Countries › Paraguay › Guide › 14. Disputes › Commercial arbitration in Paraguay: drafting the clause, constituting the tribunal and running the case under Ley 7561/2025

Commercial arbitration in Paraguay: drafting the clause, constituting the tribunal and running the case under Ley 7561/2025

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Last verified: 2026-10-28 · Status: Changing

Since 23 December 2025 arbitration seated in Paraguay follows Ley 7561/2025, a UNCITRAL style statute that favours arbitration in case of doubt, lets the tribunal rule on its own jurisdiction and extend the clause to non signatories who took part in the deal. The parties choose seat, rules, language and an odd number of arbitrators; without agreement there are three, and the civil judge fills gaps in 7 days with no appeal, while tribunals can grant and enforce interim measures, even without notice. Costs follow the loser pays rule, arbitrators set their own reasonable fees and lose them in defined cases, and a filed request interrupts limitation.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation published for Wednesday 28 October 2026. Conversions are for orientation only.

Key facts

Arbitration statute	Ley 7561/2025 (promulgated and published 23 December 2025) Ley 7561/2025 art. 71, as of 2026-10-28 · in force
Default number of arbitrators	3 arbitratorsLey 7561/2025 art. 15, as of 2026-10-28 · in force
Time to appoint before a party may ask the judge	30 daysLey 7561/2025 art. 16, as of 2026-10-28 · in force
Time for the judge to appoint a missing arbitrator	7 daysLey 7561/2025 art. 16, as of 2026-10-28 · in force
Time to challenge an arbitrator before the tribunal	15 daysLey 7561/2025 art. 19, as of 2026-10-28 · in force
Clause can be extended to non signatories	Yes, exceptionally, by the tribunal Ley 7561/2025 art. 13, as of 2026-10-28 · in force
Arbitral tribunal may order interim measures	Yes, including without notice with mandatory counter security Ley 7561/2025 art. 25, as of 2026-10-28 · in force
Days to start arbitration after a court interim measure is executed	10 daysLey 7561/2025 art. 26, as of 2026-10-28 · in force
Arbitration request interrupts limitation	Yes, on notice to respondent or filing with the institution Ley 7561/2025 art. 32, as of 2026-10-28 · in force
Default allocation of arbitration costs	Loser pays, tribunal may apportion Ley 7561/2025 art. 68, as of 2026-10-28 · in force
Individual employment disputes arbitrable	No Ley 7561/2025 art. 2, as of 2026-10-28 · in force
Temporary residence for foreign arbitrators	3 years, automatic and free Ley 7561/2025 art. 69, as of 2026-10-28 · in force
BCP reference rate used for conversions	5868.31 PYG per USDBCP planilla 28 October 2026, as of 2026-10-28 · in force

The rule

1. Arbitration agreement: form, reach and waiver. The agreement must be in writing, which is met by any record of its content, by electronic messages accessible for later reference, by documents under the electronic trust services law (Ley 6822/2021), by an unanswered assertion of the clause in statements of claim and defence, or by reference in a contract to a document containing an arbitration clause. In international cases the clause is valid if it meets the law the parties chose for it, the law governing the merits or Paraguayan law. The tribunal may exceptionally extend the clause to non signatories whose consent follows, in good faith, from their active and decisive role in negotiating, signing, performing or terminating the contract, or from their claim to benefit from it. Arbitration is waived expressly in a signed document or tacitly when a party sues in court or fails to raise the arbitration objection in time, but only for the matters sued on. Any doubt is resolved in favour of arbitration.
Cost to do it: No filing or registration fee for the agreement itself; drafting cost only.
Example: A distributor agreement for soybean meal signed by email exchange with a clause referring to the supplier's general terms, which contain an arbitration clause, binds both sides to arbitrate. / A US$1,000,000 (PYG 5,868,310,000) claim against a parent company that negotiated the deal for its Paraguayan subsidiary can reach the parent if the tribunal finds it took a decisive part in the contract (art. 13).Ley Nº 7561/2025, De Arbitraje, Art. 5, 11, 12 and 13, 2025-12-23 official text · verified 2026-10-28

