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Enrique Silvente and Isabel Pasquau


A.1      Approval of Royal Decree-Law 17/2019, dated 22 November, which adopts urgent measures for the necessary adaptation of remuneration parameters affecting the electricity system and addresses the process to cease thermal generation plant businesses.

By means of the aforementioned Royal Decree-Law, Spain aims to settle the investment arbitrations that have already been brought before ICSID by several energy companies, as well as to avoid the initiation of new proceedings that may arise from the legal changes made to the remuneration system, which reduced companies’ profitability. Thus, this law offers incentives to energy companies so they desist from such arbitrations or, if appropriate, do not initiate them.

In this regard, the Royal Decree-Law provides for a special regime to compensate companies for the legislative changes made, as said changes may cause disputes with energy companies. This regime is aimed at ensuring companies are more profitable than under the standard regime (providing profitability of 7.398% compared to 7.09%) and will be applicable for a longer period (2020 to 2031, instead of 2020 to 2025).

However, in order to qualify for the special regime, energy companies must meet one of the following conditions:

  1. Companies that have not initiated any proceedings against the Kingdom of Spain must agree not to initiate any arbitration or legal proceedings against Spain for the change Spain made to the remuneration system in previous legislative reforms.
  2. Companies involved in arbitration or legal proceedings relating to the change in remuneration must prove, before 20 September 2020, that they have exercised their right to early termination and that they have genuinely waived their right to reinitiate or continue such proceedings.
  3. Companies that have been awarded compensation by an arbitration or court ruling must also waive their right to receive said amount.

A.2      Amendment of the Intellectual Property Act

Royal Decree-Law 2/2018 of 13 April 2018 and Act 2/2019 of 1 March 2019 amended the Intellectual Property Act. One of the changes introduced by these amendments was the creation of the Intellectual Property Commission, which reports to the Ministry of Culture and Sports and is recognized as having mediation and arbitration functions, among others, in accordance with the provisions of article 193 of the Intellectual Property Act.

In particular, pursuant to article 194.2 of the Intellectual Property Act, the following disputes may be submitted to arbitration by the aforementioned Intellectual Property Commission:

  1. Disputes directly related to the collective management of intellectual property rights provided that they have been previously submitted voluntarily.
  2. The establishment of specific fees in lieu of the general fees set by the collecting societies provided that the request comes from (i) a collecting society, (ii) a users’ association, (iii) a broadcasting society, or (iv) a user that has been significantly affected in the opinion of the Copyright Commission.

A.3      Spain’s agreements with international organizations

In 2019, Spain has signed two agreements with international organizations that contain provisions allowing disputes related to matters regulated by said agreements to be submitted for arbitration. Specifically, the two agreements are:

  1. Headquarters Agreement between the Kingdom of Spain and the International Olive Oil Council (IOOC), dated 28 November 2019

Its article 24[1] provides that the settlement of disputes shall be submitted to an arbitral tribunal composed of three arbitrators.

  1. Agreement between the Ministry of Labour, Migration and Social Security of the Kingdom of Spain and the International Organization for Migration (IOM), on the implementation of projects relating to resettlement, assisted voluntary return and reintegration, relocation and integration, executed in Madrid on 20 August 2019

By means of said agreement Spain “undertakes to provide financial support to the IOM for the implementation of projects in the thematic areas of resettlement, assisted voluntary return and reintegration, relocation and integration, in accordance with the conditions set out in this Agreement and its Annexes.” The financial support agreed therein comes to approximately USD 4.5 million[2].

Clause 11[3] of the aforementioned agreement provides that any dispute related to this agreement will be settled by arbitration conducted in accordance with the 2010 UNCITRAL Arbitration Rules, as amended in 2013.

A.4      Creation of the International Arbitration Centre of Madrid (CIAM)

The most notable Spanish Courts of Arbitration recently joined forces to create the International Arbitration Centre of Madrid (CIAM).

The agreement to create the International Arbitration Centre of Madrid was signed on 16 October 2019[4]. The CIAM project arose from the decision to merge the international activities of the Madrid Court of Arbitration, the Civil and Commercial Court of Arbitration, and the Spanish Court of Arbitration. The Madrid Bar Association also joined as one of its strategic partners.

