El Salvador | Adoption of Precautionary Measures in Arbitral Proceedings
Jessé Adriel Umanzor Tóchez, Associate at ARIAS El Salvador, member of the Dispute Resolution and Labor Law team, presents this article on the adoption of Interim Measures in Arbitral Proceedings.
The Constitution of the Republic of El Salvador recognizes freedom of contract as a fundamental right, allowing civil or commercial disputes to be resolved through arbitration. In this regard, the parties may settle their disputes by means of arbitral proceedings, provided that such matters are not among those excluded under the Law on Mediation, Conciliation and Arbitration of El Salvador or under a special statute. Arbitration should be understood as a dispute resolution mechanism whereby the parties seek to resolve their controversy with the assistance of a neutral third party known as an arbitrator. To this end, the parties enter into an arbitration clause or arbitration agreement, by which they undertake to submit the resolution of the dispute to an Arbitral Tribunal rather than to the ordinary courts.
Given that Arbitral Tribunals are composed of arbitrators who do not hold the office of judge, in practice the effectiveness of their requests addressed to third parties faces certain difficulties, as such requests do not emanate from a traditional court or public authority. Consequently, there is no express sanction in the event that a person refuses to cooperate with an Arbitral Tribunal, without prejudice to any claim for damages that may arise from a refusal to comply with a requirement issued by an arbitral tribunal. In the same vein, there are actions that are necessary to ensure the effectiveness and enforcement of a potential Arbitral Award, which in some way is equivalent to a judgment in the ordinary jurisdiction. Among the different types of decisions that an arbitral tribunal may issue, there are those rendered prior to the commencement of the arbitral proceedings or during their conduct, known as Interim Measures. These measures must be requested before the competent courts, since, pursuant to the Salvadoran Civil and Commercial Procedural Code, such decisions are coercive in nature, as they emanate from a judicial authority, and there exists a duty to cooperate with the administration of justice, under penalty of a fine or referral of the matter to the Office of the Attorney General of the Republic.
Accordingly, there is a connection between the Arbitral Tribunal and the national courts when Interim Measures are sought in an arbitral proceeding. Salvadoran legislation establishes that the adoption of such measures is granted at the request of a party; therefore, it is the interested party who must file the application for them to be ordered. Such measures may be adopted during the course of the arbitral proceedings or prior thereto, as a preliminary proceeding before the filing of the arbitration claim.
It should be noted that, in order for Interim Measures to be ordered, two requirements must be established: 1) appearance of good right (fumus boni iuris), which consists of providing sufficient elements, without prejudging the merits of the claim, to demonstrate a high probability that the existence of the asserted right will be declared; and 2) risk of delay (periculum in mora), which involves determining the risk or danger affecting the claim as a result of the duration of the proceedings. Given their temporary nature, as they are intended solely to secure compliance with a potential final decision, the judge will require the posting of security to guarantee compensation for any damage that may be caused to the defendant’s patrimonial sphere.
Based on the foregoing premises, and in harmony with the Salvadoran Civil and Commercial Procedural Code, any party who proves to be part of an ongoing arbitral proceeding, or who intends to initiate one, may request the competent judge to order such measures as it deems appropriate to ensure the enforcement or effectiveness of the asserted right.
It is common for a claimant to obtain a favorable Arbitral Award ordering the respondent to pay certain amounts or declaring the existence of a right, and yet, due to the failure to request Interim Measures, the possibility of effectively enforcing the arbitral decision may be frustrated. In such cases, compliance with the award becomes nearly impossible, as the respondent may lack sufficient assets to satisfy the ordered payment, may have transferred the assets that are the subject of the dispute, or may have carried out actions that adversely affect the claimed right. As a result, the claimant does not achieve full satisfaction and is left only with a decision that cannot be enforced through compulsory execution proceedings.
Although the claimant may request the adoption of Interim Measures either before or during the arbitral proceedings, the Salvadoran Law on Mediation, Conciliation and Arbitration establishes that the maximum duration of arbitration is three months, without prejudice to the parties’ ability to agree, prior to its expiration, to an extension. By contrast, the ordinary courts experience delays in resolving applications due to their heavy caseload. Consequently, a request for Interim Measures filed during the course of the arbitral proceedings may not be resolved in a timely manner, and a judicial decision may be issued only after the maximum arbitration period has elapsed and an Arbitral Award has already been rendered. Faced with this possibility, the alternative arises of requesting such measures through preliminary proceedings prior to the filing of the arbitration claim.
Therefore, the adoption of Interim Measures either prior to or during the arbitral proceedings enhances the likelihood of securing the effective enforcement of the claimed right, largely ensuring the execution of the Arbitral Award and enabling the claimant to obtain compliance with what has been ordered by the Arbitral Tribunal. By way of example, such measures may include the precautionary attachment of assets, the intervention or administration of income-generating assets, the precautionary registration of the claim in public registries to prevent the transfer of assets, a judicial order provisionally suspending an activity, as well as any other measure that ensures the effectiveness of the decision rendered in the Arbitral Award.
