During the 1990s, Peru implemented drastic constitutional and legal reforms. One of these legal measures was the approval of the General Arbitration Act in 1996.2 Arbitration proved to be a successful mechanism to solve disputes in Peru as its use became widespread for commercial purposes. The General Arbitration Act remained in effect until 2008 when Legislative Decree 1071 replaced it.

The arbitration law approved by Legislative Decree 1071 continued to replicate the UNCITRAL Model Law, but added very important changes to strengthen the arbitration regime created in 1996. These mostly referred to restricting judicial intervention in arbitrations to specific phases and improving the annulment proceedings. For example, Legislative Decree 1071 forbids courts from intervening in the matters governed by the Legislative Decree except where so provided therein. It also provides that the arbitration tribunal is independent and, therefore, the judiciary shall not interfere with the arbitration or the arbitrators' powers and decisions,3 with the exception of the qualified ex post review of the award through an annulment proceeding.4 Judicial authorities are liable for breaches to these rules.5

Moreover, the 1993 Peruvian Constitution incorporated three crucial provisions for developing a strong arbitration system in Peru. Article 139 acknowledges arbitration as a constitutional dispute resolution mechanism by stating it is an 'independent jurisdiction' alongside the judiciary and the military courts. Article 62 provides that contractual disputes may be solved through arbitration, according to the dispute resolution mechanisms agreed to by contract or mandated by law. Finally, Article 63 provides that Peru may resolve its contractual disputes through national or international arbitration.

The importance of these constitutional provisions was reinforced by two Constitutional Court decisions. In the first decision, the Constitutional Court acknowledged arbitration as an independent constitutional mechanism for dispute resolution.6 The decision established that the power vested to arbitrators originates from Article 139 of the Constitution and not only from the parties' agreement. Hence, no authority or governmental body in Peru can interfere with an ongoing arbitration.7 The second relevant Constitutional Court decision related to arbitration was issued in 2011 in an amparo proceeding started by Sociedad Minera de Responsabilidad Ltda María Julia (known as the María Julia decision).8 The amparo is a constitutional proceeding for the protection of constitutional rights. Before María Julia, the amparo proceeding was available to any party (including a party to the arbitration and a third party) who intended to challenge an arbitral award on constitutional grounds. In practice, the annulment application became the first stage of a two-step judicial challenge of arbitral awards. Parties to the arbitration would often initiate an amparo proceeding upon rejection of their annulment request. As a result, the judicial challenge of an award could take several years. After María Julia, the annulment proceeding has become the only means to challenge awards. Amparo is now allowed only under very limited circumstances, mostly related to the effects of the award on third parties (not parties to the arbitration).

Alongside these reforms, Peru has entered into more than 30 bilateral investment treaties9 and more than 20 free trade agreements10 for the protection of investments. Also, Peru has signed the Trans-Pacific Partnership Agreement (TPP), a free trade agreement negotiated by 12 countries that are members of the Asia-Pacific Economic Cooperation.11 The TPP was signed in 2016; however, the agreement has not yet entered into force.12

Another important measure adopted by the state is that all of its contracts for major infrastructure projects (i.e., licence agreements, concession contracts, BOT, BOOT, public-private partnership contracts) contain arbitration agreements. For example, all licence agreements for investments in the hydrocarbons sector refer disputes to international arbitration administered by ICSID or ICC. In addition, contracts awarded in public bids organised by Proinversion, the agency for the promotion of private investment in Peru, contain arbitration agreements that refer non-technical disputes of significant value to international arbitration administered by ICSID and non-technical disputes of lower value to domestic arbitration administered by the Lima Chamber of Commerce Arbitration Centre.

Moreover, pursuant to the State Procurement Act, all disputes arising from contracts for the sale of goods and services entered into by the state must be resolved through arbitration.


i Developments affecting international arbitration

Legislative Decree 1071 contains specific provisions relevant to international arbitration proceedings. According to its Article 5, arbitration is considered international when: (1) the parties to an arbitration agreement have their domiciles in different states at the time of the conclusion of the agreement; or (2) the seat of the arbitration determined in, or pursuant to, the arbitration agreement is located outside the state in which the parties have their domiciles; or (3) the parties are domiciled in Peru, but a substantial part of the obligations arising from their legal relationship is to be performed, or the place with which the subject matter is most closely connected is, outside Peru.13

Legislative Decree 1071 shows a clear trend towards favouring the enforcement of international awards. The grounds for refusing recognition of international awards regulated in Legislative Decree 1071 are similar to those set forth in the New York Convention.14 Furthermore, these domestic rules would apply only in the absence of an applicable international treaty. Moreover, Article 78 of Legislative Decree 1071 expressly provides for the 'most favourable provision' rule also set forth in the New York Convention.15

Moreover, Legislative Decree 1071 reflects a strong policy in favour of arbitration by providing for the recognition and enforcement of foreign arbitral provisional measures decisions16 that are subject, with some exceptions,17 to the same regime for the recognition and enforcement of foreign arbitral awards.