The CIAM will only manage international arbitrations deriving from (i) arbitration agreements that appoint the CIAM as the managing institution, and (ii) arbitration agreements that appoint any of the aforementioned four institutions as the managing institution, provided that said agreements are signed on or after 1 January 2020.

Up until now, the institutions that makeup CIAM competed with each other in the arbitration market, which made it difficult for international economic operators to consider the Spanish arbitration system as a feasible alternative when deciding where to resolve their disputes. This situation contrasted with the institutional unity that exists in the world’s main arbitration centers, such as London and Paris. The result was that Spanish firms often decided to use foreign arbitral courts to resolve their commercial disputes. With the creation of the CIAM, it is hoped that this situation will be avoided.

A.5      Creation of the Alternative Dispute Resolution Center (ADRC) in Barcelona

In January 2019, the Barcelona Bar Association created a new comprehensive mediation and arbitration center, to promote mediation and arbitration as alternative means to judicial litigation.

The center arose from the merger of the former Icab Mediation Centre (Cemicab) and the Icab Arbitration Department. The ADRC holds a “firm commitment” to implementing, consolidating and disseminating the aforementioned alternative dispute resolution systems.

Among other services, the ADRC offers public mediation processing in collaboration with the Generalitat; comprehensive private mediation processing; management of the Mediator and Arbitrator Register; training and coordination of the ADRC Master’s degree; collaboration with institutions; and the organization of congresses[5].


B.1      “Economic public policy” as a cause to annul an award. Judgment of the High Court of Justice of Madrid No. 26/2019, dated 2 July (JUR 2019\248244)

The judgment is originated by arbitration between a company and a bank entity in which the company sought, principally, the declaration of nullity of a swap agreement granted by the bank and the restitution of any benefits and interests paid. The arbitral award, despite admitting that the entity had failed to comply with its duties of information to consumers imposed by the Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, rejected the claim and confirmed the validity of the agreement.

However, the High Court of Justice of Madrid annuled the arbitration award, following a request by the claimant in the arbitration under article 41.1.f of the Spanish Arbitration Act, on the basis that it was contrary to public policy.

The High Court of Justice of Madrid, classifying swap agreements as “complex financial instruments,” concluded that the obligation of the bank entities to duly inform consumers when contracting such financial products falls under the “economic public policy” concept and, therefore, an arbitral award could be annulled if its decision violates the rights of consumers in these cases.

Additionally, the High Court of Madrid understands that the arbitral award is arbitrary because although it considered that it was proved that the bank did not comply with its information obligations, which should determine the nullity of the contract, it rejected the claim.

B.2      Annulment of award contrary to public policy for being unenforceable. Judgment of the High Court of Justice of Castilla-La Mancha No. 1/2019, dated 25 March (AC 2019\1089)

The origin of the dispute submitted to arbitration was a shareholders’ settlement agreement, by virtue of which a business group formed by two families agreed on their separation by (i) a merger of all the companies, (ii) a subsequent spin-off and (iii) the distribution of the resulting companies in batches. The distribution of the companies and the exchange rate was agreed, as well as compensation of approximately USD 278,000[6] by one of the families to the other. The dispute was focused on the form of payment of said compensation: the family obliged to pay considered that the payment should be made through the allocation of land to one of the companies, while the creditor family required to receive the amount in cash. The award finally resolved that the payment should be made in cash. However, when the draft terms of the spin-off were submitted to the Commercial Registry for registration in accordance with the terms of the award, the Commercial Registry rejected its registration on the basis that such draft terms were contrary to art. 25.2 of Law 3/2009, dated 3 April, on Structural Modifications of Companies, which permit adjustment of the exchange rate for monetary compensation, which cannot exceed 10% of the shares’ value.

