THE AUTHORS:
Marta Cerrada Pérez, Senior Associate at Clyde&Co
Antonella Toledo, Trainee Associate at Clyde&Co
Clyde & Co’s Young Arbitration Group provides a unique insight into international arbitration issues through the lens of young international arbitration practitioners working across different jurisdictions. In this series with Daily Jus, Clyde & Co explores the evolving landscape of arbitration reforms, analyzing recent developments, legislative changes, and their impact on dispute resolution worldwide.
Arbitration has become the favoured method of dispute resolution in Spain. This preference is driven by arbitration’s inherent benefits, such as procedural flexibility, confidentiality, and the ability to choose specialised arbitrators with expertise in specific industries or legal matters. The elevation of arbitration as a preferred mode of dispute resolution has been assisted by Spain’s supportive legal framework and pro-arbitration judicial system. Notably, Madrid is becoming a hub for arbitration, underscoring arbitration’s growing importance in Spain.
This article examines how successful arbitral reform over the years has propelled Spain’s status in the international arbitration world.
The Birth of International Arbitration
Up until the 1980´s, the lack of adequate international commercial arbitration services in Spain in the face of the increase in international trade relations, particularly in the Ibero-American area, had determined that businessmen and traders in the region were forced to rely on institutions from a wholly different cultural and linguistic context to solve their disputes. This circumstance resulted in a strain on relationships with Spain in the context of international commerce. The negative impact of this strain gave way to the formal introduction of legislation on arbitration in Spain in the year 1988 by way of the Law 36/1988, of 5 December (the “1988 Act”).
The First Reform
Decades later, the first reform came with the Spanish Arbitration Act of 2003 (“SAA”), Law 60/2003, which aimed to base the existing Spanish legal provisions on arbitration on the UNCITRAL (United Nations Commission On International Trade Law) Model Law on International Commercial Arbitration (2006). Spanish legislators saw the value of the efforts made by UNCITRAL to incorporate technical advances and meet the emerging requirements of the arbitration practice. Among these demands was the need for a greater flexibility and adaptability of the rules to the peculiarities of each scenario to better integrate both continental European and common law traditions to aid the resolution of disputes between economic operators from different jurisdictions.
Beyond adopting the UNCITRAL model, the SAA pursued its own goals. First, as the number of States that had adopted the Model Law was ever growing, the SAA aimed to establish Spain as an attractive arbitration stage by harmonizing legal provisions and the signing of arbitration agreements. Second, it sought to correct the gaps and imperfections detected in the text from the 1988 Act, particularly as regards to the requirements that were set for arbitration agreements and the adoption of interim measures.
The new law opted for an anti-formalist criterion for the arbitration agreement, moving beyond the requirement of a written pact within the main contract as tthe only valid format. Instead, it recognizes modern technologies that create recorded evidence and allow for subsequent consultation, ensuring their validity. This change also affirms the legitimacy of arbitration clauses by reference, emphasizing that the parties’ intent prevail over the formal requirements of the contract.
Additionally, the SAA specified that:
- The pendency of a declinatory action in a judicial proceeding cannot hinder an arbitration from initiating or proceeding;
- The request of interim measures to a court does not, in any way, imply a tacit renunciation of arbitration; and
- Judicial intervention is residual, applicable only where it is necessary to replace the will of the parties in relation to the appointment of arbitrators and that judges are not called to carry out, either ex officio or at the request of the party, a control of the validity of the arbitration agreement, strengthening the competence and jurisdiction of the arbitrators.
The SAA was a success. As a result of this arbitral reform, there was a notable expansion of international arbitration in Spain. The number of contractual relationships that chose arbitration agreements increased greatly, a considerable amount of doctrine on arbitration has been generated, institutional arbitration centres have been established, and the use of judicial procedures to support and control arbitration were standardized.
The Second Reform
Nonetheless, the second reform came in with Law 11/2011, which not only introduced several adjustments to the SAA but also, as a complement to these reforms, amended other laws to make their provisions compatible with arbitration. The most important novelties introduced refer to reforms aimed towards increasing the legal security and effectiveness of arbitral proceedings such as:
- Establishing the possibility to apply for interim measures prior to the arbitration proceedings;
- Strengthening the role of arbitral institutions;
- Expanding the range of professionals who can act as arbitrators; and
- Allowing the parties, witnesses and experts to intervene in the proceedings in their own language.
Other relevant reforms concerning the arbitration award included:
- Establishing a resolution in favour of arbitration when the award is rendered out of time;
- Imposing a requirement for reasoned awards;
- The addition of specific remedies in case of partial overreaching of the award when it resolved issues not susceptible or submitted to arbitration; and
- An improvement in the procedure for annulment of the award and the elimination of the difference between a final and definitive award, establishing that the award will always produce the effects of res judicata, even if annulment or revision actions are brought up against it.
Moreover, the reform provided for the reassignment of judicial functions. The High Courts of Justice were attributed jurisdiction over the appointment and removal of arbitrators and jurisdiction over the hearing of the action of annulment of the award and the exequatur of foreign awards. This change implies the legislator´s recognition of a greater role for the institution of arbitration by attributing jurisdiction to hierarchically superior and more specialized judicial bodies.
The final reforms came by way the introduction of the possibility for bylaws to provide for the submission to arbitration of corporate disputes as well as the possibility of annulling registrable company agreements by arbitration award. Moreover, the single additional provision of Law 11/2011 established a new procedure, similar to arbitration but of a gubernatorial nature, to resolve conflicts between the State Administration and its instrumental entities.
Conclusion
Ultimately, the first and second sets of reforms have had positive effects on the arbitral practice in Spain. The SAA has been improved to address a number of issues that seek to extend safeguards and broaden the security and efficiency of the proceedings, all in an effort to promote the country as an attractive seat for international arbitration. All signs suggest that Spanish lawmakers will continue to take the lead in this regard.
ABOUT THE AUTHORS
Marta Cerrada Pérez is a Senior Associate at Clyde&Co in Madrid. She is a qualified solicitor in Spain with experience at various litigation stages before the different Spanish Courts, and she has been involved in both domestic and international claims. She has extensive dispute resolution experience covering litigation and international arbitration (including under ICC and DIAC Rules, among others).
Antonella Toledo is a Peruvian lawyer and a trainee at Clyde&Co’s Madrid office. She has extensive experience in the construction and infrastructure sector, from counselling tenders for the award of P3 state infrastructure projects, subsequent contractual support as well as advising on arbitration proceedings derived from infrastructure concession contracts for public use and public and private works.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
