Arbitration Alert – January 2020


Modification of the Legislative Decree that Regulates Arbitration

On January 24, 2020, the Emergency Decree (EGO) No. 020-2020 was published in the Official Gazette “El Peruano”, by which Statutory Law No. 1071 was modified, Statutory Law that regulates Arbitration.

Modifications incorporated by this regulation are listed as follows:

– The regulation is intended to modify the regulatory framework applicable only to arbitration proceedings in which the Peruvian State intervenes. Therefore, the modifications introduced are not applicable in arbitration proceedings between individuals.

– The arbitration processes shall be, as a general rule, of an institutional nature and, exceptionally, may be ad hoc only if the amount in dispute does not exceed ten (10) tax units. In any event, the arbitration process shall be by law.

– In the cases in which the Peruvian State is the affected party with a precautionary measure, the presentation of a joint and unconditional bank deposit and/or patrimonial bond shall be required as a precautionary measure in favor of the affected public entity and because of the duration of the arbitration process.

– Having previously acted in the specific case either as a lawyer for any of the parties, as an expert or having personal, labor, economic, or financial interests that could be in conflict with the practice of their arbitration function is incorporated as a case of incompatibility to be an arbitrator.

– Any challenge request shall be solved by the arbitration court or the competent Chamber of Commerce, and any agreement that establishes the possibility that the unchallenged members of the arbitration court can solve the challenge shall be declared null.

– If the parties propose no arbitration act for four (4) months, the Arbitration Center or Court will declare the abandonment of the proceeding. As a consequence thereof, the parties shall not be permitted to initiate another arbitration proceeding on the same cause of action for six (6) months. If the proceeding is declared as abandoned for a second time, the right will elapse.

– The arbitration award and records will be published once the arbitration proceeding has ended, in compliance with the exceptions established in the regulations on transparency and access to public information.

– In the case where the arbitration award is annulled due to the breach of the right of self-defense of the parties (paragraph b, subsection 1 of article 65), any of the parties shall be able to request the replacement of the arbitrator appointed or request the challenge of the arbitrators who annulled the arbitration award.

– Finally, it is established that the arbitration agreements to which the Peruvian State is a party must be prepared by the competent state bodies in coordination with the Office of the Public Prosecutor of the relevant entity.