In view of the above, one of the parties requested the annulment of the arbitral award for being contrary to public policy, alleging that it was impossible to execute and was contrary and inconsistent with the shareholders’ settlement agreement. The High Court of Justice upheld these arguments and declared the award null and void, stating that:

  1. Since the arbitration was based on the shareholders’ settlement agreement, whose purpose was the separation of the companies, the arbitral tribunal had to take into consideration the will of the parties expressed in said agreement. However, as the resolution contained in the award made such agreement impossible to be executed, the High Court of Justice understands that the basic principles of the autonomous will of the parties (the principle on which the arbitration is based) and pacta sun servanda are being violated since the award clearly contravenes the will of the parties by “making such decision incur in a violation of the right to effective judicial protection.”
  2. In addition, the High Court of Justice considered that the award lacked rationality and, consequently, duly reasoning, and could be interpreted as an arbitrary decision, since, on the one hand, it recognizes that the will of the parties was the total division of the company and, on the other hand, the award prevents the enforcement of that will.

Therefore, in accordance with article 41.1.f of the Spanish Arbitration Act, the High Court of Justice annuled the award for violation of public policy.

B.3      Annulment of award contrary to public policy and nullity of the arbitration agreement due to the lack of independence and impartiality of the arbitration institution. Judgment of the High Court of Justice of Madrid No. 5/2019, dated 15 February (JUR 2019\259556)

The arbitration analyzed in this judgment was brought by a landlord against the tenant for the non-payment of rents. The arbitration agreement was contained in the lease agreement, which was a contract of adherence used by the landlord and prepared by the institution that administered the arbitration. The award accepted the claim and the tenant applied for its annulment based on the lack of independence and impartiality of the arbitration institution.

The High Court of Justice considers that the independence and impartiality duties are applicable not only to arbitrators but also to the arbitration institution. Although it is not expressly provided in the Spanish Arbitration Act, it can be inferred from its article 21.1, which obliges the institution to fulfill the engagement and establishes its potential liability. In addition, the judgment invokes the recommendations issued by the Spanish Arbitration Club that maintain that independence and impartiality requirements must be extended to arbitration institutions. The High Court of Justice resorts to the IBA Guidelines on Conflicts of Interest in International Arbitration to determine the standards of independence and impartiality.

Finally, the court found that the arbitration institution lacked the required independence and impartiality for the following reasons:

  1. The landlord was in a situation of pre-eminence before the tenant and imposed the lease agreement.
  2. The landlord paid a fee to the arbitration institution for the template of the lease agreement, which included the arbitration agreement.
  • Under the arbitration rules of the institution, the arbitration request had to be filed by the claimant “after a meeting with an adviser” of the institution. The High Court of Justice understands that the advice given by the institution to one of the parties is not compatible with the neutrality required of the institution.
  1. The rules of the institution set forth that “the claimant shall be exempt from the provision of funds for the administrative costs of enforcement and the payment of counsel and attorney.” Therefore, the judgment states that this is an unjustified benefit for the claimant.
  2. When notifying the initiation of the arbitration to the defendant, the institution informed that “once the arbitration has been initiated, the decision will have the value of a final judgment in accordance with the Arbitration Act in force, having to assume all the expenses incurred.” This was interpreted by the High Court of Justice as “a sort of warning that he was going to lose the arbitration and be ordered to pay the legal costs.”
  3. Additionally, the High Court of Justice considered that the provision of templates such as a claim or the request for arbitration, as it was the case, is a sign that “the appearance of impartiality is broken.”

Due to all the above, the judgment declared that the institution acted in a “context of a clear connection with one of the parties (…) to whom it can advise during and after the arbitration according to its rules,” concluding that the institution “cannot act with subjective neutrality or objective disinterest in respect of an arbitration whose administration is entrusted to it under an arbitration agreement under its auspices when it contracts onerously with one of the parties involved in the arbitration for the provision of its services.” Therefore, the High Court of Justice annulled the award for being contrary to public policy, adding that this could also entail the nullity of the arbitration agreement since it infringed the principle of equality to consent to arbitration and to choose the arbitrators.

B.4      Annulment of award contrary to public policy for unduly upholding a res iudicata objection. Judgment of the High Court of Justice of Catalunya No. 2/2019, dated 14 January (RJ 2019\968)

In this case, the dispute concerned a price variation in the framework of a fuel supply contract. In a first arbitration, one of the parties claimed the payment of certain invoices to the other party, which opposed alleging, among other reasons, that the price variation clause of the contract had been breached. This allegation was rejected and the defendant was ordered to pay the invoices claimed.

