On February 6, 2025, the Constitutional Court of Ecuador (“Court”) issued Judgment No. 74-21-IN/25 (the “Judgment”), in which it assessed the constitutionality of various articles of the Regulation to the Arbitration and Mediation Law (“RLAM”):
| Article No. | Content |
|---|---|
| 2 | Provides that the requirements set forth in Article 41 of the Arbitration and Mediation Law are enforceable only when an international arbitration has its seat in Ecuador. It also establishes that an investment vehicle incorporated in Ecuadorian territory will be considered domiciled abroad when the investor who exercises effective control over the vehicle is domiciled in a different state. |
| 3 | Establishes that entities of the public sector may agree to international arbitration with a foreign seat in their contracts, provided they have prior authorization from the Attorney General of the State. This authorization will be limited to verifying that the arbitration agreement does not contradict the legislation of the chosen seat, without evaluating the convenience of its execution |
| 4 | Determines that the State and entities of the public sector, in accordance with Article 225 of the Constitution of the Republic, may submit to national or international arbitration through the conclusion of an arbitration agreement either before or after the dispute arises, or when the law or an international treaty so provides. Furthermore, prior approval from the Attorney General of the State is required when the arbitration agreement is concluded after the dispute arises or when international arbitration is agreed. Finally, if arbitration has been agreed, the arbitrators shall have exclusive jurisdiction to resolve disputes related to the legal relationship submitted to their knowledge, including those arising from administrative acts such as termination, expiration, or imposition of sanctions. |
| 6 | Establishes that, in addition to the cases provided by law, the effects of the arbitration agreement extend to: 1) Those whose consent to submit to arbitration is derived from their active and determining participation in the negotiation, execution, or termination of the legal business related to the arbitration agreement; 2) Those who seek to derive rights or benefits from the legal business, such as successors or assignees; and 3) The administrative bodies responsible for the related administrative actions. |
| 9 | Provides that the arbitral tribunal may modify, suspend, or revoke any provisional measure or preliminary order it has granted, either at the request of one of the parties or, in exceptional circumstances, on its own initiative, with prior notification to the parties. Likewise, in the same circumstances, the arbitral tribunal may modify, suspend, or revoke any provisional measure granted by a judge or emergency arbitrator before the constitution of the arbitral tribunal. |
| 15 | Determines that international arbitral awards, whether the seat is within or outside of Ecuador, will have the same effects as national awards and will be executed without the need for prior homologation. To enforce it, only a certified copy is required. The party against whom the award is executed may only object if they demonstrate compliance with the obligation, suspension of the award’s execution, or annulment of the award. Additionally, judges cannot accept appeals that delay or prevent the enforcement of the international award. |
| 16 | Establishes that the State or a public sector entity may resolve disputes related to mediation, including modifying or annulling administrative acts such as terminations, sanctions, or fines, regardless of the issuing body. In the mediation process, the State representative, with the support of their technical and legal departments, will conduct a cost-benefit analysis considering time, resources, and the likelihood of success in litigation. Mediation minutes containing agreements exceeding twenty thousand dollars must be approved by the Attorney General of the State. The signing of the mediation agreement will not generate civil or administrative liability unless there is intent; however, the official who unjustifiably refuses to sign an agreement that could have prevented a condemnation of the public entity will incur liability. |
Below is a summary of the most relevant aspects addressed by the Court:
| Legal Matter | Determination |
|---|---|
| Constitutionality of Articles 2, 3, 4, and 15. | The Court determined that these provisions are constitutional, as they do not contravene Article 167 of the Constitution, given that the jurisdictional authority can be exercised not only by the organs of the Judicial Branch but also by others established in the constitutional text. It also concluded that they do not violate Article 422, as the regulated international arbitration is not considered an action of the Ecuadorian State to enter into treaties or international instruments, as prohibited by that article. Finally, it resolved that they do not infringe Article 419, since the intervention of the Attorney General does not interfere with the powers of the National Assembly. |
| Constitutionality of Subsection 3 of Article 4 and Article 6. | The Court determined that these provisions are compatible with Articles 190, 167, and 173 of the Constitution, as administrative acts related to contract execution and those related to contracts where one party is a public entity are arbitrable. It also established that it is exclusively for the arbitrators to determine the appropriateness of third-party interventions in arbitration proceedings. |
| Constitutionality of Subsection 1 of Article 16 of the RLAM. | The Court resolved that this provision is not incompatible with Articles 190, 167, and 173 of the Constitution, as the State or public sector institutions may submit to mediation regarding matters that are subject to settlement, provided that the legal requirements for processing are followed, and the principle of legality is observed. |
| Constitutionality of Subsections 3 and 4 of Article 15. | The Court concluded that these provisions do not violate the principle of judicial independence (Art. 168 of the Constitution), as they ensure the swift enforcement of international awards through the prohibition of inadmissible actions and appeals, without affecting the independence of the Judicial Branch. Furthermore, it established that Paragraph 3 of the challenged provision does not contravene the principle of legality in sanctioning matters (Art. 76 of the Constitution), since, although it includes a prohibition for judges, it does not establish an offense or sanction through the regulatory process. |
| Constitutionality of Subsection 2 of Article 9. | The Court resolved that this provision does not affect the external independence of the Judicial Branch (Art. 168 of the Constitution), by authorizing civil judges to issue provisional precautionary measures until the constitution of the arbitral tribunal, thus guaranteeing preventive protection without interfering in the substance of the conflicts. |
| Unconstitutionality of Subsection 5 of Article 16 of the RLAM. | The Court declared Paragraph 5 of Article 16 of the RLAM unconstitutional, for violating the principle of the reserve of law, which requires that only the law can define offenses and establish penalties. According to the Judgment, the RLAM established sanctions for public officials without prior classification in the law approved by the National Assembly, which contravenes Article 76, Paragraph 3 of the Constitution. Since no legislative deliberation had occurred on this matter, the challenged provision was removed from the legal system in order to protect the principle of legality and due process. |
Hugo García Larriva, Partner at CorralRosales
hgarcia@corralrosales.com
+593 2 2567676
Rafaella Romoleroux, Associate at CorralRosales
rromoleroux@corralrosales.com
+593 2 2544144