Among the alternative means of dispute resolution, arbitration in commercial relations is a figure that over the years has been gaining territory over conflict resolution in the courts. Arbitration is a procedure by which the appointed arbitrators issue a binding decision on the parties in a dispute named award, which allows any differences raised in trade relations to be solved in a friendly, quick and impartial manner.
Some of the advantages of arbitration are that the parties can solve their differences or disputes in a private way and in less time than if you resort to the courts, thereby allowing the parties to continue their business relationships once the dispute has been overcome. Also, another advantage when it comes to contractual relationships involving parties from different jurisdictions, arbitration is an easily accessible solution, bringing speed, peace of mind and impartiality to the dispute.
In Nicaragua, the figure of arbitration has been regulated since the entry into force of the Code of Civil Procedure in January 1906, which was titled “Trial by arbitration”. This body of law ruled the appointment of arbitrators, types of arbitrations, what matters could not be submitted to arbitration, among others. However, the above was repealed in 2005 with the entry into force of Law 540 (published in “La Gaceta Diario Oficial” number 122 of June 24, 2005), called Law of Mediation and Arbitration (Ley de Mediación y Arbitraje), which is a modern Law based on the UNCITRAL Model Law of the United Nations.
Law 540 regulates both mediation and arbitration, both domestic and internationally, and also clearly indicates those entitled to the use of alternative methods of dispute resolution to solve property and non-property differences, being this any natural or legal person, including the State of Nicaragua and excluding from arbitration the matters on which there is a final court decision, child support, divorce, separation, annulment of marriage, civil status of persons, statements of legal age, and causes in which people for whatever reason cannot represent themselves; also cases requiring the assistance of the Public Ministry or those that arise between a legal representative and his client and labor disputes.
It is important to mention that the Law establishes as guiding principles the primacy of autonomy of will of the parties, equality of the parties, confidentiality, privacy, informality and flexibility of the process, speed, concentration, immediacy of proof, good faith, pro arbitration principle, due process and right to defense.
According to Nicaraguan Law, the arbitration agreement can be adopted in an arbitration clause contained in the contract or in the form of a separate or autonomous agreement, in any case it must always be in writing. The arbitration process can be Law arbitration or Equity arbitration, in the first case, the arbitral tribunal shall consist exclusively of lawyers who will settle according to the law that applies, in the second case the court may be composed of experts in the subject matter of arbitration and dispute resolution “ex aequo et bono” that is to say according to their knowledge and sense of fairness and justice. The arbitral tribunal shall always be an odd number of arbitrators. The parties are free to agree or determine the procedure that is to be followed by the arbitral tribunal in conducting the proceedings, as to the place, applicable law and language in which the arbitration process will developed, etc.
Since one of the guiding principles of arbitration is the speed, according to Law 540 no arbitration process may take more than 6 months from the integration of the arbitral tribunal, so the arbitral tribunal has to rule its award during this time, otherwise the arbitration process could be declared null and void.
Once the arbitral award has been issued and the parties notified, the law stipulates that parties must provide notice to the other parties, if they requires clarification or interpretation of a point or concrete part of the arbitral award or correction of the arbitral award in terms of calculation errors, of copy or typographical errors or any errors of a similar nature, as well as request the issuance of additional arbitral award to cover claims presented in the arbitral proceedings but omitted from the award.
The only appeal that Law 540 establishes is that of nullity which should be filed in the Civil Chamber of the Supreme Court and the arbitral award may only be annulled if i) is proved that one of the parties was under some incapacity that vitiates its will, ii) that has not been notified of the appointment of an arbitrator in the proceedings or any other reason in which has been unable to assert their rights, iii) the award deals with a dispute not contemplated in the arbitration agreement or exceed this, iv) or the composition of the arbitral tribunal did not adjusted to the agreement between the parties; or when the court finds that i) under the law of the state, the object of the dispute do not fit for arbitration or ii) that the award is contrary to public policy of the State of Nicaragua.
As we can observe, arbitration is a very useful tool to resolve disputes arising in trade relations of all kinds, and Nicaragua with their current legislation is up to facilitate conflict resolution through the process of arbitration in a private, confidential and efficient manner, very consistent with the globalized world in which we live in which requires speed in trade relations and especially in the resolution of disputes arising from these relations.