The condemned company initiated a second arbitration in which it claimed compensation for damages resulting from the lack of price revision. However, this second claim was not based on the contract, but on the rebus sic stantibus doctrine, according to which courts may modify or terminate contracts when there has been an extraordinary and supervening change of circumstances that breaks the contractual balance. In this arbitration, the other party raised a res iudicata objection, considering that the price revision allegation had already been resolved in the first arbitration. The tribunal of the second arbitration upheld the res iudicata objection and rejected the claim.

In this sense, the High Court of Justice found that, despite the fact that in the first arbitration the allegation of price variation to oppose payment of the invoices had already been discussed, it cannot be considered as “a sort of implicit counterclaim,” and therefore, despite having been discussed, it considered that no claim was made in this respect in the first arbitration proceedings. Moreover, while in the first arbitration the allegation referred to a potential contractual breach of the price variation clause, the second claim was based on the rebus sic stantibus doctrine. Therefore, it concluded that the award of the second arbitration was contrary to public policy since the first arbitration did not have res iudicata effects on the issues discussed in the second claim.

B.5      Validity of hybrid clauses providing the submission to arbitration and courts. Judgment of the High Court of Justice of Madrid No. 6/2019, dated 18 February (AC 2019\729)

In this judgment, the High Court of Justice analyzed the validity of a contractual clause by which the parties submitted any dispute arising out of the agreement to arbitration and, in the same clause, it was stated that “without prejudice to the above, the parties, renouncing their own jurisdiction, submit any dispute to the jurisdiction of the Courts of Madrid.”

The judgment concluded that under the current Spanish Arbitration Act, what is relevant for an arbitration agreement to be valid is that the parties have given valid consent to arbitration. In addition, the High Court of Justice considers that the expression “without prejudice” indicates the preferential and exclusive nature of the arbitration and, therefore, that the courts of Madrid would only be competent in the event that both parties validly renounced the arbitration agreement. In this sense, the judgment states that “having established the willingness of the parties to submit to arbitration, in principle, a clause such as the one analyzed does not become null and void since it does not involve confusion between jurisdictions nor does it imply mutual exclusion.” This solution was also supported by the legal principle favor iurisdictionis. It was also taken into consideration that, in prior judicial proceedings in France, the party currently alleging the nullity of the clause opposed to the jurisdiction of French courts by opposing the arbitration clause. On the other hand, the High Court of Justice also stated that the wrong or imprecise denomination of the arbitral institution did not imply the nullity of the arbitration agreement, to the extent that the correct institution could be inferred from the clause.

The arbitration award was also challenged, alleging that it was contrary to public policy. Among other reasons, the challenging party considered that there was an infringement of the principle of equality of arms, for having accepted evidence after the legal term to submit it, and the prohibition of unjust enrichment.

However, the High Court of Justice considered that the principle of equality of arms was respected, because the arbitration rules were flexible and empowered the arbitrator to accept new evidence at any stage of the arbitration and, when the evidence was accepted, the arbitrator granted the counterparty with a term to make allegations regarding said evidence.

The judgment, although admitting that the prohibition of unjust enrichment is a general legal principle whose infringement could make an award contrary to public policy, concluded that in this case there was no unjust enrichment.

B.6      Annulment of award contrary to public policy for unduly rejecting an objection of criminal lis pendens. Judgment of the High Court of Justice of Madrid No. 10/2019, dated 22 March (AC 2019\731)

The dispute submitted to arbitration was a claim for payment of an amount resulting of a works contract that, in parallel, was being under criminal investigation for some alleged crimes (corruption, influence peddling, embezzlement of public funds, fraud, falsification of public documents and integration into a criminal organization).

The defendant raised a criminal pre-litigation objection, alleging that the arbitration could not be resolved until there was a decision in the previous criminal investigation. However, the arbitral tribunal rejected this objection, since it understood that the criminal investigation “does not affect the validity of the arbitration agreement agreed by the parties, as the material object of this arbitration, nor the arbitral competence to resolve it” and, therefore, that “the criminal pre-litigation objection raised does not prevent the continuation of the arbitration proceedings.”

