Spanish act on arbitration

THE new Spanish Arbitration Act 60/2003 was published in the Official Gazette of the Spanish State on December 26, 2003 and came into force on March 26, 2004. It is inspired by the Model Act prepared by the United Nations Commission on International Trade Law of June 21, 1985 (Model Act of CNUDMI / UNCITRAL), taking into account the uniformity demanded by arbitration procedural law, as well as the practical requirements of international trade arbitration. Below are some of the key features of the new Act:

  • The new Act opts for a unitary regulation of domestic arbitration and international arbitration. On the other hand, it broadens the range of matters which may be the subject of arbitration, and has widened to the maximum extent possible the objective availability of matters susceptible of arbitration. Article 1 reads, “controversies susceptible of arbitration comprise those referring to matters of which free use may be made according to the law”. Nevertheless, labour arbitrations do not fall into its scope of application.
  • It should be stressed that the new Act is governed by non-formalistic criteria. It provides for the validity of notifications or communications by telex, fax, or other electronic media and the like. Equally, it provides for the validity of the arbitration agreement to be recorded either in a signed document or by interchanging letters, telegrams, telex, fax, or any other telecommunications media documenting said agreement.
  • The new Act even admits the so-called arbitration clause by reference, that is to say, a clause which is not comprised in the main contractual document, but in a separate document.
  • Time-limits are counted in calendar days.
  • The new Act provides that arbitrators are empowered to decide on their own jurisdiction. In addition, it acknowledges the possibility for arbitrators to take precautionary measures with the judicial authority’s intervention and support.
  • The Act gives priority to arbitration in law in the absence of agreement between the parties. In the case of international arbitration, arbitrators must decide the controversy in accordance with the law chosen by the parties.
  • The parties are free to decide the number of arbitrators, although they must be an odd number. In the absence of agreement, only one arbitrator will be appointed.
  • The Act limits arbitrators’ liabilities to cases of bad faith, recklessness or wilful misconduct.
  • Arbitrators must keep confidential every piece of information obtained through arbitration proceedings and may suspend or conclude arbitration proceedings if there is no allocation of funds.
  • The Act provides that arbitrators may pass partial awards, giving a decision on some of the merits of the controversy.
  • The Act provides that awards may be documented not only in written, but also in electronic, optic or any other format.
  • Arbitrators are given six months from the response to pass an award, unless otherwise agreed by the parties. This term may be extended for a maximum additional period of two months, unless otherwise agreed by the parties.
  • According to the Act, awards must be reasoned - unless otherwise agreed by the parties - and need no longer be notarised.

These, and other, characteristics of the new Act mean a qualitative step forward in the Spanish regulation of arbitration, which, doubtlessly, will encourage its greater use among entrepreneurs and traders.

The new Act also contains provisions concerning orders for enforcement of foreign awards - awards passed outside the Spanish territory. Pursuant to Article 44.2, the order for enforcement of foreign awards will be ruled by the Convention on Recognition and Execution of Foreign Arbitral Awards, signed in New York on the June 10, 1958, without prejudice to the provisions of other international conventions which may prove more favourable.

Nowadays, courts of first instance are competent to hear applications for recognition - formerly within the competence of the Supreme Court - and execution of foreign arbitral awards. More particularly, this means the court of first instance of the domicile or place of residence of the party against whom the recognition and execution is applied for. This should result in faster decisions.