Litigation 2022 Comparisons

Last Updated December 02, 2021

Contributed By ROBALINO

Law and Practice

Authors



ROBALINO is one of the most renowned law firms in Ecuador, with more than 80 lawyers, 20 of them being part of the litigation and arbitration team. Robalino Abogados is regularly involved in the biggest and most complex cases in Ecuador, as well as international arbitrations involving Ecuador, serving as counsel for major multinational companies. Recently, Robalino Abogados won an investment arbitration against Ecuador, where the award granted the client, an oil company, a USD400 million compensation. Robalino’s litigation team works closely with other departments within the firm in order to handle vast areas of litigation, including constitutional, labour, administrative, tax, public contracts, corporative, energy and mining issues. Robalino Abogados has offices in Quito, Guayaquil, Cuenca, Manta and Machala.

Ecuador’s legal system is based on civil law. It follows an adversarial model, which means that parties must promote the process and provide all probatory elements to the court in order for the court to render its ruling. Therefore, the court’s participation in the process is limited to managing the process and issuing decisions. 

Although based on civil law, the Ecuadorian legal system also takes case law into account. The precedents of the Ecuadorian National Court (“National Court”) are binding after there have been three judgments following the same criteria, and the entire court approves the precedent (Article 185 of the Constitution). The Constitutional Court’s decisions may also be binding. The rulings of lower courts may have persuasive authority. 

The legal process is mainly oral, in the sense that all evidence is produced in hearings and most decisions are made orally within such hearings. The decision is later confirmed in writing. However, hearings are preceded by written submissions, mainly a statement of claim and a response to the statement of claim. Additionally, all communications with the court regarding any non-substantive matters must be writing. 

The Ecuadorian Judicial Branch (“Judicial Branch”) organises the court system into (i) local courts, (ii) provincial courts, and (iii) the National Court.  

  • The first instance is held in local courts, mainly divided by cities (cantones). 
  • Appeal decisions are taken by provincial courts, located in the capital of each province. Some provinces do not have provincial courts due to their small population, so the provincial courts with the closest proximity have jurisdiction over causes of action in these smaller jurisdictions.  
  • The National Court is the supreme court of the Judicial Branch, located in Quito. The National Court can only rule over cassation appeals, which only corrects any erroneous misapplication or interpretation of the law.  

Courts are also organised by subject: civil, labour, administrative, criminal, family, etc. The quantum of the matter does not affect a court’s jurisdiction.  

There is also the Constitutional Court, but it’s not part of the Judicial Branch. The Constitutional Court rules over constitutional matters such as the unconstitutionality of a legal provision or when constitutional rights are violated within a judicial procedure. 

According to Article 168 of the Constitution, every phase of all proceedings is public, including documents and hearings. According to Article 13 of the Judicial Branch Code (COFJ), there may be exceptions to this rule. These exceptions must be expressly stated in a law. For example, Article 562 of the Criminal Code states that hearings regarding sexual crimes, violence against women and family members are meant to remain private. Matters concerning minors are also confidential. 

As a general rule, counsel is always needed in a judicial procedure. According to Article 142 (12) of the General Procedural Code (COGEP), all lawsuits need the signature of a registered lawyer. Also, Article 327 of the COFJ provides that all judicial procedures require the participation of counsel. 

There are a few exceptions to this. For example, in monitory procedures (expedited procedure for small amount claims) when the amount of the claim is less than three time the minimum wage (ie, USD1,200 in 2021), no counsel is required. Also, constitutional proceedings do not require a lawyer. 

Foreign lawyers cannot conduct cases in local courts; however, this is not the case in arbitration.  

Third-party funding is not regulated in Ecuador, but it is not prohibited. Also, third-party funding is not a common practice in the country.

See 2.1 Third-Party Litigation Funding

Given that it is not regulated, third-party funding could be available for both plaintiff and defendant.

See 2.1 Third-Party Litigation Funding.

See 2.1 Third-Party Litigation Funding

Contingency fees are allowed by law. As a matter of fact, the Lawyers’ Federation Act, under Article 42, provides a contingency fee if there is a disagreement between client and lawyer.

See 2.1 Third-Party Litigation Funding.

There are no pre-action rules in Ecuador. 