2. Constituting the tribunal and challenges. The number of arbitrators must be odd; three apply by default, and an even number agreed is reduced to the next lower odd number. Each side appoints one in a three member tribunal and the two choose the chair; if a party fails to appoint within 30 days of a request, or the co arbitrators cannot agree within 30 days, the Juez de Primera Instancia en lo Civil y Comercial appoints within 7 days, and these appointment decisions cannot be appealed. Each arbitrator must accept in writing within 10 days of notice of appointment, failing which the appointment is deemed refused. Arbitrators must disclose circumstances raising justified doubts about independence or impartiality; a challenge is filed with the tribunal within 15 days of learning of the constitution or the circumstance, and if rejected the party may ask the judge within 15 days, who decides within 7 days without appeal while the arbitration may continue. Nationality and domicile are no bar; foreign arbitrators are admitted for 6 months, renewable, and are paid for their work, and under the final provisions those appointed in Paraguayan seated cases obtain temporary residence for 3 years automatically and free of charge.
Cost to do it: Court assistance with appointments carries no fee in the law; foreign arbitrators' residence and entry visas are free (art. 69).
Example: If the Paraguayan respondent ignores a request to name its arbitrator, after 30 days the claimant asks the civil judge in Asunción, who must appoint within 7 days. / A Brazilian arbitrator named in a US$1,000,000 case seated in Asunción gets free temporary residence for 3 years on filing proof of appointment and acceptance.Ley Nº 7561/2025, De Arbitraje, Art. 15, 16, 17, 18, 19, 20 and 69, 2025-12-23 official text · verified 2026-10-28

3. Jurisdiction, interim measures and court support. The tribunal alone decides on its own jurisdiction, including objections to the existence or validity of the clause, which is separable from the main contract. Jurisdictional objections must be raised no later than the statement of defence. If the tribunal rejects them in a preliminary award, that decision can be challenged by annulment within 20 days (domestic) or 40 days (international) while the case may continue, but no final award may issue until the annulment is decided. Unless agreed otherwise, the tribunal may order interim measures (status quo, preventing harm, preserving assets or evidence, attachment, general bar on disposing of assets, seizure, lis pendens notes, management of the company) and may require counter security; it may act without notice in urgent cases, in which case counter security is mandatory. The tribunal enforces its own measures; where needed the civil judge must execute them within 3 days on the mere copies of the arbitration and the order, with no appeal or opposition and no power to review them. Before the tribunal is constituted a party may seek measures from the judge; once a court measure is executed, the arbitration must start within 10 days and the tribunal be constituted within 90 days or the measure lapses. The judge must also rule within 7 days on tribunal requests for help taking evidence.
Cost to do it: Counter security set by the tribunal or judge for interim measures; the applicant is liable for costs and damages if the measure proves unjustified (art. 25).
Example: A Paraguayan buyer fears its supplier will remove stock from an Asunción warehouse: it obtains an attachment from the civil judge, then must file the arbitration within 10 days of execution. / For an attachment securing US$1,000,000 (PYG 5,868,310,000), the tribunal can order it without notice if urgency is shown, but must require counter security.Ley Nº 7561/2025, De Arbitraje, Art. 10, 14, 24, 25, 26 and 40, 2025-12-23 official text · verified 2026-10-28

