Arbitration was regulated in the first codified laws issued in the 19th century in Uruguay, and has long been recognised and accepted as a respected means of resolving domestic and international disputes.

Uruguay has signed and ratified several international treaties regarding arbitration, including:

• the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards;
• the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States;
• the 1975 Inter-American Convention on International Commercial Arbitration;
• the 1979 Montevideo Inter-American Convention on Extra-territorial Effectiveness of Foreign Decisions and Arbitral Awards; and
• the 1998 Mercosur Agreement on International Commercial Arbitration and the Mercosur Agreement on International Commercial Arbitration with the Republic of Bolivia and the Republic of Chile.

Although Uruguay has not yet enacted any specific laws governing international (as opposed to domestic) commercial arbitration, arbitration is fully respected as a dispute resolution process. The various aspects (i.e. validity of arbitration agreements, recognition and enforcement of awards, parties´ autonomy, ad hoc or institutional arbitration) are primarily governed by the rules and principles of the abovementioned treaties.

In respect of domestic arbitration, such disputes are regulated by the rules and procedures embodied in the General Procedural Code of 1988 (“the GPC”).

Articles 472–507 of the GPC contain specific rules governing domestic arbitration.

Article 472 provides that all individual or collective disputes may be brought before an arbitral tribunal, unless otherwise provided by law. Article 476 specifies that the parties can submit their dispute to arbitration, except for cases that cannot be subject to compromise and settlement (e.g. for matters regarding marital status or inalienable rights).

The parties are free to choose ad hoc or institutional arbitration procedures.

The principal arbitration institution in Uruguay is the “Centro de Conciliación y Arbitraje – Corte Internacional de Arbitraje para el Mercosur” of the Bolsa de Comercio of Montevideo.

Formal requirements
According to Uruguayan law, an arbitration agreement is valid if it is in writing and specifies the disputes that can be resolved by arbitration.

In addition, in domestic arbitration, the parties must formally commit to pursue arbitration proceedings by signing a “Compromiso Arbitral”. The Compromiso Arbitral is an agreement that indicates (amongst other matters) the name(s) of the designated arbitrator(s), the procedure to be followed and the issues to be resolved by the arbitral tribunal. To be valid, the Compromiso Arbitral must be documented by a judicial minute, judicial document or by means of a public instrument before a notary public. In the event that one party refuses to sign the Compromiso Arbitral, the other party may request the local court to execute the document on the defaulting party’s behalf.

With regard to international arbitration agreements, these will be recognised in Uruguay provided that they comply with the formalities set out in Article II Section 2 of the 1958 New York Convention.

The constitution of the arbitral tribunal
Article 480 GPC provides that unless the parties (or the competent local court) appoint a sole arbitrator, the number of arbitrators shall be three or five.

The parties are free to decide whom they wish to appoint as arbitrator(s) either in their arbitration agreement or in the Compromiso Arbitral. If a party fails to appoint an arbitrator or if the parties cannot agree upon the appointment of the chairman or sole arbitrator, the competent local court may make the appointment (Articles 478 (1) and 480 (4) GPC).

Challenging arbitrators
Article 485 of the GPC provides that the parties may challenge the appointment of an arbitrator within ten days of receiving notification of that arbitrator’s appointment on the same grounds as those that would justify removing a judge (i.e. because of circumstances that could affect the arbitrator’s impartiality during the proceedings, such as a particular relationship (either friendship or enmity) with a party or an attorney; or a previous opinion expressed with respect to the dispute). A challenge can be filed outside the abovementioned time limit if new evidence emerges that subsequently justifies the arbitrator’s removal.

In respect of party-appointed arbitrators, the party who appointed that arbitrator can only challenge his appointment for reasons that became apparent after the arbitrator´s appointment.

In the event that an arbitrator is challenged successfully, or becomes otherwise unable to perform his functions, a substitute arbitrator shall replace the arbitrator. In the event that the challenge was disputed by one of the parties, or if the excluded arbitrator continues to intervene in the arbitral proceedings, the competent court will determine the matter.

Duties of the arbitrator(s)
An arbitrator’s duties are governed by general Uruguayan contract principles. Article 483 of the GPC specifies that as soon as the arbitrators accept their appointment they may be liable in damages to the parties for failing to fulfil their duties and obligations.

Jurisdiction of the arbitral tribunal
The arbitral tribunal is competent to hear the matters submitted for consideration as long as such matters fall within the scope of the arbitration agreement concluded by the parties. Pursuant to Article 491 of the GPC, the tribunal’s jurisdiction extends to all matters connected with the principal issues in dispute.

