Peru: Top developments in international arbitration
In this article, we summarize some major arbitration-related developments and cases decided in Peru in 2019-2020.
Amendments to the Peruvian Arbitration Act affecting proceedings involving the Peruvian state
On January 24, 2020, Peruvian President Martin Vizcarra issued Emergency Decree No. 020-2020amending the 2008 Peruvian Arbitration Act. Notably, all of the amendments exclusively relate to proceedings in which Peru participates as a party and not to disputes between private companies. The most relevant changes include:
- The Decree encourages parties to public procurement contracts to agree to arbitration clauses that provide for institutional, as opposed to ad-hoc, arbitration.
- Arbitrators and local courts must require investors to provide a bond in order to receive interim relief against the Peruvian state.
- The Decree further regulates arbitrator conflicts of interest.
- An arbitral institution must decide on all arbitrator challenges.
- In the absence of any procedural development or filing for four months in a particular proceeding, the proceeding is deemed "abandoned" and is automatically concluded.
- Proceedings are made public following their conclusion.
- Except for arbitration costs, tribunals may not impose any penalties or monetary sanctions.
- Where an award is set aside during the enforcement phase, the case will be remanded to the original arbitral panel and will begin again at the stage of the proceedings where the underlying grounds for annulment initially arose. At that time, the parties may challenge the arbitrators on the basis that the award has been annulled. Such challenge will be raised to, and decided by, the institution administering the proceeding or, in an ad-hoc proceeding, the International Arbitration Center of the American Chamber of Commerce of Peru (AmCham Peru). Parties may also replace their own party-appointed arbitrator for these "remanded" proceedings.
Although the Decree went into effect immediately upon its issuance, it remains subject to revision by the Peruvian Congress’ Permanent Assembly.
AmCham Peru appoints female majority to its Court of Arbitration and amends its Arbitration Rules
In December 2019, AmCham Peru appointed a majority of women to its Court of Arbitration, making it the first court in Peru to be composed of a majority of women. The new court now comprises three foreign and six Peruvian international arbitration practitioners. José Daniel Amado and Cayetana Aljovín were also appointed respectively as the court’s president and vice-president.
Along similar lines, AmCham Peru recently added 50 women (both Peruvian and foreign) to its list of arbitrators. Beyond these recent actions, AmCham seeks to promote gender equity in arbitration by working with such organizations as Women Way in Arbitration (WWA), Arbitral Woman, and The Pledge.
Separately, the institution amended its Arbitration Rules, which will be applicable to proceedings starting from May 1, 2020. The amended Arbitration Rules establish as a general rule that proceedings will be conducted virtually, unless parties decide otherwise.
AmCham Peru estimates that, under its amended Arbitration Rules, a virtual arbitration should not take longer than ten months from the time the proceeding’s schedule is set.
Peruvian arbitration institutions adopt a variety of measures to address the COVID-19 pandemic
Amid the measures the Peruvian government has taken to stem the impact of the coronavirus disease 2019 (COVID-19) pandemic, most arbitration institutions have suspended the proceedings under their administration. Meanwhile, they have established some rules and protocols so that proceedings may resume electronically.
The Board of the Arbitration Center of the Chamber of Commerce of Lima published its Practical Note No. 01/2020 to provide guidance on conducting virtual proceedings. The Practical Note establishes that hearings shall be held remotely using a platform to be provided by the Secretariat. The Board is encouraging parties and arbitrators to modify the procedural rules to the Practical Note’s provisions.
In September 2020, the Board issued Practical Notes No. 02/2020 and 03/2020 to raise its standards on celerity and efficiency. The novelties of those Notes include deadlines and guidelines for the arbitrators to fix the procedural calendar. Also, the Notes establish that if the arbitration panels do not issue the award within the time limits set forth on the Rules, the Board will reduce their fees proportionally to the delay.
Those time limits can be extended on the agreement of the parties or facing exceptional circumstances to be approved by the Board on each case.
The Notes are mandatory in all proceedings on which the arbitral panel constituted after October 1, 2020.
The Arbitration Center of the Pontifical Catholic University of Peru (PUCP) established that all proceedings under its administration shall adopt the Center’s Protocol implementing measures resulting from and in consideration of various measures. Pursuant to the Protocol, all filings shall be submitted electronically (rather than in hard copy) unless the parties agree otherwise. Also, every hearing will be held remotely through an electronic platform designated by the Center.
AmCham Peru published a Virtual Arbitration Guide on May 1, 2020 which includes recommended procedural guidelines for continuing proceedings remotely.
The Arbitration Center of the Supervising Agency of the Government Procurement (OSCE), which administers arbitration proceedings under the Peruvian Public Procurement Law, has established that all filings shall be submitted electronically and hearings shall be held virtually and through the Center’s platform, and additional notifications will be effectuated through the representatives’ email addresses.
These measures are in force as of October 2020. The Centers referred to above have also stated that they may amend their rules and protocols in the event of additional government regulations or changing circumstances arising from the pandemic.