BIDS The competition of the bidders will have as an object the amount of guaranty to be deposited, the minimum being fixed at 2,000,000 drachmas. Every increase of the guaranty up to 500,000 drachmas will involve an increase of the rental to the State by one unit, and will increase the amount of exploratory drilling by 25 percent. As an example, the bidder who raises the guaranty from 2,000,000 drachmas to 2,500,000 drachmas will have to pay a rental to the State of 7 percent of the ouput and at the same time will have to complete 25 percent more prospecting drillings in order to complete during the third year 1,000 meters of shaft instead of 800 meters. During the fourth year the concessionaire will have to complete drillings with a total depth of 1,500 meters plus 25 percent equals 1,875 meters. The guaranty must be in the form of a letter of guaranty of one of the banks listed in the Official Gazette, No. 65, Volume II, of April 13, 1937. LIST OF NOTICES PUBLISHED BY THE DIVISION OF COMMERCIAL LAWS IN COMMERCE REPORTS GENERAL ARGENTINA CUBA LUXEMBURG PANAMA GENERAL Commerce Reports for December 3, 1938 Trust Receipts in the Philippines Procedure, Translation of Documents Required - Advertising Regulations Labor, 40-Hour Week in Certain Industries Commerce Reports for December 10, 1938 Restrictions Upon Installment Sales in Brazil CZECHOSLOVAKIA - Labor, Regulations Affecting Workmen GENERAL CANADA FRANCE ITALY Insurance, War Risk Insurance Commerce Reports for December 17, 1938 - Webb Law Association Formed in Potash Industry GENERAL Section Judicial Organization, Cour de Cassation Social Commerce Reports for December 24, 1938 Income Taxation in the Union of South Africa - Social Legislation, Juridical Personality Assigned to Labor and Employer Organizations Taxation - Restriction Against Aliens, Sales Agents Commerce Reports for December 31, 1938 - Stowage Clauses in Shipping Contracts Restriction Against Aliens, Passport Requirements Insurance, Sickness Insurance Proposed GUATEMALAN LAW OF COMMERCIAL ARBITRATION By Assistant Trade Commissioner Kathleen Molesworth, Guatemala The settlement of commercial disputes by arbitration is recognized under the present laws of Guatemala, and Chapter II of the Code of Civil and Mercantile Jurisprudence, which was promulgated in Decree 2009 of September 15, 1934, covers the general subject of arbitration. The regulations as contained in this Code are applied in all cases of civil and mercantile litigation in which arbitration is resorted to in lieu of court proceedings, except in the case of fire insurance claims for which there are separate arbitration regulations. Previous to the promulgation of the Code of Civil and Mercantile Jurisprudence, the Code of Civil Procedure, promulgated in Decree 175 of March 8, 1877, the Law of Mercantile Jurisprudence, promulgated July 20, 1877, and a number of miscellaneous dispositions modifying these two laws were in force. In order to adapt this legislation to the later needs of the country, and to correct deficiencies in the laws, a commission was named to study and report on a project for a new Code of Civil and Mercantile Jurisprudence to be presented to the National Legislative Assembly for approval. In a report dated April 20, 1934, the Commission made a report to the Ministry of Gobernacion y Justicia of the work which had been done, and attached the proposed new Code, which Code was approved by the National Legislative Assembly on May 26, 1934, to become effective on September 15 of that year. In their report the Commission made the following comments as to the section of the Code dealing with arbitration: Arbitration proceedings may be of two classes, those submitted for action by legal arbitrators (árbitros de derecho) and those in which action is taken by lay arbitrators (árbitros arbitradores). The dispositions of the former Code with reference to the statements which must be included in the arbitration agreement are retained, following in general the precepts which already exist in this connection, but the dispositions which were formerly scattered through Chapters I and II of the Code are now combined in a single chapter in order to unify the material. In order that justice in arbitration suits may not be evaded through the naming as lay arbitrators of persons who have not offered to act in this capacity, it is provided that if the person named can not act for any reason, and the interested party does not name another arbitrator within eight days, the competent court shall name one. The right is reserved to waive appeal in cases of arbitration, but the right of repeal may not be set aside, not only because arbitrators become an adjunct of the Courts of First Instance, but also because it would be dangerous not to submit their actions to the control of a superior tribunal, as otherwise this would be equivalent to considering the arbitrators infallible and not responsible for their acts, as well as permitting them to resolve questions not submitted for their action, or to infringe