Title: Arbitration in public procurement in Ecuador

Author: María Verónica Meza Antón

The following research deals with public procurement in Ecuador, from a contractual point of view. That means an analysis of the main controversies that arise at the contract implementation stage and how to resolve them.

We find at this point that ordinary justice (contentious-administrative procedure) is the method of resolution of a general nature and that arbitration is applicable only in exceptional cases, prior to a request for approval by the Attorney General of the State.

What are the limitations of arbitration in public procurement?

It is therefore important to ask: What are the limitations of arbitration in public procurement? What makes this mechanism a form of dispute resolution of a regulated and exceptional nature? In order to answer these questions, the following considerations must be taken into account:

LOSNCP (Organic Law of the National System of Public Procurement) has established a plural form of dispute resolution in public contracting, for which it has provided: "Contracting entities and contractors shall seek to resolve in an expeditious, fast and direct manner the differences and discrepancies arising from contractual activity”.

Legislator through the mentioned regulation disposed that the resolution form of controversies should be quickly, efficiently and directly. These features make us thinking directly as a first option in the arbitration and other mechanisms ADR.

Nevertheless, there is a limitation regarding the application of arbitration. This comes from the presence of the public interest and public order that can be in the controversies of public rights. It is not possible for the administration to make the use of theautonomy of the will to reach an arbitration agreement or ADR mechanisms.

The exercise of principle of autonomy of the will is only applicable in the matters deemed to be available

The exercise of principle of autonomy of the will is only applicable in the matters deemed to be available. In the matter of availability, it is necessary to ask if the availability is an objective or subjective right for the parts. In conclusion, at the author discretion is subjective sincethe right to be compromisible should be to free disposition. And being the citizenship titular of these rights generally, they cannot be understood as available.

The compromisable matter that LAM requires to submit disputes to arbitration has a binding relationship with availability, since to be able to compromise it is necessary to have the availability of the right.We are not talking about will autonomy, since in public law the parties do not enjoy autonomy, since what has been granted to the administration is the exercise of discretionary activity to decide through the Attorney General of the State what is best in the general interest.

From the abovementioned lines it has been interpreted that arbitration is not admissible in those controversies that concern or are in discussion the general interest. However, prior authorisation will be applicable when the scope of what is understood to be the general interest is not at stake, provided that the conflict between the administration and the contractor does not affect public interests and is not contrary to established public order.

It is a difficult task for the PGE to determine the criterion of arbitrariness of the matter, since its availability will depend not only on the willingness of the parties, but also on the availability of the law. However, the jurisprudence of the National Court of Justice has been very emphatic in stating that in public contracting there is a compromisable matter and therefore suitable to resolve in the light of arbitration.

Arbitration will be adequate for controversies based on subjective rights

In analysis of the mentioned, in general lines I can say that the arbitration will be adequate for those controversies that are based on subjective rights, among them those of patrimonial character, having as limit of application the arbitration the affectation of the general interests and the established public order.

From my point of view, I can conclude indicating that the application of arbitration in public procurement would be widely beneficial. It would suffice for the legislator to determine certain specific issues that could be submitted to arbitration and for SERCOP in its model contracts for each acquisition to have clause formats regulated by the State Attorney General Office. With that, inclusion of pathological clauses will be avoided and making the Ecuadorian justice system more efficient.