The High Court of Justice, however, declared the award null and void, considering that the criminal proceedings had a close connection with the dispute submitted to arbitration since the outcome of the criminal proceedings could be decisive in the validity of the contract on which the arbitration claim was based. Furthermore, it stated that, in order to uphold the criminal pre-litigation objection, “it is sufficient that there be enough evidence of criminality to determine the initiation of criminal proceedings and their investigation,” without it being necessary to make a specific classification of the facts nor that they have been proven.

B.7      Annulment of award contrary to public policy for undue reversal of the burden of proof. Judgment of the High Court of Justice of Madrid No. 4/2019, dated 12 February (AC 2019\265)

In the arbitration reviewed by this judgment, a telephone operator made a claim against a consumer for the payment of certain invoices for calls made from abroad. In the arbitration proceedings, the consumer requested that the company provide the record of a telephone call that the consumer himself made to the company (indicating the day and time of the call), in which he was told that the calls from that country were subject to the normal rate. Although the award accepted the existence of said call, it considered that the consumer failed to prove its content and, therefore, upheld the claim.

The High Court of Justice, however, understood that the burden to prove the content of the call was on the telecommunications operator, on the basis of the principle of ease of proof. Therefore, it stated that the undue reversal of the burden of proof (such proof being fundamental for the resolution of the claim) implies a violation of the right to effective judicial protection and, consequently, the award must be annulled for being contrary to public policy.

B.8      Non-existence of arbitration agreement for having been inserted in delivery notes, without the consent of one party. Judgment of the High Court of Justice of Galicia No. 15/2019, dated 10 Abril (JUR 2019\183378)

This judgment analyzes the existence and validity of an arbitration agreement contained on delivery notes in “small print.” The arbitral tribunal concluded that such an arbitration agreement was valid since the clauses contained in the delivery notes fall within the concept of a pre-formulated standard contract, which is admitted by article 9.2 of the Spanish Arbitration Act.

However, the High Court of Justice considered that, despite the fact that the Spanish Arbitration Act is flexible on the form that the arbitration agreement may take, in this case, there would not be a valid arbitration agreement in place, because (i) there was no prior consent (neither express nor tacit) of one of the parties, (ii) the delivery notes are not an appropriate document to establish an arbitration agreement, since their function is simply to prove the delivery of goods, and (iii) they understand that the fact that the submission to the arbitration had been included in delivery notes and in “small print” shows a clear intention that the arbitration agreement went unnoticed. Therefore, in accordance with article 41.1.a of the Spanish Arbitration Act, the High Court of Justice annulled the award due to the non-existence of the arbitration agreement.

B.9      Recognition and enforcement of a foreign award when proceedings to have them declared null had been initiated and are still pending. Judgment of the High Court of Justice of Murcia No. 1/2019 dated 12 April (ROJ ATSJ MU 12/2019).

A recent ruling of the High Court of Murcia, dated 12 April 2019, declared it is not relevant if the award is not final for the purpose of approving it internally. In said case, the claimant sought the enforcement and recognition of an award issued by the ICC in Bogota (Colombia), against which the defendant had brought an action seeking its nullity.

The court maintained that pursuant to article 5(1)(e) of the New York Convention, an award could only be denied if: (i) it is not yet binding for the parties; or (ii) it has been declared null or was suspended by a competent authority of the country where the award was granted. Therefore, the court stated that the enforcement and recognition of an award do not depend on whether it is final or not.

The court alleged that, as the award had not been suspended or declared null, it was binding for the parties, regardless of whether or not any action had been submitted to void it (as occurred in the case at hand). The court stated that a binding award should not be confused with a final award and it also based its reasoning on the fact that: (i) article 45.1 of the Arbitration Act provides for the enforceability of an award, notwithstanding an action being brought to declare it null and on that (ii) article 46.1 of the Arbitration Act refers to the New York Convention in respect of the law governing the enforcement of foreign awards, which determines that it applies in preference to the Act on International Legal Cooperation 29/2015 of 30 July 2015 for the enforcement and recognition of final judgments issued in the ordinary jurisdiction.