upon the rules for procedure agreed upon by the parties in the case. Based on these comments, Chapter II of Book III of the Code of Civil and Mercantile Jurisprudence deals with the general subject of arbitration proceedings. Under this Chapter, any differences, except in cases where arbitration is specifically prohibited, may be submitted to arbitration proceedings. The cases which may not be settled by arbitration are (1) suits involving minors, persons subject to interdiction, and absentees, except in this latter case with judiciary authorization granted with full knowledge of the reason for absence; (2) suits in which the Public Treasury is involved, except under conditions prescribed by the fiscal laws; (3) suits involving charities and public institutions, unless approved by the Government; (4) cases of criminal responsibility, although those in which points of civil order result in the suit may be submitted to arbitration; (5) questions of the civil status of individuals; and (6) cases involving the right to receive subsistence. Persons who may not serve as arbitrators are (1) persons under 21 years of age; (2) persons who cannot read or write; (3) Judges of the Guatemalan courts, except in cases before the courts of other Republics; (4) persons who are deprived of the rights of their citizenship; and (5) persons who have not the right to name arbitrators. THE ARBITRATION AGREEMENT The decision to submit differences to arbitration must be set forth in a legal arbitration agreement (escritura pública), and must include a statement of the object or objects of arbitration, the names of those chosen by the parties to the dispute or the method of choosing them, the time limit within which the arbitrators are to present their decision, the powers granted to the arbitrators, and the recourses which may be waived, that of repeal being irrenunciable. If the sum involved is less than 500 quetzales, this agreement may be made in a private document or in a statement before a judicial authority setting forth the same information as in other cases. In case no time limit should be specified for the decision of the arbitrators the agreement will still be considered valid, and the arbitrators will be allowed 100 days, including holidays, in which to terminate their deliberations. The interested parties may name a single arbitrator, or one, or several, may be named by each party. The interested parties may also provide for the organization of the arbitral court in the manner which they consider expedient, provided that there is always an uneven number of arbitrators including the umpire. Either party may petition the competent court to set a term of three days in which arbitrators are to state whether or not they will act as arbitrators, and in case neither the arbitrator named, nor the substitute who may be named, will accept the charge, the Court is to name another person. In the naming of the third arbitrator, or umpire, if the interested parties cannot agree on one person, the other arbitrators shall name this arbitrator, and in case they cannot agree, the decision shall be based on the drawing of lots, if the parties so agree, or in other cases by the Court. No one shall be obliged to act as an arbitrator, but once the position has been accepted the obligation must be fulfilled, and a fine of 10 percent of the amount of the suit may be imposed for failure to do so. Arbitrators may resign only on account of serious illness, the necessity of being absent for more than two months, or force majeure. Within the time limit specified in the arbitration agreement the arbitrators are to hear the evidence and make their decision, which is to be presented only in the form and on the questions set forth in the agreement. Upon the formal conclusion of their decision, it is referred to the ordinary court for execution. Arbitrators may not impose fines on witnesses or experts, and in general the ordinary courts are responsible for all types of judicial compulsion in connection with the suit. In defining the two types of arbitration proceedings, the Code states that legal arbitrators (árbitros de derecho) must be practicing lawyers, and subject to the legal requirements of regular court practice. However, the interested parties in their agreement may indicate longer or shorter periods for the proceedings, if desirable. Legal arbitrators are legally bound, as in the ordinary courts. Lay arbitrators (árbitros arbitradores) are not subject to the rules of ordinary legal procedure, and their decisions are to be based on equity and justice, according to their best knowledge and belief, without being bounu by legal precepts. The lay arbitrators must act in accordance with the rules established by the interested parties in the arbitration agreement, and also with those contained in this Code. In lay arbitration cases, even though the interested parties do not so state, it is understood that the right of appeal to the ordinary courts from the decisions of the arbitrators is waived. Cases of lay