Atty. Sheyla Cuenca
Head of Administrative Law Department
New Ruling from the Constitutional Court on Foreign Arbitral Awards
The recent ruling 3232-19-EP/24 by the Constitutional Court of Ecuador has set a significant precedent: foreign arbitral awards do not need a prior homologation process to be enforced in the country.
This decision stems from the case of CW Travel Holdings N.V. against Seitur, where the initial request for enforcement was denied due to lack of homologation. However, the Court concluded that this requirement violated the legal security rights of the claimant.
Implications of the Ruling
The Constitutional Court determined that the homologation requirement imposed by the trial judge was based on a repealed regulation, thus contravening the right to legal security. Although Article 363, Section 5 of the General Organic Code of Processes (COGEP) mentions homologation, a systematic interpretation of the current legal framework, particularly the Organic Law for Productive Promotion, no longer requires it.
Violation of the Right to Effective Judicial Protection
Additionally, the Court stated that the judges of both instances violated the right to effective judicial protection by imposing an irrational requirement. Under the New York Convention, which Ecuador has ratified, foreign awards must be enforced as if they were final judgments issued by national judges, without the need for homologation.
Repercussions for the Ecuadorian Legal System
This ruling reinforces the elimination of the prior homologation requirement in Ecuadorian law, promoting the swift enforcement of international awards and respecting the right to effective protection, especially regarding execution. The ruling not only provides greater legal certainty but also fosters a more favorable environment for international arbitration in Ecuador.
Conclusion
This case is of great interest for several key reasons:
Facilitates the Enforcement of Foreign Arbitral Awards: The elimination of the homologation requirement means that international arbitral awards can be enforced more quickly in Ecuador, saving time and resources.
Legal Security: The Constitutional Court's decision strengthens legal security by aligning with international treaties such as the New York Convention, providing a more predictable and stable legal environment for businesses.
Promotes Foreign Investment: This ruling can attract more foreign investments, as investors will have greater confidence in the enforcement of arbitral awards in Ecuador without the hurdles of additional processes.
Legal Cost Savings: Clients can reduce their legal costs by avoiding an additional homologation process, which is beneficial for companies seeking to enforce their rights abroad.
Protection of the Right to Effective Judicial Protection: The ruling emphasizes the importance of the right to effective judicial protection, ensuring that legitimate claims are addressed without irrational requirements, which is crucial for any company operating in an international environment.
Boost to International Arbitration: This change strengthens arbitration as the preferred method of resolving international commercial disputes, offering a more efficient and reliable process.
If you need assistance with dispute resolution, including arbitration and mediation, do not hesitate to contact us. We are expert lawyers in these areas and are ready to help you navigate the complex international legal landscape.
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