Guatemala

Part I: what can be enforced?

1. What counts as an arbitral “award” that can be enforced?

In the case of an award issued abroad, it is considered enforceable when there are no pending applications for annulment, and it is therefore final, binding, and enforceable.

For arbitrations in Guatemala, once the requests for correction and interpretation of an award have been exhausted, the losing party has one month starting at the date of the award to file an appeal for review of the award. If an appeal is not filed or if the appeal is denied, the award is considered final, binding, and enforceable.

2. Formal requirements that an award needs to conform with to be enforceable

• There should not be an appeal for cancellation or review pending.
• Be presented in the original or as a certified copy, attached to the request for enforcement.
• If the award is in a language other than Spanish, it must be translated by a sworn translator licensed in Guatemala. If there is no translator available, it must be translated by two people who speak or write the language.

3. Orders on interim measures: enforceability

a. Domestic awards

b. International commercial arbitration awards

• The enforcement procedure has been unified in the Guatemalan Arbitration Law, ie, the same procedure applies to the enforcement of domestic and foreign awards.
• In both cases, the enforcing party can apply for precautionary measures. These can be granted by the judge.

4. Emergency awards: enforceability

a. Domestic awards

b. International commercial arbitration awards

• Considering the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention) and the provisions of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985), emergency awards could be enforced in accordance with the special procedure provided for in the Guatemalan Arbitration Law. These conventions do not distinguish between final and emergency awards.
• However, on a case-by-case basis, enforcement may be problematic if judges believe that such a procedure applies only to “final” awards that resolve the merits of the dispute. This discussion continues at the international level, and there are conflicting views as to whether an emergency award is enforceable or not. We have found no precedent in Guatemalan jurisprudence that resolves such a discussion.
• Interpretation may be facilitated by the provisions of the arbitration rules to which the parties are subject, such as the International Chamber of Commerce (ICC) Rules, which provide in Article 35(6) that: “Every award shall be binding for the parties” and shall be enforced promptly, the parties having waived all appeals. This provision can be read to mean that any award, whether final, interlocutory, or emergency, is enforceable.
• Without prejudice to the enforcement of an emergency award, the parties may choose to seek legal assistance from a judge in Guatemala to protect their rights before or during the arbitration.

Part II: resisting enforcement

5 a. How are awards set aside?

• The Guatemalan Arbitration Law is based on the UNCITRAL Model Law and is part of the New York Convention. However, Guatemalan law does not provide for the “annulment” of an award.
• In Guatemala, an arbitral award can only be challenged through an appeal for “revision”.
• The appeal for review includes the grounds provided in the New York Convention and the Inter-American Convention on International Commercial Arbitration (1975) (Panama Convention) for the petition for annulment, but the effect of the appeal for review is different.
• In Guatemala, the court hearing the review has the power to “confirm, annul or modify the award” and, in the case of annulment or modification, it can rule on the merits, ie, it is the chamber and no longer an arbitral tribunal that decides the case.
• This departure from the UNCITRAL Model Law and the New York Convention has been widely criticised and the subject of petitions for reform of the Arbitration Act, which have not yet borne fruit.
• Therefore, in the face of an enforcement action, the appeal for annulment of foreign awards is made to the competent courts of the country where the award was issued, and the appeal for review is made to the competent courts of the country where the award was issued.

b. Can enforcement be resisted if the respondent has not formally applied to set aside the award?

• No. For foreign awards, according to Article 47A(v) of the Arbitration Law, the award is enforceable if it has not been annulled or if no petition for annulment is pending.
• In the case of Guatemalan awards, under Article 48 of the Arbitration Law, the party against whom enforcement is sought may object if it proves that a petition for review is pending. Otherwise, it can be enforced.

c. Can non-parties seek annulment?

No.

d. Grounds to seek setting aside

According to Article 43 of the Guatemalan Arbitration Law, an arbitral award may be reviewed by an appellate tribunal only if:

The party filing the petition demonstrates:

• One of the parties to the arbitration is incapacitated or that the arbitration agreement is null and void.
• It was not notified of the appointment of the arbitrator or of the arbitration.
• The award relates to a dispute not provided for in the arbitration agreement or contains decisions that exceed the terms of the agreement.
• The composition of the arbitral tribunal or the proceedings were not in accordance with the agreement between the parties or, in the absence of such agreement, were not in accordance with the law.

