by Atty. Jhon Mora
The Constitutional Court of Ecuador issued a groundbreaking judgment on May 24, 2023, strengthening arbitration in Ecuador, addressing a case related to the nullity of an arbitral award. This decision has significant implications for the power of judges to annul awards.
Below, we briefly describe the (i) facts of the case, (ii) arguments of the Constitutional Court, and (iii) the importance of the constitutional judgment.
Facts of the Case
In the case at hand, a company named OTECEL S.A. initiated an arbitration proceeding in 2015 against the Telecommunications Regulation and Control Agency (ARCOTEL) and the Office of the Attorney General (PGE). After the regular process, the arbitral tribunal issued an award in favor of OTECEL in 2017. However, ARCOTEL and the PGE filed a request for annulment of the award, which was evaluated by the President of the Provincial Court of Justice of Pichincha. In 2018, the annulment of the award was declared based on a specific ground established in the Arbitration and Mediation Law.
OTECEL filed a legal action alleging a violation of its constitutional rights to legal certainty and due process. The Constitutional Court thoroughly analyzed the case, considering existing jurisprudence and the principles governing arbitration as an alternative method of dispute resolution. After a meticulous examination, the Court determined that due process and the guarantee of compliance with rules and rights of the parties had been violated.
Arguments of the Constitutional Court
The judgment of the Constitutional Court established that the judge had unjustifiably extended the application of a ground for annulment established in the Arbitration and Mediation Law and that the annulment of the award had generated legal uncertainty by modifying an existing legal situation. Furthermore, it was determined that the judge lacked jurisdiction to annul the award due to the lack of objective arbitrability. Objective arbitrability is the criterion used to determine which disputes or issues are susceptible to being resolved through arbitration.
Importance of the Constitutional Judgment
This jurisprudential precedent set by the Constitutional Court has significant implications. The rule established is that provincial judges must strictly adhere to the legal provisions and avoid exceeding the limits of their analysis when dealing with the nullity of arbitral awards. This decision seeks to promote legal certainty and strengthen the arbitration system as an effective alternative for dispute resolution.
In summary, the judgment of the Constitutional Court of Ecuador establishes a relevant precedent by protecting fundamental rights in arbitration proceedings, strengthening legal certainty and due process. This decision reinforces the arbitration system as a reliable and effective tool for resolving disputes in Ecuador.
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