The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
The Constitution of the Republic of El Salvador recognizes freedom of contract as a fundamental right, allowing civil or commercial disputes to be resolved through arbitration. In this regard, the parties may settle their disputes by means of arbitral proceedings, provided that such matters are not among those excluded under the Law on Mediation, Conciliation and Arbitration of El Salvador or under a special statute. Arbitration should be understood as a dispute resolution mechanism whereby the parties seek to resolve their controversy with the assistance of a neutral third party known as an arbitrator. To this end, the parties enter into an arbitration clause or arbitration agreement, by which they undertake to submit the resolution of the dispute to an Arbitral Tribunal rather than to the ordinary courts.
Given that Arbitral Tribunals are composed of arbitrators who do not hold the office of judge, in practice the effectiveness of their requests addressed to third parties faces certain difficulties, as such requests do not emanate from a traditional court or public authority. Consequently, there is no express sanction in the event that a person refuses to cooperate with an Arbitral Tribunal, without prejudice to any claim for damages that may arise from a refusal to comply with a requirement issued by an arbitral tribunal. In the same vein, there are actions that are necessary to ensure the effectiveness and enforcement of a potential Arbitral Award, which in some way is equivalent to a judgment in the ordinary jurisdiction. Among the different types of decisions that an arbitral tribunal may issue, there are those rendered prior to the commencement of the arbitral proceedings or during their conduct, known as Interim Measures. These measures must be requested before the competent courts, since, pursuant to the Salvadoran Civil and Commercial Procedural Code, such decisions are coercive in nature, as they emanate from a judicial authority, and there exists a duty to cooperate with the administration of justice, under penalty of a fine or referral of the matter to the Office of the Attorney General of the Republic.
Accordingly, there is a connection between the Arbitral Tribunal and the national courts when Interim Measures are sought in an arbitral proceeding. Salvadoran legislation establishes that the adoption of such measures is granted at the request of a party; therefore, it is the interested party who must file the application for them to be ordered. Such measures may be adopted during the course of the arbitral proceedings or prior thereto, as a preliminary proceeding before the filing of the arbitration claim.
It should be noted that, in order for Interim Measures to be ordered, two requirements must be established: 1) appearance of good right (fumus boni iuris), which consists of providing sufficient elements, without prejudging the merits of the claim, to demonstrate a high probability that the existence of the asserted right will be declared; and 2) risk of delay (periculum in mora), which involves determining the risk or danger affecting the claim as a result of the duration of the proceedings. Given their temporary nature, as they are intended solely to secure compliance with a potential final decision, the judge will require the posting of security to guarantee compensation for any damage that may be caused to the defendant’s patrimonial sphere.
Based on the foregoing premises, and in harmony with the Salvadoran Civil and Commercial Procedural Code, any party who proves to be part of an ongoing arbitral proceeding, or who intends to initiate one, may request the competent judge to order such measures as it deems appropriate to ensure the enforcement or effectiveness of the asserted right.
It is common for a claimant to obtain a favorable Arbitral Award ordering the respondent to pay certain amounts or declaring the existence of a right, and yet, due to the failure to request Interim Measures, the possibility of effectively enforcing the arbitral decision may be frustrated. In such cases, compliance with the award becomes nearly impossible, as the respondent may lack sufficient assets to satisfy the ordered payment, may have transferred the assets that are the subject of the dispute, or may have carried out actions that adversely affect the claimed right. As a result, the claimant does not achieve full satisfaction and is left only with a decision that cannot be enforced through compulsory execution proceedings.
Although the claimant may request the adoption of Interim Measures either before or during the arbitral proceedings, the Salvadoran Law on Mediation, Conciliation and Arbitration establishes that the maximum duration of arbitration is three months, without prejudice to the parties’ ability to agree, prior to its expiration, to an extension. By contrast, the ordinary courts experience delays in resolving applications due to their heavy caseload. Consequently, a request for Interim Measures filed during the course of the arbitral proceedings may not be resolved in a timely manner, and a judicial decision may be issued only after the maximum arbitration period has elapsed and an Arbitral Award has already been rendered. Faced with this possibility, the alternative arises of requesting such measures through preliminary proceedings prior to the filing of the arbitration claim.
Therefore, the adoption of Interim Measures either prior to or during the arbitral proceedings enhances the likelihood of securing the effective enforcement of the claimed right, largely ensuring the execution of the Arbitral Award and enabling the claimant to obtain compliance with what has been ordered by the Arbitral Tribunal. By way of example, such measures may include the precautionary attachment of assets, the intervention or administration of income-generating assets, the precautionary registration of the claim in public registries to prevent the transfer of assets, a judicial order provisionally suspending an activity, as well as any other measure that ensures the effectiveness of the decision rendered in the Arbitral Award.
The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.