1. 1.Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?

    The relevant legislation is the Conciliation and Arbitration Law (Arbitration Law), enacted through Decree 161-2000, and any treaty, convention or agreement, either multilateral or bilateral, to which Honduras is party.

    An arbitration is considered to be international when the parties to an arbitration agreement have, at the moment of entering into such agreement, their residence in different countries; or if one of the following places is located out of country where the parties have their residence: the place of the arbitration, if such place has been determined in the arbitration agreement or, according to it, is different; or the place where a substantial part of the obligations arising from the relationship are located or the place with which the object of the controversy has a closer relationship.

  2. 2.Has the UNCITRAL model arbitration law been adopted in your jurisdiction?

    In general terms, UNCITRAL arbitration law was used as a model when enacting the Honduran Arbitration Law, with some variations arising from the experience that countries such as Colombia, for example, have had with the application of their own arbitration laws and regulations.

  3. 3.Is your jurisdiction a party to both the New York Convention and the Panama Convention? Is it a party to any other conventions or treaties governing international commercial arbitration agreements, awards or proceedings?

    Yes, Honduras is party to both the New York Convention and the Panama Convention.

  4. 4.Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?

    Yes, Honduras is party to the ICSID Convention. To the best of our knowledge, no steps have been taken to withdraw from ICSID or renounce the convention.

  5. 5.Has your jurisdiction refused to honour an international arbitral award issued against it?

    Not to the best of our knowledge.

  6. 6.Is a pre-dispute clause or separate agreement to resolve international commercial disputes by arbitration enforceable?

    Yes, it is enforceable. There is no need for a post-dispute agreement.

  7. 7.Is a pre-dispute clause or separate agreement to resolve disputes by arbitration enforceable in consumer cases? Is there any legislation in your jurisdiction governing the arbitrability of consumer disputes?

    Both alternatives are viable in consumer dispute cases. Currently in Honduras, the Consumer Protection Law (Decree No 24-2008 published in the Official Gazette No. 31,652 on 7 July 2008 and effective as of its publication), in its article 101, encourages the use of arbitration tribunals as an alternative means to resolve those disputes that may arise in connection with such matters, susceptible of being resolved by these procedures.

  8. 8.What are the requirements for an enforceable arbitral agreement?

    The arbitral agreement has to be in writing. The agreement can be contained in a covenant within an agreement or in a separate document as an arbitration agreement. The Arbitration Law even recognises as a valid and binding arbitration agreement any kind of written or other means of communication among the parties, stating their unequivocal will to submit to arbitration proceedings.

  9. 9.Is there a subject matter that is not legally subject to arbitration in the context of an international business transaction?

    The arbitration law provides that any matter over which the parties have free disposition can be subject to arbitration.

    It specifically provides that the following matters cannot be subject to arbitration:

    • criminal matters, except when referring to civil responsibility derived from a crime;
    • future alimonies;
    • conflicts related to the civil status of people, except for those related to the estate related thereto;
    • matters over which a final ruling has been issued;
    • matters in which the Attorney General’s Office has to intervene in representation and defence of those who cannot represent themselves due to the lack of capacity or legal representation; and
    • in general, all matters that are not susceptible of a transaction.

    In case of contractual relations arising from the Free Trade Agreement between the Dominican Republic, Central America and the United States, under contracts of representation, distribution and agency of companies party to the treaty in Honduran territory and according to commitments in the treaty referred to above, any dispute that arises from the interpretation or application of a contract or letter of representation, distribution or agency shall be resolved in accordance with what is established in the contract, or otherwise identified by paragraphs 5 (a) (i) and 5 (a) (ii) of annex 11.13, section E of chapter 11 of the Treaty.

  10. 10.Does the law specify whether an arbitration will be in equity or under law if the parties do not expressly specify the nature of the arbitration in the agreement?

    Yes, the law provides that in the absence of a definition with regards to the nature of the arbitration, it should be understood that the arbitration should be under law.

  11. 11.How does the law limit party autonomy with respect to the terms of an arbitral agreement?

    There are no limits with regards to this matter. Parties can design their own ad hoc arbitration process according to the law.

  12. 12.Under what circumstances does the law allow a non-signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

    There is no specific legal disposition regarding this matter, but in our opinion, this would only be possible if the party who signed the agreement does not oppose this participation.

  13. 13.Under what circumstances does the law allow a signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

    In an international arbitration, these claims shall proceed as long as they refer to controversies that have risen or may arise between natural or legal persons on matters on which they have free will and which relate to matters not expressly prohibited by law.

  14. 14.Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it by a signatory of the arbitral agreement in a court of law?

