Litigation

Court system

What is the structure of the civil court system?

In Ecuador, civil courts are primarily divided by territory and hierarchy. Both divisions overlap at the third level of hierarchy, where there is only one national court for the whole country. Regarding that hierarchy, there is a first level of civil courts that handles all the cases from a specific territory within the province. At this level, only one judge manages each case.

Additionally, there is the court of appeals or provincial court, with one of each per province, except for provinces that do not handle many claims, such as the Galapagos Islands. In the court of appeals, three judges sit and handle each case, and a ruling is issued by majority vote. Similar to the first level, the number of judges varies by the amount of claims each province handles, with a minimum of three per case.

Finally, at the third level of hierarchy, there is the National Court, which is located in Quito. Similar to the court of appeals, three judges sit to manage each case and all claims are split between judges specialising in specific matters. For the National Court, by law, there should be 21 judges in total. Not all civil claims may reach the National Court, as this level is reserved for significant breaches of the law.

In Ecuador, there is no subdivision within civil claims, whether by nature or size; however, at a higher level, claims and therefore courts are divided between the different areas of the law, one of them being civil claims. There are no specialist commercial or financial courts in Ecuador.

Judges and juries

What is the role of the judge and the jury in civil proceedings?

There is no jury in Ecuadorian judicial proceedings.

The role of the judge depends on the individual judge. As per article 3 of the Organic General Code of Procedure, the judge shall direct and control the process and avoid any unnecessary delays. If necessary, the judge can interrupt any party to request any clarification or to promote further debate. The role of the judge lies between an inquisitorial and a passive role, meaning that the parties are responsible for driving the process forward; however, the judge has the power to request further evidence of witnesses or parties if he or she sees fit.

Limitation issues

What are the time limits for bringing civil claims?

The general time limit for filing a civil claim is 10 years; however, there are certain exceptions to this. Some examples of shorter time periods are tort claims, which have only four years to file the claim; the collection of some accounts that meet specific requirements, for example, promissory notes, being only five years; and some others that are less frequently used.

Legislation does not allow the possibility to agree the suspension of time limits, the parties being bound by what is established in law.

Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

There are no pre-actions that parties should take into account to file a civil claim. However, since the enactment of the Organic General Code of Procedure, the claim should be filed along with all evidence and experts’ reports to support the arguments. This benefits the filing party, as it has more time to prepare a claim.

Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

Civil proceedings commence with the submission of the claim to the court, which assigns the claim to a specific judge by using a draw system. The judge verifies that the claim complies with the formal requirements mentioned in the Organic General Code of Procedure. If there is nothing to complete, then the judge orders the court to serve the claim to the defendant, who has 30 days to provide a response to the claim or counterclaim. According to legislation, the summons process is the sole responsibility of the court, meaning that the parties do not interfere in this part of the process and are able only to request the court to move the summons process forward through written petitions.

Since the enactment of the Organic General Code of Procedure in 2015, which established an oral litigation system, courts have gained more effectiveness and court processes are faster. However, there is still a need for more judges to handle the caseload. There have been a couple of changes in the law with the intention to relieve the judges' caseload; however, they are still responsible for handling too many cases.

Recently, the judges of the National Court were evaluated and many were removed from their positions, increasing the caseload and making timetables longer.

Timetable

What is the typical procedure and timetable for a civil claim?

There are various civil claims, all of which have different procedures and timetables, but the most common form of civil claim will follow the following procedure and timetable. As the timetable established by the Organic General Code of Procedure is rarely met owing to the caseload, the following is in practice what applies:

  • The claim is filed.
  • A judge is assigned to the claim and admits the claim (30 days).
  • The claim is served (between one and six months). Parties are often required to file written petitions to move the process forward. There are multiple ways to serve a defendant, the most common of which is by being posted to the defendant’s residence. As for the documents for serving, a copy of the claim will be delivered to the defendant.
  • The defendant has 30 days to answer the claim or file a counterclaim.
  • Once the defendant files a response, the judge will set a date for the preliminary hearing (the timing depends on the availability of the judge, usually four to 12 weeks). At the preliminary hearing, the parties will make their opening statements, state their preliminary defences and announce the evidence that will be presented in the trial hearing.
  • Afterwards, the judge will set a date for the trial hearing (the time between a preliminary hearing and a trial hearing varies between two weeks and four months). In the trial hearing, the parties will present all admitted evidence and closing statements.
  • At the end of the trial hearing, the judge issues his or her ruling orally, and then has 10 days to notify the parties with the written ruling. On notification of the written ruling, the parties have the possibility to file an appeal within the following 10 days (only if they expressed their will to do so orally in the trial hearing). The counterparty will have another 10 days to answer the appeal.
  • After the appeals have been filed, they will be remitted to the court of appeals, which will set a date for the hearing (between three and five months).
  • After the hearing, the parties have the chance to file a cassation appeal before the National Court, within 30 days of the issuance of the written ruling.
  • Once the appeal has reached the National Court, it will be submitted for the review of alternate judges, who will verify that the cassation appeal meets a the particular requirements.
  • If admitted, the National Court will set a date for a hearing and will issue the ruling at the end of that hearing (three to six months).
Case management

Can the parties control the procedure and the timetable?

