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There have been no relevant legal developments on arbitration in Spain during 2021.


B.1       Award annulment proceedings: the interpretation of a contractual clause cannot be alleged as contrary to public policy when the arbitration award is reasoned and compliant with the applicable foreign law. Judgment of Madrid High Court of Justice No. 27/2021 dated 4 May 2021

In this case, the parties had entered into a Liquefied Natural Gas Sale and Purchase Agreement (SPA). The dispute arose between the parties due to the interpretation of clause 12.2.3 of the SPA, subject to New York Law, whereby the buyer should pay the charges for the passage of each vessel through the Panama Canal regardless of whether or not the vessel incurred such charges. The buyer alleged that the literal interpretation of this clause would result in the buyer paying the seller for costs that it had not actually borne, of more than USD 150 million, which was an economically unreasonable result. The arbitration was heard by an arbitral tribunal appointed by the London Court of International Arbitration and the arbitration seat was Madrid.

The award outlined -as it was also argued by the seller- that literal interpretation of clause 12.2.3 of the SPA should prevail, pursuant to New York law, and also noted that it was consistent with parties’ will, as evidenced by other collateral pieces of evidence. Therefore, the tribunal dismissed the buyer’s arguments and claims.

Under these circumstances, the buyer filed a claim for the annulment of the award before the Madrid High Court of Justice. The plaintiff-buyer argued that such interpretation was contrary to any principle of commercial reasonableness and, therefore, was contrary to procedural public policy (orden público). In addition, the plaintiff alleged that the award contained a clear error of interpretation, ignored certain evidence, and was arbitrary in its reasoning.

The defendant-seller challenged the annulment claim on the grounds that the award was compliant with New York law (which was further evidenced by means of an expert legal opinion), and had duly considered and assessed all the evidence put forward during the arbitration, hence being sufficiently motivated and compliant with procedural public policy.

The Madrid High Court of Justice dismissed the annulment claim, on the grounds that, according to article 41 of the Spanish Arbitration Act, and as stated by the seller, the award’s judicial review is limited to the external aspect of the award and not to the merits of the matter submitted to arbitration, the grounds for review being exceptional, and limited to blatant infringements of due process or constitutional rights, which is deemed contrary to Spanish public policy.

Moreover, an arbitration award is not subject to the same duty of motivation as a judgment but is adjusted to a parameter of its own. This parameter must first and foremost be freely set by the parties to the arbitration itself, in accordance with the Spanish Arbitration Act. Consequently, as long as the award explains its decision in a clear and consistent manner, it may not be annulled due to a lack of motivation and/or, ultimately, an infringement of public policy.

In the case at hand, the High Court agrees with the defendant’s position that the contested award sets out the factual background, reflects the position of the parties and analyzes the issue in a reasoned manner, regardless of whether or not the plaintiff agrees with them or are intrinsically correct. Furthermore, in this case, the award does not ignore essential evidentiary elements and is in any event compliant with the law of the State of New York.

Notably, the judgment contains a dissenting opinion by one of the magistrates, who considers that the action for annulment of the award should be upheld on the grounds that it lacked motivation and involved an unfair enrichment, contrary to Spanish “public economic policy”. In the dissenting magistrate’s view, the High Court can, and must, audit, analyze and review the general reasoning and the particular evaluation of evidence by the arbitral tribunal from the perspective of the control of public policy, in order to preserve the parties’ fundamental rights to a reasoned decision under article 24 of Spanish Constitution.

B.2       Arbitration in Spain is not governed by the right to defense provided in the Spanish Constitution, but by the legal requirements of the Spanish Arbitration Act. Arbitration in equity does not require that the decision be compatible with the application of substantive law. Constitutional Court Judgment No. 17/2021 dated 15 February 2021.

