Law and Practice
Pedro Moreira/Mercedes San Juan
SCA LEGAL, S.L.P.
1. What is the relevant legislation on arbitration in Spain? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
In Spain, arbitration is ruled by Law 60/2003, as revised in 2009, 2011 and 2015 (the Arbitration Act). This legislation applies to all arbitrations taking place in Spain that not are covered by special rules. In case of arbitrations covered by special rules (eg, consumer arbitration, administrative arbitration), the Arbitration Act still applies to all matters not covered by such rules (ie, subsidiarily).
The Arbitration Act covers all relevant issues in arbitration, including the arbitration agreement and its effects, the arbitrators and their powers, the arbitration proceedings, and the award and its effects and validity. Under the act, arbitration agreements must be in writing; an oral arbitration agreement is thus void, at least in the case of domestic arbitration.
The Arbitration Act does not apply – not even subsidiarily – to arbitration in labour matters (eg, in collective labour agreements), which is covered only by those few rules foreseen in the labour legislation regarding certain specific issues (eg, strikes, elections of labour representatives, interpretation of collective labour agreements). In some labour matters, arbitration of disputes may be deemed mandatory by the authorities – something that would never happen in the case of arbitrations covered by the Arbitration Act, for which a valid arbitration agreement is always a prerequisite.
2. Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
As a rule, the Arbitration Act applies to both domestic and international arbitration that takes place in the territory of Spain (Article 1). Certain provisions apply to international arbitration only (eg, Article 2.2 on limitation of the prerogatives of parties that are sovereigns or companies, Article 9.6 on the validity of the arbitration agreement and Article 34 on the rules applicable to the substance of dispute).
Pursuant to Article 3 of the Arbitration Act, an arbitration is deemed international if any of the following circumstances occurs:
- The parties reside in different countries at the time the arbitration agreement is concluded;
- The place of arbitration, the place where a substantial part of the obligations arising from the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected is different from the country where the parties reside; or
- The relationship from which the dispute arises affects the interests of international trade
3. Is the arbitration legislation in Spain based on the UNCITRAL Model Law on International Commercial Arbitration?
The Arbitration Act follows the 1985 UNCITRAL Model Law on International Commercial Arbitration. However, the amendments to this model law adopted in 2006 were not incorporated into the Arbitration Act by the three amendments to the Arbitration Act enacted since 2009.
4. Are all provisions of the legislation in Spain mandatory?
No. Some provisions of the Arbitration Act are clearly mandatory, such as those on:
- the types of disputes that cannot be submitted to arbitration;
- the requirement that the arbitration agreement be in writing;
- the powers of the courts in matters submitted to arbitration;
- the rules of interpretation in certain matters;
- the independence and impartiality of the arbitrators;
- the need for the parties to be treated equally and to have full opportunity to present their case;
- the requirement that the award be in writing; and
- the effects, ground statement and the grounds for challenging an award.
Other than these, most provisions are applicable only if the parties – or, in a few cases, the arbitrators – have not opted for a different solution (eg, rules on deadlines and notifications, number of arbitrations, challenging an arbitrators, provision of funds deemed necessary to cover the arbitrators’ fees and expenses, procedural rules to be followed by the arbitrators in conducting the arbitration, place and language of the arbitration, oral hearings, the effects of default of a party, the appointment of experts to report on certain issues, choice of rules of law pursuant to which the dispute will be decided, deadline for delivery of the award, arbitration costs, timeframe for retention of documentation of the arbitration).
5. Are there any current plans to amend the arbitration legislation in Spain?
For the time being, no plans to amend the arbitration legislation have been disclosed.
6. Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Spain has been a party to the 1958 New York Convention since 1977. Spain has made no reservations to this convention.
7. Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Yes. Spain has been a party to the 1961 European Convention on International Arbitration since 1975 and has also concluded several bilateral treaties on international arbitration (eg, with Argentina, Austria, Brazil, Chile, France, Italy, Mexico, Portugal and Uruguay).
