The arbitration reform, an alternative to solve conflicts in Spain

Spanish Government has approved the remission of the law project to reform the arbitration Law and the regulation of the institutional arbitration of General Administration of the State of 2003, to the legislative entity power. This Law Project is accompanied by another one about the complementary Organic law, which modifies the Organic Law of the Judicial Power of 1995, in regard to the support functions to the arbitration law. This project law has been also referred to the legislative entity power.

The aim of this reform is to promote alternative systems to solve conflicts or controversies, and at the same time the workload of the Tribunals and the costs will be reduced. As the resolution will be adopted by arbitrators appointed by the parties, arbitration proceedings are expected to become faster.

Furthermore, this reform is supposed to reinforce the arbitration use and the international importance of Spain as an arbitration court, particularly with Latin-American countries.

Main modifications

  • Support functions and judicial control of arbitration is attributed to the Boards of Civil and Criminal Court of the Superior Courts of Justice, and includes the judicial appointment of the arbitrator, the knowledge of the annulment action of the award and the exequatur of foreign awards, that nowadays correspond to the First Instance Court. Therefore, the level of the judicial organs that make these functions will increase and enhances the uniformity of approach, so their decisions will be more predictable. Attribute judicial decisions arising from the arbitration, in particular the recognition of foreign awards to higher courts, makes raise the range of arbitral institution. Consequently, this measure is internationally highly valued.
  • This law project also modifies the judicial treatment of the existence of an arbitration clause, which means that it will not be a lack of jurisdiction or competence and it will be treated as a procedural exception, which processing will be more functional for the national and international arbitrators.
  • Without prejudice to other possibilities in the corporate area, the law specifies the possibility of arbitration in matters of social challenges, recognizing the statutory arbitrations for the capital companies.
  • In order to maximize the independence and the transparency of the arbitrators labor, the law reinforces the capacity, the responsibility and the incompatibilities of the arbitrators, and moreover the function of the arbitral institutions. On the other hand, this law reform respects the system of consumer arbitration, to which the provisions of the Arbitration Act will be supplementally applied.
  • The law also introduces formal changes in the awards, in which the particular votes disappeared and the awards must be always motivated.
  • It simplifies the transaction of the annulment action of final awards established in the current Law on Arbitration and a quick solution to cases of partial abuse of the award is incorporated as a new feature.
  • Public institutions henceforth will have to use these alternative systems of dispute resolution. A special arbitration proceeding is established for disputes between the State administration and other public organisms. The procedure will also be applied to state corporations and foundations.
  • Remain out of these proceedings: penal matters, accountancy responsibility, and the issues derived from the doings of the General State Intervention.
  • Finally, the rule of invalidity of the arbitration convention in case of bankruptcy is modified: the convention will instead remain valid, unless the judge invalidates it in case it is being detrimental to creditors.

This article is not considered as legal advice