Arbitration in Spain in times of COVID

Today more than ever, it is essential for companies to quickly and efficiently resolve any legal dispute or conflict that may affect them. The global COVID-19 pandemic has indeed weakened the Spanish and international business framework, and companies need, more than ever, an impartial system that allows them to:

  • Protect their rights and interests
  • Obtain resolutions that bring their disputes with third parties to an end in the short term
  • Avoid the eternization of judicial proceedings.

In this regard, arbitration stands out as an efficient way to achieve these objectives, being a clear alternative to ordinary courts. Unfortunately, arbitration in Spain has not yet acquired the expected dimension, compared to other countries, probably due to the absence of a business and legal culture of arbitration and lack of awareness regarding its advantages over ordinary jurisdiction.

What is arbitration

Arbitration is, ultimately, an alternative dispute resolution mechanism to courts. It is private and informal and allows the parties to resolve their dispute before one or several impartial people (the arbitrators), who are authorized to resolve the conflict through a final and binding decision for the parties (the award).

The award has the same effectiveness and legal value as a judgment and is, therefore, enforceable in the event of non-voluntary compliance.

Besides, it is worth emphasizing that the award cannot be appealed, unlike a court judgment, for there is, as a rule, no second instance in arbitration. Hence, the deadlines to obtain a final resolution on the merits of the case are considerably shortened.

Even if the possibility to request the annulment of an award exists, it only applies for strictly limited reasons and usually does not allow for a substantial review of the arbitrator’s decision.

Advantages of arbitration in Spain

Arbitration, therefore, presents many advantages over the justice system:

  • The parties can freely choose the arbitrator or competent arbitral court to solve the case by including an arbitration clause in the relevant contract.
  • The arbitrators’ high degree of specialization ensures they are professional experts in the field, thus obtaining a more technical resolution in most cases.
  • The arbitration procedure is characterized by the availability and celerity of the arbitrators in issuing their awards. Judges, on the contrary, are usually overwhelmed by the excess of cases and lack of resources. The arbitration procedure also allows setting a maximum time limit in the arbitration agreement for the dispute resolution, ensuring an award much sooner than a judgment.
  • The arbitration system is a simple and more informal system than the judicial as the parties agree on the resolution method of the dispute: procedure, language, and other relevant issues.
  • Contrarily to the public nature of the judicial systems, privacy and confidentiality of arbitration may also be agreed upon. The dispute and its resolution will be unknown to the public.
  • Awards are perfectly enforceable and sometimes even effortlessly than judgments. A large majority of countries are members of the 1958 New York Convention governing international arbitration.

For the above reasons, arbitration is set to become the most common system for dispute resolution between companies in Spain. Especially in contexts of economic crises where the market requires agile solutions to day-to-day problems.

If your company needs to solve a dispute or conflict and is considering arbitration in Spain as a dispute resolution mechanism,

Please note that this article is not intended to provide legal advice.

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