No, parties cannot control the procedure or the timetable. The procedure is a fixed procedure established in law that cannot be changed, even with the agreement of the parties. The exception is that the parties are able to defer a hearing by mutual agreement.

Evidence – documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

There is no duty to preserve documents before trial. However, it is possible that a judge will order the exhibition of evidence before (through preparatory measures) or during the trial.

Evidence – privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

Legislation does contemplate that certain documents are privileged, such as those shared by lawyers, doctors and psychologists. In this sense, the advice of an in-house lawyer will be protected under a privileged document.

Evidence – pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

There is no obligation to exchange written evidence from witnesses and experts prior to trial, and this is uncommon under Ecuadorian law. However, parties may disclose certain evidence when they are trying to settle prior to trial. Regarding written evidence and expert reports, these shall be submitted along with the claim or response to the claim.

Evidence – trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

When filing a claim, all written evidence and experts' reports shall be submitted along with the claim or response to the claim. During the trial, written documents should be exhibited and presented during the trial hearing, reading the relevant sections that support the claim.

Witnesses and experts must provide their testimony in court for the other party to cross-examine them, as per the contradiction principle set in the Organic General Code of Procedure. However, witnesses do not present a written statement, but an oral statement only. In the claim or response to claim, the parties should include a brief description of what the testimony of such a witness will bear.

Interim remedies

What interim remedies are available?

The Organic General Code of Procedure does establish the possibility of filing some injunctive relief measures with the objective of safeguarding the interests of the plaintiff. Depending on the nature of the claim to be filed, the injunctive relief measure will vary, but all have the same objective. The interim remedies available are the following:

  • asset seizure;
  • the freezing of accounts;
  • restrain in transfer of property; and
  • prohibition on leaving the country

 

The remedies are available in support of foreign proceedings. However, owing to the procedure of validating foreign orders taking too long, remedies often defeat their purpose. Prior remedies will only be applicable when the claim is filed in Ecuador, as they require a claim to be filed within a certain period of time.

Remedies

What substantive remedies are available?

Available remedies include restitution, damages and specific performance. However, the judge is not allowed to order more than is asked for by the plaintiff in the claim, meaning that the plaintiff is the one that calculates what should be received for the damage sustained. These calculations include the interest payable in a money judgment, which shall be calculated according to the rates established by the central bank.

The concept of punitive damages does not exist under Ecuadorian legislation. In damage claims, the plaintiff is only entitled to the direct damage and loss of profit.

Enforcement

What means of enforcement are available?

Unfortunately, in Ecuador, if a court ruling is disobeyed, another procedure must be initiated. These procedures are usually a lot shorter than an ordinary civil procedure; however, they need to follow a specific procedure, which usually take up to a year. It is through this process that the court will order compliance with a ruling.

There are other types of orders, different from a ruling, where the court may use the police to enforce a special request. The judge may impose fines or order costs to the attorneys or parties when certain orders are disobeyed.

Public access

Are court hearings held in public? Are court documents available to the public?

Yes, regarding civil claims, all court hearings are public. The same is true for all documents, such as pleadings, witness statements and court orders. Anyone can access the web page of the judicial system to search for a specific case, where they can find the details of the case, such as plaintiff, defendant, matter of the case, court case number, the date on which the case was filed, and a summary of the case history. With this information, anyone can request a physical copy of the entire case file from the court.

Costs

Does the court have power to order costs?

The court has the power to order costs for either party whenever a party litigates in an abusive manner or in bad faith. The costs ordered by the court may not exceed 10 basic salaries (US$400 a month in 2020) and will be ordered taking into consideration the procedure, the value of the claim and the actions taken by the parties, among other factors.

For the costs, the applicable legislation is the Constitution of Ecuador, the Organic General Code of Procedure and the cost-setting rules.

The parties are not required to provide security for the defendant's costs.

Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

The Organic General Code of Procedure does not establish any type of arrangement between lawyers and their clients; the parties are free to agree on the conditions for the representation in a claim.

