Arbitration procedures and practice in Spain: overview

by Alfonso López-Ibor, Pablo Henríquez de Luna and Virginia Jover, Ventura Garcés & López-Ibor Abogados

A Q&A guide to arbitration law and practice in Spain.

The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.

To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A tool.

This Q&A is part of the multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-guide.

Use of arbitration and recent trends

1. How is commercial arbitration used and what are the recent trends?

Use of commercial arbitration and recent trends

The Arbitration Act 60/2003 entered into force in 2004. It represents a leap forward in the development of the arbitration system as a method of resolving disputes over commercial contracts.

The Arbitration Act is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law). It seeks to:

  • Harmonise the legal regime for arbitration (in particular for international commercial arbitration).
  • Promote the dissemination of the practice of arbitration.
  • Promote the unity of criteria in the application of arbitration, to promote greater efficiency in settling disputes.

Advantages/disadvantages

The introduction of arbitration in Spain is slower in comparison with the rest of Europe and in many other countries, but is progressive. As an alternative to court litigation, it aims to offer an expeditious, effective and cheaper resolution of disputes, interpretations, breaches or non-performances.

The disadvantages of arbitration in Spain are higher costs, the fact that the potential outcome is non-challengeable, the difficulty in ensuring that truly impartial arbitrators are appointed, among others.

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

The Spanish legislator follows the recommendations of UNCITRAL, under the UNCITRAL Model Law, and takes into account UNCITRAL's work incorporating technical advances and meeting the new needs of arbitration practices, particularly with regard to the requirements of arbitration agreements and the adoption of precautionary measures.

The UNCITRAL Model Law is specifically designed for international arbitration; but its purposes and solutions are valid, in the vast majority of cases, for domestic arbitration.

The principal legislation that governs arbitration in Spain is:

  • Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention).
  • European Convention on International Commercial Arbitration 1961 (Geneva Convention).
  • Arbitration Act 60/2003 (Arbitration Act). This is applicable to arbitration within Spanish territory, whether of a domestic or international nature.
  • Spain is a party to several multilateral treaties that with matters of restricted scope and provide for arbitration to settle disputes. For example, the Geneva Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR Convention).
  • Spain is also party to bilateral treaties on enforcement of judgments. In most cases these cover arbitration awards and the law to be applied to an award from or which are recognised in countries which are not members of the New York
  • Convention. However, the relevance of bilateral treaties is minor as the New York Convention is ratified by more the 100 countries.
  • Spain has entered into a significant network of bilateral treaties on investment protection, which also have clauses on submission to arbitration, either under UNCITRAL or the International Centre for Settlement of Investment Disputes (ICSID).

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

The Arbitration Act includes several mandatory provisions, such as:

  • Article 1: the Arbitration Act applies to domestic and international arbitration conducted in the territory of Spain.
  • Article 2: disputes on matters regarded by law to involve freedom to contract or choice can be settled by arbitration.
  • Article 8: the courts having jurisdiction over arbitration assistance and supervision.
  • Article 9: the form and content of the arbitration agreement.
  • Article 11: the arbitration agreement binds the parties to its terms and prevents courts from hearing disputes submitted to arbitration, where invoked by the party concerned as a plea to the jurisdiction of the court.
  • Article 15: appointment of arbitrators. The parties are free to agree on a procedure for appointing the arbitrator or arbitrators, providing the principle of equality is honoured.
  • Article 22: arbitrators are empowered to determine their own competence (kompetenz-kompetenz) (see Question 7).
  • Article 23.2: irrespective of the form adopted by arbitral decisions on interim measures, the rules on setting aside and enforcement of awards will apply to them.
  • Article 40: action to set aside awards.
  • Article 41: grounds (numerus clausus).

4. Does the law prohibit any types of disputes from being resolved via arbitration?

Only disputes relating to matters with free disposal of the parties can be settled by arbitration (Article 2, Arbitration Act). This means that criminal, tax, labour or family issues cannot be submitted for arbitration. However, industrial property and issues subject to company bye-laws are eligible for arbitration.

Limitation

5. Does the law of limitation apply to arbitration proceedings?

The law of limitation applies to both arbitration and judicial proceedings. In commercial disputes, the legal statute of limitations for:

  • Contractual claims is five years (Article 1964,  Civil Code).
  • Tort liability is one year (Article 1968.2, Civil Code).

However, this period can be interrupted by the claiming party through a judicial or extrajudicial action which will restart the statute of limitations period. Finally, there are other limitations under the Commercial Law or the Corporation Law.

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Source

Ventura Garcés & López-Ibor Law Firm

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