Law on Conciliation and Arbitration

The purpose of this Law is to establish suitable, expeditious, and reliable methods for resolving conflicts and thereby strengthening legal certainty and peace.

Conciliation is a mechanism for resolving disputes through which two or more natural or juridical persons attempt to achieve by themselves the resolution of their differences with the assistance of a neutral and qualified third party who shall be called a conciliator.

All matters that are susceptible to settlement, withdrawal, and those that the Law expressly determines shall be subject to conciliation.

The agreement reached by the parties through conciliation shall have the effects of res judicata and executive force under the same conditions as a final judicial sentence.

Conciliation may be judicial or extrajudicial.

In all those proceedings in which a first or sole instance judgment has not been rendered and which concern wholly or partially matters susceptible to conciliation, there shall be at least one opportunity for conciliation at a hearing that must be held before beginning the presentation of evidence proposed for the proceeding.

For the purposes provided in the preceding article, the judge, ex officio or at the request of a party, shall summon the parties to a hearing in which the judge shall urge them to reach settlement formulas. In the event that the parties do not do so, the judge shall be empowered to propose them, provided this does not imply prejudgment.

If the parties reach an agreement in accordance with the law, the judge shall approve it; to this end, a Conciliation Record shall be drawn up containing the said agreement and must be signed by the parties. If the conciliation agreement concerns the totality of the litigation, the judge shall issue an order declaring the proceeding terminated; otherwise, the proceeding shall continue with respect to those matters not agreed upon without necessity of an order so directing.

Unjustified failure to attend the conciliation hearing or lack of cooperation by any of the parties in the same shall give rise to the judge imposing a fine in an amount not less than one and not more than three (3) monthly legal minimum wages for the largest Commercial Sector, and shall give rise to the issuance of a certificate of disagreement, continuing with the proceeding immediately. For the assessment of the fine, the judge shall take into account the conduct of the party against whom it is imposed and the conditions of the case in question.

The parties must personally attend the conciliation hearing and, in the case of juridical persons, by means of legal representatives. The attorneys-in-fact of the parties may be present and provide advice to their clients, but shall not intervene directly in the hearing. In the event that the parties cannot attend directly, they must be represented by attorneys-in-fact duly and expressly authorized.

Justices of the Peace are authorized to conduct conciliation hearings in their jurisdiction without regard to the amount in dispute in all those matters that, in accordance with this Law, are susceptible to such conciliation. Conciliation conducted before a Justice of the Peace shall have the same effects as that promoted by a judge in proceedings. A record of the conciliation hearing shall be drawn up and duly signed by the parties and the judge; if no agreement is reached, the record shall serve the parties in a new proceeding when a new conciliation hearing is to be attempted so as not to hold it; except that both parties request it.

Chambers of Commerce, Professional Associations, Trade Associations, and Higher Education Institutions may establish and organize conciliation centers in accordance with the terms established in this Chapter. Such centers shall form an integral part of the respective Institution and shall not be an independent juridical person thereof. Extrajudicial conciliation may be: Institutional, when it is conducted in the conciliation centers established in the present Law; notarial, when it is conducted before a notary public, or administrative, when it is conducted before administrative officials, duly authorized by law for such purpose.

Conciliation centers must comply with the following requirements: 1) Establish a regulation that shall contain:

• a)

  Organizational chart of the center, method of appointing its officials and assignment of functions;

• b)

  Administrative rules applicable to the center;

• c)

  Conciliation procedure rules;

• d)

  The list of conciliators, with indication of how it is structured, the requirements for joining it, the validity of the list, the causes for exclusion from the list, as well as the method of appointing conciliators;

• e)

  Fee schedules for conciliators; and,

• f)

  Administrative cost schedules. 2) Organize a file of conciliation and disagreement records.

The centers shall have the facilities and installations necessary to properly perform their functions and shall be responsible for damages that may be caused by inefficient or negligent performance of their legal and regulatory obligations.

Conciliators of the centers, before being accepted and included in the list and before exercising their functions, must approve the training that shall be provided to them by the center.

TRAINING OF CONCILIATORS, EXCEPTION. All conciliators shall be university professionals, except for university students who carry out their practice in the conciliation centers of Higher Education Institutions.

FREE CONCILIATION. Conciliation services provided in the conciliation centers of Higher Education Institutions shall be free of charge.

DISQUALIFICATION OF CONCILIATOR FROM OTHER PROCEEDINGS. Whoever acts as a conciliator shall be disqualified from acting in any judicial or arbitral proceeding related to the conflict and subject matter of the conciliation, whether as Judge, arbitrator, witness, advisor, or representative of one of the parties.

COMPETENCE OF CONCILIATION CENTERS. In conciliation centers, all matters that are susceptible to settlement and waiver may be conciliated. Conciliation provided in matters of labor, family, minors, civil, commercial, agrarian, administrative contentious, and police, or criminal matters as applicable, may be validly carried out before a conciliation center. Conciliation carried out in a center produces the effects established in this Law and fulfills the requirement of the conciliation hearing within the proceeding, unless both parties request the judge to hold a new conciliation attempt.

CONFIDENTIALITY IN CONCILIATION. Conciliation shall be confidential in nature; those who participate in it must maintain the utmost discretion and confidentiality; the settlement formulas that are proposed or discussed shall not affect any eventual proceeding.