arbitration may be appealed, as well as cases of legal arbitration, when there has been an infringement of the rules set forth in the arbitration agreement. ARBITRATION CLAUSES IN CONTRACTS The foregoing is an outline of the procedure that is followed in all cases of civil and mercantile claims, except in claims against fire insurance companies, in which the parties wish to submit the claim to arbitration, or have previously agreed to do so. In Book No. 2 of the Commercial Code, dealing with commercial contracts, Chapter I, Article 237 requires that in the articles of partnership or incorporation of commercial firms (escritura social) among other statements there shall be set forth the form in which liquidation of the company's business is to be made, and the division that is to be made of the assets, and (Section 10) whether any disputes which may occur within the firm are to be settled by arbitration or not, and, if so, the manner in which the arbitrators are to be named. Clauses regarding arbitration are also often included in contracts, as illustrated by the following translation of a paragraph taken from the contract between the Government of Guatemala and a foreign commercial air line, covering the establishment of an air service to carry mail, express and passengers: All difficulties which may arise between the Government and the Company shall be settled by arbitrators named one by each party, and these, before the discussion of the case has been begun, shall name a third to cast the deciding vote in case of disagreement. In case an agreement cannot be reached on the naming of the third arbitrator, he shall be designated by the President of the Supreme Court of the Republic. The decision of the arbitrators, or of the third arbitrator, shall not be subject to any ordinary or extraordinary appeal measures, and shall be respected as a sentence issued by a competent authority. In no instance shall the Company have recourse to diplomatic intervention. In cases where the articles of incorporation have contained the agreement to submit to arbitration in cases of liquidation and dissolution, such agreements have been sustained by the Guatemalan courts. Illustrative of this was a recent decision in the case of a local firm formed to operate a fleet of taxicabs. It was stated in the articles of incorporation that the partners would never submit to legal action any disputes arising between them, or the liquidation proceedings in case of a dissolution of the company, and a local firm of public accountants was named in the document to act as arbitrators in such cases. At the expiration of the term for which the partnership was formed one of the partners refused to submit the liquidation proceedings to arbitration, invoking the right of every citizen to have recourse to justice through the courts of the Republic. The case was brought before the Court of First Instance, and the terms of the original contract were upheld, the Judge ruling that liquidation proceedings could be conducted only by the arbitrators named in the contract. ARBITRATION IN FIRE INSURANCE CASES In the case of fire insurance claims, a separate procedure for arbitration was established by Decree No. 1556 of August 13, 1934, (Leyes de Guatemala, Vol. LIII, p. 221), the foreword to which Decree states that it is issued in view of the necessity of obtaining settlement in fire insurance cases by a system of rapid, controlled, and efficient judgment which will tend to avoid prolonged judicial controversies. In this Decree it is provided that the insured must present his claim to the insurance company within fifteen days after the fire, and must at the same time advise the Ministerio Público of the presentation of his claim and the amount involved. The insured and the insurer may voluntarily agree as to the amount of the claim to be paid, within fifteen days after the presentation of the claim, and the Ministerio Público will in such cases act as the authority of control. If the term of fifteen days expires without such a voluntary agreement, or if before that time a difference of opinion should arise, the arbitration proceedings shall be instituted at once before the Ministerio Público. The general rules for the selection of arbitrators are much the same as those for other arbitration cases; they must be persons of recognized character and ability; each party to the claim shall name one, or a single arbitrator may be agreed upon by both parties; if two are named they shall name a third to act as umpire, and if they cannot agree on this nomination, it shall be made by the Ministry of Finance. A notary shall be named by the arbitrators to act as secretary of the arbitral court, and once the court is organized it shall proceed to the hearing of the claims of the insured and the answers of the insurer. The evidence is to be presented within thirty days following the organization of the arbitral court, and at the end of that time the arbitrators shall have twenty days in which to formulate their decision and fix the amount |