In Ecuador, the statutes of limitation depend on the type of claim to be initiated. The general rule regarding statutes of limitation (provided in Article 2415 of the Civil Code) is a ten-year period for ordinary claims and a five-year period for executive claims.  

There are also short-term statutes of limitation in specific cases, including the following:

  • one-year term applicable to fraudulent conveyance (acción pauliana); 
  • two-year term applicable to informal businesses and small quantum claims; 
  • three-year term for claims to recover professional fees; and
  • four-year term for possessory claims.  

A defendant can be subject to a suit in Ecuador if the conditions stated in Articles 9 and 10 of COGEP are met. Article 9 provides the general rule that a local court has jurisdiction over the defendant if the defendant’s domicile is located in the city where such court has jurisdiction. There are also other rules when a defendant might be subject to a claim in Ecuador without having its domicile there. For example, a defendant may be suited in Ecuador if: 

  • the place where payment is to be made or the respective obligation is to be performed is in Ecuador; 
  • the place where the contract was entered into was Ecuador; 
  • the place where the defendant has expressly agreed to be bound by the contract is Ecuador; 
  • the place where the real estate that is the subject matter of the claim is located in Ecuador; and 
  • the place where the damages were caused is Ecuador.

All documents and requirements for the initial complaint are listed in Article 142 of the COGEP. In general terms, the lawsuit must contain: 

  • the designation of the judge before whom it is proposed; 
  • plaintiff’s information (full names, ID number, address, etc); 
  • the defendant’s full names and the designation of the place where the defendant is to be served; 
  • a statement of the facts upon which the claim is based; 
  • the legal grounds that justify the claim; 
  • a statement of the evidence to be produced within trial; 
  • the clear and precise claim that is demanded; 
  • the amount of the claim; and 
  • the specification of the type of procedure to be followed. 

Depending on the type of claim there might be additional requirements.  

According to Article 148 of COGEP, the plaintiff may amend their lawsuit before the defendant files their answer to the claim. 

Service of process is performed exclusively by the Judicial Branch through its employees; however, the plaintiff must provide all documents and information regarding the residence of the defendant. 

The services of process are performed by delivering a copy of the claim at the defendant’s domicile. An online service of process has recently been implemented but it is only applicable if the defendant has expressly agreed to be served through this mechanism. It might only be applicable in cases where the defendant is a company; in such case, it can be served through the email address registered in the Superintendency of Companies, and only after the physical service has failed. 

A party can be sued outside Ecuador. In such case, the plaintiff must request the court to issue a rogatory letter to serve the defendant abroad. This procedure involves filing a request with the National Court and the Ministry of Foreign Affairs.  

According to Article 157 of COGEP, if the defendant fails to respond, the court shall deem it as a refusal to the claim. This means that the defendant loses their opportunity to present a defence and to produce evidence against the plaintiff’s claims, but the plaintiff still has the burden to prove their case. In this instance, the defendant can present and argue their case in the hearing.  

Ecuadorian legislation does not provide for institutions like class actions. Nevertheless, according to Article 30 of COGEP, communities, nationalities and other collective groups are allowed to bring a claim for the rights of such communities.  

Access to justice is free, and this is a right established in Articles 75 and 168 of the Constitution. Also, Article 191 establishes the right to a free lawyer if the social and economic conditions of the parties so warrant. 

Nonetheless, there are other costs that parties must endure in a process, like professional fees of counsel and experts, serving publication costs, payment for copies, mobilisation, audio and video recordings, certifications or other documents, etc. There are no requirements to provide estimates for these costs.

It is possible to make an interim application before the trial. According to Article 120 of COGEP, prior to a judicial process, the plaintiff may apply for an interim motion in order to safeguard the evidence or to determine the capacity of third persons that are to be the subjects of a future trial.

The plaintiff cannot apply for early judgment. 

The defendant can argue on preliminary grounds for dismissal, which is intended to strike out the plaintiff’s case before the trial hearing. The main preliminary grounds for dismissal are the lack of the court’s jurisdiction, lack of capacity, lis pendens, existence of an arbitration agreement, that the statutes of limitation have lapsed, among others.  

The following are common dispositive motions before trial. 