4. Procedure, applicable law and the award. Parties are free to set the procedure; failing agreement the tribunal runs the case as it sees fit, decides admissibility and weight of evidence, may appoint experts and must hold a hearing with the expert if asked. Proceedings start when the respondent, or the institution, receives the request, and that notice interrupts limitation unless the tribunal is never constituted for reasons attributable to the claimant. Procedural orders may be reconsidered within 3 days. If the respondent fails to defend, the case continues and default is not an admission. The tribunal applies the law chosen by the parties (a reference to a country's law means its substantive law, not its conflict rules) or, failing a choice, the law it considers appropriate, and decides in equity only if expressly authorized, never where public policy rules are involved or a state entity is a party. Decisions are by majority, or by the chair if there is no majority; awards must be written, reasoned unless agreed otherwise, dated and state the seat. The award must be rendered within the time set by the parties, the rules or the tribunal, but lateness is a ground for annulment only if expressly agreed.
Cost to do it: Expert fees are part of the costs of the arbitration (art. 4 definition of costs).
Example: A claim for unpaid invoices sent to the respondent on 2 November 2026 stops the limitation clock on that date, provided the tribunal is later constituted. / Two foreign parties with an English law clause in a US$1,000,000 contract seated in Asunción will have English substantive law applied, not English conflict rules.Ley Nº 7561/2025, De Arbitraje, Art. 29, 31, 32, 36, 37, 38, 39, 41, 42, 43, 44 and 47, 2025-12-23 official text · verified 2026-10-28

5. Costs and arbitrators' fees. Parties may agree cost rules directly or through institutional rules; otherwise the law applies. Costs cover tribunal fees and expenses, secretary, experts, approved witness expenses, institutional charges and the reasonable legal costs of the winning or partly winning party. Fees must be reasonable given the amount, complexity and time spent; each arbitrator's fee is stated separately and fixed by the tribunal, which charges nothing extra for corrections, interpretation or additional awards. Each party deposits an equal advance; if deposits are unpaid 30 days after the request, the tribunal may suspend or end the case. Absent agreement the loser pays, though the tribunal may apportion; the winner's legal costs are fixed in a separate decision that is enforceable in court under the judgment enforcement rules of the Código Procesal Civil. Arbitrators who resign or are removed lose unearned fees; one who refuses to sign the award loses half; if the award is annulled for lateness they return all fees, and half if annulled for lack of notice or inability to present a case. Those refund decisions are executive titles.
Cost to do it: Equal advances on costs from each side; no statutory fee scale for arbitrators, unlike the court lawyer fee scale of Ley 1376/1988.
Example: In a PYG 5,868,310,000 dispute, each side pays half of the advance fixed by the tribunal; if the respondent does not pay within 30 days, the claimant may pay its share to keep the case alive or the tribunal may suspend it. / On a US$1,000,000 claim the winner recovers reasonable legal costs through a separate tribunal decision that can be enforced like a judgment.Ley Nº 7561/2025, De Arbitraje, Art. 4, 23, 64, 65, 66, 67 and 68, 2025-12-23 official text · verified 2026-10-28

6. Arbitrability limits and the state. Any patrimonial, settleable matter may be arbitrated, plus matters authorized by law or treaty; individual employment disputes may not, although professional athletes' disputes may be arbitrated until the sports secretariat sets its own procedure. Inheritance disputes may go to a sole arbitrator under a will or an agreement of all heirs. State bodies, municipalities, state owned companies and binational entities may arbitrate their contracts unless the matter is exclusively public law; if a state body terminates a contract containing an arbitration clause for the contractor's breach, the dispute goes to arbitration, not to the civil or administrative courts, and arbitration with the state is always at law and public. A clause in a consumer contract imposing arbitration is void under the consumer law.
Cost to do it: No extra cost; but confidentiality cannot be agreed in arbitrations with state entities.
Example: A construction contractor whose public works contract is terminated by ministerial resolution takes the dispute to the arbitral tribunal named in the contract, not to the Tribunal de Cuentas. / A US$1,000,000 (PYG 5,868,310,000) claim by a foreign employee for severance must still go to the labour courts, even if the employment contract has an arbitration clause.Ley Nº 7561/2025, De Arbitraje; Ley Nº 1334/1998 as amended by Ley Nº 5427/2015, Ley 7561 art. 2 and 3; Ley 1334 art. 28 d), 2025-12-23 official text · verified 2026-10-28

