Arbitration As An Alternative Method To Resolve Disputes Derived From A Contract

Published by financial newspaper Moneda and Diario Tiempo, August 2010

What is arbitration?

Arbitration is an alternative method to resolve conflicts with one or more arbitrators. It is a more agile way than a judicial process and it is common in commercial contracts which include a clause that states that any problems that may arise between parties in a contract may be solved by arbitration.

This clause excludes the start of a trial for issues submitted to arbitration.

Which is the applicable law in Honduras and what does it state?

In Honduras, arbitration is governed by the Arbitration and Conciliation Act (Act 161 of 2000) and in the Rules of Conciliation and Arbitration Centre of the Chamber of Commerce and Industry of Tegucigalpa.

As an arbitration process is a quicker process than a trial, new laws such as PPP Law (September 2010) and the Law for the Promotion and Protection of Investments (July 2011) included the arbitration procedure for any conflicts derived from PPP contracts and from investments done in the country.

The arbitration law is based on the Model United Nations "UNCITRAL" and involves the modernization of the Honduran law on conflict resolution.

Under the Act, the parties may agree on the rules of procedure for the settlement of their conflict or undergoing a procedure established by an arbitration center. The law provides that the arbitration may be in law, equity or technical (the referees dictate their decision on the basis of their specific knowledge of a particular issue, trade or science).

Additionally the parties may agree who will be in charge of the arbitration procedure and dictate the award and in case they don't reach an agreement on this matter the arbitration body shall appoint the arbitrator. Also the parties may freely determine the place of arbitration but usually the arbitration institution decides which will take place.

The arbitration process shall not exceed five months of duration unless the parties or the arbitrator decide to prolong it.

Arbitrators

It is very important the active role of arbitrators in the arbitration process because they are the ones who carry out the process...