IMPEDIMENTS AND RECUSAL OF CONCILIATORS. Conciliators shall have the same impediments and shall be recusable for the same grounds established for arbitrators. Recusal shall be resolved by the Director of the respective Conciliation Center. When it concerns a notary and the notary is recused, the notary shall refer the parties so they may go to another notary. If the recused party is an administrative official, the recusal shall be decided by his or her hierarchical superior in accordance with the Law of Administrative Procedures.

NON-APPEARANCE AT THE HEARING. If one of the parties fails to appear at the hearing to which they were called, a date shall be set for a new hearing. If the called party fails to appear at the second hearing, the conciliator shall issue to the interested party a certificate of impossibility of conciliation.

CONCLUSION OF THE CONCILIATION PROCEDURE. The conciliation procedure concludes: 1) With the signature of the Conciliation Act containing the agreement reached by the parties, clearly specifying the obligations of each party; and 2) With the signature of an act in which the parties and the conciliator record their disagreement.

TOTAL OR PARTIAL CONCILIATION AGREEMENT. If the conciliation covers all of the differences, there shall be no occasion for the respective judicial proceeding; if the agreement is partial, it shall be recorded in the act and the parties shall be free to settle the non-conciliated differences by any other procedure permitted by Law.

VALIDITY OF THE ACTS. Both the Conciliation Act and the certificate of disagreement shall be authentic, with only the signature of the parties and the conciliator without need for any notarial or judicial procedure. In the event that the agreements contained in the act involve acts subject to registration, presentation to the corresponding public registry of a copy of the act shall be sufficient, without need for legalization or any additional procedure of any kind. Registrars are obligated to record such acts. Interested parties may obtain authenticated copies of these acts from the respective conciliation center. TITLE II OF ARBITRATION CHAPTER I OF CONCEPT AND SCOPE OF APPLICATION

CONCEPT OF ARBITRATION. Arbitration is a mechanism for resolution of controversies, through which the parties in conflict refer the resolution thereof to an arbitral tribunal.

SCOPE OF APPLICATION. This Law shall apply to national arbitration; likewise, it shall apply to international arbitration, without prejudice to what is provided in the treaties, agreements, conventions, and other instruments of international law ratified by Honduras.

CONTROVERSIES SUBJECT TO ARBITRATION. Controversies that have arisen or may arise between natural or juridical persons may be submitted to arbitration with respect to matters over which they have free control.

NOT SUBJECT TO ARBITRATION. The following may not be subject to arbitration:

• 1)

  Criminal cases, except insofar as they relate to civil liability arising from the crime;

• 2)

  Future maintenance obligations;

• 3)

  Those conflicts related to the civil status of persons, except insofar as they relate to the patrimonial regime pertaining thereto;

• 4)

  Questions upon which a final judicial sentence has been rendered;

• 5)

  Questions in which, in accordance with the laws, the Public Prosecutor must intervene in representation and defense of those who, due to lack of legal capacity or representation, cannot act by themselves; and 6) In general, all those conflicts that are not susceptible to settlement.

COLLECTIVE LABOR DISPUTES. Collective labor disputes in the matter of arbitration shall be resolved by what is provided in the Labor Code.

STATE ARBITRATION. Controversies arising from contracts that the Honduran State and public law entities execute with natural or legal persons, whether national or foreign, may be submitted to arbitration.

TESTAMENTARY ARBITRATION. Except for the limitations established by public policy, the testator may, by his sole will, provide for arbitration in order to resolve controversies that may arise among his non-forced heirs and legatees, whether regarding the portion of the inheritance not subject to forced assignment, controversies arising from the valuation, administration or collection of the inheritance, or controversies that arise in all these cases with the testamentary executors.

PRESUMPTION OF ARBITRAL AGREEMENT. Arbitral agreements referred to in legal relationships contained in general contracting clauses or adhesion contracts shall be fully valid between the parties. It is presumed, without admission of contrary evidence, that the arbitral agreement was to be known, if it was made public through adequate publicity.

DEFINITIONS AND RULES OF INTERPRETATION. The following definitions and common rules of interpretation are adopted for this Law:

• 1)

  Arbitral Tribunal: Means either a single arbitrator or a plurality of arbitrators.

• 2)

  Arbitration as to procedural rules may be: a) Ad-hoc: That in which the parties agree on the rules of procedure applicable to the resolution of their controversy; and b) Institutional: That in which the parties submit to a procedure established by an arbitration center;

• 3)

  Arbitration as to its nature may be: a) In law: That in which arbitrators base their decision on the positive law in force. b) In equity: That in which arbitrators decide according to common sense and equity; and, c) Technical: That in which arbitrators issue their award based on their specific knowledge in a particular science, art, or profession.

• 4)

  Award: Decision or ruling handed down by an arbitral tribunal.

• 5)

  Rules concerning the composition of the arbitral tribunal and arbitral procedure are supplementary in nature in relation to the will of the parties.

