URUGUAYAN RULES ON LEGISLATIVE AND JUDICIAL COMPETENCE
Traditionally, Uruguay has been a pro-arbitration country, and its courts have taken an arbitration-friendly approach. The tradition has remained the rule, even in absence of a comprehensive regulation on international arbitration.
One of the problems that international arbitration deals with in Uruguay is that of the applicable law to the merits of the dispute.
Section 2403 of the Uruguayan Civil Code provides that “Rules on legislative and judicial competence that are determined in this Title may not be modified by the will of the parties. Party autonomy may only be exercised within the margins provided by the applicable law”. This means that under Uruguayan law, parties are barred from freely choosing the applicable law and competent courts to a certain dispute.
An exception to this rule is provided in the last sentence of section 2403. In this regard, when Uruguayan conflict of law rules lead to the application of the law of a country that allows party autonomy in the selection of the applicable law, then parties may freely choose the law governing their agreements. On the other hand, when the application of our conflicts of law rules leads to the application of Uruguayan law, or the law of a country that does not allow the parties to choose the applicable law, choice of law clauses are not valid.
However, it is debatable whether this provision also prevents parties to a contract from agreeing the applicable law, when they have chosen international arbitration as their dispute resolution mechanism.
Oct-Dec 2017 issue
Guyer & Regules