Unjust enrichment refers to a situation where one person benefits economically at the expense of another without a valid justification. For this concept to apply, several elements must coexist, including a financial advantage for one party to the detriment of another, and a lack of any justification for this benefit.

In Peru, unjust enrichment is regulated under Article 1954 of the Civil Code, which provides that "anyone who unjustly enriches themselves at the expense of another is obliged to compensate them". This provision allows the unjustly impoverished party to take legal action against the benefitted party in both judicial and arbitral forums.

However, some legal professionals question whether this concept applies to public contracting arbitration, given that Law No. 30225[1], the State Contracting Law, contains a provision that limits its application. Article 45[2], Paragraph 4 states that unjust enrichment cannot be arbitrated, but its wording is unclear. It is difficult to determine whether this prohibition is general or applies only in specific cases—that is, whether unjust enrichment can never be arbitrated or if it can be in certain situations. Let's examine:

Article 45.- Dispute Resolution Methods in Contract Execution

45.4. The decision by the Entity or the Comptroller General of the Republic to approve or not approve additional services cannot be subjected to conciliation, arbitration, or the Dispute Resolution Board. Claims related to unjust enrichment or undue payment of compensation, or any other claim arising from the non-approval of additional services or the partial approval of these by the Entity or the Comptroller General of the Republic, as applicable, cannot be subjected to conciliation, arbitration, or any other dispute resolution mechanisms established in this Law or its regulations, and must be addressed by the judiciary. Any agreement to the contrary is null and void.

Due to the lack of clarity, some have argued that unjust enrichment is not applicable in any case, interpreting the provision as follows:        

Unarbitrable:

  • Claims related to unjust enrichment or undue payment.
  • Claims related to the payment of compensation.
  • Claims related to any other dispute arising from the non-approval of additional services or the partial approval of these.

However, over time, local doctrine has leaned towards distinguishing between the scenarios outlined in the cited article, concluding that the prohibition is limited to the following three scenarios:

Unarbitrable:

  • Claims related to unjust enrichment or undue payment arising from the non-approval of additional services or the partial approval of these.
  • Claims related to the payment of compensation arising from the non-approval of additional services or the partial approval of these.
  • Claims related to any other dispute arising from the non-approval of additional services or the partial approval of these.

The difference lies in the interpretation of Article 45, Paragraph 4, which leads to the conclusion that the limitation on claiming unjust enrichment only exists when the situation arises from the approval of additional services.

In our view, the second interpretation is the correct one, not only because it is based on a proper reading of the article's grammatical structure but also because it aligns with the pro arbitri[3] principle inherent in arbitration. Moreover, adopting the first interpretation would imply that compensation claims could not be made in arbitration against the State, which would be absurd.

Similarly, Castillo Freyre and Sabroso indicate that the State Contracting Law does permit arbitrability "as long as [the unjust enrichment] does not arise from the non-approval of additional services or the partial approval of these by the Entity or the Comptroller General of the Republic.” [4]

In the case of Consorcio Sacahaca against the Subsectoral Irrigation Program of the Ministry of Agriculture and Irrigation, the sole arbitrator emphasized that the limitation on arbitrability is not general but only applies when unjust enrichment pertains to the approval of additional services:


"The State Contracting Law [...] explicitly prohibits the arbitration of claims related to unjust or undue enrichment arising from the non-approval of additional services, which should be addressed by the judiciary." [5]

 

In summary, it is currently entirely possible to request through arbitration that the counterparty be ordered to compensate for the amount by which they were unjustly enriched, provided there is no objection arising from the State Contracting Law and that the case is not related to additional services, in which case the dispute must be resolved by the judiciary.

 


[1] On June 24, 2024, Law No. 32069 – the New General Law on Public Procurement – was published. As of the date this commentary was written, this law has not yet come into effect.

[2] In Law No. 32069, referred to in the previous note, there is a provision similar to Paragraph 4 of Article 45. Paragraph 3 of Article 76 states: '76.3. Claims related to unjust enrichment or undue payment of compensation or any other of a similar nature arising from the non-approval of additional services or partial approval thereof by the Comptroller General of the Republic cannot be submitted to the Dispute Prevention and Resolution Board, conciliation, or arbitration. These cases fall under the jurisdiction of the Judiciary’.

[3] This principle states that when there are doubts regarding arbitrability, the most favorable stance towards arbitration should be adopted.

[4] CASTILLO, Mario, and SABROSO, Rita. 'Unjust Enrichment in Public Contracting Arbitration,' in: PUCP Arbitration, no. 6, 2016, pp. 19-29.

[5] Retrieved from: http://www.osce.gob.pe/descarga/arbitraje/laudos/EXTERNO/2019/219-2019.pdf