Originally from Arbitration Law and Practice in Latin America - Second Edition

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I. INTRODUCTION: ARBITRATION IN GUATEMALA—

HISTORY AND INFRASTRUCTURE

A. History and Current Legislation on Arbitration

1. Historical evolution of law relating to arbitration

In 1995 the Guatemalan national legal framework started facilitating and promoting the development of arbitration as an effective dispute resolution method. Previously and with some particular provisions, the Civil and Commercial Procedural Code of 1934 (“Código de Enjuiciamiento Civil y Mercantil”) essentially repeated the regulations of applicable law, commonly used in other countries at the time. It also regulated the arbitration agreement to be formalized in a public deed with a requirement to contain the full name of the arbitrators, the dispute to be solved, time period to render the award and place of arbitration. In the event that one of the parties did not fulfill its commitment to execute the arbitration agreement, the law established a judicial procedure (“vía ejecutiva”) to enforce the arbitration agreement so that the judge could order the enforcement of the arbitration agreement. The lack of expeditiousness in the judicial procedures to enforce the arbitration agreement, among other factors, resulted in a major setback to the development of arbitration as an effective tool of dispute resolution.

The legislators, became aware of the issues raised by the previous arbitration law and changed the procedure to enforce the arbitration agreement. Along with other reforms, the Civil Procedural Code of 1964 (“Código Procesal Civil y Mercantil”) established a fast-track procedure, to enforce the arbitration agreement. Despite the reforms, it did not translate into an acceptance of the arbitration procedure as an effective dispute resolution method. The major critics of this new arbitration law were:

i) The no fulfillment of one of the parties to comply with the agreement created a burden on the party seeking arbitral proceedings. This burden consisted in requiring assistance from a court, through a request of a non-time effective judicial procedure, as it could take a year to enforce the arbitration agreement.

ii) All arbitration agreements had to be formalized in notarial instruments or public deeds. The lack of this formality rendered the arbitration agreement null and void.

iii) There was no express recognition of the notion or concept of “separability and autonomy” of the arbitral agreement.

iv) There was no express recognition of the principle “kompetenz-kompetenz”.

v) There was no express recognition on the right of the parties to select an institution to manage the arbitral proceedings, for the appointment of arbitrators or any other supplementary services for “ad hoc” arbitration.

vi) All the arbitration procedures regarded as “arbitration in law” (in contrast to “arbitrations in equity” to be distinguished below) shall be handled as mandatory, to give the effect to the parties did not have the right to decide on all the procedural aspects of the arbitration.

vii) The final award was subject to a judicial review by the Supreme Court through a special procedure, which declared the award enforceable, null, void or invalid.