Arbitrability and restrictions on arbitration
8. How is it determined whether a dispute is arbitrable in Spain?
For a dispute to be arbitrable in Spain, the only prerequisite is that the place of arbitration, as chosen by the parties or the arbitrators, be in Spain. Therefore, neither the parties nor the dispute need to have any connection with Spain for the dispute to be arbitrable in Spain; it lies in the parties’ full discretion to have the dispute arbitrated in Spain.
9. Are there any restrictions on the choice of seat of arbitration for certain disputes?
Pursuant to Article 26.1 of the Arbitration Act, the parties are free to agree on the place of arbitration without restriction. Failing such agreement, this will be determined by the arbitrators, having regard to the circumstances of the case and the convenience of the parties.
Notwithstanding the place chosen for arbitration under this provision, the arbitrators may, unless the parties have agreed otherwise, meet at any place they deem appropriate to hear witnesses, experts or the parties, inspect goods or documents, or examine persons. Arbitrators may hold consultation meetings at any place they deem appropriate (Article 26.2).
10. What are the validity requirements for an arbitration agreement in Spain?
The arbitration agreement must express the parties’ willingness to submit to arbitration all or some of the disputes arising between them in respect of a given legal relationship, whether contractual or otherwise (Article 9.1 of the Arbitration Act).
The arbitration agreement must be in writing, in a document signed by the parties or an exchange of letters, telegrams, telexes, faxes or other telecommunication methods that ensure a record of the agreement is kept (this requirement will be satisfied when the arbitration agreement appears and is accessible for subsequent consultation in an electronic, optical or any other type of format) (Articles 9.3 and 9.4).
In addition, the Arbitration Act accepts that there is an arbitration agreement when, in an exchange of statements of claim and defence, the existence of an arbitration agreement is alleged by one party and not denied by the other (Article 9.5).
In respect of international arbitration, the arbitration agreement will be valid and the dispute arbitrable if they meet the requirements laid down by any of the following:
- the rules chosen by the parties to govern the arbitration agreement;
- the rules applicable to the substance of the dispute; or
- the rules laid down in Spanish law (Article 9.6).
The Arbitration Act also provides for intra-enterprise arbitration agreements in Article 11bis. Under this provision, these agreements need to be included in the corporate by-laws by a two-thirds majority of the shares or stakes into which the share capital of the corporation is divided.
11. Are there any provisions of legislation or any other legal sources in Spain concerning the separability of arbitration agreements?
Yes. At least for certain purposes (eg, validity of the arbitration agreement or any others whose acceptance would prevent consideration of the merits of the case), Article 22 of the Arbitration Act treats the arbitration agreement as independent. In this sense, if an arbitration clause forms part of a broader contract, it will be treated as an agreement independent of the other terms thereof. In addition, the arbitrators’ decision to the effect that the contract is null and void will not ipso iure void the arbitration clause itself.
12. Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
Yes. Article 26 of the Arbitration Act provides that if the parties have not agreed on the place of the arbitration, this will be determined by the arbitrators, having regard to the circumstances of the case and the convenience of the parties.
As to the language of the arbitration, Article 28.1 provides that if the parties have not agreed on the language or languages to be used in the proceedings, and this issue cannot be determined on the grounds of the circumstances of the case, arbitration will be conducted in any of the official languages of the place of the proceedings. Nonetheless, a party that alleges it is unfamiliar with such language will be entitled to participate in hearings, rebuttals and defence in its own language.
Objections to jurisdiction
13. When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
According to Article 22 of the Arbitration Act, a party must raise an objection to the jurisdiction of the tribunal no later than on submission of the statement of defence. The fact that a party has appointed or participated in the appointment of the arbitrators will not preclude it from lodging such an objection.
An objection that the arbitrators are exceeding the scope of their jurisdiction must be made as soon as the matter alleged to be beyond the scope of their jurisdiction is raised during the arbitration proceedings. The arbitrators will admit later objections only if the delay is justified.
