Trade and Commercial Law Assessment - Honduras - Economic ...

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS arbitral award. It is expected that the Tegucigalpa arbitration center will be operating at full capacity in 5 years. The center is focused on national arbitration and arbitrators’ training. The director of the center has said that foreign language arbitrations can be handled, provided that awards are translated into Spanish, but foreign language arbitration has yet to take place. In Honduras it is mandatory to be part of the bar, Colegio de Abogados(Colegio), to practice law, although there are no special requirements for gaining admission to the Colegio. The Colegio has authority to suspend lawyers through the tribunal de honor but rarely does so. The Colegio has a division specializing in issues related to notaries called Instituto de Notariado. The Colegio provides training to lawyers but has no mandatory requirements for continued legal education. The federation of private business, Consejo Hondureño de la Empresa Privada (COHEP), has organized conferences on rule of law issues and has presented documents with relevant proposals. COHEP has also lobbied the government for various reforms. E. SOCIAL DYNAMICS Binational chambers of commerce, such as the Honduran-American Chamber of Commerce, have demanded changes in the law on distribution contracts to make them fair to the owners of the products and hence to foster opportunities associated with the introduction of foreign goods and firms. There are, however, no pending initiatives that would correct the imbalance in these contracts. If CAFTA is approved, the domestic law for distribution contracts would be indirectly repealed by the treaty’s negotiated provisions related to distribution contracts. Banks have requested legal certainty for electronic transactions and electronic signatures to provide a clear legal context for incorporating such transactions and avoiding fraud. As in the case of distribution contracts, however, such provisions have not been adequately addressed by the government. The chambers of commerce have proposed a reduction in the bureaucratic steps needed to notarize powers of attorney granted from abroad and those to be used abroad. Nevertheless, steps have not been taken to reduce or simplify these procedures. There is wide agreement regarding the need for judicial reform. Nonetheless, no substantial reform initiatives are imminent. The Law on Judicial Career is not applied by the Supreme Court and has thus been largely unable to create the changes it was intended to make. The business community demands quicker judicial procedures. Some proposals point to the need to implement oral procedures. The Supreme Court is working on a new civil procedure code, but although the new code incorporates some oral procedural steps, procedures will remain primarily of a written nature. Arbitration centers should be promoted as an alternative means of enforcing contracts. There is a sense among some businesspeople that arbitration could help solve disputes quickly and allow businesses to circumvent the judicial system until improvements are made. IV-5
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS F. RECOMMENDATIONS ♦ Legal reforms are needed in contract law to provide legal certainty to modern business practices. Laws on leasing, franchising, factoring, electronic contracts, and electronic signature should be drafted and approved. ♦ The Law on Distribution Contracts should be reformed to eliminate bias against foreign actors. If CAFTA is not approved, a working group should be set up and a new law on distribution contracts should be drafted and approved. ♦ The steps needed to notarize a power of attorney to be used abroad and to legalize a foreign power of attorney should be reduced. A working group should be appointed to address this issue and to determine whether Honduras should become a signatory of the Inter-American Convention on the Legal Regime of Powers of Attorney Abroad. ♦ The judicial system is in need of significant reform. An independent body should be created to appoint, train, and monitor judges. Civil society should be significantly represented therein. The Law on Judicial Career should be applied. ♦ The legal profession in general should undergo reform. Admissibility requirements for lawyers and notaries should be stiffened and rigorously enforced. Consideration should be given to international practices such as an admission or bar examination and mandatory continuous legal education for lawyers. Similarly, law schools should be subject to strong control and supervision. ♦ Legal education should be reformed and modernized. Law schools should both have a required core curriculum and be allowed to implement modern legal themes into their programs. Law schools should promote student specialization during the final portion of programs through provision of elective courses. Existing lawyers and judges should be trained in the importance of rule of law, basic legal principles, international law, international business law, foreign jurisprudence, and doctrine such as “substance over form,” and economic analysis of law. Using a case methodology to teach lawyers and judges allows greater flexibility in interpretation of the law and should be encouraged. Overall legal education reform should include training in basic legal principles for common citizens to give civil society the means of monitoring the rule of law and shaping the greater legal climate. ♦ More arbitration centers should be created. Specialized arbitration centers devoted to settling disputes of SMEs should be created to handle the specific needs of this important economic sector. Similarly, a promotional campaign on the use of alternative dispute mechanisms could increase the use of these valuable alternative means of legal settlement. Through legal reform and training of judges, the use of amparo should be restricted to exceptional cases when an arbitration award or arbitration clause is involved. ♦ The draft civil procedure code should be updated. Oral procedures should be the standard. International experts should advise on cases in which oral procedures are viable as well as on the types of oral procedures to be included in the civil procedure code. The new code also should allow official communications to occur electronically, by fax, and IV-6
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