The procedure for the enforcement of international arbitral awards is expedited. The competent court for the recognition of foreign awards is the appeal commercial or civil court of the award debtor's domicile or where the award debtor's assets are located. Should the court decide for the award recognition, such decision will be final. Only when recognition is refused the parties may file an extraordinary appeal before the Supreme Court.18 According to Articles 77 and 68 of Legislative Decree 1071, once the award is recognised, the interested party may seek its enforcement through an enforcement proceeding before the commercial or civil law court of the arbitration's seat or where the award would have its effects.

Although the practical experience by the national courts on recognition and enforcement of international arbitral awards and provisional measures under Legislative Decree 1071 has been limited; this limited experience has revealed an arbitration-friendly environment from the judiciary towards this matter.

Legislative Decree 1071 also contains a pro-arbitration regime for the annulment of international awards. In fact, Article 63 establishes that international arbitration awards may only be annulled on the following qualified grounds:

  1. the absence of the arbitration agreement or if it is null, void or incapable of being performed;
  2. the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;
  3. the composition of the tribunal or the arbitral procedure was not in accordance with the parties' agreement or, failing such agreement, was not in accordance with the applicable arbitration rules, unless the agreement of these rules is contrary to a mandatory provision of Legislative Decree 1071;
  4. the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration;
  5. the award was rendered beyond the term agreed by the parties or provided in the applicable rules; or
  6. the award is contrary to international public policy.

An annulment request shall be filed before the appeal court of the arbitration's seat.19 Should the award be annulled totally or partially, such decision may be subject to an extraordinary appeal on qualified grounds before the Supreme Court. If the award is upheld by the appeal court; however, this decision shall be final.

According to Legislative Decree 1071, judges cannot review the substance of the matters decided in an arbitration or the reasoning or findings of the arbitration tribunal.20

Notwithstanding the pro-arbitration legislation described above, 2017 also witnessed some backlash from certain groups in Congress that proposed draft legislation that would undermine the power of arbitration institutions to secure the quality of the arbitrators that apply their rules.21 Congress continues to discuss this draft legislation, which would forbid arbitral institutions from being bound to appoint arbitrators from a fixed list of arbitrators or to confirm arbitrators in the absence of the parties' agreement.

The arbitration community has expressed its deep concern regarding proposals and measures such as the ones previously described. It remains to be seen whether the efforts to weaken arbitration institutions will succeed.

ii Developments in Peruvian court practices

Over the past 10 years the Peruvian judiciary has proven to be an ally to the arbitration system. Recent experience has confirmed this. Publicly available information shows that the Commercial Appeal Court of Lima rejected approximately 80 per cent22 of annulment applications decided in 2018.

These decisions reflect the growing respect of the courts for the independence of arbitrators' jurisdiction and for the non-interference rule.

In the same vein, publicly available information shows that the Commercial Appeal Court of Lima upheld approximately 85 per cent of enforcement applications decided in 2018.23

ii Developments in arbitral institutions' rules and practices

In 2017, the ICC Court preliminary statistics showed an increase of Peruvian parties in ICC arbitrations during 2016, which is testimony of a growing confidence in international arbitration by Peruvian stakeholders.24 It is noteworthy that 2016 saw the launch of the ICC office in Peru, which became increasingly active during the 2017–2018 period.

The growing confidence and usage of international arbitration by Peruvian stakeholders has demanded the sophistication of domestic arbitral institutions. As a consequence, 2017 was a year of substantial changes in arbitration practice in Peru, with the entering into force of the new arbitration rules of the Lima Chamber of Commerce Arbitration Centre on 1 January.

As reported elsewhere,25 these new arbitration rules have incorporated the best international practices into domestic arbitrations and international arbitrations seated in Peru.