  • Lawsuit dismissal motion: this is a dispositive motion taken by the court when the lawsuit or response does not comply with the requirements in Article 142 of COGEP (see 3.4 Initial Complaint). 
  • Abandonment motion: this is a dispositive motion taken by the court when the plaintiff does not attend a hearing, or when plaintiff ceases to continue with the proceedings for a period of six months. 
  • Preliminary grounds for dismissal decision: this dispositive motion relates to the court’s ruling over the preliminary grounds for dismissal. 
  • Annulment motion: this dispositive motion is taken by the court when there are grounds for the annulment of the procedure. 

In accordance with Article 46 of the COGEP, third parties are allowed to join a process. There are two types of third parties: 

  • when the third-party claims to be declared holder of the right discussed in the process; and  
  • when the third party has a substantial relation with one of the parties, which may be affected in some way due to the judicial procedure where the third party is not involved. 

In all cases, third parties must prove their interest in order to participate in the process.  

There are no securities for the defendant’s costs.

Interim applications are free. However, the losing party can be condemned to pay the costs incurred by the court and the other party.

Unless the law provides a specific term, a ruling on any application/motion must be made within a three-day term. In practice, however, it is unusual that this term is met.  

There is no possibility to request that an application be dealt with on an urgent basis.  

Discovery is limited to requesting the exhibition of specific documents that are in the possession of the other party or third parties. 

It is possible to obtain evidence from third parties by making a request to the court in the initial complaint or answer to the claim. For such purpose, the party must prove that it was impossible to obtain such documents without the court’s assistance. 

There are no specific rules regarding discovery. Generally, the court will order the discovery of specific documents as long as they are relevant to the subject in dispute.

There is no applicable information in this jurisdiction.

The Ecuadorian law recognises legal privilege, although it is not regulated thoroughly. It mainly recognises attorney-client privilege and work product protection within judicial procedures, but not in other areas.  

There is no applicable information in this jurisdiction.

As stated in 4.1 Interim Applications/Motions, injunctive relief may be awarded if two requirements are met: 

  • evidence of the existence of a credit in favour of the plaintiff; and 
  • evidence that the defendant’s assets are lower than the credit or that the thing/object of the future process is in jeopardy. 

Ecuadorian legislation establishes three types of injunctive relief: 

  • seizure is the transfer of the real estate in the hands of a depositary, who after the trial must transfer the estate to the winner of the bid; 
  • prohibition on disposal is the prohibition of the debtor to sell or mortgage the thing; and 
  • withholding is the prohibition of the debtor of withdrawing money from a bank account.  

In the executive procedure, the plaintiff may apply for injunctive relief over debtors' assets (Article 351 of COGEP). 

There is no regulation that allows a judge to prevent proceedings in another jurisdiction. 

According to Article 127 of COGEP, courts must have a hearing to rule over an application for injunctive relief up to two days after it is filed. This term is not usually met. In practice, it can take approximately one or two months to obtain injunctive relief. 

In executive processes the injunctive relief could take up to two weeks. 

The injunctive relief is always obtained ex parte. Nonetheless, if the defendant appears at the hearing, the court shall allow their participation.  

The applicant may be liable for the damages caused by the injunctive relief. If the injunctive relief causes damages and the defendant proves that such relief had no grounds, the applicant may be liable for damages. 

In principle, being an international law subject, this type of injunctive relief will be subject to international treaties on the subject. For example, Ecuador is a party to the Inter-American Convention on Execution of Preventive Measures. 

The injunctive relief has as its purpose to ensure the performance of the debtor’s/defendant’s obligation. For that reason, injunctive relief against third parties should not proceed. 

According to Article 282 of the Ecuadorian Criminal Code, it is a felony not to obey an authority’s order. This felony is sanctioned by a prison term of one to three years. 

The trial hearing begins with opening statements by the parties. Later, the parties produce their evidence, which includes oral examination of witnesses and experts (if applicable). After the evidence is showcased, the parties make their closing arguments.  

Hearings tend to be one to three hours long. The court can suspend the hearing at any time and can set the date when the hearing will resume. The court conducts the hearing and may limit time and interventions (even though this is contrary to the right of defence provided for in the Constitution). The court shall conduct the hearing in accordance with the principle of equity. 