If the Appeals Chamber determines:

• The subject matter of the dispute is not arbitrable under the Guatemalan legal system.
• The award is contrary to the public order of the State of Guatemala.

e. Timelines to seek setting aside

• A petition for review must be filed within one month of the issuance of the decision.
• The court shall grant the other party a hearing on the petition for review for a period of two days.
• If the petition for review invokes factual issues, the proceeding is opened to evidence for a period of 10 days.
• At the end of the evidentiary period, the chamber should rule within three days.
• In practice, an appeal for review is resolved in approximately three to six months.

f. Grounds to resist enforcement

• According to Article 48 of the Arbitration Law, the defendant may oppose enforcement by proving that the appeal for review is pending, which must be evidenced by documentary evidence. If the defendant proves this, the court shall suspend enforcement until the appeal for review is decided.
• Likewise, the respondent may prove the existence of one of the grounds for refusal of enforcement provided for in Article 47 of the Arbitration Law. This applies to foreign arbitral awards that have not been the subject of an appeal for review.
• In addition, the Constitutional Court of Guatemala has issued at least three controversial decisions in amparo proceedings, in which it has declared that, in addition to the opposition, the enforced party has the right to raise exceptions that tend to destroy the effectiveness of the enforceable title (award), and that the judge is obliged to resolve such exceptions.
• The Constitutional Court of Guatemala’s reasoning is based on the fact that in the process of enforcement of the award regulated by the Arbitration Law, the procedures for the enforcement of national judgments are applied in a complementary manner (in what is not provided for), and since the raising of preliminary objections is allowed in these procedures, it considers that this is also allowed in the process of enforcement of the award.
• Although the considerations of the Constitutional Court are controversial and contrary to effective enforcement, since there are three rulings in the same sense, according to Guatemalan law, these rulings constitute legal doctrine that must be respected by the courts.

g. Which court to go to for setting aside?

The court competent to hear the appeal for review is a chamber of the Court of Appeals (of the Civil Division) with territorial jurisdiction in the place where the award was rendered.

h. Formal requirements before court can grant setting aside

• The request must be made within one month of the award.
• The request must be in writing.
• The request must be accompanied by the arbitral award to be challenged and documents supporting one of the grounds for appeal provided for in Article 43 of the Arbitration Law.
• The tribunal shall examine the merits of the appeal and, if it finds that it meets the requirements, it shall accept it for processing and shall grant the other party two days to make its decision.
• Thereafter, the court may open the appeal to evidence if it leads to a discussion of factual issues.
• Subsequently, the court must solve the appeal for review without further proceedings.

i. Do courts grant stay on enforcement as an interim measure?

• The appeal for review has a suspensive effect. It is not possible to proceed with execution until the appeal for review is resolved.
• If the enforcing party seeks to enforce the award, the defeated party could have the enforcement stayed simply by documenting that the appeal for review is pending.

j. What is the appellate mechanism against the decision of the court of first instance?

• According to the Arbitration Law, there is no right of appeal against the procedural or substantive decisions of a panel hearing an application for review. There is no right of appeal.
• In practice, whoever loses the appeal for review is likely to file a constitutional action of amparo against the decision of the court that heard the case. Many of these amparos allege lack of justification, violation of public order, lack of effective judicial protection, or other rights provided for in the Guatemalan Constitution.
• However, the granting of an amparo is a rare occurrence.

Part III: enforcing foreign awards

6. New York Convention applicability

Yes, Guatemala is part of the New York Convention, and the procedure for the enforcement of arbitral awards contained in the Guatemalan Arbitration Law was created to comply with the convention.

7. Timelines for enforcement

• According to the Arbitration Law, once a petition for enforcement of an arbitral award has been filed, the court shall consider whether the award is enforceable and shall authorise the enforcement proceeding.
• Once the proceeding is admitted, the party against whom the award is sought to be enforced has three days to oppose the enforcement.
• Within this period, the party against whom enforcement is sought may object by showing that an appeal for review is pending or by showing any of the grounds set forth in Article 47 of the Arbitration Law.
• If the objection is unsuccessful, the court shall proceed with the enforcement by ordering the precautionary measures requested to ensure payment.
• Once the assets are secured, if there are movable or immovable assets, they are appraised and auctioned to the highest bidder.
• The auction of goods is followed by a procedure of granting contracts for the transfer of the domain and a procedure of voluntary surrender of the goods to the enforcing party or forced surrender with the help of the judge and even the public force.