Although there are no publicly available statistics related to these changes, in our experience the new rules have proven to be effective for the management of international arbitrations in Peru. For example, the new rules for joining additional parties to an arbitration have demonstrated to be a very effective tool for resolving complex disputes, mainly in construction arbitrations. In fact, these new rules contain specific provisions regarding the timing for the joinder of an additional party and certain requisites to allow such joinder. As a consequence, the decisions regarding the joinder of additional parties have gained predictability.

The above is also true for the new rules regarding consolidation of arbitrations. Before these changes, consolidation was only possible if all parties consented. Now, consolidation is always available before the tribunal is formed when all claims have been initiated under the same arbitration clause or when filed under different arbitration agreements provided that the following conditions are met: the agreements are compatible, the agreements refer to the same legal relationship and the parties in the arbitrations are the same. In all cases, should the parties in the arbitrations be different, they must have consented to be governed by all the arbitration agreements. The decision to consolidate is an administrative decision by the Superior Council of the Centre. After the tribunal is constituted, consolidation is only possible if the parties file a joint consolidation request and the arbitrations have the same tribunals.

The new rules provide for prima facie decisions to be made by the Superior Council as to the existence of an arbitration agreement. Once the arbitration request and response are filed, if there are any objections to the existence of an arbitration agreement by the parties, the Superior Council decides if the arbitration must continue. This is only an administrative decision. Later, the objections must be finally decided by the tribunal with no regard to the decision issued previously by the Superior Council. However, if the Superior Council considers there is no arbitration agreement, the arbitration is terminated. One of the interesting matters that remain to be seen is the treatment that the Superior Council will give to the concept of 'existence of the arbitration agreement' and the type of objections that will merit a prima facie decision. The rules refer expressly to objections regarding multiparty and multi-contract arbitrations. The Superior Council will decide whether there is an arbitration agreement governing all parties (including additional parties). In the case of multiple arbitration agreements, the Superior Council will evaluate the compatibility of the various arbitration agreements involved and whether consent exists taking into account if the agreements refer to the same legal relationship. These new rules establishing the Superior Council's role in issuing decisions on the existence and scope of the arbitration agreement are positive additions, given that before the competence allocation between the Superior Council and the arbitral tribunal was, in some cases, not clear to the parties.

The new rules provide for confirmation of party-appointed arbitrators that are not included in the list of arbitrators approved by the Centre. The rules state that to confirm arbitrators, the Superior Council will take into account the terms of the statement of independence and impartiality, their specialisation and experience in the matters in dispute, the qualifications agreed to by the parties and any other circumstances deemed relevant. In international arbitrations, the nationality of an arbitrator is relevant, as well as knowledge of the language of the arbitration. When deciding on the confirmation of arbitrators, the Superior Council is not required to express its motives and is not bound to previous decisions on confirmation. In our experience, this rule has added to the quality of the arbitrators acting in the Centre's arbitrations.

Rules for appointing tribunals in cases of multiparty arbitrations have been included. When the arbitration agreement does not regulate the method to appoint arbitrators, the Centre will require claimants to jointly appoint their arbitrator and respondents to jointly appoint theirs. Additional parties joined to the arbitration must appoint their arbitrator together with the claimants or respondents. In cases where any party fails to appoint its arbitrator, the Centre will appoint all arbitrators and decide who acts as chair. This rule modified the previous rule that provided that, in such cases, only the defaulting party arbitrator will be designated by the Centre.

The new rules allow for emergency arbitrator decisions before the constitution of the tribunal. The emergency arbitrator procedure is only available for parties who entered into an arbitration agreement as of 1 January 2017. Parties can opt out of the procedure in the arbitration agreement. When the state is a party to the arbitration, the emergency arbitrator procedure is only available if the parties expressly opt in to the rules of emergency arbitrator. The emergency measure request must be notified to the other parties to the arbitration. The Superior Council will nominate an emergency arbitrator from the Centre's list of arbitrators. Challenges to the emergency arbitrator may be submitted within three days after the appointment or having knowledge of the facts on which the challenge is based. The emergency arbitrator must render its decision within 15 days of receiving the request. The emergency arbitrator is free to determine the procedure to be followed as long as all parties are given a reasonable opportunity to present their position. However, to the date, the Centre has not enacted the table of fees for the emergency arbitrator. Hence, this mechanism is not yet available.