Ecuadorian law provides for the possibility of having a management hearing, but they are not usually used. In order to have a management hearing one of the parties must request it, and the court must notify all of the parties of the date and time when the hearing will be held. 

Jury trials are not available in any circumstances.

According to Article 160 of COGEP, all evidence shall meet the following requirements. 

  • Utility – the possibility of the evidence being enough to prove the facts stated by the parties or the possibility of convincing the court. 
  • Relevance – the capacity of the evidence to prove the facts stated by the parties. 
  • Pertinence – the evidence must be related to the object of the dispute. 

Besides this, evidence must be legal in that it must have been obtained by legitimate means. 

In accordance with Article 221 of COGEP, experts are allowed to participate in the process. Both parties and the court may introduce expert reports with the claim or the response to the claim, and shall be later examined during trial. Article 226 of COGEP also allows the court to request an expert if the parties’ expert reports are contradictory. 

As mentioned in 1.3 Court Filings and Proceedings, hearings are public, except in some specific cases determined by law. No transcripts of the hearing are drafted; the court’s clerk drafts a short summary minute with the main issues of the hearing, which is also public. The clerk also records the hearing in audio. The recording is only available to the parties, in accordance with Article 83 of COGEP. 

As mentioned at 7.2 Case Management Hearings, judges conduct every aspect of a hearing and are able to stop or limit the parties’ interventions. According to Article 93 of COGEP, all decisions or rulings shall be made orally during the hearings. In some cases, the court may suspend the hearing for up to ten days in order to reach a decision. The parties are later notified of the ruling in writing.  

According to law, proceedings shouldn’t take more than nine months in total, but this does not occur in practice. For instance, commercial disputes usually take up to one year and a half to three years, from filing the lawsuit until the court’s ruling. This timeframe depends to a large extent on the service of process. The service of process can take anywhere between one and six months. If any party files an appeal, the process can be extended by an additional year.

Court approval is necessary if the parties want to give the settlement in the process the same effect as a judicial decision. If the parties agree to an extrajudicial settlement (without court approval), it would only be considered an executive title (título ejecutivo), which requires a judicial procedure before its enforcement.  

Settlements with state entities and state-owned entities require the approval of the Attorney General of Ecuador.  

If the settlement is made within a judicial procedure, it will be public, given the fact that the settlement is considered a part of the judgement, and judgments are public. If the settlement is made outside the judicial procedure, it may remain confidential (if the parties so agree).  

Article 363 of COGEP recognises two types of settlements, both considered judicial rulings; these are: (i) the settlement with court approval and, (ii) the settlement when no judicial procedure has begun. Both have the same effects and are enforced in the same way, through an enforcement or execution procedure (Article 362 of COGEP).  

Settlement agreements may be set aside based on grounds of an annulment, which are the same grounds for annulment for any kind of contract: capacity, agreement without coercion, licit subject matter and licit cause.  

A judge has the authority to order awards that can oblige a party to do things, not to do things, or to pay obligations. 

  • In “to do” obligations, judges can order a third party to execute the ruling or, do it themselves as signing deeds. 
  • In “not to do” obligations, judges have coercive faculties through police agents. 
  • Paying obligations are enforceable through liens, embargoes, seizures. All of these procedures require bid processes for any asset involved.  

A judge can also render declarative decisions, with no remedy related to it.

Ecuadorian legislation does not provide for punitive damages. The main rule is that damages must be compensatory, ergo, the maximum sentence is the amount of the proven damages.

A successful party may collect interest accruing before and after the judgment. According to Article 371 of COGEP, during the enforcement phase, the court shall appoint an expert to determine the accrued interests. The interests shall be calculated from the moment that the obligation was enforceable until the expert’s report date. As per Article 64 of COGEP, if there is no specific date to perform the obligation, the interest accrues from the moment the defendant was served.  

See 9.1 Awards Available to the Successful Litigant

If there are liquid assets, like bank accounts, Article 396 of COGEP provides for the direct seizure. If there are no liquid assets, like real estate, Article 398 of COGEP provides for the foreclosure of the assets and their sale in a public auction. 

