbitration and forms of dispute settlement mediation and conciliation is available in the publications of “Revista Jurídica LA LEY.” In addition, other publications are available in “Revista Jurídica de la Universidad Católica.” Recently, at the request of the Chamber of Commerce of Uruguay, a book containing a compilation of articles by Paraguayan specialists was published on arbitration in Paraguay. Articles on doctrine are published on the web site www.camparaguay.com. The Arbitration and Mediation Center is working on a publication on the subject which is to be published during the first semester of 2003.

 
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