NOTICES AND COMMUNICATIONS. The following criterion regarding written notices and communications is adopted:

• 1)

  Any notice and any other written communication that is personally delivered to the recipient or to his representative, at his special address, at the establishment where he conducts his principal activity or at his habitual residence shall be considered valid;

• 2)

  When none of the places indicated in the previous paragraph can be located, any notice or written communication that has been sent by certified mail or any other means that leaves evidence of the fact shall be considered received at the last known establishment, address, or habitual residence; and,

• 3)

  Notices shall equally be valid when made by certified mail, telex, facsimile, or any other electronic communications medium, of which proof of receipt by the recipient remains. In the cases of paragraphs 1) and 2), the notice or communication shall be considered received on the date on which delivery was made.

JURISDICTION AND JUDICIAL ASSISTANCE. Regarding jurisdiction and judicial assistance, the following rules are adopted: 1) In controversies resolved in compliance with this Law, only the corresponding arbitral tribunal shall have jurisdiction. No other tribunal or instance may intervene, unless this Law expressly authorizes it; and, 2) The judicial authority competent to provide assistance in the cases established in this Law shall be the one qualified to hear the controversy in the absence of arbitration. In default thereof, it shall be the one of the place where the arbitration is to take place, if it has been provided; failing that, and at the election of the claimant, that of the place of execution of the arbitral agreement or of the establishment or residence of the respondent or any of them, if there are several.

CONCEPT OF ARBITRAL AGREEMENT. The arbitral agreement is the accord by which the parties decide to submit to arbitration the controversies that have arisen or may arise between them with respect to a specific legal relationship, whether contractual or non-contractual in nature.

FORM OF ARBITRAL AGREEMENT. The arbitral agreement must be in writing. It may take the form of a clause included in a contract or that of an independent agreement. An arbitral agreement shall be understood to have been formalized in writing not only when it is contained in a single document signed by the parties, but also when it results from the exchange of letters or any other means of communication or correspondence that unequivocally leaves documentary evidence of the parties' will to submit to arbitration. The Arbitral Agreement shall be understood to have been formalized in writing when, despite the absence of a prior agreement, at the initiative of one of the parties involved, a controversy is submitted to the decision of one or more arbitrators who accept to resolve the controversy, with the subsequent assent of the other party. There shall be presumed to be assent when the opposing party is notified of the initiative of the party who promoted the intervention of the arbitrator or arbitrators and appears in the arbitral proceeding without objecting to such intervention.

AUTONOMY OF ARBITRAL AGREEMENT. Any Arbitral Agreement that forms part of a contract shall be considered as an agreement independent of the other stipulations thereof. Consequently, the non-existence, nullity, or partial or total voidability of a contract or other legal act containing an arbitral agreement does not necessarily imply the non-existence, invalidity, or unenforceability thereof. Arbitrators may freely decide on the controversy submitted to their determination, which may include issues concerning the defects affecting the contract or legal act that contains the arbitral agreement. Notwithstanding the foregoing, when the complete nullity of a contract proceeds from a final judicial decision, the Arbitral Agreement shall not survive.

DILATORY EXCEPTION. Regarding the dilatory exception of arbitration: 1) The arbitral agreement implies the renunciation by the parties to initiate judicial proceedings regarding the matters or controversies submitted to arbitration; and, 2) The judicial authority that takes cognizance of a controversy subject to an arbitral agreement must abstain from hearing the case when requested by the party judicially sued. In that case, such party may raise the exception of arbitration which shall be resolved summarily and without recourse against the decision.

WAIVER OF ARBITRATION. Regarding the waiver of arbitration:

• 1)

  It shall be valid only when the will of the parties concurs, whether express or tacit;

• 2)

  The parties may expressly waive arbitration through an agreement that is documented in writing and signed jointly or separately; and,

• 3)

  There is deemed to be tacit waiver when one of the parties is sued judicially by the other and fails to raise the exception of arbitration at the corresponding procedural opportunity. The act of either party, before or during the arbitral proceeding, requesting from a competent judicial authority the adoption of precautionary measures shall not be considered a tacit waiver of arbitration.

NUMBER OF ARBITRATORS. The parties shall determine the number of arbitrators, which in any case shall be odd. In the absence of agreement by the parties, there shall be three arbitrators if the controversy is of major importance, or one if it is of minor importance.

REQUIREMENTS TO BE AN ARBITRATOR. Only natural persons in full exercise of their civil rights may be appointed as arbitrators. When arbitration is to be decided in accordance with law, arbitrators must be law professionals. When arbitration is to be resolved in accordance with technical norms or principles, arbitrators must be experts in the respective art, profession, or trade. The parties may establish additional requirements or conditions for arbitrators in the arbitral agreement.

WHO CANNOT BE ARBITRATORS. Those who have with the parties or their representatives any of the causes for abstention and recusal established by procedural rules cannot act as arbitrators. Judges, magistrates, prosecutors, and those exercising public functions cannot act as arbitrators, except those whose functions are linked to teaching.

APPOINTMENT OF ARBITRATORS. The parties may appoint the arbitrators directly and by mutual agreement or delegate to a third party, whether a natural or legal person, the partial or complete appointment of the arbitrators. In the absence of agreement by the parties or failure to appoint them by the delegated third party or parties, the arbitrators shall be appointed by the arbitration institution that corresponds, when it is institutional arbitration by arbitration institutions legally established in the place of domicile where the arbitration is to take place, at the request of either party.

NOTIFICATION OF REPLACEMENT APPOINTMENT. The appointment must be communicated to the designated arbitrators in person, and they shall have five (5) days to manifest whether they accept it or not. Failure to respond within the stated term shall be considered as non-acceptance and shall permit proceeding with the replacement.