The process to enforce a foreign judgment is composed of two phases. The first phase is called “homologation”. This procedure must be initiated before the provincial court where the defendant is domiciled. Here, the court shall verify compliance with the following five requirements:  

  • the judgment complies with all external formalities to be considered authentic in the state of origin; 
  • the judgment is final in accordance with the laws of the country where it was issued; 
  • the judgment is duly translated into Spanish; 
  • the existence of procedural documents and certifications that the defendant was legally served and that the right of defence was ensured; and  
  • the homologation request must indicate the place of residence of the defendant where the service of process must be performed. 

The second phase is the enforcement of the foreign judgment in the enforcement procedure. Article 363 (5) of COGEP grants the quality of enforcement title to foreign judgments once they are homologated. This procedure is the same as the enforcement of any local judgment. 

In principle, there is only one level of appeal, that being before the provincial court. If parties are not satisfied with the provincial court’s ruling, they can file a cassation appeal before the National Court. Nonetheless, this is not technically an “appeal”. Cassation only proceeds when: 

  • there has been a misapplication, non-application or erroneous interpretation of procedural rules; 
  • the judgment does not contain the requirements demanded by law or if contradictory or incompatible decisions are adopted, as well as when they do not comply with the requirement of motivation; 
  • the judgment has resolved what is not the subject matter of the case or has been granted beyond what was demanded, or omits to resolve any point of the dispute; 
  • there has been a misapplication, non-application or erroneous interpretation of the legal provisions applicable to the evaluation of the evidence; and 
  • there has been a misapplication, non-application or misinterpretation of substantive law rules, including mandatory case law precedents. 

After the cassation is resolved by the National Court, the losing party can only file an extraordinary protection action, which is a separate procedure before the Constitutional Court for violation of constitutional rights during the judicial process. 

Judgments and procedural orders are appealable if expressly allowed by law, as stated in Article 256 of COGEP. The appeal is resolved by the provincial courts.  

The appellant can appeal verbally once the court has rendered its judgment, or after ten days when the written decision is notified. The written appeal must state the arguments on which it is based; otherwise, the court shall understand the appeal as not being filed. 

The appeal can review any issue dealt with at first instance (factual or legal), so long as the appealing party specifies such issue as part of the appeal. The appeal court does not make a full review of the case, but only of the specific issues brought by the appealing party. 

On appeal, there is always a hearing. The appellant cannot present new facts beyond what was stated in first instance. According to Article 258 of COGEP, the appellant may present new evidence as long as this evidence was not available at first instance.  

The appeal court cannot impose any condition on granting an appeal.

The appeal court may grant or reject the appeal. If the appeal is granted, the court may totally or partially amend the first instance judgment. If the court rejects it, the first instance judgment is ratified.  

As a general rule, costs of litigation are charged to the party who has litigated abusively or in bad faith.  

Furthermore, litigation costs are generated when one of the following circumstances stated in Article 287 of COGEP is met: 

  • when the party does not appear at a hearing that the same party requested; 
  • when the plaintiff withdraws its lawsuit after the defendant is notified; 
  • when the appeal is declared void or has been rejected and declared to have been filed in bad faith, in abusive exercise of its right, or with procedural disloyalty, subject to the penalties provided by law; and 
  • when the debtor does not appear at the hearing and has not delivered consignment procedure.  

Ecuadorian legislation establishes the Rules for Litigation Costs. When the payment of costs in favour of the other party is ordered, costs will take into account all judicial expenses incurred during the prosecution of the process, including counsel’s fees, expenses, mobilisation for external proceedings, audio and video recordings, certifications or other documents, except those that are obtained free of charge. All items must be justified with invoices. 

Article 4 of the Rules for Litigation Costs contains the following criteria to quantify the litigation costs:  

  • type of proceeding; 
  • quantum of the process; 
  • instance in which the sentence in costs is declared; 
  • the use of dilatory tactics; 
  • actions that have caused procedural nullities; 
  • economic condition of the litigant ordered to pay costs; and 
  • whether the party ordered to pay costs belongs to a priority attention group. 

It is not very often that courts condemn a party to pay litigation costs, and when they do, the value is often minimal.  

There is no interest charged on costs. 

ADR is widely used in Ecuador. Arbitration and mediation are used the most. Dispute boards are still uncommon.

