The Spanish Court of Arbitration produced a new set of rules that entered into force on 15 May 2010 (see Legal update, The Spanish Court of Arbitration launches a new set of Rules). On 15 March 2011, some amendments were introduced to these rules. The main and most noteworthy addition is a new procedure of appeal before another arbitral panel to which the parties may opt-in, either when the arbitration agreement is concluded or at a later stage.

This new procedure of appeal will be heard by a second instance arbitral tribunal consisting of three arbitrators designated by the Spanish Court of Arbitration, unless the parties had agreed on a different mechanism for appointing the arbitrators.

The scope of the appeal is twofold. On the one hand, the parties have the possibility of relying on the grounds for setting aside the award contained in the Spanish Arbitration Act 60/2003 (SAA). On the other hand, the rules provide for a full review of the merits of the case (and even allow for the production of new evidence in the second instance in specific cases), with the possibility of requesting the reversal of the first award and the rendering of a new one.

This uncommon feature breaks with the general international practice which conceives arbitration as a "sole instance" procedure and will surely provoke some controversy among the arbitration community. For the time being, it is possible to anticipate a number of practical problems in its application. For example, it is possible to foresee difficulties from the fact that the two month deadline for the filing of an action to set aside an award contained in the SAA starts with the notification of the award, and the SAA does not provide for the possibility of suspending this deadline while the appeal against the award is decided (which is more than likely to take more than two months).

Another issue that may give rise to practical difficulties is the enforceability of an award that is being appealed. The SAA contains no provision precluding an award under appeal from being enforced. It also does not provide for any mechanism to undo enforcement measures in case the award is reversed at the appeal. Although the situation is similar to the provisional enforcement of awards under annulment (which is regulated) it is unclear whether these rules would also apply to the awards under appeal.

Another problem that may be envisaged is the undermining of confidence in the system by arbitration users in case many awards are reversed in appeal, similar to what is happening in ICSID arbitration, where the frequent annulment of awards by ad hoc committees is having a negative impact on the credibility of ICSID arbitration.

We will have to wait to see how this mechanism of appeal is received by arbitration users and the arbitral community and how these anticipated practical problems are dealt with by the institution and, more importantly, by the Spanish courts.