New arbitration law: Paraguay

Martin Carlevaro
Berkemeyer, Asuncion

Vivian Maldonado
Berkemeyer, Asuncion

On 23 December 2025, Law 7561 (the ‘Arbitration Law’) was published, revoking the previous Law 1879/2002 (the ‘Arbitration and Mediation Law’), except for Articles 53–67 thereof, which govern mediation. The new law applies to private arbitration, both domestic and international, with its seat in Paraguay, and provides for specific rules on judicial assistance and judicial control, including – under defined circumstances – even where the seat is outside the country. This legislation constitutes a comprehensive update of Paraguay’s arbitration regime, aligned with international standards inspired by the United Nations Commission on International Trade Law (UNCITRAL) Model Law, that strengthens the independence of arbitration, the arbitral tribunal’s authority to rule on its own jurisdiction (kompetenz-kompetenz), the restriction of court intervention and overall procedural legal certainty.

The main developments introduced by the new law are set out below.

Disputes

The law allows any dispute involving pecuniary/economic interests and capable of settlement to be submitted to arbitration, excluding disputes arising out of individual employment relationships. It introduces succession arbitration by testamentary stipulation, admits professional sports arbitration – applicable until the issuance of the specific regulation contemplated in Law 2874/2006 – and allows the state, its entities and state-owned or state-participated companies to resort to arbitration in certain cases, always in the form of arbitration at law and subject to the principle of publicity.

Arbitration agreement

An arbitration agreement is valid if it is in writing in any form, including electronic communications. It may also be evidenced by an exchange of statement of claim and statement of defence that affirms its existence without being denied. In addition, the law recognises the valid receipt of electronic communications within the arbitral proceedings.

Prohibition of undue judicial interference

One of the most significant advances of the new regime is the express prohibition of undue judicial interference. Such interference is characterised as judicial misconduct, reaffirming the functional autonomy of the arbitral tribunal. Court intervention is permitted only in the cases expressly provided by law, including cooperation with interim measures, evidence practice and the enforcement of awards.

Transparency and procedural simplification

The law introduces innovations aimed at strengthening transparency and procedural simplification, including:

• the possibility of an express or implied waiver of arbitration;

• the extension of the arbitration agreement to non-signatories in cases of active participation or direct benefit;

• formal acceptance and constitution of the arbitral tribunal within set time limits, and the possibility of the tribunal reconsidering non-final decisions;

• the full or partial reimbursement of arbitrators’ fees in cases of resignation, removal or annulment of the award; and

• the interruption of the statute of limitations for any right upon notification to the other party of the request for arbitration or upon filing with the agreed arbitral institution administering the arbitration.

Interim measures

The new regime expands the arbitral tribunal’s powers to order interim measures directly, including measures to preserve the status quo, prevent imminent harm or ensure the effectiveness of the award. It recognises the possibility of requiring security (counter-security), as well as ordering ex parte measures (without notice) in duly justified urgent cases. Courts, for their part, must enforce the arbitration’s interim decisions, without reviewing their merits or admitting opposition.

Annulment action

The arbitral award’s effectiveness is reinforced, maintaining the annulment action as the sole means of challenge, with exhaustive grounds subject to restrictive interpretation. A new ground for annulment is added for late issuance of the award, applicable only where the parties or the arbitration rules have expressly provided for it. In addition, the requirement of judicial recognition (exequatur) is eliminated for domestic awards, which may be enforced directly before the competent judge.

International arbitration

The law clarifies the criteria for international arbitration. It harmonises recognition and enforcement with applicable treaties, allowing the application of the most favourable rule for enforcement and, failing that, provides a specific domestic procedure with refusal grounds aligned with international standards.

Interpretative approach

The law expressly adopts an interpretative approach favourable to arbitration: in case of doubt, disputes must be resolved in favour of arbitration. Additionally, the law instructs interpreters to rely on general principles when the law is silent on the matter. This approach sets a limit for judicial intervention to that expressly provided for in the law.

Waive or limit the annulment action

The law also incorporates the possibility for the parties to waive the action for annulment entirely or limit it to specific reasons by express agreement when neither party is Paraguayan and neither has its domicile, residence or principal place of business in Paraguay. This preserves the autonomy of the parties in cross-border cases.

Conclusion

This new law approved a modern, digital and autonomous arbitration framework, geared towards effectiveness, institutional trust and predictability in dispute resolution. This positions Paraguay as a reliable and competitive seat for domestic and international arbitration by strengthening the autonomy of arbitral proceedings, limiting court intervention and prioritising the enforceability of arbitral awards, aligned with international standards.

Martin Carlevaro is a partner at Berkemeyer in Asuncion. He can be contacted at martin.carlevaro@berke.com.py Vivian Maldonado is an associate at Berkemeyer in Asuncion. She can be contacted at vivian.maldonado@berke.com.py