Ecuadorian legislation does not prohibit a third party investing in a claim and taking part of the proceeds of the claim. However, legislation does contemplate the possibility of purchasing litigation rights.

Insurance

Is insurance available to cover all or part of a party’s legal costs?

In Ecuador, there is no specific insurance to cover legal costs; however, legal costs may be insured when they are part of a bigger insurance contract, such as car insurance or general civil responsibility insurance.

Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

Ecuador does not have the possibility of filing class action lawsuits, except for claims filed for harming the environment. Even though this is a possibility, this is not a proper class action lawsuit; however, all Ecuadorian citizens are entitled to file a suit on behalf of the environment for environmental damage.

Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

Parties may appeal against the final decision on the merits of the case issued by a trial judge. There is no limitation on the grounds and circumstances for this appeal; they are allowed to challenge procedural issues, evidence or legal arguments.

Parties may also appeal other court decisions of the court, for example, the decision to admit or reject preliminary defences, such as lack of jurisdiction, improper venue, lack or improper joinder or arbitral clauses. Also, a party may appeal the court’s decision to admit or reject evidence during the hearing.

Appeal is not available against the decisions of the Tax and Administrative Tribunals.

There is a right to further appeal before the National Court (a cassation court), which will not review the facts of the case but has the power to review matters of law. Decisions of the Tax and Administrative Tribunals may only be challenged in a cassation proceeding before the National Court.

Additionally, parties may initiate a constitutional action if they believe that the final decision of any court has violated their constitutional rights, where parties are required to exhaust all previous ordinary and extraordinary remedies to access the Constitutional Court.

Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

Article 105 of the Organic General Code of Procedure establishes the procedure for recognition and enforcement of foreign judgments. This is an expedited process that requires the following steps:

  • The requesting person shall file an application for recognition before the competent tribunal of the provincial court.
  • The court will serve the person against whom the judgment was rendered with the process.
  • The defendant will have five business days to file a response arguing any of the available defences.
  • Within 30 days from the date on which the response was or should have been filed, the court must decide whether to recognise and enforce the foreign judgement.
  • If a properly substantiated and accredited defence was filed and the complexity of the case warrants it, the court will set a date for a hearing. The hearing must be convened within 20 business days from the date when the response was filed.
  • The court will issue its decision in the same hearing.

 

There is no appeal available to challenge the decision of the provincial court.

Unless there is an international convention to which Ecuador is a signatory, and which does not require reciprocity, reciprocity is essential. The Ecuadorian National Court has established that, if the decision was issued by a country that does not admit, recognise or enforce Ecuadorian judgments, the enforcement of any decision from that country will not be admitted in Ecuador.

Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

Ecuadorian law does not provide a procedure for obtaining oral or documentary evidence for use in proceedings in other jurisdictions.

Arbitration

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

The Ecuadorian Arbitration and Mediation Law is not based on the UNCITRAL Model Law.

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

The arbitration agreement must be in writing. Additionally, if the arbitration involves a public party, authorization and approval of the arbitration clause by the Attorney General are required. 

Also, if the claim is brought up due to torts, the arbitration clause should specify the facts that surround that tort (applicable to past or future)

Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

If the agreement and rules are silent, three arbitrators are appointed. The parties shall agree on the appointment of all three arbitrators and their alternatives. If no agreement is reached, the arbitration centre will draw from an internal list of arbitrators.

The grounds to challenge the arbitrators are the same grounds to challenge a judge; there is no restriction on the right to challenge the appointment of an arbitrator.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

The parties are free to choose arbitrators from internal lists in local arbitration centres or may choose other arbitrators from other countries outside the lists without any limitation. However, if the centre is in charge of appointing the arbitrators, they may only draw them from its internal list of arbitrators.

The internal lists of arbitrators of the different arbitration centres include several experienced lawyers and professors who are capable of meeting the needs of a complex arbitration.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Several procedural requirements must be followed in the arbitration procedure. The Arbitration and Mediation Law provides for the manner and time to file the claim and response. It establishes a mandatory mediation hearing and provides rules to conduct the hearing, the production of evidence and the final hearing.

Court intervention

On what grounds can the court intervene during an arbitration?

Ecuadorian courts do not have the power to issue an injunction to stay proceedings. Courts are involved in arbitration only to help arbitrators enforce the tribunals’ decisions and interim relief.

Parties may not agree to override the court’s powers, but they may grant arbitrators some powers that are usually exercised by courts, for example, the power to order interim relief.

Interim relief

Do arbitrators have powers to grant interim relief?

Arbitrators have the power to grant interim relief. However, if the parties have not expressly granted this power in the arbitration agreement, the tribunal will need the help of the courts to enforce this relief.

Award

When and in what form must the award be delivered?

