Spain: The New Spanish Arbitration Act

A new Spanish Arbitration Act was approved on December 23, 2003 and will come into force in March, 2004. The new Arbitration Act replaces the one previously in force, dating from 1988.

Although arbitration is increasingly seen in Spain as a real alternative to dispute resolution in Court, the execution of arbitration agreements is not as frequent as in other jurisdictions. This is why the main aim of the new Act is to promote the development of arbitration in Spain. Furthermore, the new Act tries to draw Spanish regulations on arbitration closer to international standards. This is considered as a way of increasing the number of cases in which Spain can be appointed as the venue for the arbitral tribunal in international disputes, especially if the two parties involved in the dispute are domiciled in Spanish-speaking countries.

The regulations contained in the new Act are mainly founded upon the uncitral Model Law on International Arbitration adopted on June 21, 1985, which is regarded in the new Act as the best integration of continental and common law arbitration rules. International companies should be, as a consequence of the new Act, more familiar with Spanish rules on arbitration. This should increase the number of international disputes submitted to arbitral tribunals located in Spain.

The main rules included in the new Act, which tends to remove formalities and facilitate the development of arbitration proceedings, are the following:

1. The new Arbitration Act will apply to any arbitration proceedings carried out in Spain, regardless of the nationality or domicile of the parties. There are only minor adaptations to international arbitration cases, which are precisely defined in the Act.
2. States and State-controlled entities cannot invoke any privileges or immunities under their own Law.
3. The requirements of arbitration agreements are made more flexible. Arbitration agreements may be recorded by electronic means, executed by reference to a separate document or derived from the exchange of communications between the parties.
4. The arbitral tribunal may be made up of one or more arbitrators. Where the parties have not agreed upon the number of arbitrators, the arbitral tribunal will be composed of one single arbitrator.
5. The arbitral tribunal is authorised to decide on its own jurisdiction (Kompetenz-Kompetenz rule).
6. The arbitral tribunal may render one or more awards. As a consequence, the arbitral tribunal may render separate awards for matters which can be treated separately.
7. The arbitral tribunal may adopt interim measures, which is one of the most important developments included in the new Act. Measures adopted by the arbitral tribunal shall be enforced by judicial courts. Judicial courts may also directly adopt interim measures related to arbitration proceedings.
8. The procedural rules are very flexible and may be determined by the parties or, as regards those aspects not agreed by the parties, by the arbitral tribunal. If the parties have submitted their dispute to an arbitral institution, the procedural rules of the institution will automatically apply.
9. The new Act gives the parties a wide discretion to decide upon the Law applicable to the merits of the dispute. The arbitral tribunal will decide at its discretion only if the parties have expressly agreed as such.
10. The award is immediately enforceable, even if an action for its annulment has been filed before the courts.
11. Courts of First instance may intervene in the arbitration proceedings in order to support the functions of the arbitral tribunal, for the following purposes: (i) to appoint the members of the arbitral tribunal, if the parties do not reach an agreement; (ii) to assist the arbitral tribunal in obtaining evidence; (iii) to decide on and enforce interim measures; and (iv) to enforce the arbitration award. Provincial Courts (Courts of Appeal) will deal with the actions for annulment of arbitration awards. These actions may only be based on certain specific grounds.
12. The recognition and enforcement in Spain of foreign arbitration awards is, as a general rule, subject to exequatur proceedings, pursuant to the rules of the New York Convention of June 10, 1958, provided there are no more favourable provisions applicable to the recognition in other treaties (bilateral or multilateral) in each particular case.