14. Can a tribunal rule on its own jurisdiction?
Yes, according to Article 22 of the Arbitration Act, arbitrators have the power to rule on their own jurisdiction.
15. Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
No. The arbitrators’ decision that they have jurisdiction to hear the case may be challenged only by lodging an application to set aside the award in which it is adopted (Article 22.3 of the Arbitration Act). This understanding is reinforced by Article 7 of the act, which provides that no court will intervene in matters governed by the act, except where so provided in the same.
16. Are there any restrictions on who can be a party to an arbitration agreement?
No. The law includes no restrictions in this respect. While some disputes are not arbitrable, as set out in Article 2.1 of the Spanish Arbitration Act (matters which are not within the free disposition of the parties), there are no restrictions on the parties. All persons can be a party to an arbitration regarding matters not excluded from arbitration.
17. Are the parties under any duties in relation to the arbitration?
The only duty imposed on the parties is that of confidentiality regarding any information that comes to their knowledge in the course of the arbitration proceedings (Article 24.2 of the act).
18. Are there any provisions of law which deal with multi-party disputes?
No. There are no specific provisions on multi-party disputes, with the exception of a reference in Article 15.1 of the Arbitration Act on the appointment of arbitrators. Nonetheless, this in itself does not mean that a multi-party disputes cannot be resolved through arbitration. Rather, it means that when, under an arbitration agreement, a multi-party dispute is to be heard in arbitration, the arbitrators will need to set rules applicable to any joint litigation issues or apply the regulations governing their court. While Spanish law includes no rules on multi-party disputes, the regulations of several courts of arbitration do include such provisions (eg, those of the Corte de Arbitraje de Madrid and the Corte Civil y Mercantil de Arbitraje).
Applicable law issues
19. How is the law of the arbitration agreement determined in Spain?
In international arbitration, the law of the arbitration agreement is that agreed by the parties. In the absence of such agreement, the arbitration agreement will be deemed valid if it meets the requirements of the law applicable to the substance of the dispute or of Spanish law (Article 9.6 of the Arbitration Act). For matters of interpretation of an arbitration agreement deemed valid under more than one law that go beyond its validity, the arbitrators are free to opt for the law that they consider most appropriate bearing in mind the nature of the dispute.
20. Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will a tribunal determine what it should be?
Yes. The arbitrators will uphold a party agreement regarding the substantive law of the dispute (Article 34.2 of the Arbitration Act). If the substantive law chosen by the parties is unclear, the arbitrators will apply the law that they deem appropriate (Article 34.3 of the act).
Consolidation and third parties
21. Does the law in Spain permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
The Arbitration Act includes no provisions on this. Nonetheless, this does not necessarily mean that the consolidation of separate arbitrations into a single arbitration proceeding is forbidden. It depends on whether the procedural rules agreed by the parties (Article 26.1) allow for such consolidation. In Spain, the regulations of several courts of arbitration contain provisions on the consolidation of arbitration proceedings (eg, those of the Corte de Arbitraje de Madrid and the Corte de Arbitraje del Ilustre Colegio de Abogados de Madrid).
22. Does the law in Spain permit joinder of additional parties to an arbitration which has already been commenced?
The Arbitration Act includes no provisions on this. Nonetheless, this does not necessarily mean that the joinder of additional parties to an arbitration that has already been commenced is forbidden. It depends on whether the procedural rules agreed by the parties (Article 26.1) allow for such joinder. In Spain, the regulations of several courts of arbitration contain provisions on the joinder of additional parties (eg, those of the Corte de Arbitraje de Madrid and the Corte de Arbitraje del Ilustre Colegio de Abogados de Madrid).
23. Does an arbitration agreement bind assignees or other third parties?
No. On the ground of being a contract, the arbitration agreement cannot bind third parties (rule of the res inter alios acta). Third parties can be bound by an agreement only when they accept to be so, in which case they cease to be third parties.