    In Honduras, the main rule is that arbitration is voluntary when the matters arising are subject to compromise or withdrawal. The arbitration may be agreed by virtue of a contractual term or through correspondence between the parties. Likewise, a non signatory could file for arbitration. In this case, if the signatory were to answer the lawsuit, it will automatically be committed to the arbitration.

    Having said that, the enactment of the Investment Law (Decree 51-2011) requires investors to use arbitration as the primary method of conflict resolution in order to ensure greater legal certainty. This is applicable in the cases of the following disputes:

    • between shareholders;
    • between investors from each other
    • intellectual property;
    • in relation to contracts of representation or agency;
    • anti-competitive practices; and
    • real property.

    Parties may submit their disputes to the courts as an exception to the rule.

  15. 15.Under what circumstances may a signatory to an arbitral agreement compel arbitration of a claim asserted against it by a non-signatory of the arbitral agreement in a court of law?

    Under Honduran law, a defendant may decline a lawsuit arguing that the dispute was submitted to arbitration.

    On the other hand, as a general rule in arbitration is voluntary, it could not compel a non-signatory to submit their dispute to arbitration jurisdiction based on this conflict, except the case mentioned in the investment law, where the main road is the arbitration.

  16. 16.Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration?

    There is no reference whatsoever in the law that contemplates dispositions providing for litis consortium (such as multi-party disputes and class-action arbitration); nevertheless, these procedures are perfectly feasible and enforceable as long as parties have submitted voluntarily to arbitral jurisdiction in accordance with applicable legal dispositions.

    Arbitral institutions and arbitrators

  17. 17.Are foreign arbitral institutions authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law in order to administer an arbitration seated there?

    Yes, foreign arbitral institutions that have been included in treaties to which Honduras is a party can administer arbitrations in Honduras. They do not require any licensing. The arbitration award is valid and binding according to arbitration law.

  18. 18.Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution such as the ICDR, the ICC or the LCIA vulnerable to challenge?

    No, the parties in an international arbitration will be entitled to choose both the applicable substantive and procedural rules and according to which the arbitrators shall resolve the dispute. Moreover, arbitral awards rendered abroad and the ones considered to be international by Honduran law shall be executed in accordance with the treaties, agreements or conventions in force in Honduras.

  19. 19.Does the law require that arbitrators in international arbitrations be citizens or residents of your jurisdiction?

    No, our law does not require that arbitrators in international arbitrations (seated in our jurisdiction) be citizens or residents of our jurisdiction. Foreigners can serve as arbitrators in Honduras.

  20. 20.Does your law require that arbitrators in international cases be lawyers?

    The law does not require for arbitrators in international cases to be lawyers, unless the arbitration is under law – in which case arbitrators have to be lawyers. But they do not have to be registered as such in Honduras. Non-lawyers can serve as international arbitrators.

  21. 21.Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?

    The fees of foreign arbitrators serving in an arbitration in Honduras, whose source is Honduran or has its residence in Honduras, would be subject to income tax at a 35 per cent rate.

  22. 22.Must arbitrators in international arbitrations be independent and impartial? What is the legal standard governing conflicts of interest and disclosure by arbitrators in international arbitrations?

    There is no legal standard in connection with this matter in particular; in any case, the Arbitration Law provides that local arbitrators are subject to legal standards governing conflict of interest as contemplated by the Honduran Civil Procedure Code.

  23. 23.Will courts entertain requests to disqualify an arbitrator during an arbitration?

    Based on applicable arbitration law, and similar to any other matter that has been submitted to arbitration proceedings, these kinds of requests would have to be immediately rejected by an ordinary court considering that the party seeking a disqualification would be recognising arbitral jurisdiction over the matter and therefore providing the judge with legal arguments to dismiss the matter on legal grounds. Up to now, courts have been consistent with this criterion.

  24. 24.Does the law require that arbitral proceedings be held in a specific language?

    No. In general, the parties can decide in which language the arbitration proceedings will take place, but if the arbitration is local and institutional – that is, under the rules of the Chamber of Commerce Center for Arbitration – the arbitration must be in Spanish, although the parties can request a translator. In case of international arbitration under the rules of the Center, the parties can determine the language; and in the absence of such determination, the arbitration tribunal can determine in which language will the proceedings or certain proceedings be held.

  25. 25.Can foreign lawyers serve as advocates in arbitral proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel?

    Foreign lawyers can serve as advocates in arbitral proceedings.

  26. 26.Are the fees of foreign layers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?

    Any fees paid in Honduras, as per the criteria set forth under question 21, would be subject to local taxation.

  27. 27.In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings?

    The law does not provide for this matter in particular.

  28. 28.Please describe common practice and usage in international arbitrations seated in your jurisdiction with respect to a party’s right to require an opposing party to produce documents pertinent to the dispute.