A timely enforcement proceeding could take six to eight months. In practice, however, there are some circumstances that may affect the effectiveness of an enforcement proceeding, such as:

The debtor acknowledges that the appeal is pending and that this suspends the execution.

• The debtor, in addition to the opposition, files exceptions against the validity of the award, which may prolong the discussion on whether the exceptions are granted or not. The discussion may even reach the Constitutional Court, in an amparo proceeding.
• In the specific case of foreign arbitral awards, the losing party in the arbitration, upon being notified of an enforcement proceeding, files a series of procedural incidents and later amparo actions, which in certain cases have caused serious delays in the enforcement.
• If the party being enforced engages in malicious litigation with the intention of delaying the proceedings, this may delay enforcement.

8. Which court to go to? Relation with location of assets?

The civil courts of first instance of the defendant’s domicile or of the place where the defendant’s assets are located shall have jurisdiction to hear an action for the enforcement of an arbitral award. The choice is left to the enforcing party.

9. Can non-parties resist enforcement?

• No, in the case of court orders issued in a proceeding to enforce an arbitral award against a party, third parties who are required to cooperate in locating or affecting the assets of the party against whom the award has been enforced should not oppose the enforcement.
• In the case of a party who should have been called to arbitration and could be bound by the award, it is possible that such party may seek review of the award and/or oppose its enforcement.

10. Compelling disclosure of local assets? How to identify assets available for enforcement?

• In Guatemala, there are confidentiality rules regarding reserved information about individuals in public records, tax, and financial information that make it difficult to locate assets subject to foreclosure.
• However, it is possible to use certain public information that is available to verify whether the foreclosed party is the owner of real estate, vehicles, or identifiable personal property that can be seized.
• The enforcing party also has the option of asking the judge to issue a general attachment order to all banks in the system, freezing bank or investment accounts in the defeated party’s name. As a result, the banks will receive information on the amounts that can be recovered.
• Likewise, the enforcing party can request the seizure of the foreclosed party’s company, with the purpose that the judge appoints a receiver (custodian) who will be in charge of managing the company, paying the expenses to keep the business running, and keeping the rest for the benefit of the foreclosure process.
• In the intervention of a company, it is possible to identify goods, money, or credits that can be seized in favour of the enforcing party.

11. Are third-party funded awards enforceable?

Yes, enforcement is allowed. Of course, it will be required that the relevant award has survived the challenge of nullity and that it is not subject to the grounds set forth in Article 47 of the Guatemalan Arbitration Law.

12. What interim reliefs are available pending enforcement of awards? Which of those reliefs are granted ex parte?

Guatemalan legislation provides for the following provisional measures:

• Travel ban: restriction on an individual leaving the country without leaving an attorney with sufficient authority to represent the defendant in court.
• Embargo: judicial notation on movable or immovable property to cover the value of the defendant.
• Annotation of lawsuit: judicial annotation on a real or movable property on which the declaration of a real right is disputed.
• Sequester: seizure of the debtor’s property.
• Intervention of an agricultural or commercial establishment and appointment of a trustee to act as administrator.

There is also the possibility of the claimant requesting ‘emergency measures’, which consist of specific provisional measures to protect the rights that may be at risk during the enforcement of the arbitral award. With respect to these types of measures, they can be requested before the arbitral award enforcement proceedings, and the judge, before granting them, may require the prospective enforcing party to provide a guarantee to protect against damages that the measures may cause. If the guarantee is provided, the judge will make the requested measures effective and set a time limit for the enforcement action to be brought. All precautionary measures are issued ex parte or inaudita parte to ensure their effectiveness.

13. Formal requirements for enforcement application: what documents need to be filed in court?

• The original, certified, or notarised copy of the award needs to be filed.
• The original, certified, or legalised copy of the arbitration agreement needs to be filed.
• The translation of the above documents by a sworn translator in Guatemala needs to be filed, if they are in a language other than Spanish. If there isn’t a sworn translator in the country, the translation under oath by two persons who speak and write the language and Spanish, with legalisation of their signatures.
• If there are important documents that could prove that the appeal for annulment (foreign awards) or review (awards based in Guatemala) has already been resolved, it is also recommended to include them.