In cases where the amount in dispute is under the threshold to be determined by the Centre's table of fees, the rules of expedited procedure will apply. The Centre may decide not to apply these rules in light of the complexity of a case. The expedited procedure will be conducted by a sole arbitrator. If the arbitration clause provides for a three-member tribunal, the Centre will invite the parties to modify it to a sole arbitrator. In the expedited procedure, the parties will present the following memorials: claim, response and counterclaim, and a response to the counterclaim. All evidence must be accompanied by the corresponding memorials. One hearing may be organised to hear witness and expert testimony. The award must be issued by the tribunal within three months from being constituted. However, to date, the Centre has not enacted the tables of fees for this procedure, and so this mechanism is not yet available.

iii Investor–state disputes

2018 brought the third ICSID decision against Peru. In a decision rendered on 30 November 2017 in Bear Creek Mining Corporation v. Republic of Peru, the Arbitral Tribunal upheld the investor's indirect expropriation claim ordering Peru to pay US$18,237,592 in damages with compound interest at a rate of 5 per cent, plus US$5,986,183.29 in costs, plus compound interest at a rate of 5 per cent. This amount substantially equals the amount Peru was ordered to pay in Duke Energy International Peru Investments No. 1 Ltd v. Republic of Peru, the largest award issued against this state in investment arbitrations.

2018 commenced with a report of a potential new investment claim related to the construction of an international airport in the city of Cusco.26 Also, 2017 witnessed a report of potential new investments claims against Peru related to the Lava Jato case. The trigger notice submitted by Odebrecht's subsidiaries pursuant to the Luxemburg–Peru BIT, related to the Urgent Decree 003 issued by Peru as a consequence of corruption allegations involving Odebrecht's projects in Peru.27

Up until 18 May 2018, 18 cases were registered at ICSID by investors against Peru or one of its state entities. Of these, 10 cases are treaty-based and eight are contractual disputes that relate to the interpretation of concession, licence or legal stability agreements.

Before Bear Creek only two cases, initiated by Duke Energy International Peru Investments No. 1 Ltd and Mr Tza Yap Shum, were concluded with an award that ordered Peru to pay a sum of money. In the Duke case, the tribunal ordered the payment of US$18.44 million because the tax authority had breached the tax stabilisation guarantee and the implied duty of good faith. In the second case, the tribunal found that there had been expropriation by the tax authority and ordered the payment of US$786,306. In both cases, Peru filed for annulment of the award, but annulment was rejected.

Cases initiated by Isolux Corsán Concesiones SA and Compagnie Minière Internationale Or SA were concluded by settlement before an award was issued. A case initiated by APM Terminals was concluded at the request of the claimants with no objections by Peru. Cases initiated by Luchetti, Renée Rose Levy and the Renco Group were concluded because the tribunal considered that it lacked jurisdiction.

Five other cases initiated by Convial, Aguaitía, Caraveli Cotaruse, Pluspetrol and Rene Levy were dismissed entirely. In three of these, there was an award of costs in favour of Peru.

A new ICSID arbitration against Peru was registered in May 2018. This arbitration was initiated by Autopista del Norte SAC under a concession contract for the construction and operation of a highway system. Two new ICSID cases against Peru were registered in 2017: the first was initiated by Lidercon SL, a Spanish national, under the Spain–Peru BIT; and the second was initiated by Metro de Lima Línea 2 SA under the concession contract for the construction of a subway metro line in Lima. In 2016, various companies of the Gramercy Funds group sent a notice of intent to commence arbitration against Peru under the Peru–US free trade promotion agreement and the UNCITRAL Rules with regard to an investment made in agrarian land reform bonds. Peru responded by challenging the admissibility of the claims and jurisdiction over the claims under the Peru–US free trade promotion agreement.

In 2016, the President of Peru approved the settlement agreement recommended by the government's special commission for investment disputes regarding a dispute over the application of penalties to Abengoa Transmisión Sur SA under the concession contract to build a transmission line in Peru.

To date, only four ICSID cases are currently pending; an award is expected this year in one of them (DP World v. Republic of Peru). These pending cases relate to investments made in Lima's ports, a highway, facilities for technical supervision of transportation vehicles and a subway line.

It is noteworthy that in 2006, Congress enacted Law 28933 creating the State Coordination and Response System for International Disputes. The System aims to establish a means of efficient coordination between state entities and foreign investors when an international investment dispute emerges. Another goal is to centralise information regarding international investment and the emergence of disputes. The System is integrated by a coordinator, a special commission and state entities. The coordinator of the System is the Ministry of the Economy and Finance. The special commission, which represents the government in international investment disputes, is composed of the following permanent members:

  1. a representative from the Ministry of the Economy and Finance;
  2. a representative from the Ministry of Foreign Affairs;
  3. a representative from the Ministry of Justice; and
  4. a representative from the Agency for Promotion of Private Investment (Proinversión).

