Enforcement of foreign judicial and arbitration awards in Guatemala: judicial proceedings v arbitration

This article was originally published in the newsletter of the International Bar Association (IBA). You can read it on the IBA website or directly here on our blog: https://www.ibanet.org/enforcement-of-foreign-judicial-and-arbitration-awards-in-Guatemala

Guatemala’s approach to the enforcement of foreign judicial and arbitration awards has remained largely unchanged since the latter part of the 20th century. The legal framework is built on four foundational principles:

1. Reciprocity: Guatemala grants the same enforcement rights to foreign awards as those granted to Guatemalan awards in the foreign jurisdiction.
2. Non-enforcement in cases of contumacy or absence: Foreign judgments issued when the defendant was absent or did not appear are automatically excluded from enforcement, regardless of whether due process was observed.
3. Public policy exception: Awards that violate Guatemalan public policy are not enforceable.
4. In rem actions: Foreign awards involving in rem actions are considered unenforceable.

This framework mirrors the historical stance of the United States, which previously rejected enforcement of judgments issued in absentia. While US policy has evolved, Guatemala’s legislation has remained unchanged since 1965. 

In terms of international treaties, Guatemala has ratified only selected conventions under The Hague system, notably the Apostille Convention and the Convention on International Adoptions. It is not a party to the Convention on the Recognition and Enforcement of Foreign Judgments. However, Guatemala has ratified several procedural conventions within the Inter-American system, including those related to alimony, notifications, judicial cooperation, interim measures, and the enforcement of arbitral awards – but not foreign judicial rulings.

A constitutional challenge was raised in 2022 against the clause excluding enforcement of foreign judgments issued in contumacy. The court, however, ruled that the challenge addressed the application of the law rather than its inherent constitutionality.

In contrast, Guatemala has embraced arbitration. It is a signatory to the New York Convention and the Inter-American Convention on International Commercial Arbitration. Additionally, Guatemala has enacted an arbitration law based on the UNCITRAL Model Law. These instruments affirm that foreign arbitration awards hold the same legal weight as national judicial or arbitration rulings, even if the defendant fails to appear during proceedings.

Given this legal landscape, contractual clauses submitting disputes to foreign courts may be rendered ineffective if a Guatemalan defendant does not appear during the proceedings, despite proper service. Therefore, arbitration should be considered a more reliable mechanism for resolving contractual disputes, as arbitral awards are enforceable in Guatemala even if arbitral proceedings took place in the absence of the defendant.