RESPONSIBILITY. Acceptance obligates arbitrators to fulfill their function with diligence and dedication and they shall be responsible for repairing the damages and losses that they may cause to the parties or to third parties through their fault and negligence.

PROVISION OF FUNDS. Arbitration centers or arbitrators, as the case may be, may demand from the parties at any time the provision of funds that they deem necessary to cover the fees of the arbitrators and the expenses that may be incurred in the administration and processing of the arbitration or the adjustment thereof. If the conditions of the case warrant it. Payments shall be made in the form and at the moment determined by the institution or the Arbitrators. The centers must establish in their regulations the amount and form of payment of the fees of the arbitrators, the center and other costs and expenses of the arbitral proceedings, which shall be binding on the parties.

ABSTENTION AND RECUSAL. Arbitrators may abstain from acting as such or be recused on the same grounds established by the Code of Civil Procedure for holders of the judicial authority. In the same manner they may be recused for failure to meet the conditions that in accordance with the law or by agreement of the parties have been established in the case. Arbitrators designated by the parties may only be recused immediately and on grounds that arise after their appointment.

NON-ACCEPTANCE OF RECUSAL. If the arbitrator does not accept the proposed recusal, the resolution thereof shall be adopted by the arbitral institution in the case of institutional arbitration or by the remaining arbitrators when they are ad-hoc. In the case of a sole arbitrator, if not institutional, the decision on recusal shall be adopted by the judicial authority that would have been competent to hear the proceeding object of the arbitration. Against the decision of the arbitrators, the arbitral institution or the judge, as the case may be, by which the recusal is resolved, no appeal shall lie. If the arbitrator abstains from hearing the case or accepts the recusal, he shall be replaced in the same manner in which the arbitrator to be replaced was designated.

CONSTITUTION OF THE TRIBUNAL. In the event that the tribunal is composed of more than one arbitrator, they shall elect from among themselves a President of the arbitral tribunal. In cases where there is only one arbitrator, he shall exercise all the functions and powers of the tribunal. The arbitral tribunal, if it deems it appropriate, shall appoint a secretary. CHAPTER IV OF ARBITRAL PROCEDURE

APPLICABLE RULES. The parties may freely determine the rules of procedure if they have not submitted to those of an arbitral institution. In the event that the parties have made no decision on this matter, the rules of the arbitral institution in which the arbitration is to be conducted shall be followed when it is institutional, or those established in this Law in the case of ad-hoc arbitration. In no case shall any incidental matter be admissible within the arbitral proceedings except those procedures contemplated in this Law.

CASES OF GREATER AND LESSER AMOUNT. In cases considered of greater amount the parties must act through a legal professional. In those in which the claims are considered of lesser amount, they may act for themselves or avail themselves of a legal professional. For the purposes of this Law, matters of greater amount shall be considered those in which the claims are equal to or exceed the sum equivalent to fifty (50) monthly legal minimum salaries for the largest commercial sector, and of lesser amount those which have an amount lower than the stated.

SUPPLEMENTARY PROCEDURE. Except as otherwise provided by the parties or the arbitrators in accordance with the terms of Article 52, the arbitral procedure for ad-hoc arbitration shall be subject to the following rules:

• 1)

  The party promoting the initiation of arbitration must submit to the arbitrators the claim together with its attachments, within eight (8) days counted from the acceptance of the last arbitrator. Once the claim is received, it shall be immediately served to the defendant who shall have eight (8) days to submit their response together with the respective attachments. In this same period and opportunity they must present their exceptions and counterclaim if applicable. The exceptions and counterclaim, if any, shall be served to the claimant to pronounce thereon for which they shall have (8) days. In the case of proposing exceptions against them, service shall be made in the form and terms of the main claim;

• 2)

  In the event that the party promoting the arbitral proceeding does not submit their claim within the provided opportunity, the Tribunal shall terminate its functions and return the proceedings to the parties. If the claim has defects in its presentation, it shall return it so that it may be promoted within three (3) days. In the event that the defendant does not submit any response, the proceedings shall continue their course.

• 3)

  Once the periods indicated above have expired, the arbitrators shall call the parties to a conciliation hearing in the manner provided by this Law. In the event an agreement is reached, the arbitrators shall terminate the proceedings. The parties may request the Tribunal that the settlement reached be elevated to the category of a final arbitral award.

• 4)

  If no total agreement on the claims is reached, the proceedings shall continue with the initiation of the evidentiary period of twenty (20) days common to propose and present evidence. Notwithstanding, exceptionally the arbitrators, at the request of the parties, may extend or reduce this period if required by the complexity of the matters submitted thereto;

• 5)

  Once evidence has been presented, the parties shall submit within the period of three (3) days a written summary of their arguments; and,

• 6)

  Once the foregoing is verified, the arbitrators shall proceed to issue the award for which they must take into account the maximum period established for arbitral proceedings in this Law.

CONCILIATION HEARING IN INSTITUTIONAL ARBITRATION. The Director of the arbitral institution must, before the arbitral proceedings are initiated, call the parties to a conciliation hearing that shall be held under their direction at the respective center. For such purpose, the convocation shall be made prior to the appointment of the arbitrators and, in the event total agreement on the claims of the parties is reached, it shall give rise to the termination of the arbitral proceedings. If it is partial, the arbitral tribunal shall be limited to resolving only those matters that remain pending.