The High Court of Justice of Madrid annulled an arbitral award that was rendered within an equity corporate arbitration. The award, which ordered the dissolution of a company, was annulled since the High Court of Justice of Madrid considered that it lacked “sufficient grounds” and, therefore, infringed the constitutional right to obtain a reasoned decision provided in article 24.1 of the Spanish Constitution.

Subsequently, the Constitutional Court revoked the judgment of the High Court of Justice of Madrid. The Constitutional Court declared that arbitration in Spain is based on the parties’ freedom of choice established in article 10 of the Spanish Constitution and, therefore, article 24.1 does not apply to arbitration. Instead, the requirement that the award is motivated should be assessed according to the Spanish Arbitration Act.

In this regard, the Spanish Arbitration Act only imposes that the award states the reasons for its decision, but does not expressly require that the arbitrator decides on all the arguments presented by the parties or that they must indicate the evidence on which they have based their decision.

In relation to arbitration in equity, the Constitutional Court declared that, although arbitrators could reinforce their reasoning with legal arguments, they could dispense with legal rules and resort to considerations of fairness and equity, even if the decision is incompatible with the application of substantive law.

This judgment has been also invoked in other rulings of 2021 (among others, Judgments of the High Court of Justice of Madrid No. 57/2021 dated 9 September 2021 and of the High Court of Justice of Galicia No. 25/2021 dated 20 September 2021.

B.3       Enforceability of an award vis à vis third parties. An arbitration award imposing a pecuniary obligation on a capital company does not have the effect of res judicata against another company resulting from a partial spin-off of the original one. Judgment of Spanish Supreme Court No. 710/2021 dated 20 October 2021

The case refers to an arbitration award that imposed a financial penalty on a company in favor of the claimant. The defendant company (D) subsequently underwent a spin-off period, as a result of which a new entity (E) was established. The claimant then attempted to enforce the award against E, in its condition as a joint and severally liable debtor. The Madrid First Instance Court considered that the obligation was binding on the new company, but the Madrid Provincial Court reversed the judgment. In this context, the claimant challenged the appeal judgment before the Spanish Supreme Court.

The Supreme Court dismissed the claimant’s challenge on the grounds that the arbitration award resulting in a pecuniary obligation for D should not have res judicata effect on E and does not state that E shall be held jointly and severally liable in subsequent litigation. This conclusion is based on the fact that E was not a party to the arbitration proceedings, so the requirement of subjective identity required by article 222.3 of the Spanish Civil Procedure Act (together with the objective and casual identity) for a ruling to have a res judicata effect was not met. Moreover, the dispute was not identical, to the extent that the grounds for the arbitration action against D was an agreement between the parties, while the basis for the subsequent litigation claim was the partial spin-off of D. In fact, article 542.1 of Spanish Procedural Act prevents a plaintiff from trying to enforce a judgment against a joint and several debtors if they were not a party to the proceeding.

B.4       The parties of arbitration proceedings are free to agree whether the arbitral award should express the reasoning of the decision and in what terms, since the judicial control and its limits on arbitration proceedings do not derive from article 24 of the Spanish Constitution, but from the Spanish Arbitration Act. Constitutional Court (First Chamber). Judgment No. 65/2021 dated 15 March 2021.

The arbitral award to which this judgment refers was rendered within an equity arbitration. The award upheld the claimant’s petition to declare that the defendant had breached the agreement, but included no reference to the compensations claimed by the claimant. The High Court of Justice of Madrid upheld a partial annulment action towards the arbitral decision and considered that it was contrary to article 24 of the Spanish Constitution (right of defense and right to obtain a reasoned decision) and to public order since the award was inconsistent because it did not recognize any compensation in favor of the claimant.

The Constitutional Court revoked the High Court of Justice of Madrid’s judgment because it reviewed the case on the merits, which is not allowed. Furthermore, the Constitutional Court declared that, when the parties freely submit to arbitration, they choose to leave aside the jurisdictional guarantees set forth in article 24 of the Spanish Constitution, confirming that the guarantees of arbitration proceedings are the jurisdictional guarantees expressly provided in the Spanish Arbitration Act.