In the case of assignment of an agreement that includes an arbitration clause, in principle, the assignee will be bound by the assigned agreement as a whole – that is, under the exact terms as the assignor – and as such will also be bound to submit a dispute to arbitration as foreseen by the arbitration clause. Nonetheless, this will depend on what the law applicable to the agreement, which is that applicable to the assignment, provides on the subject.
24. How is the tribunal appointed?
Rules for the appointment of the tribunal are set out in Article 15 of the Arbitration Act.
The general rule is that the parties are free to specify the number (which must be odd) of arbitrators or the person who will be appointed and his or her personal requirements (Article 15.1). In addition, they are free to entrust the administration of the arbitration and the appointment of arbitrators to public corporations empowered to exercise arbitral functions (according to their governing statutes) or not-for-profit entities (eg, associations, societies) whose objects entail the conduct of arbitration proceedings. In that case, arbitral institutions will exercise their functions in accordance with the rules approved by the corresponding entity (Article 15.2).
The parties are free to agree on the procedure for the appointment of the arbitrators, provided that there is no breach of the principle of equal treatment. Nonetheless, in the absence of an agreement on this, the following rules set forth in Article 15.2 will apply:
- In an arbitration with a sole arbitrator, the arbitrator will be appointed by the competent court upon the request of any of the parties;
- In an arbitration with three arbitrators, each party will nominate one arbitrator and the two arbitrators thus appointed will nominate the third arbitrator, who will act as the presiding arbitrator. If a party fails to appoint the arbitrator within 30 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of the latest acceptance, the appointment will be made by the court at the request of a party.
- When there are multiple claimants or respondents, one side will nominate one arbitrator and the other side another. If the claimants or the respondents cannot agree on their nomination, all arbitrators will be appointed by the competent court upon request of any of the parties.
- In arbitrations with more than three arbitrators, all will be nominated by the competent court upon request of any of the parties.
If it is not possible to appoint the arbitrators through the procedure agreed by the parties, any party may apply to the competent court to nominate the arbitrators or, if appropriate, to adopt the necessary measures for this purpose (Article 15.3). The court may refuse this request if, on the basis of the documents submitted, it deems that no arbitration agreement exists (Article 15.5).
Where arbitrators are to be appointed by the court, it will produce a list of three candidates for each appointment. In producing this list, the court will have regard to any qualifications established by the parties and will take the measures necessary to guarantee the independence and impartiality of the arbitrators. In the case of the appointment of a sole or a third arbitrator, the court will also take into account the convenience of nominating an arbitrator of a nationality other than those of the parties and, where applicable, those of the arbitrators already appointed, in light of the prevailing circumstances. The arbitrators will subsequently be appointed by lot (Article 15.6).
There will be no appeal against final decisions in respect of matters attributed to the competent court (Article 15.7).
Pursuant to Article 16 of the Arbitration Act, once the arbitrators have been appointed, unless the parties have agreed otherwise, each arbitrator, within 15 days of the date of communication of the nomination, should communicate his or her acceptance to the party making the appointment. If such acceptance is not communicated within this timeframe, the arbitrator will be deemed not to have accepted the nomination.
25. Are there any requirements as to the number or qualification of arbitrators in Spain?
Yes. The parties are free to determine the number of arbitrators, provided that such number is odd. In the absence of any agreement between the parties, only one arbitrator will be appointed (Article 12 of the Arbitration Act).
Unless otherwise agreed, in internal arbitrations other than those to be decided in equity, where the arbitration is to be decided by a sole arbitrator, this will be a lawyer in practice and acting as such. Where the arbitration is to be decided by three or more arbitrators, at least one of them must be a lawyer in practice and acting as such (Article 15.1 of the act).
