PERU: An Introduction to Dispute Resolution: Arbitration

Arbitration in Peru: Consolidation, Challenges, and Opportunities

Introduction

There is no doubt that arbitration has become the principal dispute resolution mechanism in Peru, particularly in sectors such as infrastructure, industry, energy, construction, and public services.

This development is largely the result of a sustained public policy that, for over two decades, has promoted mandatory arbitration in public procurement, positioning it as the most appropriate mechanism for resolving disputes outside the judiciary.

Despite efforts to promote other mechanisms, such as dispute boards (Juntas de Resolución de Disputas – JRD) and the growing use of mediation, the enactment of the new General Law on Public Procurement, Law No 32069 (LGCP), reaffirms the primacy of arbitration by maintaining it as the mandatory mechanism for resolving disputes arising from contracts with the state. In doing so, the legislative body acknowledges its technical effectiveness and reinforces its central role among alternative dispute resolution mechanisms.

Consolidation of the General Law on Public Procurement and its impact on arbitration

The LGCP, published in June 2024 and in force as of April 2025, represents a significant regulatory shift aimed at modernising public procurement. While it replaces the previous legislative framework, it reaffirms arbitration as the primary dispute resolution mechanism, recognising its specialisation, efficiency, and autonomy.

One of its key innovations is the creation of the Registry of Arbitral Institutions and Dispute Boards Administration Centres (REGAJU), administered by the Specialised Body for Efficient Public Procurement (OECE). This registry seeks to ensure that arbitration-administering institutions comply with minimum ethical, technical, and infrastructural standards.

The law also reinforces the requirement to use institutional arbitration over ad hoc proceedings, except in lower-value cases. At the same time, it promotes the use of dispute boards as tools for proactive contract management, with their decisions being binding unless formally challenged.

In addition, the LGCP’s regulatory framework, enacted via Supreme Decree No 009-2025-EF, outlines procedures for the appointment of arbitrators, consolidation of claims, and traceability of arbitral awards. It also promotes transparency through the mandatory submission of awards to SEACE (Peru’s electronic government procurement system), thereby reinforcing principles of integrity and accountability – especially relevant where disputes involve public funds.

This new regulatory environment has had a direct and positive impact on the professional practice of specialised law firms. It demands the institutionalisation of best practices such as procedural management protocols, document traceability systems, continuous arbitration training, and a comprehensive understanding of the new regulatory regime governing public procurement.

In summary, the LGCP not only confirms the central role of arbitration but also introduces measures that strengthen its institutional framework, enhance the quality of case management, and consolidate the trust of both public and private stakeholders in this dispute resolution mechanism.

Peru and investment arbitration

As of 2025, Peru continues to rank among the countries with the highest number of pending investment arbitration cases. These disputes, initiated by foreign investors, are primarily concentrated in strategic sectors such as road infrastructure, mining, transport, and energy. In most cases, companies allege contractual breaches or regulatory changes affecting their operations.

Although Peru’s frequent involvement in these proceedings is not necessarily a commendable distinction, it has driven improvements in the state’s legal defence capacity. In this context, the State Co-Ordination and Response System for International Investment Disputes (SICRECI) has been strengthened through renewed leadership, further consolidating its role as a mechanism for co-ordinating the legal and financial defence of the state.

SICRECI is designed to prevent fragmented or inconsistent institutional responses and enables the formulation of a more cohesive and robust defence strategy. It also helps identify recurring risks in contractual arrangements and fosters the continuous improvement of the state’s legal and contractual frameworks.

While Peru has secured favourable outcomes in several cases, recent rulings have resulted in adverse decisions with significant financial implications for the state. These experiences have prompted calls to improve contractual drafting, ensure stricter enforcement of existing regulations, and enhance the management of complex public projects. Investment arbitration has become a structural feature of the state’s legal landscape. While this has captured the attention of both domestic and international legal markets, it does not send a strong signal regarding the country’s attractiveness to foreign investors.

The ongoing challenge lies in strengthening dispute prevention through better risk management and greater institutional proactivity. Arbitration will continue to play a central role, and it is therefore essential to maintain institutional capacity to engage in these proceedings with professionalism and competence.

Opportunities for improvement in Peru’s Arbitration Law

In January 2025, a Multisectoral Working Group was established to assess and propose reforms to Peru’s Arbitration Law, through Ministerial Resolution No 0016‑2025‑JUS. This follows a similar initiative launched in 2024 under Resolution No 0124‑2024‑JUS. Both groups were mandated to review Legislative Decree No 1071 (“Peruvian Arbitration Law”), which has been in effect since 2008.

The current working group includes representatives from the Ministry of Justice, the State Attorney General’s Office, the judiciary, various public institutions, as well as certain private sector stakeholders and arbitration centres. However, unlike its predecessor, the latest group is predominantly composed of public sector members – an aspect that has attracted criticism, as it may limit the diversity of perspectives in the drafting of proposals and lead to reforms that compromise the equal standing of the parties in arbitrations involving the state.

So far, no substantial progress or concrete proposals have been released. This lack of outcomes has raised concerns among arbitration professionals and academics who were expecting a technical, inclusive, and timely review process. While the initiative represents an important institutional milestone, it requires a more balanced composition of its members and greater transparency in its activities.

Any reform efforts should pay particular attention to reviewing oversight criteria for arbitral institutions, strengthening ethical safeguards, and promoting greater transparency – especially in ad hoc and commercial arbitrations where the state is not directly involved. In recent times, practitioners have witnessed the emergence of unreliable arbitration centres that threaten the integrity of the system. While such entities have been excluded from the most meaningful cases due to unprofessional conduct and questionable practices, the risk remains.

Nevertheless, it is essential to support measures that guarantee consistently high standards for centres wishing to administer private arbitrations, with transparency as a core value – as already demonstrated by Peru’s leading arbitration institutions. Likewise, initiatives that promote efficiency, reduce conflicts of interest, and ensure access to impartial and professional arbitral justice should be strongly encouraged.

Conclusion

Despite the challenges that remain, arbitration in Peru maintains a strong and growing position. Its consolidation as the principal mechanism for dispute resolution – particularly in the fields of public procurement and foreign investment – offers a significant opportunity for law firms to specialise, adopt best practices, and build a reputation in a system that increasingly demands technical rigour and professional excellence.