CONCILIATION HEARING IN AD-HOC ARBITRATION. In the case of ad-hoc arbitration, once the proceedings are initiated and the parties have presented their claim and the respective response and in the case of a counterclaim and its reply, the arbitrators shall call the parties to conduct a conciliation hearing which shall take place within the following eight (8) days. In the event there is total agreement between the parties, they may request that it be recorded in the form of an arbitral award and the proceedings shall be terminated. If there is no agreement or it is partial, the proceedings shall continue to resolve the matters that remain pending.

NEW CONCILIATION HEARING. At any stage of the arbitral proceedings, whether ad-hoc or institutional, before issuing the award, the parties by mutual agreement may request the tribunal that they be convoked to a new conciliation hearing which shall be subject to the same rules established in this Article or reach a settlement that shall be incorporated in an arbitral award if the parties so request. The time that the parties take for conciliation, from the request until the moment an agreement is reached between them or the refusal thereof, shall not be taken into account in the computation of the period of duration of the arbitral process.

INITIATION OF ARBITRAL PROCEEDINGS. Arbitral proceedings are deemed initiated when the last of the designated arbitrators has manifested to the parties in writing their acceptance of the position. From that moment the period of duration of the arbitral tribunal shall be counted which, unless otherwise agreed by the parties, may not exceed five (5) months, without prejudice to the parties being able, by mutual agreement and in advance of its expiration, to decide to extend it.

SUSPENSION OF ARBITRAL PROCEEDINGS. The parties by mutual agreement may at any time agree to the suspension of arbitral proceedings; likewise it shall be suspended in the case of death, resignation or removal of an arbitrator, until such arbitrator has been replaced and the designated arbitrator has accepted the position. In any of the cases referred to, the period of suspension of the process shall not be taken into account for purposes of computing the maximum period of duration of the arbitral proceedings and consequently shall be deducted in its entirety.

POWER OF THE ARBITRAL TRIBUNAL TO DECIDE ON ITS COMPETENCE. Arbitrators are empowered to decide on their own competence, including on objections relating to the existence, efficacy or validity of the arbitration agreement. The total or partial objection to arbitration on the grounds of non-existence, inefficacy or invalidity of the arbitration agreement or for not having agreed that arbitration resolve the matter in question shall be raised when the parties present their initial claims. Notwithstanding, the arbitrators may consider these matters ex officio. Without prejudice to what is established in the arbitral regulations of the institution, in the case of institutional arbitration, or what is agreed by the arbitrators or the parties in ad-hoc arbitration, the arbitrators shall resolve these matters as a preliminary issue. However, the arbitral tribunal may proceed with the proceedings and decide on such objections in the award.

PLACE OF ARBITRATION. The parties may freely determine the place of arbitration. If not provided for in the arbitration agreement, the rules of the arbitral institution shall apply when the arbitration is institutional, or the arbitrators shall decide in other cases.

ADMISSIBILITY AND VALUE OF EVIDENCE. The arbitral tribunal shall have exclusive authority to determine the admissibility, relevance, and value of evidence. At any stage of the proceedings, the arbitrators may request clarifications or information from the parties; they may also ex officio order the presentation of evidence that they deem necessary. In the case of partial evidence, they may order that the expert opinion be explained or expanded. The arbitral tribunal may consider time periods for stages already completed by the parties as elapsed. The inactivity of the parties does not prevent the continuation of the proceedings or the issuance of an award based on what has already been acted upon. The arbitral tribunal may, with stated reasons, dispense with evidence not presented if it considers itself adequately informed, by means of a ruling that shall not be subject to any appeal. The presentation of evidence, except in the case of documentary evidence, shall take place at a hearing for which the parties shall be notified in advance of the date, time, and place where the respective hearing or proceeding shall take place. Evidence shall be presented by the tribunal as a whole: for evidence that must be conducted outside the place of domicile. It may either conduct it directly or delegate to some judicial authority of the place to conduct it. For the presentation of evidence abroad, the tribunal must proceed in the same manner and terms as ordinary judges proceed in accordance with the Civil Procedural Code.

COPIES OF PROCEEDINGS AND DOCUMENTS. Copies of all proceedings, documents, and any other information that one of the parties provides to the arbitral tribunal shall be delivered to the other without need for a ruling ordering it. Likewise, expert reports and evidentiary documents on which the arbitral tribunal may base its decision shall be made available to both parties.

JUDICIAL ASSISTANCE FOR PRESENTATION OF EVIDENCE. The arbitral tribunal may request the assistance of any judicial authority for the presentation of evidence that it cannot conduct itself.

BUSINESS DAYS AND HOURS. For the conduct of arbitral proceedings, all days and hours are business days. -- CHAPTER ON ARBITRAL AWARDS

MANNER OF RESOLVING MATTERS. The arbitral tribunal shall decide the matter submitted to its consideration subject to law, in equity, or in accordance with technical norms and principles, in accordance with what is stipulated in the arbitration agreement. In the event that the parties have not made an agreement in this regard, the tribunal must resolve in accordance with law.