In accordance with Article 13 of the Arbitrator Act, any persons in full possession of their civil rights may be arbitrators, unless prevented by the legislation to which they may be subject in the practice of their profession. Unless the parties have agreed otherwise, no one will be prevented by reason of nationality from acting as an arbitrator.
26. Can an arbitrator be challenged in Spain? On what basis can an arbitrator be challenged? Are there any restrictions on the challenge of an arbitrator?
Yes. Pursuant to Article 17.1 of the Arbitration Act, an arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess qualifications agreed by the parties.
A party may challenge an arbitrator it has appointed, or in whose appointment it has participated, only for reasons of which it becomes aware after the appointment has been made (Article 17.2).
27. If a challenge is successful, how is the arbitrator replaced?
In accordance with Article 20.1 of the Arbitration Act, the replacement of a challenged arbitrator follows the rules that applied to the appointment of his or her predecessor.
Once the substitute arbitrator has been appointed and the parties have been heard, the arbitrators will decide whether proceedings conducted prior to substitution must be repeated (Article 20.2).
28. What duties are imposed on an arbitrator? Are these all imposed by legislation?
The most important duties imposed on arbitrators are those of independence and impartiality during the arbitration. In no case will an arbitrator be allowed to maintain any personal, professional or commercial relationship with any of the parties (Article 17.1 of the Arbitration Act). Pursuant to Article 17.2 of the act, a person proposed as arbitrator must disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. From the time of their appointment, arbitrators must disclose without delay any such circumstances to the parties.
Arbitrators must also accept their appointments and must comply with their commission in good faith. If they fail to do so, they will be liable for any damages resulting from bad faith, recklessness or mens rea (Article 21.1 of the act).
In addition, arbitrators and arbitral institutions are bound to keep confidential any information that comes to their knowledge in the course of the arbitration proceedings (Article 24.2 of the act).
Finally, arbitrators or arbitral institutions on their behalf are bound to take liability insurance or equivalent security for the amount established in the rules. Public entities and arbitral systems integrated in or under the aegis of governmental authorities are exempt from this obligation (Article 21.2 of the act).
29. What powers does an arbitrator have in relation to:
(a) Procedure, including evidence?
Pursuant to Article 25.2 of the Arbitration Act and if the parties do not agree on the procedure to be followed by the arbitrators in conducting the proceedings, the arbitrators may, subject to the provisions of that statute, conduct the arbitration in such manner as they deem appropriate. Such power includes that of determining the admissibility, relevance, materiality, taking (even ex officio) and evaluation of the evidence.
(b) Interim relief?
Unless the parties have agreed otherwise, the arbitrators may, at the request of any party, grant any interim measures deemed necessary in connection with the object of the dispute. The arbitrators may require the claimant to furnish sufficient security (Article 23.1 of the Arbitration Act). Decisions on interim relief will be treated as an award for the purpose of their enforcement and setting aside (Article 23.2 of the Arbitration Act).
Any interim measures are enforced by the court with jurisdiction in the place where the award is to be enforced or, failing that, by the court at the place where the measures are to carry legal consequences, as foreseen by Article 724 of the Civil Proceedings Act 2000 (Article 8.2 of the Arbitration Act).
(c) Parties which do not comply with its orders?
Pursuant to Article 31 of the Arbitration Act and unless otherwise agreed by the parties, if, in the absence of sufficient cause, in the arbitrators’ judgement:
- the claimant fails to communicate its statement of claim within the time limit, the arbitrators will terminate the proceedings, unless the respondent expresses its intention to apply for relief or remedy;
- the respondent fails to communicate its statement of defence within the time limit, the arbitrators will continue the proceedings without treating such failure in itself as an admission of the facts alleged by the claimant; or
- any party fails to appear at a hearing or to produce evidence, the arbitrators may continue the proceedings and make the award on the evidence before them.
(d) Issuing partial final awards?
Unless the parties have agreed otherwise, the arbitrators will rule on the dispute in a single award or in as many partial awards as they deem appropriate (Article 37.1 of the Arbitration Act).
