Madrid court rules on whether party had waived agreement to arbitrate | Practical Law

Madrid court rules on whether party had waived agreement to arbitrate | Practical Law

Alejandro López Ortiz (Senior Associate) and Silvia Martínez (Junior Associate), Lovells LLP

Madrid court rules on whether party had waived agreement to arbitrate

Practical Law Legal Update 6-501-3985 (Approx. 2 pages)

Madrid court rules on whether party had waived agreement to arbitrate

Published on 04 Feb 2010International, Spain
Alejandro López Ortiz (Senior Associate) and Silvia Martínez (Junior Associate), Lovells LLP
In its Order 38/2009 of 27 January, the Court of Appeal of Madrid has considered whether a letter amounted to a waiver of an arbitration agreement.
A party to a contract filed a claim before the Courts of Madrid arguing that the other party had waived its consent to arbitration by stating in a letter that "we will have to turn to the court for the defence of our interests". The claimant also alleged that, in any event, an arbitration agreement contained in a standard form contract must be considered invalid.
The Court of Appeal of Madrid dismissed the claimant's argument, concluding that a generic reference to "turn to the courts" in an exchange of communications between the parties cannot be considered as a waiver of the agreement to arbitrate. The court also rejected the argument that the arbitration clause was invalid, stating that a company cannot disregard its consent to arbitration based on the sole fact that the agreement is contained in a standard form contract. The court thus re-affirmed that a higher degree of diligence is expected from companies when entering into a contract, including a considered decision when agreeing to arbitrate.
For further information on the agreement to arbitrate contained in standard form contract between companies in Spain, see Legal update, The agreement to arbitrate between companies: no matter how, no matter where).