    There is no legal provision that would enable a party to require an opposing party to produce documents pertinent to the dispute. Therefore, each party has the obligation to produce its own documents in order to prove any circumstance relative to the arbitration process. An alternative could be to request a preliminary judicial order by which an inspection could be executed by an ordinary court and thereby have the possibility of accessing certain documents that could be in the opposing party’s possession.

  29. 29.Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?

    Yes, this principle is followed and arbitrators, according to local law, have to determine if they have jurisdiction over a matter, or what specific matters included in a claim they will rule over.

  30. 30.Do the courts follow the principle of the independence and separability of the arbitration clause?

    Yes, local arbitration law provides for the principle of independence and separability of the arbitration clause.

  31. 31.If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the courts under normal circumstances? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?

    Yes, there is a specific preliminary defence which is filed under these circumstances, and courts are compelled to deny admission of such lawsuits. The court should resolve this matter without further proceedings and without getting into the merits of the case.

  32. 32.Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?

    Interim relief is not contemplated with regards to arbitration proceedings. The law does provide for preliminary measures that can be executed with the assistance of a court, in which case the law also provides that such measures shall not be understood as a waiver to arbitration.

  33. 33.Can arbitrators issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court lend its aid in enforcing such an order against a recalcitrant third party?

    Yes, arbitrators can issue subpoenas in order to compel the production of evidence that cannot only be limited to the evidence provided by the parties, but also any other evidence the arbitration tribunal deems appropriate. Arbitrators can request judicial support when they cannot execute evidence by themselves.

  34. 34.Can a party to an arbitration seek relief from the court to obtain evidence in aid of an international arbitration? What is the scope of such relief?

    The Arbitration Law states that courts must provide judicial assistance to arbitral tribunals that take place in our country (national or international).

    However, it also provides that, if for any reason the arbitration tribunal cannot carry out these procedures, it may seek assistance from any judicial authority it deems appropriate in order to achieve their goal in seeking evidence.

    Therefore, the order issued by the Arbitral Tribunal shall have the same strength as the order of a court of ordinary jurisdiction and shall take place fulfilling all the formalities provided in ordinary jurisdiction cases (subpoenas, forms of producing evidence, witness deposition, etc).

  35. 35.Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?
  36. 36.Have the courts issued injunctions enjoining arbitral proceedings from going forward?

    The Supreme Court has issued orders suspending arbitration proceedings as a consequence of a party filing a Constitutional Remedy, which is alleged when defending individual personal constitutional guaranties.

  37. 37.Does the law provide that post-award interest accrues on an unpaid arbitral award?

    The law does not provide for this matter, but general commercial law principles will apply and the legal interest rate (an annual rate of 7 per cent) would apply.

  38. 38.Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?

    Arbitral tribunals may award attorneys’ fees; in any case, the awarded party attorney is not necessarily entitled to such an award.

  39. 39.What are the grounds for challenging an international award issued in an arbitration seated in your jurisdiction?

    The law does not provide for this specific matter; but the law does provide in general for cases in which the recognition and execution of a foreign arbitration award can be denied when requested by a certain interested party as follows:

    • when any certain party to the arbitration agreement was subject to incapacity;
    • when an arbitration agreement is not legally valid according to the law to which it has been submitted, or according to the prevailing law in the country where the award was issued;
    • when the party against whom the award is being held has not been duly notified with regard to an arbitrator’s appointment or of the arbitration proceedings, or has not been able, for any reason at all, to exercise its rights;
    • when the award refers to a dispute that has not been considered in the arbitration agreement or contains decisions that exceed the terms of the arbitration agreement (nevertheless, if the dispositions contained in the award which do refer to matters can be separated from those that have not, recognition and execution of the first is possible);
    • when the composition of the arbitration tribunal or the proceedings have not adjusted to the agreement as entered into by the parties or, in case of the absence of such agreement, have not adjusted to the law of the country where the arbitration proceedings were held; and
    • when the award is not yet compelling to the parties, or if it has been annulled or suspended by a tribunal whose legislation was applied in order to dictate the award.

    The Supreme Court of Justice can unilaterally deny recognition or execution when it proves that, according to the laws of the republic, the matter subject to arbitration was not susceptible to arbitration or that the award is contrary to international public order.

  40. 40.Is ‘lack of reasonableness’, manifest disregard or a mistake in the application of the substantive law to the dispute of an international award grounds to vacate it?

    Regarding the first part of the question, and generally, a lack of reasonableness in decisions is not a reason in itself to vacate the award under Honduran law, unless the resolution of the award contains contradictory provisions within itself, and as long as this fact has been claimed in a timely manner before the arbitral tribunal. Even then, this will not result in the vacating of the award given that the arbitral tribunal can make the corresponding corrections in order to avoid such nullity. On the second issue, if the court by order of the parties had to decide in law, an error in the application of substantive law will not cause the nullity of the award.