The tribunal has 150 business days from the date of the first hearing to issue the award. The tribunal may extend this period up to 300 business days if needed.

The award must be taken by a majority of votes, in writing and signed by all the arbitrators. Additionally, the tribunal must set a date to read out the award to the parties.

Appeal

On what grounds can an award be appealed to the court?

The arbitral award is not subject to appeal. However, the parties may set aside the award on limited grounds:

  • the party was not given proper service of process, or the award was rendered in default and such party was not able to present his or her case;
  • the party was not given proper notice of any decision or order of the tribunal and was, as a result, unable to present his or her case;
  • the evidence requested by a party was not duly produced or practised when there was a relevant fact that needed to be proved;
  • the award deals with a difference not contemplated by or not falling within the terms of the claim, or it contains decisions on matters beyond the scope of the submission to arbitration; or
  • the composition of the arbitral tribunal was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law.

 

The decision of the Provincial Court on this matter is final and is not subject to appeal.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

The procedures to enforce a foreign or a domestic award are the same, as follows:

  • the requesting party shall file a request to enforce the award, together with a certified copy of the award. If the award is not rendered in Spanish, the requesting party will need to provide a proper certified translation;
  • the trial judge will review the enforcement request and issue an enforcement order, ordering the requested party to comply with the award within five business days;
  • the judge will serve the requested party with this order; and
  • if the party fails to comply with the judge’s order, the judge may seize the requested party’s assets and sell them at a public auction.

 

The enforcement procedure was affected by the political desire of the government to attract investment; therefore, this proceeding is more favourable than the one set out in the New York Convention.

Costs

Can a successful party recover its costs?

Arbitral tribunals are reluctant to award arbitration costs. In most cases, arbitration costs may be recovered, but each party must bear the legal fees. In some exceptional cases, if a party has delayed the proceedings or acted in bad faith, the tribunal may award full recovery.

Alternative dispute resolution

Types of ADR

What types of ADR process are commonly used? Is a particular ADR process popular?

The most common ADR process is mediation. Some important and complicated contracts in construction, oil, energy and mining industries include dispute boards or expert adjudication.

Requirements for ADR

Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

The parties may agree on a multi-step arbitral clause that requires a conciliation or mediation process before going to arbitration. In the absence of this agreement, the Ecuadorian Arbitration and Mediation Law requires a mandatory mediation process before appointing the arbitral tribunal. The arbitration centre will set a date for this mediation hearing and if a party does not attend the hearing, this fact may be considered by the tribunal when awarding costs.

This multi-step process may also be implemented before a regular court trial when agreed upon by the parties. Once the trial has begun, the preliminary hearing includes an obligatory conciliation stage for the parties. The parties can settle at any point of the trial, before the final ruling.

If the parties have agreed on a multi-step clause, an arbitral tribunal may compel them to participate in the ADR process.

Miscellaneous

Interesting features

Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

Ecuador is one of few civil law countries that have implemented an oral proceeding for all civil and commercial processes. During the preliminary hearing, the parties will argue all defences and argue why the requested evidence is relevant and needs to be presented. The judge will issue his or her decision in the hearing.

During the trial hearing, the parties will present all evidence, similar to an international arbitration. However, under Ecuadorian law, documents must also be presented and read out. The judge also issues the final decision on the merits in the same hearing. The parties must appeal orally at the end of hearing; otherwise their right to appeal is lost.

Update and trends

Recent developments

Are there any proposals for dispute resolution reform? When will any reforms take effect?

On 26 June 2019, the Organic General Code of Procedure, which regulates all processes under the jurisdiction of the Ecuadorian court, was amended. Among the relevant provisions that were amended are the following: the domicile for notifications in a contract is the domicile to serve the process to the defendant; and, in all process involving the state or its entities, the court that has jurisdiction over the dispute is the court of the domicile of the plaintiff and the parties may grant a power of attorney to their lawyers in the hearing.

Additionally, the annulment courts have made a series of controversial decisions in proceeding to set aside arbitration awards, especially when involving a public party, by reviewing the arbitral tribunal jurisdiction, which is not a cause to set aside an award under Ecuadorian law.

The courts also interpreted the grounds to set aside an award where it deals with a difference not contemplated by or listed under the terms of the claim, or where the award contains decisions on matters beyond the scope of the submission to arbitration, to include the following: ‘the subject matter of the difference is not capable of settlement by arbitration under the law of that country’. As a result, the courts have set aside several arbitration awards, ruling that disputes arising out of administrative acts (unilateral termination of contracts or penalties) are not capable of settling by arbitration, even though the Constitution and the Public Procurement Law provide for arbitration clauses in these contracts.