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ARBITRATION IN EL SALVADOR: A NECESSARY IMPROVEMENT
Gabriela Alvarenga Perdomo - firstname.lastname@example.org
Living in a globalized world where operations materialize faster each time, we can’t afford to lose any precious time at all; and when complications arise is everyone’s desire to get them out of the way as soon as possible.
The State, through the Judicial Power, has had the justice administration and conflict resolution monopoly for years, and the natural consequence of this practice, a single entity in charge of this task, resulted in a big workload that nowadays judges find it hard to keep up with. Mechanisms like conciliation or mediation were thought to be alternative solutions to alleviate the work, to resolve the conflicts in an amicable way with a third person involved trying to identify the party’s interest while simultaneously avoiding to translate the problem to a higher, and busier, instance.
As stated, a globalized world means new challenges, new areas of business and specialization is required in order to meet the new necessities in conflict resolution. Truth is, we can’t really guarantee that the specific issue brought to a certain court would be in its area of expertise, and that is something not even the best lawyer can do.
For years, the only option to resolve controversies was through the State’s slow system, where people were left with hope for a turn of events at a long appeal or to settle for a resolution that did not satisfy either party completely.
The world is ahead of the law most of the time and finds its own creative ways to solve problems, just as Economics has taught us, high demand of a scarce resource will result in a price increase; and justice administration is precisely that, a scarce resource, especially when operations can’t be put on hold waiting for a judicial ruling.
In that context, Arbitration presents itself as a specialized and faster way to resolve conflicts, ever heard that time is money? Well arbitration fee seemed like a reasonable price to pay in order to get reliable resolutions with a better perception of what was in dispute.
The parties in an arbitration process, exercising their autonomy, are able to choose in which hands they deposit the solution to a conflict and provide as much information as they consider pertinent to get an informed judgement. The structure of the process assures the parties that the arbitrators take into account all the variables and singularities of a given situation; this kind of liberalities can’t be taken in a courthouse and are part of the main reasons why people are inclined to arbitration.
It’s no surprise then that the once all mighty courthouses get mistrusted about its problem solving cousin taking matters into his own hands, putting the State’s imperium at debate; which is why areas of public order, such as criminal law, had been put out of limits for arbitration in order to preserve certain rights that require special guardianship.
This environment of suspicion in arbitration revolves around the fear of it aspiring to controvert more areas of law than it does today, taking more and more power of the State, and the guarantees that the parts in dispute agree to dispose themselves for a third party to intervene.
However, arbitration and the traditional justice administration system shouldn’t be perceived as rivals; on the contrary they can be complements, since the first is just a response in the hunt for a more effective method of conflict resolution that does not contradict the principles of social justice and State’s imperium.
An advantage to this collaboration is that arbitrators take some of the cases away from tribunals, therefore workload for the latter is consequently reduced and speeds up the justice administration process for those that can’t or are not willing to invest on an arbitration process, positioning the resources were they serve their better use.
It becomes also necessary to take into account that arbitration friendly countries are more likely to attract investors under the certainty that the rule of the party autonomy regarding dispute resolution will be respected and have the support of the institutions to execute the arbitration award. A faster and efficient business environment and corporate relations are favored from this condition.
El Salvador is one particularly interesting case, since its Conciliation, Mediation and Arbitration Law contemplates the possibility to appeal the arbitration award, allowing the national courthouses to revert the resolution. This disposition alone is the reason why the Chamber of Commerce hasn’t seen many arbitration processes through the years, since the actual law denaturalized the whole idea behind the arbitration: to exclude the traditional courts from the resolution of a certain dispute.
When parties opt freely for an arbitration process, they are agreeing to submit themselves to the arbitration award, since they know the basis of the decision and, more often than not, the ruling isn’t win or lose like in a traditional courthouse, but a solution that feels closer to justice, giving each their own according to the rules they had established prior in the contract.
That said, it is not fair to permit that the party most affected by the resolutions always has a “card under the sleeve” with court appeal, wasting time and money in a never-ending cycle of controversy. The pacta sun servanda principle finds an obstacle in this kind of disposition as all the advantages of the careful selection of arbitrators vanish in an attempt to revert the situation.
Just as other countries in Latin America have adopted arbitration as part of the solution, El Salvador should be joining this tendency; as a country in need for new markets, arbitration can open a whole range of possibilities to professionals willing to innovate and take a step further from the traditional fields of expertise.
All the advantages listed before should be enough to consider adding this law reform to the agenda, solely the respect to the autonomy of individuals in contracts is enough fundament to provide institutional support in order to guarantee the rights contemplated in the country’s Constitution, specifically freedom of contract.
It is time for El Salvador to be less conservative and less of a paternalistic State when it comes to business development and trust that those who work in the field know best when it comes to their own interest, countries like Costa Rica, Peru and Chile have gotten good results doing so.
The long awaited reform may come right in time for the country to welcome the virtues arbitration has shown in other latitudes. They say is never too late to take a decision in the right direction, but this has taken long enough to prove the actual system is not working as it should and there is enough evidence that alternatives like arbitration should be given at least the benefit of the doubt.
ARBITRAJE Y PAZ: Cómo el Arbitraje cambió el mundo.
9.00 am - Registro de participantes - evento gratuito con inscripción necesaria en este enlace: https://goo.gl/forms/G8NyK0c9JDl4nnXG3
9:30 am. Apertura del acto por medio de las palabras de señor Diego Echegoyen, fundador de "El País Que Viene"
9:40 am. Proyección del film "The Quiet Triumph: How Arbitration Changed the World" con introducción de Manuela de la Helguera, abogada internacional en Wiss and Partners LLP.
10:30-11:00 am. Conversatorio sobre The Quiet Triumph: How Arbitration Change the World"
- Annette Magnusson, directora del Arbitration Institute del Stockholm Chamber of Commerce
- Herman Duarte, fundador de HDUARTE-LEX y alumnus extraordinario Universidad de Estocolmo
11:00-11:20 pm. Preguntas y respuestas del público.
11:20-11:30 pm. Palabras de Cierre por Enrique Escobar, Socio de LEXINCORP