Arbitration Law in Nicaragua
Arbitration in Nicaragua is primarily governed by the Arbitration and Conciliation Law (Ley de Arbitraje y Conciliación), enacted in 2005. This law provides the legal framework for both domestic and international arbitration in Nicaragua and aligns closely with international standards, including the UNCITRAL Model Law on International Commercial Arbitration.
Nicaragua is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which facilitates the recognition and enforcement of foreign arbitral awards in Nicaragua and vice versa.
Key Aspects of Arbitration Law in Nicaragua
1. Legal Framework
- Arbitration and Conciliation Law (2005): This is the primary legislation governing arbitration in Nicaragua. It governs both domestic and international arbitration and is in line with the UNCITRAL Model Law.
- Nicaragua’s legal framework is designed to ensure party autonomy and an independent arbitration process, allowing the parties to freely choose the rules and procedures for arbitration.
- The law ensures that arbitral awards are binding and enforceable, and establishes limited grounds for challenging or setting aside awards.
- New York Convention (1958): Nicaragua is a signatory to the New York Convention, which facilitates the international recognition and enforcement of arbitral awards.
2. Types of Arbitration
- Domestic Arbitration: Arbitration between parties within Nicaragua or those that have agreed to arbitrate under Nicaraguan law.
- International Arbitration: Arbitration that involves foreign parties or international disputes.
- Institutional vs. Ad hoc Arbitration:
- Institutional Arbitration: Arbitration conducted under the rules of an established arbitration institution, such as the Nicaragua Chamber of Commerce (Cámara de Comercio y Servicios de Nicaragua) or international institutions like the ICC or LCIA.
- Ad hoc Arbitration: Arbitration conducted without the involvement of an institution, with the parties choosing the procedural rules. UNCITRAL rules are commonly used in ad hoc arbitrations.
3. Arbitration Agreement
- The arbitration agreement must be in writing and specify that disputes will be resolved through arbitration.
- The agreement can be a clause within a contract or a separate agreement.
- Nicaraguan courts generally uphold valid arbitration agreements and will refer disputes to arbitration unless the agreement is invalid due to lack of capacity, fraud, or coercion.
4. Arbitral Tribunal
- The number of arbitrators is typically agreed upon by the parties. Usually, the tribunal will consist of one or three arbitrators. If the parties cannot agree, the court may appoint the arbitrators.
- Arbitrators must be independent and impartial, and parties are free to choose arbitrators with the necessary expertise for the dispute.
- Foreign arbitrators are permitted, and it is common for international parties to appoint foreign arbitrators in cross-border disputes.
5. Arbitration Procedure
- The procedure is primarily governed by the arbitration agreement between the parties. If the agreement does not provide for the procedure, the Arbitration and Conciliation Law provides default rules for conducting arbitration.
- Parties are free to choose the seat of arbitration, language, and arbitration rules.
- The law also allows the arbitrators to determine the procedural aspects of the arbitration, such as the timeline, rules of evidence, and the conduct of hearings.
- Confidentiality is an essential aspect of the arbitration process in Nicaragua.
- The arbitral tribunal has the power to grant interim measures, such as injunctions or orders to preserve the subject matter of the dispute.
6. Arbitral Awards
- An arbitral award is final and binding on the parties once issued. The award is enforceable in Nicaragua in the same way as a court judgment.
- The award must be in writing, signed by the arbitrators, and include a reasoned decision, unless the parties agree otherwise.
- Challenging an award: An arbitral award can only be challenged on limited grounds, such as:
- Lack of jurisdiction of the tribunal.
- Serious procedural irregularities.
- Violation of public policy (ordre public).
- There is a mechanism to set aside an award under certain circumstances, but the grounds for doing so are narrow.
7. Recognition and Enforcement of Arbitral Awards
- Domestic arbitral awards are directly enforceable as court judgments in Nicaragua.
- Foreign arbitral awards are recognized and enforced in Nicaragua under the New York Convention. A party seeking to enforce a foreign award must apply to the Nicaraguan courts, which will recognize and enforce the award unless:
- The award is contrary to Nicaraguan public policy.
- The party seeking enforcement was not given a fair opportunity to present its case.
- The jurisdiction in which the award was issued does not recognize Nicaraguan awards.
Key Arbitration Institutions in Nicaragua
- Nicaragua Chamber of Commerce (Cámara de Comercio y Servicios de Nicaragua): This institution administers arbitration and alternative dispute resolution services in Nicaragua and is a prominent institution for domestic arbitration.
- International Institutions: In addition to local institutions, Nicaraguan parties often use international institutions such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), or UNCITRAL for international arbitration.
- Ad hoc Arbitration: Parties are free to opt for ad hoc arbitration, and UNCITRAL arbitration rules are commonly used for ad hoc proceedings.
Conclusion
The Arbitration and Conciliation Law (2005) in Nicaragua provides a modern and efficient framework for domestic and international arbitration. It is aligned with international standards, including the UNCITRAL Model Law and the New York Convention, making Nicaragua an attractive jurisdiction for resolving both local and cross-border disputes. The legal framework ensures party autonomy, impartiality, and flexibility, while providing the necessary legal structure for the recognition and enforcement of arbitral awards.
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