Background
This major step taken by the Dominican Republic is part of a process that initiated in 1987 with the enactment of Law 50-87 on Chambers of Commerce and Production, which vested upon these institutions the right to administer arbitral procedures; a process intended to promote the use of alternative methods for the resolution of disputes other than the state courts, and which followed with the ratification of both the New York Convention and Panama Convention. Based upon the provisions of Law 50-87, the Council for Conciliation and Arbitration of the Chamber of Commerce and Production of Santo Domingo was created, and a culture of arbitration began to form, increasing each year the number of cases administered by this institution. Nowadays, Chamber of Commerce and Production of Santiago also administers arbitral procedures.
However, it was not until year 2005 that a group of experienced attorneys in the field of arbitration, both domestic and international, approached the Congress with a law bill on commercial arbitration based on the UNCITRAL Model Law.
In the drafting of the law, the main purpose was to adapt the provisions of the UNCITRAL Model Law to the legal framework of the Dominican Republic, overcoming the failures of the old legislation and addressing all relevant substantive and procedural law issues according to the internationally accepted principles and legal standards that promote uniformity of arbitral procedures, taking special consideration of mandatory provisions of Dominican law that affect arbitral agreements or procedures.
Basic provisions
The scope of application of the law extends to all domestic and international commercial arbitration that takes place in the Dominican Republic (Article 1). It abides to the principle of autonomy of the parties thus the rules contained therein are suppletory to the agreement of the parties, to the extent the latter does not contravene certain aspects that are exclusively regulated by this law (Article 4.5).
In Articles 3 and 4, the law defines the disputes than can be brought to arbitration based on the principle set forth in the old legislation that restrained it to matters that could be freely disposed of or settled by the parties. Additionally, under these provisions, the Dominican state can be a party to arbitration, and particular rules are set out for the summons and appointment of legal counsels by the State in these cases (Article 5).
In general, the law does not depart from the basic standards of the Model Law that aim to guarantee the smooth functioning of arbitral procedures, such as:
- It provides for the separability of the arbitral agreement, and thus a decision by the arbitral tribunal that the contract is null and void shall not entail the invalidity of the arbitration clause, except when the nullity of the contract as a whole is derived from a definite and irrevocable judgment (Article 11).
- It limits the intervention of the local courts to the cases expressly stated in the law, and imposes upon the courts the obligation of referring the parties to arbitration when an action is brought in a matter which is the subject of an arbitration agreement (Articles 8, 9 and 13).
- The law embodies the principle of kompetenz- kompetenz, vesting upon the arbitral tribunals the authority of ruling on their own jurisdiction (Article 20).
- It confers upon the parties the right to request the order of 'and upon the courts and the arbitral tribunal the power to grant', interim measures (Articles 13 and 21).
- It only allows the application for setting aside and award as exclusive resource against it, under the specified and restricted conditions set out in the Model Law (Articles 39 and 40).
- The law imposes upon the local courts the obligation to recognize and enforce arbitral awards, whether issued in the Dominican Republic or abroad, surpassing the previous legislation by clearly establishing the procedure to be followed by both the parties and the courts to that extent. It also restricts the grounds for refusing recognition or enforcement of arbitral awards following the policy and rules internationally accepted since the New York Convention.
In respect to certain procedural issues on the constitution of the tribunal and the instruction of the case, the drafters of the law took advantage of the flexibility of certain provisions contained in the Model Law and incorporated few variations, although not substantial, such as:
- The definition and form of the arbitral agreement follows the rule set forth in the Model Law, requiring for it to be in writing, however the Dominican law additionally incorporates the set of rules that should be taken into account by the arbitral tribunal in an international procedure to determine the validity of the agreement (Article 10).
- Following the general principles in arbitration, the parties are to determine the number of arbitrators called upon to resolve the dispute, but to prevent risks of frustrating the decision process in the arbitral procedure, the law requires an odd number of arbitrators. Failing such determination, the law provides that a sole arbitrator shall be appointed (Article 14).
- The arbitrators, the parties and the arbitral institutions shall maintain the confidentiality of the proceedings (Article 22).
- To the extent the parties have not agreed otherwise, along with the demand for arbitration, claimant shall notify the name of the proposed or appointed arbitrators, and within the specified time limit, respondent shall notify claimant its statement of defense and propose arbitrator or appoint arbitrator (Article 27). It differs from the UNCITRAL Model Law according to which a request for arbitration is firstly submitted by claimant and subsequently the statements of claim and defense are submitted within the time limits agreed by the parties or set by the arbitral tribunal.
- Furthermore, since the demand for arbitration is what initiates the proceedings, claimant will not default on this basis, but only for not appearing before the tribunal. If under these circumstances arbitrators continue along with the proceedings and render an award, both the proceedings and award shall be considered as contradictory and no violation of the right of each party to its case can be invoked (Article 29).
- The law states in a detailed manner the procedure to be followed by the parties in the taking and presentation of evidence before the tribunal, even addressing the situation in which the evidence has to be taken in a foreign country (Article 30).
One of the major achievements resulting from this law, in terms of procedural rules, is that it resolves the inconsistencies that existed regarding the procedure for the enforcement of an award. Prior to this law, the Civil Procedural Code was silent on that matter, and as a consequence Dominican courts held different opinions on their power to review the merits of the case. This shortcoming of the previous legislation could imply at the moment negative consequences for local and foreign businesses, and prevented the international conventions from being readily enforced. Currently, recognition and enforcement of a foreign arbitral award should be handled by the First Instance Court of the National District following a non-adversarial procedure.
With the enactment of this law, the Dominican Republic strengthens its legal framework on domestic arbitration, it recognizes the importance of arbitration in the context of international commercial relations, promotes a more secure climate for investments, and sets the grounds to be perceived as forum for international arbitrations.