CONTENT OF AWARD. The award shall be pronounced in writing and must contain:

• 1)

  Place and date;

• 2)

  Names of the parties, their representatives if any, and of the arbitrators;

• 3)

  The matter submitted to arbitration and a summary of the allegations and conclusions of the parties;

• 4)

  The evaluation of the evidence presented;

• 5)

  The decision, which must be clear, precise, and consistent with the claims and other relief sought timely in the lawsuit, making the declarations that these require, condemning or absolving the defendant, and deciding all litigious points that were subject to debate. When these have been several, the pronouncement corresponding to each of them shall be made with proper separation;

• 6)

  The determination of the costs of the proceedings if any; and,

• 7)

  Signature of the members of the tribunal and the secretary.

MANNER OF ISSUING THE AWARD. The award may be issued by unanimity or by simple majority of votes. The dissenting arbitrator must state in writing the reasons that motivate his separation from the criterion of the majority arbitrators. In the event that there is no majority, the decision shall be that of the president of the tribunal.

FORCE AND VALIDITY OF AWARD. The award has the same force and validity as a judicial sentence; it shall be notified to the parties at the hearing that the arbitral tribunal convenes for this purpose or within three (3) days of its issuance, delivering an authentic copy thereof.

CLARIFICATION AND CORRECTION OF AWARD. The award shall be subject to correction, clarification, or completion and shall become final once the proceedings are concluded, when applicable. Within three (3) days following notification of the award, the parties may request clarification, completion, or correction thereof due to calculation, copying, or typographical error, or the arbitrators may ex officio carry it out. The tribunal must clarify, complete, or correct the award, if applicable, within a period not exceeding seven (7) days counted from the respective request. No appeal shall lie against that decision.

EFFECTS OF AWARD. The final arbitral award produces the effect of res judicata and has merit for execution in the same manner and terms established in the Civil Procedural Code for judicial sentences. CHAPTER VI OF APPEALS

MOTION FOR RECONSIDERATION. Against decisions of the arbitrators, other than the award, only a motion for reconsideration shall lie, except in those cases where the present Law has provided that no appeal shall lie. The motion for reconsideration must be filed and argued at the same hearing in which the arbitral decision is issued. The tribunal must resolve the motion at the same hearing or suspend it to resolve the matter later, provided that in no case shall it exceed three (3) days counted from the moment it is filed.

NULLITY APPEAL. Against the arbitral award, only an appeal for nullity may be filed within seven (7) days following notification thereof or of the ruling by means of which it is clarified, corrected, or completed. The appeal must be filed in writing before the arbitral tribunal, which must immediately forward it to the competent appellate body and shall only proceed on the grounds that are expressly established in the present Law. Its procedure shall correspond to the court of appeals of the jurisdiction of the place where the award was issued. Notwithstanding, the parties, at their own cost, although it was not provided for in the arbitration agreement, may agree that the appeal shall be processed and decided before a new arbitral tribunal. The appellate arbitral tribunal shall be constituted solely to hear nullity and shall be constituted in the manner established by this Law in its Chapter III, Section I of Title II.

GROUNDS FOR NULLITY. The only grounds for nullity of the award are the following:

• 1)

  Absolute nullity of the arbitration agreement arising from illicit object or causes. Other grounds for absolute or relative nullity may only be invoked when they have been alleged in the arbitral proceedings and have not been cured or validated in the course thereof;

• 2)

  The arbitral tribunal was not constituted in a legally proper manner, provided that this ground has been expressly alleged from the inception of the arbitral proceeding;

• 3)

  Notifications were not made in the manner provided in this Law, unless from the procedural record it can be inferred that the interested party knew or should have known of the ruling;

• 4)

  When evidence timely requested was not decreed without legal foundation or necessary proceedings to present it were not conducted, provided that such omissions have an impact on the decision and the interested party has claimed them in the proper manner and time, except in the case contemplated in Article 62, fifth paragraph of this Law;

• 5)

  The award was issued after the expiration of the term fixed for the arbitral proceedings or its extensions;

• 6)

  The decision was rendered in equity when it should have been rendered in accordance with law, provided that this circumstance appears manifest in the award;

• 7)

  The operative part of the award contains arithmetic errors or contradictory provisions, provided that they have been timely alleged before the arbitral tribunal;

• 8)

  The award fell upon points not subject to the decision of the arbitrators or more was granted than requested; and,

• 9)

  The decision was not rendered on matters subject to arbitration.

ADMINISTRATION OF NULLITY APPEAL. The Court of Appeals or the arbitral tribunal shall summarily reject the nullity appeal, when it appears manifest that its filing is untimely or when the grounds do not correspond to any of those indicated in the preceding article. In the ruling by means of which the court or the arbitral tribunal assumes knowledge of the appeal, if it is found to be proper, it shall order successive service for five (5) days on the appellant to sustain it and on the opposing party to present its argument. The services shall be made in the registry and without need for a new ruling. If the appeal is not properly formalized by the appellant, the court or the arbitral tribunal shall declare it abandoned with costs awarded against the appellant.

CONSEQUENCES OF THE NULLITY APPEAL. Once the transfer has been made and the necessary evidence has been presented at the discretion of the court or arbitral tribunal, the appeal shall be decided, for which the court or tribunal in its case shall have a period not exceeding one (1) month. When any of the grounds stated in numerals 1), 2), 3), 4), 5) and 6) of Article 74 are upheld, the court or arbitral tribunal in its case shall declare the award null and void. In the other cases, the arbitral tribunal shall be ordered to make the corresponding corrections or additions. Against the ruling of the Courts of Appeals or the arbitral tribunal in its case, no appeal shall lie.