  41. 41.To what degree have international awards rendered in your jurisdiction been vacated on the grounds of ‘public policy’?

    In Honduras, International Awards to this date have not been affected by nullity based on public policy adopted by the state.

  42. 42.What is the period of time a party has to challenge such an award?

    There can only be an action for annulment against an arbitral award within seven days from the notification or providence through which it is clarified, corrected or complemented.

  43. 43.Please describe the standard used by the courts in deciding whether to vacate an international arbitral award rendered in your jurisdiction.

    There are no standards whatsoever in connection with arbitration awards. The lack of reasonableness is not considered a ground to vacate an international award. To the best of our knowledge, there are no precedents.

    Considering the nature of arbitration in Honduras (single instance), courts of appeal or other arbitration tribunals cannot review the substance or applicable law to the award and may only limit their analysis to specific issues specifically provided by the law.

  44. 44.Please describe any recent significant experiences or cases that illustrate the attitude of your courts toward the annulment of international awards rendered in your jurisdiction.

    There are no cases whatsoever to the best of our knowledge. Nevertheless, it would be recommendable to further investigate this matter, considering that Honduras does not have a systematically ordered registry of this particular matter.

  45. 45.Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?

    We have seen no evidence of this.

  46. 46.May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?

    In practice and in the case of domestic arbitration, if parties agree to waive or restrict court reviews, court reviews may still be available.

  47. 47.Please describe the process for enforcing an arbitral award rendered in another jurisdiction.

    Arbitration awards pronounced abroad, as well as those considered international according to arbitration law, will be executed in Honduras in accordance with the treaties, covenants or conventions enforceable in Honduras.

    Recognition and execution of an arbitration award has to be requested at the Supreme Court of Justice.

    Recognition and execution of the foreign award will take place according to the applicable dispositions of treaties, covenants and conventions in force in Honduras.

  48. 48.Assuming that the award is covered by a convention applicable in your jurisdiction, how long does it take to obtain an order of enforcement in the first instance? How long does it take for the enforcement process to run its full course through to the last instance?

    There is no certainty about this, but in my opinion, it should take no longer than 6 to 12 months if there is no opposition under the written civil procedure currently applicable. If there is opposition, there is no way of knowing how long it could take under written procedure, but in any case it could be several years, depending on the remedies used by the parties.

    It is important to mention that a new Civil Procedure Code has been approved and is currently under vacatio legis, and will be applicable next year, in which case this procedure should reduce considerably as a consequence of it being an oral procedure.

  49. 49.Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgement?

    There is no difference, the process is the same as it is provided in chapter 3, title II, book 6, articles 753 to 756 of the Honduran Code of Civil Procedure.

  50. 50.Please describe some significant recent experiences with the enforcement of foreign arbitral awards.

    Arbitration in Honduras under the Arbitration Law has a very recent history (since 2000) and therefore, to the best of our knowledge, there has been no experience of this yet.

  51. 51.To what degree has ‘public policy’ been a ground to refuse enforcement of an international award rendered abroad?

    To the best of our knowledge there is no precedent whatsoever. Public order laws, under Honduran law, should be understood as those legal dispositions to which the parties cannot renounce or which cannot be modified or waived by private agreements.

  52. 52.Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?

    According to the Arbitration Law, in general these matters are subject to any treaties, conventions or agreements applicable in Honduras; on the other hand, in the absence of such treaties, conventions or agreements, Arbitration Law provides alternative rules which state that recognition and execution of a foreign arbitral award can be denied in certain cases.

  53. 53.What is your view of the future of international arbitration and is the trend positive in your jurisdiction? What advice do you have with respect to dispute resolution for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction?

    Honduras has not yet seen much international arbitration, but in our view it will certainly continue to grow, particularly because local arbitration as an institution has had much acceptance and is developing fast as a very effective substitute for national common courts.

    Local arbitration centres are very well respected (Chamber of Commerce Centre for Arbitration and Conciliation) and their arbitrators have been carefully selected, therefore constituting a very interesting choice when submitting the resolution of disputes. Ordinary courts, particularly the Supreme Court of Justice, have given complete support to these mechanisms. Therefore, if the local company proposes such a local centre and their arbitrators, in our opinion it should provide a safe environment for the arbitration proceeding to take place. It is recommended that the proceedings are subject to the centre’s regulation and that the arbitration proceeding be institutional and under law in its nature.

Copyright © 2012 Law Business Research Ltd. All rights reserved. | http://www.lbresearch.com

87 Lancaster Road, London, W11 1QQ, UK | Tel: +44 207 908 1188 / Fax: +44 207 229 6910

http://www.latinlawyer.com | editorial@latinlawyer.com