• MIAS

Arbitration in Bolivia

By José Carlos Bernal, partner, Aguilar Castillo Love (Bolivia) &

Abraham Maman, legal assistant, Aguilar Castillo Love (Bolivia)



In 2015 the new Law on Conciliation and Arbitration (hereinafter the "Arbitration act") was issued in the Plurinational State of Bolivia, replacing the previous Law, which was in force for 18 years. Although the Arbitration Act contains features generally accepted in arbitration practice around the world, it also has special subtleties and characteristics, which merit a more meticulous analysis. It is relevant to note that the Arbitration Act is not recognized as being based on the UNCITRAL Model Law.


This article provides the reader with an overview of the development of arbitration in the country in recent decades, including relevant news and regulation, to provide an introduction to arbitration in Bolivia.


The new path of arbitration in Bolivia


A first important fact about the Arbitration Act is that it establishes 13 matters which are expressly excluded from conciliation and arbitration procedures (Arbitration Act Art. 4). The property of natural resources, taxes, matters concerning the functions of the State and administrative contracts (with certain exceptions) are among these 13 matters.


Regarding administrative contracts, it is relevant to point out that the law establishes that state entities or companies may apply conciliation and arbitration, but only in disputes arising from contracts for the acquisition of goods or services with foreign entities or companies which do not have a legal domicile in Bolivia (Arbitration Act Art. 6). This scenario is contrary to what happens in the neighboring country of Peru, where the Contracting and Acquisitions Law (Art. 53) provides that arbitration or conciliation are the mandatory means of dispute resolution for administrative contracts. Bolivia has a much more restrictive vision regarding the arbitration of administrative contracts.


A second relevant aspect of the Arbitration Act is that it contains specific regulations on “emergency arbitration” (Arbitration Act Art. 67) in commercial arbitration, as a mechanism that the parties may use to request interim and preparatory measures prior to the constitution of the arbitral tribunal, without the need to resort to the judiciary. However, the wording of the Arbitration Act has carried unintended consequences, and the figure of the “emergency arbitrator” is rarely used, because it is required to expressly include this feature in the arbitration clause or agreement. If the possibility of using an emergency arbitrator is not mentioned in the arbitration clause or agreement itself, the parties cannot request assistance of an emergency arbitrator, forcing them to resort to the judiciary for emergency measures, or to wait for the constitution of the arbitral tribunal, thus defeating the purpose of the norm.


It is important to add that the appointment of the emergency arbitrator will be made by the Arbitration Center agreed upon by the parties for the development of the arbitration process, which according to its regulations will select a lawyer as arbitrator, and which can be challenged by the requesting party (Arbitration Act Art. 69).


Determinations issued by the emergency arbitrator are effective and will be sent to the public or private authority in charge of complying with the measure imposed. If it becomes necessary to resort to judicial assistance (due to the lack of imperium of arbitrators), the competent court must enforce the determinations of the emergency arbitrator without admitting any opposition or appeal against them. Unfortunately, the inclusion of articles regarding emergency arbitrators in the Arbitration Act has not led to their more frequent use, as was originally intended.


Finally, regarding foreign awards, which according to Article 120 of the Arbitration Act are: "(...) any arbitral award rendered in a seat other than the territory of the Plurinational State of Bolivia", these will be recognized and enforced in the country in accordance with the treaties on recognition and enforcement of arbitral awards (Arbitration Act Art 121). Bolivia is signatory and party to 3 such instruments:

  • Bolivia has been a party of the Inter-American Convention on International Commercial Arbitration (Panama Convention) since January 30th 1975.

  • Bolivia has been a party to the 1958 New York Convention (New York Convention or "NYC") since August 12th 1994.

  • Bolivia approved and ratified the Inter-American Convention on Extraterritorial Effectiveness of Foreign Judgments and Awards of 1979 (Montevideo Convention) since April 7, 1998.


The national courts have had the opportunity to recognize foreign judicial decisions, but the publicly available jurisprudence does not show that, so far, there have been cases of recognition of foreign arbitral awards in Bolivia.


Investment Arbitration


The Arbitration Act is the result of a political change promoted by the government of Evo Morales Ayma, who assumed the presidency in 2006 and ordered the nationalization of formerly public companies in strategic economic sectors of the country, such as hydrocarbons, electricity, and telecommunications.


The new Political Constitution (the “Constitution”) was issued in 2009, and it included substantial changes for foreign investors in Bolivia. Article 320 (II) of the Constitution establishes that: "All foreign investment shall be subject to Bolivian jurisdiction, laws and authorities, and no one may invoke a situation of exception, nor appeal to diplomatic claims to obtain more favorable treatment"; and Article 366 establishes that "All foreign companies that carry out activities in the hydrocarbons production chain in the name and on behalf of the State shall be subject to the sovereignty of the State, to the dependence of the laws and authorities of the State. No foreign court or jurisdiction shall be recognized in any case and they may not invoke any exceptional situation of international arbitration, nor resort to diplomatic claims". The interpretation and scope of these restrictions have been the subject of considerable debate.


The Investment Promotion Law (“Investment Law”) was issued in 2014, and it establishes 3 types of investment: (i) Bolivian investment (originating in Bolivia), (ii) mixed investment including state investment and national or foreign private investment, and (iii) foreign investment originating from outside of Bolivia.


The Arbitration Act of 2015 was constructed on the political and ideological basis of the Constitution and the Investment Law. One of its noteworthy aspects is the specific regulation regarding arbitration of investment disputes with the State. The following rules stand out: (i) It is mandatory to seek conciliation prior to arbitration (Arbitration Act Art. 127), (ii) the seat of the Conciliation and Arbitration must necessarily be Bolivia, but hearings may be held, evidence may be produced and other proceedings may be carried out outside the Bolivian State (Arbitration Act Art. 129), (iii) the Arbitral Tribunal shall apply the Constitution, Bolivian laws and regulations to decide the merits of the dispute, (iv) the duration of the arbitration may be extended up to 600 (six hundred) calendar days and (v) in the absence of an agreement between the parties to choose the appointing authority, the position shall be held by the Secretary General of an Investment Dispute Settlement Center of a Convention which Bolivia is a member of (at that time the creation of a UNASUR Arbitration Center was being proposed), and in the absence thereof, the Secretary General of the Permanent Court of Arbitration of The Hague shall take the position. These provisions show Bolivia's clear intention to avoid submitting to arbitration in international forums, which consequently has also affected the perception of the country in the eyes of foreign investors.


On the other hand, Bolivia was a member state of the International Centre for Settlement of Investment Disputes (ICSID) since August 12, 1994, until it denounced the Convention on November 3, 2007, becoming the first country to do so. This determination was aligned with the decisions of other leftist governments in the region. Ecuador in 2009 and Venezuela in 2012 also denounced the ICSID Convention.

After leaving ICSID, Bolivia determined that the Bilateral Investment Treaties (BITs) should be adapted to the new legal treatment of foreign investments, which implied the need to denounce the 22 BITs entered into with Argentina, Austria, Germany, China, Chile, Italy, the Netherlands, the United States, Peru, Paraguay, Spain, Sweden, Switzerland, Cuba, Denmark, Ecuador, France, South Korea, the Belgium-Luxembourg Union, Mexico, Romania and the United Kingdom. To date, Bolivia has not signed any new BITs.