B.10    Enforcement and recognition of foreign arbitral award when there is an infringement of procedural requirements. Judgment of the High Court of Justice of Madrid No. 10/2018 dated 20 December (EDJ 2018/718633)

In a decision issued by the High Court of Madrid on 20 December 2018, the court dismissed a claim for enforcement and recognition of an arbitral award on the grounds that the claimant had provided an incomplete copy of the award, in which the legal grounds for granting the award were missing. The court maintained that this requirement was essential, pursuant to article IV of the New York Convention of 1958, and also to the provisions set forth in article 265 of Spain’s Civil Procedures Act. Thus, the court declared that a complete copy of the award was essential, and not subject to remedy, not only because it is a procedural requirement, but also because it is a supporting document for the claim. Thus, the court stated that a partial copy of the award was not enough to verify if the award respected Spanish public policy and it decided to dismiss the claim.

In contrast, in another decision previously issued by the same court on 18 April 2018[7], the court granted a claim for enforcement and recognition, even though the claim did not initially contain an original of the written agreement in which the parties undertook to submit the disputes that had arisen to arbitration, nor even a certified translation of the arbitral award or the original written agreement (certified by an official translator, a diplomat, or a consular agent). The court stated that it was possible to admit the timely correction of purely procedural deficiencies, provided that the essential requirements were met in its presentation and that the defects could be remedied by the claimant within the deadline stipulated for this, as the claimant finally did.

[1] Article 24. Settlement of disputes (2019 Agreement)

Any dispute relating to the application or interpretation of this Agreement (or any supplementary agreement which may be executed), if not settled by negotiation between the two Parties, shall at the request of either Party, be submitted to a tribunal composed of three arbitrators for final decision.

The arbitrators shall be appointed as follows: one by the Executive Director, one by the Spanish Minister of Foreign Affairs and Cooperation and the third by the other two arbitrators. If one of the Parties does not appoint an arbitrator or if no agreement is reached on the appointment of the third arbitrator (within three months of the request for arbitration), either Party may request the President of the International Court of Justice to appoint the arbitrator or arbitrators.

[2] Approximately EUR 4 million.

[3] Article 11. Dispute settlement.

11.1 Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be settled amicably by negotiation between the Parties.

11.2 In the event that the dispute, controversy or claim is not resolved by negotiation within 3 (three) months after the receipt of the notification sent by one of the Parties to indicate the existence of the dispute, controversy or claim, either Party may request that the dispute, controversy or claim be resolved through a conciliation procedure conducted by a conciliator in accordance with the 1980 UNCITRAL Conciliation Rules. Article 16 of the UNCITRAL Conciliation Rules does not apply.

11.3 In the event conciliation fails, either party may submit the dispute, controversy or claim to arbitration within a maximum period of three (3) months from the date on which the conciliation proceedings were completed, in accordance with article 15 of the UNCITRAL Conciliation Rules. The arbitration shall be conducted in accordance with the 2010 UNCITRAL Arbitration Rules, as amended in 2013. There shall be only one arbitrator and the language of the arbitration proceedings shall be English unless the Parties agree otherwise in writing. The arbitral tribunal shall not have the authority to award punitive damages. The arbitration award shall be final and binding.

11.4 This Agreement, as well as the arbitration covenant above, shall be governed by the terms of this Agreement, supplemented by internationally accepted general principles of law for matters not covered by the Agreement, to the exclusion of any individual national legal system that subjects the Agreement to the laws of a specific jurisdiction. Internationally accepted general principles of law shall be deemed to include the UNIDROIT Principles of International Commercial Contracts. Both Parties shall maintain confidentiality in the settlement of disputes. This Clause shall remain in force after the expiry or termination of this Agreement.



[6] EUR 250,000.

[7] High Court of Madrid, Ruling 4/2018, dated 18 April 2018 (EDJ 2018/97462).


Enrique Silvente is a team leader in the Dispute Resolution Practice Group in Baker McKenzie's Barcelona office


Isabel Pasquau is an Associate of the Dispute Resolution Practice in Baker Mckenzie Madrid’s office.