14. Enforcing awards that have been annulled/set aside at other courts. Enforcing when an annulment application is pending at a foreign court

• If an award is set aside, it is unenforceable.
• If an award is pending before a foreign court on a petition for annulment, it is also unenforceable pursuant to Arbitration Act Art 47(a)(v), as it is deemed not yet binding on the parties.

15. Once application for enforcement is allowed, how does the actual enforcement against assets work?

• Once the execution has been declared admissible and the defendant’s objections and defences have been rejected, the assets that have been subject to precautionary measures may be subject to definitive measures, such as an order for a financial institution or a creditor of the defendant to pay money to the defendant, or the seized assets (real and personal property) may be sold by public auction.
• In the case of goods to be auctioned, the goods are valued by experts, then the auction notices are published, and the auction is awarded to the highest bidder (who pays interest and court costs). If there are no bidders, the enforcing party may request that the assets be awarded directly in payment.
• In the case of intervention by agricultural or commercial establishments, the intervenor (depositary) would have to maintain the administration of the company until the amount owed can be collected, and in such cases, it will be the judge who will order the delivery to the enforcing party.
• The success of the enforcement of an arbitral award in Guatemala depends largely on the existence of assets that can be recorded to support the payment.

16. What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?

• When there are not enough assets in sight, it is common, within the framework of an enforcement procedure, to request precautionary measures such as seizures, interventions, and others that serve as a means of obtaining information about other assets.
• If the defeated party takes possession of their assets, disposes of them, encumbers them, hides them, or simulates credits or disposals with the purpose of avoiding the payment of their obligations, and does not leave sufficient assets to respond to the payment of their debts, they may be prosecuted for the crime of ‘taking possession of assets’, established in Article 352 of the Penal Code of Guatemala.
• This crime is punishable by two to six years in prison. If the responsible party is a merchant (commercial company), it will also be sanctioned with disqualification for twice the time of the sentence.

17. What is the procedure for repatriation of sums awarded after obtaining an order for enforcement?

There is no procedure established in the tax laws. Guatemala has a territorial income system and income earned outside of Guatemalan territory is not subject to tax.

18. Do courts grant orders for security for costs?

• Yes, the costs of an enforcement proceeding are generally borne by the party being enforced. These costs are added in the liquidation proceedings and include, for example, the fees of lawyers, experts, trustees, agents (if necessary for their intervention), expenses caused by attachments, edicts (publications), certifications, inventories, registrations, and other specific costs that can be proven to have been incurred by the enforcing party.
• The costs will become part of the debt and the assets of the executing party will also be liable for the costs.
• The precautionary measures granted by the court hearing the case must also guarantee the costs.

19. Exchange control regulations: do they affect payments to foreign award holders?

Guatemala recognises the free negotiation of foreign currencies, and foreign currencies will be accepted at the official exchange rate between the Guatemalan quetzal and the United States dollar.

20. Enforcing awards from non-New York Convention places

• The Guatemalan Arbitration Law allows for enforcement in light of the Panama Convention and any other treaty on recognition and enforcement of arbitral awards to which Guatemala is a party, if applicable.
• It would depend on the place where the award was issued analysing if for some reason it is not enforceable.

21. Enforcing against sovereigns

• The enforcement of arbitral awards against the State of Guatemala is provided for in the Arbitration Law.
• However, regarding precautionary measures, in Decree 101-97 approved by the Guatemalan Congress (Organic Law of the Budget), there is a legal prohibition on seizing, confiscating, or intervening in any way in the allocations that cover budgetary items, cash, deposits, securities, and other movable and immovable assets of the state.
• In other words, in executions against the state, precautionary measures are not allowed. The way to proceed in these cases is for the state to exhaust the defence mechanisms that exist within the execution process and, when the resolution becomes final, the amount finally approved by the court must be included in the state’s budget for the next fiscal year. The national budget must be approved by congress and payment must be made within the first two months of the fiscal year in question.

22. Appellate mechanism available?

• There shall be no appeal in the enforcement proceeding.
• Once the assets in the enforcement proceeding are exhausted, a liquidation proceeding must be conducted with respect to the capital, interest, and court costs of the enforcement proceeding. The order authorising such liquidation may be appealed to a civil Court of Appeal.

Part IV: enforcing domestic awards

Since the procedure for enforcing domestic and foreign awards is the same, the answers are the same as those provided in Part III.