PRECAUTIONARY MEASURES IN CASE OF NULLITY APPEAL. Once the nullity appeal has been filed, the interested party may request the appropriate precautionary measures to ensure the full effectiveness thereof. CHAPTER VII OF THE EXECUTION OF THE AWARD AND CESSATION OF FUNCTIONS AND SETTLEMENT OF EXPENSES OF THE TRIBUNAL

EXECUTION OF THE ARBITRAL AWARD. The competent judicial body that would have jurisdiction over the dispute in the absence of arbitration shall have jurisdiction over the execution of arbitral awards.

CASES IN WHICH THE ARBITRAL TRIBUNAL CEASES FUNCTIONS. The arbitral tribunal shall cease its functions:

• 1)

  When the deposit of expenses and fees provided for in this Law is not made in a timely manner;

• 2)

  By the will of the parties;

• 3)

  When the award is final with its additions, corrections or supplements;

• 4)

  By the interpretation of the nullity appeal, except when it concerns grounds 7), 8) or 9) of the preceding Article 74;

• 5)

  By the expiration of the period set for the proceedings or its extension; and,

• 6)

  When there has been complete agreement at the conciliation hearing according to Article 55.

FINAL SETTLEMENT OF EXPENSES. Once the proceedings are concluded, the tribunal shall make a final settlement of expenses, shall deliver to the arbitrators what corresponds to them, shall cover pending expenses and, after a detailed accounting, shall return any balance to the parties if there is one. CHAPTER VIII OF THE ARBITRATION CENTERS

CREATION OF ARBITRATION CENTERS. Chambers of Commerce, Professional Associations, Trade Associations and Higher Education Institutions may establish and organize arbitration centers in accordance with the terms established in this Law. The Center shall form an integral part of the institution and shall not be an independent legal person separate from it. Arbitration centers may also be conciliation centers.

REGULATION OF THE ARBITRATION CENTER. Every arbitration center must have its own Regulation, which shall contain at minimum:

• 1)

  The list of arbitrators, the requirements for inclusion on the list, the validity of the list, the grounds for exclusion from the list as well as the manner of designating arbitrators;

• 2)

  Fee schedule for arbitrators;

• 3)

  Administrative expenses schedule;

• 4)

  Administrative rules applicable to the center;

• 5)

  Organizational chart of the Center, method of designation of its officials and assignment of functions; and,

• 6)

  Regulation of the arbitral procedure.

FACILITIES OF THE ARBITRATION CENTERS. The centers shall have the facilities and installations necessary to properly fulfill their functions. SECOND SECTION CHAPTER IX OF INTERNATIONAL ARBITRATION

APPLICATION OF TREATIES. The provisions of this chapter shall be applied to international arbitration, without prejudice to what is provided in any treaty, convention or multilateral or bilateral pact ratified by the Republic of Honduras.

HIERARCHY OF TREATIES. In case of conflict between treaties, pacts or international conventions and this Law, the former shall prevail.

SCOPE OF APPLICATION. Arbitration is international in the following cases:

• 1)

  When the parties to an arbitration agreement have, at the time of its execution, their domiciles in different states;

• 2)

  If one of the following places is located outside the State in which the parties have their domiciles: a) The place of arbitration, if it has been determined in the arbitration agreement or in accordance with it is different; and, b) The place of performance of a substantial part of the obligations of the legal relationship or the place with which the object of the dispute has the closest connection. For the purposes of this article, if any of the parties has more than one domicile, the domicile shall be the one that has the closest connection with the arbitration agreement; if a party has no domicile, its habitual residence shall be taken into account.

INTERNATIONAL ARBITRATION OF THE STATE. Disputes arising from contracts of the Honduran State and public law entities entered into with nationals or foreigners not domiciled may be submitted to international arbitration within or outside the country.

APPLICABLE RULES ON THE MERITS OF THE DISPUTE. The parties in international arbitration shall be empowered to choose both the substantive and procedural rules in accordance with which the arbitrators shall resolve the dispute.

RECOGNITION AND ENFORCEMENT OF THE AWARD. Arbitral awards pronounced abroad, as well as those deemed as international in accordance with this Law, shall be enforced in Honduras in accordance with the treaties, pacts or conventions that are in force in the Republic.

COMPETENT JUDICIAL BODY BEFORE WHICH RECOGNITION AND ENFORCEMENT OF THE AWARD SHALL BE REQUESTED. Recognition and enforcement of the arbitral award shall be requested before the Supreme Court of Justice.

LEGALIZATION AND TRANSLATION OF THE AWARD. The party requesting recognition and execution shall present the award and the arbitration agreement duly legalized, and translated into Spanish as applicable.