Competence to rule on jurisdiction
Uruguayan law does not expressly recognise the principle of “Kompetenz-Kompetenz”, although the 1998 Mercosur Agreement recognises the concept in Article 18.4. There is, nevertheless, a developing body of recent case law suggesting that an arbitral tribunal is now able to rule on its own jurisdiction.

Power to order interim measures
In domestic arbitration, the power to order interim measures is reserved to the courts. More specifically, Article 488 of the GPC provides that any interim measures required prior to the constitution of the arbitral tribunal (for example, to obtain or preserve evidence and to ensure signature of the Compromiso Arbitral) will be dealt with by the competent local court, applying its powers under Article 494 of the GPC.

In international arbitration, Article 19 of the 1998 Mercosur Agreement provides that interim and conservatory measures can be adopted either by the arbitral tribunal or the courts.

Arbitral procedure
The conduct of the arbitral proceedings is primarily governed by the rules determined by the parties (either directly or by referring to the rules of an arbitral institution). If the parties fail to make such determination, the provisions of the law apply. In this respect, Article 490 of the GPC provides that unless the parties have determined the procedure, the rules applicable to the ordinary judicial procedure will apply.

Commencement of arbitration
There is no express provision in the GPC governing when the arbitral proceedings officially begin. The rules of the Centro de Conciliación y Arbitraje provide that the proceedings commence when the claim is notified to the General Secretariat of the institution.

General procedural principles
The main principles governing arbitral proceedings in Uruguay are the freedom of the parties to determine the arbitral procedure (Article 490 of the GPC) and those of justice and fair process (Article 499 (4) (iv) of the GPC).

Place and language of arbitration
The place and language of the arbitration may be chosen freely by the parties. Thus, a language other than Spanish may be chosen for international arbitrations conducted in Uruguay. Article 13 (2) of the 1998 Mercosur Agreement provides that, in case the parties have not expressly chosen the language of arbitration, it will be the language of the place of the arbitration.

The rules of the Centro de Conciliación y Arbitraje (Article 7 (1)) provide that if there is no agreement between the parties, the language will be, in principle, the one of the Compromiso Arbitral; except if the arbitral tribunal decides on the basis of the observations made by the parties or the circumstances of the arbitration that a different language should apply.

Oral hearings and written proceedings
Uruguayan law does not contain any provisions regarding the conduct of the arbitral proceedings. However, submissions by the parties must, in principle, be presented in writing, unless the arbitral tribunal especially requires submissions to be orally presented during the hearings.

The date of hearings should be determined after due notification to the parties. With respect to the written proceedings and the oral hearing, the principle of equal treatment should apply at all stages of the proceedings. In domestic arbitration, pursuant to Article 490 of the GPC, it is compulsory that prior to the commencement of the arbitral proceedings, the arbitral tribunal organises a hearing where the parties can discuss a settlement, if necessary with the assistance of the arbitral tribunal. If the arbitral tribunal fails to order such a hearing, the arbitral proceedings will be considered null and void.

The parties are free to submit and require all types of evidence such as documentation, witnesses and experts.

Court assistance in taking evidence
Judges may, pursuant to Article 492 of the GPC, provide assistance to the arbitral tribunal, where necessary, for the purpose of obtaining evidence and summoning witnesses who have refused to voluntarily attend and give evidence.

Choice of law
In international arbitration proceedings seated in Uruguay, the arbitrators must apply the law chosen by the parties. In the absence of an agreement by the parties, the arbitrators must determine the applicable law. Alternatively, the parties can agree that the arbitrators should dispense with any consideration of the law and instead make their award solely on the basis of what they consider to be fair and equitable.

Likewise, in domestic arbitration proceedings, Article 477 of the GPC requires the Compromiso Arbitral to stipulate whether the dispute will be determined by legal or equitable principles and, if no choice of law is made, the arbitrators will render their award based on equitable principles.

Time, form, content and notification of the award
Article 496 of the GPC provides that:

1. the award should be rendered within the time limit indicated in the Compromiso Arbitral or, if not, within 90 business days of the date of the first step taken by the arbitral tribunal, unless the parties decide to stay the proceedings;
   
   
2. the arbitrators will meet to deliberate. If any of them are absent, the others will render the award provided the absent arbitrators agree with the decision; and
   
   
3. the award has to be rendered and signed by the majority of the arbitrators. If no majority decision can be reached, the award will be limited to the matters upon which a majority decision can be rendered and a new arbitrator shall be appointed by the parties to determine the outstanding issues. If the parties fail to appoint a new arbitrator, the arbitral tribunal may do so. Pending resolution of the outstanding issues by the new arbitrator, the parties may proceed to enforce the award on those issues that were the subject of a majority decision.