The special commission may also include non-permanent members, such as a representative of the Ministry of Foreign Commerce and Tourism and a representative of the relevant state entity. Once the existence of a dispute is notified, this special commission is in charge of assessing the possibilities of negotiation and participating in the negotiation phase with the foreign investor. It also has the capacity to instruct the relevant state entities to provide information, to decide whether to retain outside legal counsel, to decide upon the designation of arbitrators and to decide upon cost allocation.

The new System enacted by Law 28933 also establishes mandatory criteria to be taken into account by state entities when reaching investment agreements with foreign investors. Investment agreements shall:

  1. include a clause providing for a negotiation period of at least six months as a mandatory prerequisite to access international arbitration;
  2. include a neutral system of dispute resolution (typically ICSID or UNCITRAL arbitration);
  3. establish the responsibility of the parties regarding costs derived from arbitration or conciliation; and
  4. establish the obligation of the foreign investor to notify the emergence of a dispute to the coordinator, notwithstanding its further obligations to notify its counterparty of the initiation of the controversy to begin the phase of direct negotiation.

Thus, international investment agreements with state entities will generally require a foreign investor to notify the state of the existence of a dispute prior to commencing arbitration. This requirement is also contained in many investment treaties. An important question that arises among investors is what the exact content of this notice should be. Although Law 28933 offers no guidance, as previously reported, the notification of the dispute may include the following:28

  1. background information;
  2. relevant facts;
  3. a clear identification of the main points of the controversy;
  4. the investor's claim, clearly established; and
  5. proposals for alternative dispute resolution.

This new System created by Law 28933 shows Peru's strong commitment to attracting and protecting foreign investment. In addition, it has demonstrated to be a highly efficient mechanism to settle investment controversies without having to resort to arbitration.


Arbitration has played an important role in the economic development of Peru, and it will continue to hold a prominent position as a dispute resolution mechanism in future. The role of Peru as a potential venue for international arbitration proceedings depends on how Peru's practice under Legislative Decree 1071 continues to evolve. For now, the tendency of the Peruvian arbitral institutions regarding the case management of both domestic and international arbitration, together with the friendly and respectful approach of the judiciary towards arbitration and the Constitutional Court's precedents regarding arbitration, seem to pave the way for increasing the importance of international arbitration in Peru and for Peru to become an auspicious place for international arbitration.


1 José Daniel Amado and Cristina Ferraro are partners, and Martín Chocano is a senior associate at Miranda & Amado, Abogados.

2 Law 26572.

3 See Article 3.2 of the Legislative Decree 1071.

4 See Article 3.4 of the Legislative Decree 1071.

5 See Id.

6 Decision of the Constitutional Court No. 6167-2005-PHC/TC, Paragraph 14.

7 Ibid., Paragraphs 11 and 12.

8 Decision of the Constitutional Court No. 00142-2011-PA/TC.

9 Information provided by Investment Policy Hub. UNCTAD, available at investmentpolicyhub.unctad.org (last visited on 27 April 2018).

10 Information provided by the Ministry of Foreign Trade, available at www.acuerdoscomerciales.gob.pe (last visited on 27 April 2018).

11 Canada, the United States of America, Mexico, Chile, Japan, Singapore, Malaysia, Brunei, Vietnam, Australia, New Zealand and Peru.

12 See information available at www.acuerdoscomerciales.gob.pe.

13 Article 5 of the Legislative Decree 1071.

14 Article 75.2 of the Legislative Decree 1071.

15 New York Convention, Article VII.1.

16 Article 48.4 of the Legislative Decree 1071.

17 Article 48.4(a) – Article 48.4(e) of Legislative Decree 1071.

18 Article 76.4 of the Legislative Decree 1071.

19 Article 8.4 of the Legislative Decree 1071.

20 Article 62.2 of the Legislative Decree 1071.

21 Bill 01088/2016-CR submitted on 15 March 2017.

22 This percentage reflects only those decisions that have been made available to the authors and not the totality of the court's decision in 2018.

23 This percentage reflects only those decisions that have been made available to the authors and not the totality of the court's decision in 2018.

25 Amado, Jose Daniel and Olavarria, Lucia, The International Arbitration Review, Chapter 28, Seventh Edition, 338, 342–344.

28 Amado and Olavarría, see footnote 26, p. 346.