SUPPLEMENTARY PROCEDURE FOR RECOGNITION AND EXECUTION OF THE AWARD. The recognition and execution of a foreign arbitral award shall be carried out in accordance with the provisions of treaties, pacts, or conventions in force in the Republic; if none are in force, the following rules shall apply:

• 1)

  Recognition and execution of a foreign arbitral award may only be denied at the request of an interested party in any of the following cases:

  • a)

    That one of the parties to the arbitration agreement was affected by some incapacity;

  • b)

    That the agreement is not valid by virtue of the law to which the parties submitted it or, if nothing had been indicated in this respect, by virtue of the law of the country in which the award was rendered;

  • c)

    That the party against whom the award is invoked has not been duly notified of the appointment of an arbitrator or of the arbitration proceedings or has been unable, for any other reason, to assert its rights;

  • Ch)

    That the award refers to a dispute not provided for in the arbitration agreement or contains decisions that exceed the terms of the arbitration agreement. However, if the provisions of the award that refer to questions submitted to arbitration can be separated from those that are not, recognition and execution may be granted to the former;

  • d)

    That the composition of the arbitral tribunal or the arbitration procedure have not complied with the agreement entered into between the parties, or in the absence of such agreement, that they have not complied with the law of the country where the arbitration took place; and,

  • e)

    That the award is not yet binding on the parties or has been annulled or suspended by a court whose legislation was applied to render the award.

• 2)

  The Supreme Court of Justice, of its own motion, may deny recognition or execution when it verifies that according to the laws of the Republic, the subject matter of the dispute is not susceptible to arbitration or the award is contrary to international public policy.

JURISDICTIONAL BODY COMPETENT FOR EXECUTION OF THE AWARD. The execution of the award, once recognized in the manner provided by treaties, pacts or conventions or, failing that, by this Law, shall be carried out before the judge who, in accordance with the provisions of the Code of Civil Procedure and the Law on Organization and Powers of the Courts, shall be responsible for the execution of national judgments. TITLE III TRANSITORY PROVISIONS, EFFECTIVE DATE AND REPEAL CHAPTER I TRANSITORY PROVISIONS

PENDING PROCEEDINGS. The arbitral proceedings pending upon the entry into force of this Law shall be governed in accordance with the previous Law. This provision includes the remedies that are in process. The arbitration agreement validly stipulated prior to the effective date of this Law shall be governed, as to its effectiveness, by the provisions of the new law. CHAPTER II REFORMS, REPEAL AND EFFECTIVE DATE

REFORM OF ARTICLE 4, LETTER A) OF THE LAW ON ADMINISTRATIVE CONTENTIOUS JURISDICTION. To reform Article 4, letter a) of the Law on Administrative Contentious Jurisdiction contained in Decree No. 189-87 of November 20, 1987, which shall read as follows:

Administrative contentious jurisdiction shall not extend to:

a) Questions of a civil, commercial, labor, and criminal nature and those others which, although related to acts of public administration, are assigned by law to another jurisdiction or fall under agrarian law or arbitral questions to which the State has submitted itself; and, b) .........

REFORM OF ARTICLE 286 OF THE CODE OF CIVIL PROCEDURE. To reform Article 286 of the Code of Civil Procedure by adding the following as a dilatory exception: 1)....; 2)....; 3)....; 4)....; 5)....; 6)....; and, 7) The submission of the disputed matter to arbitration if so agreed.

REFORM OF ARTICLE 471 OF THE CODE OF CIVIL PROCEDURE. To reform Article 471 of the Code of Civil Procedure, with respect to exception number 10) of the executory judgment which shall read as follows: 1)....; 2)....; 3)....; 4)....; 5)....; 6)....; 7)....; 8)......; 9)......; 10) The submission of the disputed matter to Arbitration; and, 11) ...

REFORM OF ARTICLE 21 OF THE LAW ON REPRESENTATIVES, DISTRIBUTORS AND AGENTS OF NATIONAL AND FOREIGN COMPANIES. To reform Article 21 of the Law on Representatives, Distributors and Agents of National and Foreign Companies, contained in Legislative Decree No. 549 of November 24, 1977, which shall read as follows:

The disputes that arise between the grantor and the grantee shall first be resolved by conciliation; if there is no agreement, or if the agreement is partial, the dispute shall be submitted to arbitration or judicial proceedings. The competent judge to hear the dispute in the event that the judicial route is chosen shall be of the domicile of the grantee.

REPEALS:

• 1)

  To repeal Chapter II, Title XI of Book IV of the Civil Code called OF COMPROMISES, which contains Articles 2019 and 2020;

• 2)

  To repeal Title XX of Book III of the Code of Civil Procedure, which contains the arbitration judgment; Articles 900 numeral 2) and 902 numeral 3), as well as Chapter VIII, Title XXI, Articles 948 through 950 of the Code of Civil Procedure;

• 3)

  To repeal Title IX on judges and arbitrators contained in Articles 116 through 119 of the Law on Organization and Powers of the Courts; and,

• 4)

  To repeal any other provision that opposes it.

This Decree shall enter into force twenty (20) days after its publication in the Official Gazette La Gaceta. Given in the city of Tegucigalpa, Municipality of the Central District, in the Session Hall of the National Congress, on the seventeenth day of the month of October of two thousand. RAFAEL PINEDA PONCE President JOSE ALFONSO HERNÁNDEZ CORDOVA Secretary ROLANDO CARDENAS PAZ Secretary To the Executive Power. Therefore Execute It Tegucigalpa, M.D.C. December 29, 2000 CARLOS ROBERTO FLORES FACUSSE Constitutional President of the Republic The Secretary of State in the Offices of Governance and Justice. ENRIQUE FLORES VALERIANO