Ecuadorian legislation promotes ADR. The Arbitration and Mediation Law (LAM) was enacted in 1997. Recently, in August 2021, the Regulation to LAM was enacted. The Rules of Arbitration have a very pro-ADR approach.  

Ecuador belongs to several international conventions that deal with ADR and/or enforcement of foreign awards.  

Ecuador has a number of very respected arbitration institutions, like the Chamber of Commerce of Quito (CCQ), or the Ecuadorian-American Chamber (AMCHAM), that handle hundreds of arbitration and mediation procedures every year. There are other ADR institutions in the country. Also, Ecuadorian legislation allows for international arbitration in certain circumstances.  

The conduct of arbitrations is mainly regulated by LAM. LAM provides a simple description of the arbitration phases: submission of the statement of claim, response, mediation hearing, constitution of the tribunal, hearings and award. Also, the Regulation to LAM contains further specific provisions for the arbitral procedure. Finally, each arbitration institution has their own rules to conduct the arbitration. However, the main rule regarding the conduct of arbitration is that the parties are free to organise the arbitration proceeding in such a way that it best suits their interests. 

Arbitral awards (local or foreign) have the same effect as judicial decisions. Hence, they do not need a recognition procedure. Their enforcement follows the same rules as the enforcement of judicial decisions.  

There are some subjects that are not arbitrable. The general rule is that the subject must be disposable (transigible); that means, the right discussed in arbitration can be settled, waived or negotiated. Usually, all rights that are only economic in nature are disposable, like contract obligations. To the contrary, matters like family, taxes, labour or constitutional rights are not subject to arbitration, since those are deemed to be public policy. 

Parties can only challenge an arbitral award if one of the five grounds of Article 31 of LAM is met, namely: 

  • the service of process during the arbitration was not performed correctly, and it directly affected the defendant’s right of defence; 
  • a party has not been notified of the orders of the tribunal, and it directly affected the defendant’s right of defence;  
  • when the tribunal did not convoke or did not produce certain evidence, although there were facts that required such evidence to be proved; 
  • the award refers to matters not submitted to the arbitration clause or the ruling of the awards goes beyond what was claimed; or
  • when the procedures provided by LAM or by the parties for the appointment of the tribunal were violated. 

Foreign and domestic awards follow the same enforcement procedure as the one for a judicial judgment.

There are no relevant proposals for dispute resolution reforms. Nonetheless, because of the effects of COVID-19, there have been important amendments to COGEP.  

The first amendment was published in Official Gazette No 345 of 8December 2020, which modified certain rules applicable to the service of process. Specifically, Articles 53 and 55 of the COGEP were amended. In Article 53, a subsection was added that allows the plaintiff to serve the defendant electronically, via its email address, in addition to the ordinary service.  

In Article 55, the possibility of summoning the defendant by telematic means has been added. The telematic summons is exceptional and is reserved for specific circumstances only, ie, when the parties have agreed so in a contract. 

In March 2020, the Judicial Branch suspended its activities in most courts. Since then, it has implemented virtual hearings and virtual filing systems to guarantee the administration of justice and the continuity of cases. Since July 2020, the Judicial Branch has tried to resume its entire operation. Nonetheless, there is a significant delay in all proceedings. The service of processes, in particular, takes much longer than it used to before the pandemic. 

ROBALINO

12 de Octubre Ave No 26-48 and Abraham Lincoln Ave
Edificio Mirage, 16th floor
Quito
Ecuador

+593 2 3810 950

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Law and Practice in Ecuador

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ROBALINO is one of the most renowned law firms in Ecuador, with more than 80 lawyers, 20 of them being part of the litigation and arbitration team. Robalino Abogados is regularly involved in the biggest and most complex cases in Ecuador, as well as international arbitrations involving Ecuador, serving as counsel for major multinational companies. Recently, Robalino Abogados won an investment arbitration against Ecuador, where the award granted the client, an oil company, a USD400 million compensation. Robalino’s litigation team works closely with other departments within the firm in order to handle vast areas of litigation, including constitutional, labour, administrative, tax, public contracts, corporative, energy and mining issues. Robalino Abogados has offices in Quito, Guayaquil, Cuenca, Manta and Machala.