Spain: arbitration round up 2010/2011

An article highlighting the key arbitration related developments in Spain in 2010/2011. 

Alejandro López Ortiz (Senior Associate), Ana Morales (Associate) and Silvia Martínez (Junior Associate), Hogan Lovells International LLP

Top developments of 2010

The forthcoming amendments to Spain's Arbitration Act

Probably one of the most debated arbitration topics during 2010 in Spain has been the proposed amendment to the Spanish Arbitration Act. The draft of the bill amending the Act was made public by the Spanish Government in March 2010, and it is currently being debated by the Spanish Parliament.

As previously commented (see Legal updates, Future amendments to the Spanish Arbitration Act (www.practicallaw.com/8-501-6252) and Spain unveils draft Bill requiring higher threshold for awards to be found contrary to public policy (www.practicallaw.com/7-502-2258)), the bill is part of the Government's initiative to modernise Spain's justice system by promoting, among other things, alternative methods of dispute resolution.

The proposed amendments include:

  • Removal of the requirement for arbitrators to be lawyers.

  • Re-allocation of judicial competence in relation to proceedings in support of arbitration (with proceedings being allocated to the Superior Courts of Justice of each of the Spanish Autonomous Regions (Comunidad Autónoma), instead of to the First Instance Courts).

  • Qualification of the public policy ground for setting aside an award, requiring a "manifest" breach of public policy.

  • New proceedings for objecting to the jurisdiction of the courts on the basis of the existence of an arbitration agreement.

  • Depriving arbitrators of the faculty to act ex aequo et bono in domestic arbitrations, even if the parties have so agreed.

  • New interpretation proceedings for awards where arbitrators partially exceed their functions.

  • Arbitral institutions are obliged to monitor arbitrators' ability, the transparency in their designation and their independence.

  • Regulation of corporate arbitration concerning the contesting of corporate agreements or decisions.

These amendments are now being debated by the Spanish Parliament before their final approval and enactment. Some of the Spanish arbitration community have expressed their concern and resistance to some of the proposed changes. In particular, the amendments that seem to be finding greater opposition are:

  • The new proceedings for objecting to the jurisdiction of the courts.

  • The question of whether arbitrators should or should not be lawyers.

  • The removal of the arbitrators' faculty to act ex aequo et bono in domestic arbitrations.

The political debate seems to be revolving around some of the concerns of the Spanish arbitration community (see Legal update, Spain unveils draft Bill requiring higher threshold for awards to be found contrary to public policy (www.practicallaw.com/7-502-2258)). However, it will be necessary to wait until the enactment of the new Bill to see the new framework for arbitration in Spain.

General modernisation of the arbitration scene in Spain

In the context of the modernisation of arbitration in Spain, and following the launch of a more modern set of rules on 1 January 2009 by the Madrid Court of Arbitration (see Legal update, The New Rules of the Court of Arbitration of Madrid start walking (www.practicallaw.com/1-386-5169)), other Spanish arbitral institutions have followed suit. In this regard, there has been a general tendency to loosely follow the Arbitration Model Rules launched some time ago by the Spanish Club of Arbitration.

On 15 May 2010, the New Rules of the Spanish Court of Arbitration entered into force (see Legal update, The Spanish Court of Arbitration launches a new set of Rules (www.practicallaw.com/5-502-4376)). The most significant feature of these new rules is the shortening of the proceedings, mainly by reducing the deadline to render the award. In ordinary proceedings the award must be rendered within 5 months from the filing of the Answer, with the possibility of a single extension of one month. Additionally, the new rules offer parties the choice of two forms of expedited proceedings: summary and speed proceedings.

On 20 July 2010, the Arbitration Court of the Madrid Bar Association (Corte de Arbitraje del Ilustre Colegio de Abogados de Madrid) launched a new set of rules for arbitration proceedings administered under its auspices. One of the main characteristics of the new rules is the introduction of abbreviated arbitral proceedings for claims of under €100,000 or for claims with an undetermined amount. Together with the new set of Rules, the Arbitration Court reviewed its list of arbitrators and the qualifications required to be part of that list, as well as the administration fees and arbitrator fees in order to make the institution more attractive and affordable.

Moreover, another private arbitration institution, the Civil and Commercial Court of Arbitration (Corte Civil y Mercantil de Arbitraje or CIMA), has also followed this trend by launching a new set of rules.

Finally, another step in the modernisation of the arbitration scene in Spain came with the launch, on 28 September 2010, of the new online arbitration management platform of the Madrid Court of Arbitration, called TAO-OAM, and its new website (see Legal update, Madrid Court of Arbitration launches online arbitration management platform and new website (www.practicallaw.com/8-503-4703)). Both initiatives evidence the court's commitment to technologically revolutionise the management of its arbitration cases. Although for now the use of this platform will be voluntary (requiring the agreement of both parties to the arbitration proceedings) it will be used internally by the court, allowing it to provide a faster service to its users.

Changes in the Spanish Criminal Code affecting arbitration

As previously reported (see Legal update, The relationship between arbitrators and parties under Spanish criminal law (www.practicallaw.com/4-502-6700)), an amendment to the Spanish Criminal Code entered into force on 23 December 2010.

This recent amendment implied a step further in the fight against corruption and corporate crimes. Arbitration practitioners must be aware that parties to arbitration proceedings who give or offer a bribe to an arbitrator will now be punished under the Spanish Penal Code. Until now, only individuals who offered, promised or gave a bribe to a judge or other public servant would be punished. As of 23 December 2010, this provision has been extended to any "person exercising a public function", which includes not only arbitrators but also expert witnesses and, arguably, could include the staff of arbitral institutions.

However, it is noteworthy that while the legislation now fully regulates the crime of bribery with regards to arbitrators and parties to arbitration proceedings, the same is not true for other situations which could occur in arbitration - such as trading influence or wilful misapplication of the law which are not qualified as crime unless committed by public servants and authorities (which does not include other persons exercising public functions).

 

Anticipated developments in 2011

The changing scene for arbitration in Spain

The enactment of the amendments to the Spanish Arbitration Act will become the key development in the Spanish arbitration arena for 2011. It will be interesting to see whether the Spanish Parliament takes into account the concerns that the Spanish arbitration community have regarding some of the proposals (see "The forthcoming amendments to Spain's Arbitration Act" above).

On 30 December 2010, a new court specialising in arbitration (First Instance Court no. 101) opened in Madrid (see Legal update, Madrid opens specialist arbitration court). This newly created court will be the competent court for most new arbitration-related matters in Madrid in 2011 and going forward. We will continue to monitor the effect of the new court on the arbitral process over the forthcoming year.

 
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