(e) The remedies it can grant in a final award?
The Arbitration Act does not rule on the sorts of remedies that can be granted in a final award. Nonetheless, bearing in mind the nature of arbitration and the function assigned to it, as an alternative to court proceedings and rulings, it is clear that the remedies that can be granted in a final award are no different from those that can be granted in a court ruling.
A final award can thus either or cumulatively:
- order the defendant to pay a certain amount to the claimant and/or to do or not do something;
- create, modify or extinguish a certain right or obligation; and
- declare how a provision is to be interpreted or applied to certain facts involving certain parties at the request of a party, in terms that are binding on both parties.
The Arbitration Act contains no provisions on the sorts of interest that can be pursued or protected through arbitration, the rule being that all matters can be submitted to arbitration, with the exception of those that involve unrenounceable rights. Given that Article 37.1 of this statute grants the arbitrators the power to “rule on the dispute”, it must be understood that they also have the power to rule on the interests behind the dispute, provided that the dispute is arbitrable.
30. How may a tribunal seated in Spain proceed if a party does not participate in an arbitration?
Depending on which party fails to participate in an arbitration, such failure will have the effects foreseen in Article 31 of the Arbitration Act. Under this provision, only if the claimant fails to serve its statement of claim will the arbitrators terminate the proceedings, and that only if the defendant does not express its intention to apply for relief or remedy. In other cases, the proceedings will continue or at least be allowed to continue at the discretion of the arbitrators.
31. Are arbitrators immune from liability?
No. According to Article 21.1 of the Arbitration Act, arbitrators are liable for damage and losses they cause by reason of bad faith, recklessness or fraud. Where the arbitration is entrusted to an arbitral institution, the injured party will have a direct action against that institution, regardless of any actions for compensation against the arbitrators. In addition, also pursuant to such provision, arbitrators are requested to insure such liability for an amount of no less than that to be approved by an administrative regulation. The obligation to take this insurance is waived in the case of public entities and arbitral systems integrated in or under the aegis of governmental authorities.
The role of the court during an arbitration
32. Will the court in Spain stay proceedings and refer parties to arbitration if there is an arbitration agreement?
Yes. The courts should refrain from hearing a dispute if there is an arbitration agreement that defers jurisdiction on the same to arbitrators and the defendant files a declinatory plea before the court where the claim is pending (Article 11 of the Arbitration Act).
33. Does the court in Spain have any powers in relation to an arbitration seated in Spain and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
Courts in Spain have no powers in relation to arbitration seated abroad, as the Arbitration Law applies only to arbitrations seated in Spain.
With regard to arbitrations seated in Spain, pursuant to the Arbitration Act, the role assigned to the courts is very limited. The general rule is that no court is allowed to intervene in arbitration, except in relation to matters provided for by the act (Article 7). These matters, as foreseen in Article 8 of the act, are as follows:
- Appointment of arbitrators: Jurisdiction will reside with the court of first instance at the seat of the arbitration. If the seat has not yet been determined, then jurisdiction will reside with the court of the place of residence of any of the respondents. If none of the respondents has its domicile or habitual place of residence in Spain, then jurisdiction will reside with the court of the domicile or habitual place of residence of the claimant; or if the claimant has no domicile or habitual place of residence in Spain, then with the court of first instance of the claimant’s choice.
- Assistance in the taking of evidence: Jurisdiction will reside with the court of first instance of the place where the assistance is to be provided, in terms that follow the rules foreseen in Article 33 of the Arbitration Act.
- Interim measures: Jurisdiction will reside with the court with jurisdiction at the place where the award is to be enforced or, failing that, with the court at the place where the measures are to carry legal consequences, in accordance with Article 724 of the Civil Proceedings Act 2000.
- Enforcement of the award: Jurisdiction will reside with the court of first instance of the place where the award was given.
- Application to set aside an award: Jurisdiction will reside with the provincial court of appeal with jurisdiction over the place where the award has been given.
