Court Upholds Party Autonomy as Arbitration Principle

In one of the first cases brought under the new Law on Mediation, Conciliation and Arbitration, a court of appeals of the San Salvador district has vacated an award on the grounds that the arbitral tribunal was not legally constituted. The decision deals with interesting issues concerning the developing doctrine of Salvadoran arbitration law and the interplay between the law and the freedom of the parties.

An arbitral tribunal issued an award against a government agency which was the defendant in a contractual dispute. The arbitral clause provided for a three-member tribunal: each party was to appoint one arbitrator, the third arbitrator being appointed by the first two arbitrators. It stipulated that if one party failed to appoint its arbitrator within the specified term, the arbitrator would be appointed by the chief justice of the Supreme Court. One of the requirements was that the arbitrators should have no interest in the matter.