Ab. Jhon Mora
Head of the Competition and Antitrust Department
Meythaler & Zambrano would like to inform you about an important precedent set by the Constitutional Court of Ecuador concerning the enforcement of foreign arbitral awards in the country.
Case Background
Case 3232-19-EP stems from a request for the enforcement of a foreign arbitral award filed by CW Travel Holdings N.V. against SEITUR Agencia de Viajes y Turismo Cía. Ltda.
The original dispute arose from a breach of contract, resulting in an award issued by the ICC International Court of Arbitration (Case 19058/GFG) ordering SEITUR to pay USD 2,144,946.78.
Previous Judicial Decisions
Enforcement order: On 5 April 2019, the Civil Judicial Unit of Iñaquito issued an enforcement order in favour of CW Travel Holdings N.V.
SEITUR’s opposition: SEITUR opposed the enforcement, arguing that the award violated the rights of an Ecuadorian company and that the amount awarded exceeded the original claim.
Nullification and dismissal of the claim: On 6 June 2019, the Judicial Unit declared the proceedings null and dismissed the enforcement of the award for not being homologated or bearing an execution certification.
Appeal confirmation: On 30 September 2019, the Provincial Court of Justice of Pichincha confirmed the nullification and dismissal of the award.
Extraordinary Protective Action
CW Travel Holdings N.V. presentó una acción extraordinaria de protección ante la Corte Constitucional, argumentando que las decisiones previas vulneraban sus derechos a la tutela judicial efectiva y seguridad jurídica, imponiendo requisitos no contemplados en la ley ni en tratados internacionales para la ejecución de laudos arbitrajes extranjeros.
Constitutional Court Decision
On 9 May 2024, the Constitutional Court issued Judgment 3232-19-EP/24, accepting the claim of CW Travel Holdings N.V. and declaring that its constitutional rights had been violated. In a majority ruling, the Court determined that:
Homologation and execution certification: The requirement for homologation of the foreign arbitral award and the execution certification are not supported by the Arbitration and Mediation Law or the applicable international treaties. The Organic Law for Productive Development eliminated the need for homologation of foreign arbitral awards in 2018.
Right to enforcement: The right to enforce foreign arbitral awards without the need for homologation is reaffirmed, provided they meet the requirements set forth in the applicable legislation and international treaties.
The Constitutional Court highlighted that imposing homologation and execution certification contradicts both the Regulation of the Arbitration and Mediation Law and the New York Convention. The judgment emphasises that these rules are intended to facilitate, not complicate, the enforcement of foreign awards, protecting the rights of the parties and promoting a legal environment conducive to international arbitration and the right to effective judicial protection
Conclusion
The judgment eliminates uncertainty regarding the need for homologation of foreign awards, aligning with international standards.
Furthermore, the ruling simplifies the process of enforcing foreign arbitral awards, fostering a more favourable environment for investment and dispute resolution.
Lastly, a clear guideline has been set for future cases of foreign award enforcement in Ecuador. The Constitutional Court’s decision strengthens Ecuador’s position as a country committed to international arbitration, offering a clearer and more accessible legal framework for the enforcement of foreign awards.
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