- Recognition of foreign awards: Jurisdiction will reside with the civil and criminal chamber of the regional high court of the region where the party whose recognition is requested or where the person affected by such awards or decision has its place of business; and subsidiarily with the respective court at the place of enforcement of such arbitral awards or decisions, or the place where they are to carry legal consequences.
34. Can the parties exclude the court’s powers by agreement?
No. The powers of the courts, as foreseen in the Arbitration Act, are mandatory and as such are immune from any sort of exclusion agreed by the parties.
35. How will the tribunal approach the issue of costs?
Unless the parties have agreed otherwise, it will be up to the arbitrators to decide in the award on the costs of the arbitration, which will include the fees and expenses of the arbitrators and, where applicable:
- the fees and expenses of counsel or representatives of the parties;
- the cost of the services provided by the institution administering the arbitration; and
- other expenses of the arbitration proceedings (Article 37.6 of the Arbitration Act).
36. Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in Spain?
No. Bearing in mind the regime foreseen by Article 37.6 of the Arbitration Act, the parties are free to agree in terms of costs without any restrictions.
37. Is third-party funding permitted for arbitrations seated in Spain?
No law forbids a party to an arbitration seated in Spain from obtaining third-party funding to cover the costs of the same. Therefore, under general rules, which allow any person to engage in any sort of business not forbidden by law, the answer must be positive.
38. What procedural and substantive requirements must be met by an award?
Article 37 of the Arbitration Act sets out procedural requirements that must be met by arbitral awards.
According to this provision, and unless otherwise agreed by the parties, the arbitrators will decide the dispute in a single award or in as many partial awards as they deem necessary (Article 37.1).
The award will be made in writing and will be signed by the arbitrators, who may add any dissenting opinions. Where there is more than one arbitrator, the signatures of a majority of the members of the tribunal or the signature of the presiding arbitrator alone will suffice, provided that the reason for any omitted signature is stated (Article 37.3).
The award will state the reasons upon which it is based, unless it is delivered on agreed terms in accordance with Article 36 (Article 37.4).
The award will state the date and the place of arbitration as determined in accordance with Article 26.1. The award will be deemed to have been made at that place (Article 37.5).
The award may be formalised before a notary public. Any party, at its own expense, may require the arbitrators, before notification, to formalise the award before a notary public (Article 37.8).
The arbitrators will notify the award to the parties in the form and time agreed by them or, failing such agreement, by means of the delivery to each party of a copy signed by the arbitrators (Article 37.7).
As to the substantive requirements that must be met by arbitral awards, the most important is that, in accordance with Article 41.1 of the Arbitration Act, the award cannot cover matters not submitted to arbitration by the parties or matters that are not arbitrable.
39. Must the award be produced within a certain timeframe?
Yes. Pursuant to Article 37.2 of the Arbitration Act and unless the parties have agreed otherwise, the arbitrators must deliver the award within six months of the date of submission of the defence or the expiration of the deadline foreseen for such submission. Again, unless the parties have agreed otherwise, this period may be extended by the arbitrators for a period not exceeding two months, by means of reasoned decision.
Subject to any contrary agreement by the parties, failure to deliver the award within this timeframe will not affect the validity of the arbitration agreement or of the later award delivered, without prejudice to the liability which the arbitrators may incur for the delay.
Enforcement of awards
40. Are awards enforced in Spain? Under what procedure?
Yes. Awards in arbitrations seated in Spain are enforceable in Spain under the same terms as rulings of a court (Article 44 of the Arbitration Act and Article 517.2, 2nd, of the Civil Proceedings Act 2000).
Foreign awards – that is, awards in arbitrations seated outside Spain – are enforceable in Spain only once they have received exequatur, as foreseen by Article 46 of the Arbitration Act, which provides that recognition and enforcement of foreign awards follow the New York Convention. In all matters not covered by the convention, enforcement of a foreign award will be subject to the provisions on enforcement set out in the Civil Proceedings Act 2000 as if it were an award or ruling issued in Spain.
