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.
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.
Yes, Honduras is party to both the New York Convention and the Panama Convention.
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.
Yes, it is enforceable. There is no need for a post-dispute agreement.
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.
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.
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:
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.
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.
There are no limits with regards to this matter. Parties can design their own ad hoc arbitration process according to the law.
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.
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.
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:
Parties may submit their disputes to the courts as an exception to the rule.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
Foreign lawyers can serve as advocates in arbitral proceedings.
Any fees paid in Honduras, as per the criteria set forth under question 21, would be subject to local taxation.
The law does not provide for this matter in particular.
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 partys possession.
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.
Yes, local arbitration law provides for the principle of independence and separability of the arbitration clause.
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.
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.
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.
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).
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.
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.
Arbitral tribunals may award attorneys fees; in any case, the awarded party attorney is not necessarily entitled to such an award.
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:
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.
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.
In Honduras, International Awards to this date have not been affected by nullity based on public policy adopted by the state.
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.
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.
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.
In practice and in the case of domestic arbitration, if parties agree to waive or restrict court reviews, court reviews may still be available.
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.
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.
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.
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.
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.
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.
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 centres regulation and that the arbitration proceeding be institutional and under law in its nature.
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