Settlement
As already stated, Article 490 of the GPC provides that, in all cases, prior to the hearing date the arbitral tribunal will encourage the parties to discuss settlement (if necessary with the assistance of an arbitrator(s)). The arbitrators can renew such encouragement as many times as they deem necessary during the procedure.

If the parties settle their dispute, the proceedings will terminate by compromise and settlement.

Termination of proceedings
The arbitration is terminated by:

• a final award;
• a settlement of the dispute agreed by the parties; or
• the expiration of the time limit (an award rendered after the time limit as elapsed can be annulled).

Correction and interpretation of the award
Although the arbitral proceedings terminate once the award is rendered, the arbitrators remain competent only to provide clarification and additional information concerning the award where requested to do so by the parties in accordance with Article 488 of the GPC.

Costs
Article 497 of the GPC states that the arbitrators will determine who will pay the costs of the arbitration. If a party is unsuccessful on certain issues, the arbitral tribunal may direct that party to pay the other side’s legal costs and expenses. On the other hand, the successful party may not be awarded all of its legal costs and expenses, depending on its conduct during the arbitration proceedings.

The jurisdiction of the courts
The Uruguayan courts actively support arbitration. They have jurisdiction to execute the Compromiso Arbitral where a party refuses to do so (Article 478 of the GPC); to appoint arbitrators where the parties fail to agree (Article 480 (4) of the GPC); and to perform any preliminary investigations or enquiries prior to the constitution of the arbitral tribunal (Article 488 of the GPC). The courts also deal with any challenge to the arbitral award (Article 501 (1) of the GPC) and applications for recognition and enforcement of awards (Articles 498 and 502 of the GPC).

Under Uruguayan law, arbitration awards cannot be appealed. The award may, however, be challenged as null and void on limited grounds set out in Article 499 of the GPC, namely in circumstances where the arbitral tribunal:

1. issued its award after the expiry of the time limit for rendering its award;
2. ruled on matters that were not within the scope of the arbitration agreement;
3. failed to rule on matters submitted to them for determination; or
4. refused to accept any essential and overriding evidence (i.e. relevant documents, witnesses).

Domestic awards
Arbitral awards rendered in domestic arbitration proceedings are, unless a challenge against the award is pending, considered as a decision from State courts and are thus not subject to any particular regulation for their recognition and enforcement (Article 377 No. 4 of GPC).

These awards can be enforced in a short procedure called “via de apremio” in which the respondent has limited grounds to oppose (such as payment or evidentiary reasons that affect the validity of the award).

Foreign awards
The recognition and the enforcement of foreign arbitral awards is widely admitted in Uruguay, either pursuant to international treaties (e.g. the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the 1975 Inter-American Convention on International Commercial Arbitration, the 1979 Inter-American Convention on Extra-territorial Effectiveness of Foreign Decisions and Arbitral Awards, or the 1998 Mercosur Agreement), or in accordance with domestic law (Article 502 of the GPC).

For the purposes of recognising a foreign award, an application should be made to the competent court in the district where the relevant party seeks to enforce the award. However, before enforcement can be granted, the party seeking enforcement will need to seek exequatur before the Uruguayan Supreme Court. The Supreme Court of Justice can deny the recognition of a foreign award only for reasons provided in the New York Convention 1958. Once the Supreme Court accepts the enforcement of the award, the file will be remitted to the relevant district court where the award will be enforced on the basis of a procedure of via de apremio. In the proceedings, a respondent can oppose enforcement only on the basis that it can prove payment of the amount awarded by the arbitral tribunal by reference to documentary evidence.

It should be noted that enforcement of a foreign award will be refused on public policy grounds (international public order) in the event of an infringement of a fundamental principle of Uruguayan law, and not in the event of a simple difference between local and foreign laws.

Both domestic and international arbitration are widely accepted and respected in Uruguay.

The fact that Uruguay has ratified the New York Convention, and is party to many other leading international arbitration treaties, provides security not only to those that arbitrate in this country but also to parties seeking to have their foreign awards recognised and enforced in the jurisdiction.

In addition, the provisions in the GPC regulating domestic arbitration provide further assurance that the courts accept and encourage the use of arbitration as an alternative form of dispute resolution in Uruguay.

CMS Bureau Francis Lefebvre
Marcelo T. de Alvear 612 Piso 1
C1058AAH Capital Federal
Buenos Aires, Argentina


Marcelo Cippitelli
T +54 11 43 11 10 08
F +54 11 43 11 80 88
E mcippitelli@cms-bfl.com.ar


Patrick Patelin
T +54 11 43 11 10 08
F +54 11 43 11 80 88
E ppatelin@cms-bfl.com.ar