Grounds for challenging an award
41. What are the grounds on which an award can be challenged, appealed or otherwise set aside in Spain?
According to Article 41.1 of the Arbitration Act, an arbitral award may be set aside only if the party making the application alleges and provides evidence of one of the following:
- The arbitration agreement did not exist or was not valid;
- The applicant was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
- The arbitrators decided on questions that were not submitted to arbitration;
- The appointment of the arbitrators or the arbitration proceedings did not accord with the agreement of the parties, unless such agreement conflicted with a provision of the Arbitration Act from which parties cannot derogate, or, failing such agreement, did not accord with the act;
- The arbitrators decided questions that are not arbitrable; or
- The award conflicts with public policy.
The grounds referred to in the second, fifth and sixth bullets above may be determined by the court hearing the application to set aside the award on its own initiative or at the request of the attorney general, in the latter case where the dispute concerns interests whose defence is legally vested in this legal officer (Article 41.2).
In the cases referred to in the third and sixth bullet points above, the decision to set aside will affect only those aspects of the award that relate to questions not submitted to arbitration or non-arbitrable subject matter, provided that they can be separated from the remainder of the award (Article 41.3).
42. Are there are any time limits and/or other requirements to bring a challenge?
Yes. An application to set aside must be filed within two months of the date on which the applicant received the award or, if a request to correct, clarify or supplement the award was made, from the date on which the applicant received the decision on that request or the date on which the term for making that decision expired (Article 41.4 of the Arbitration Act).
In addition, the court proceedings (Article 8.5 of the Arbitration Act) must follow the procedural rules foreseen in Article 42 of the Arbitration Act, which provides for the use of the summary or minor proceedings (juicio verbal), foreseen in the Civil Proceedings Act 2000 for smaller and other claims excluded from ordinary proceedings, with the adaptations set forth in that provision.
The ruling of the court that hears the challenge is not appealable (Article 42.2 of the Arbitration Act).
43. Are parties permitted to exclude any rights of challenge or appeal?
The Arbitration Act does not foresee the exclusion of the right of challenge set forth in Article 41. The challenge is aimed at setting aside an award on several strict legal grounds specifically set out in that provision; an appeal based on breach of other provisions, whether substantial or procedural, is not possible under the Arbitration Act.
Nonetheless, on the grounds that the act does not expressly exclude appeal altogether, there is an understanding – accepted by the regulations of some courts of arbitration (eg, the Corte Española de Arbitraje) – whereby, although the appeal of an arbitral award before the courts is excluded by Article 7 of the Arbitration Act, an appeal before a second arbitral instance is not so excluded. This is based on the reasoning that the parties are entitled to set their own procedural rules and the inclusion of an appeal instance within the arbitration proceedings is definitely a procedural matter.
44. Is arbitration seated in Spain confidential? Is a duty of confidentiality found in the arbitration legislation?
Yes. Arbitration is subject to confidentiality, as foreseen in Article 24.2 of the Arbitration Act, which provides that the arbitrators, the parties and arbitral institutions are obliged to maintain the confidentially of information that comes to their knowledge in the course of the arbitration proceedings.
45. Are there any exceptions to confidentiality?
There are no exceptions to confidentiality. Nonetheless, confidentiality may cede in certain scenarios – notably:
- where the courts are requested to intervene in relation to arbitration proceedings (eg, interim measures, enforcement and setting aside of an award), as judicial proceedings as a rule are public (Article 120 of the 1978 Spanish Constitution); and
- on the grounds of transparency and general interest (eg, where at least one of the parties to arbitration is a state or a public body; criminal investigations).
In addition, if both parties agree on the disclosure of certain information covered by confidentiality, in principle this agreement should not be void, insofar as the right to keep certain information confidential is renounceable by the party to which that information belongs.