Step	Time limit	Article
Appoint co arbitrator after request, or co arbitrators agree on chair	30 days, then judge appoints within 7 days	Art. 16
Arbitrator accepts appointment	10 days	Art. 17
Challenge an arbitrator before the tribunal	15 days; then judge within 15 days, decision in 7 days	Art. 19
Raise procedural objections (default)	5 business days	Art. 8
Raise jurisdictional objections	No later than the statement of defence	Art. 24
Annul a preliminary award rejecting jurisdiction	20 days domestic, 40 days international	Art. 24
Start arbitration after a pre arbitral court measure	10 days; tribunal constituted within 90 days	Art. 26
Reconsider a procedural order	3 days unless set otherwise	Art. 36
Pay advance on costs	30 days after the tribunal's request	Art. 67
Correction, interpretation or additional award	10 days domestic, 20 days international	Art. 50 and 51

Key time limits in a Paraguayan seated arbitration (Ley 7561/2025)

Worked example

Clause to seat: a US company sells irrigation pivots to a Paraguayan farm for US$1,000,000 (PYG 5,868,310,000). The contract provides for a sole arbitrator, seat Asunción, Spanish and English, New York law on the merits. The farm sues in Ciudad del Este instead; the US seller objects on the basis of the clause and the judge must refer the case to arbitration unless the clause is manifestly void (art. 14), while the arbitrator may proceed in parallel.
Interim relief: before the tribunal exists the seller obtains an attachment from the civil judge of the Capital (art. 10 and 26). It files the request for arbitration within 10 days of execution; the sole arbitrator, once appointed, may maintain, change or lift the court's measure, and the judge cannot oppose that decision.

Step by step

Choose the seat expressly: the law's procedural rules apply only to Paraguayan seated arbitrations, though art. 11 to 14, 25, 26 and 59 to 63 also apply to foreign seated ones (art. 1).
Set an odd number of arbitrators, the rules, language and governing law; use an institution's rules if you want its fee scale and administration.
If neither party is Paraguayan or based in Paraguay and you want finality, add an express waiver or limitation of annulment (art. 53).
On a dispute, send the written request for arbitration to interrupt limitation (art. 32), and request appointments in writing to start the 30 day clock (art. 16).
Check each arbitrator's disclosure and diary 15 days for any challenge (art. 19).
Raise jurisdictional objections in the defence at the latest, and procedural objections within 5 business days or the agreed time, to preserve annulment grounds (art. 8, 24 and 52).
Pay the advance on costs within 30 days of the request to avoid suspension (art. 67).

Common traps

Unless the law says business days, its time limits are calendar days counted from the day after receipt, with only a final non working day rolling over (art. 7); the 30 day appointment and 10 day acceptance periods are calendar days.
Courts are expressly barred from suspending an arbitration by injunction, amparo or any other measure (art. 9), so a parallel court action will not stop the case.
An even number of arbitrators in the clause is cut automatically to the next lower odd number (art. 15).
Suing in court on a matter covered by the clause, or not objecting in time, waives arbitration for the matters claimed (art. 12).
Non signatory affiliates and parents can be drawn into the arbitration if they took a decisive part in the contract (art. 13).
Equity decisions require express authorization and are excluded where public policy rules apply or a state entity is a party (art. 2, 41 and 42).
Court ordered pre arbitral measures lapse if the arbitration is not started within 10 days or the tribunal is not constituted within 90 days (art. 26).
A late award is not annullable unless the parties expressly made lateness a ground (art. 44).
Arbitration clauses imposed on consumers are void (Ley 1334/1998 art. 28 d, as amended by Ley 5427/2015).

Sources

← Courts, arbitration and enforcement in Paraguay: the 2025 arbitration law, foreign awards and judgments, the New York Convention and ICSIDEnforcing arbitral awards in Paraguay: annulment, execution of domestic awards and recognition of foreign awards →

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