Arbitration allows the parties to resolve disputes outside the ordinary jurisdiction of the Judiciary by mutual agreement. To be valid, it requires a clear law governing agreements, procedures, and arbitral awards. This legislation allows national courts to support the process and recognize final decisions.
Paraguay previously had Law No. 1879/2002, which was based on the UNCITRAL Model Law. The New Law No. 7561/2025 updates and strengthens this framework, incorporating innovations to adapt to today's trade environment and resolve previous ambiguities.
The improvements include an interpretive rule that prioritizes the validity of arbitration in cases of doubt, an express prohibition on suspension by ordinary courts, and the extension of the agreement’s effects to non-signatory parties with a decisive role in the contract. In addition, it establishes clear rules regarding the nullity and enforcement of domestic and international awards, promoting certainty and expediency.
The law still has some outstanding issues, such as the direct filing of actions for annulment with the Supreme Court of Justice and the recognition of an emergency arbitrator for preliminary injunctions.
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