In addition, the Constitutional Court states that, according to the Spanish Arbitration Act, the parties may agree on whether the award must be reasoned and in what terms. Consequently, the reasoning behind arbitral awards has no impact on public policy.

B.5       Exequatur proceedings: Procedural default is not a valid cause for challenge of the exequatur of the arbitration award, if the party was duly notified of the arbitration proceedings, but voluntarily refused to defend itself. Ruling of Madrid High Court of Justice No. 10/2021 dated 21 September 2021

In this case, the parties had subscribed to a consultancy contract whereby the plaintiff undertook to provide services to the defendant, subject to Sharia law and with an arbitration clause in favor of The International Chamber of Commerce (ICC), in Doha (Qatar). Following a series of non-payments, the plaintiff initiated arbitration proceedings before the ICC. The request for arbitration was served on the defendant – who was domiciled in Spain – and the arbitrator contacted the defendant by telephone and verified receipt of the notices. However, the defendant refused to appear in proceedings or file their defense.

An award in default was finally rendered and ordered the defendant to pay monetary damages. Since the defendant refused to voluntarily comply with the judgment, the plaintiff initiated exequatur proceedings in Spain against them.

The Madrid High Court of Justice confirmed the award and concluded that none of the obstacles listed in article V of the New York Convention of 1958 that would prevent the exequatur of the award were present. From a formal point of view, the claimant demonstrated that it had issued and received continuous communications that brought the matters under discussion to the full knowledge of the respondent. In the jurisdictional proceeding, the respondent also failed to file pleadings and was again declared in procedural default.

B.6       The parties may dispose of action for annulment of an award based on the infringement of the public policy. Constitutional Court Judgment No. 55/2021 dated 15 March 2021.

In the course of annulment proceedings filed with the High Court of Justice of Madrid against an arbitral award, the parties reached a settlement agreement and jointly requested the termination of the annulment proceedings.

However, the High Court of Justice of Madrid rejected the termination of the proceedings and annulled the award. The High Court of Justice of Madrid considered that, once annulment proceedings are initiated, the parties cannot dispose of the annulment action, since it affects public policy and, therefore, the court is obliged to resolve it.

The Constitutional Court revoked the High Court of Justice of Madrid’s decision, stating that the High Court of Justice of Madrid made an extensive and unjustified interpretation of the concept of public policy, unlawfully preventing the parties from disposing of the object of the process of annulment of the arbitral decision. In this sense, the Constitutional Court establishes that arbitration is governed by the principle of disposition of the parties to settle the dispute, which also applies to the annulment action of the arbitral award.

B.7       Exequatur proceedings: Arbitration award enforceability, foreign law criminal matters and public policy infringement. Ruling of Catalonia High Court of Justice No. 96/2021 dated 10 March 2021

The case refers to an infrastructure and construction contract which included an ICC arbitration clause, with the seat of arbitration in Panama and subject to Mexican Laws (State of Veracruz). Due to interruption of construction work and disagreements in meeting deadlines, the plaintiff started arbitration proceedings, which resulted in an award that fully granted its claim, and subsequently requested exequatur from the Catalonia High Court of Justice.

The Public Prosecutor’s Office and the defendant objected to the award exequatur for reasons provided in the New York Convention. In particular, the Public Prosecutor argued that the award was not final, since an appeal for annulment had been filed in Panama. The defendant alleged that: (i) the effects of the award were unduly extended to third companies that had not subscribed to the agreement, (ii) the award ruled on matters not subject to the agreement and on issues that had already been submitted before the courts of Veracruz, (iv) that the award ruled on criminal matters that cannot be submitted to arbitration, and (v) that all the previous infringements supposed a public policy infringement.

The Catalonia High Court of Justice indicates that, pursuant to article V of the New York Convention, an award is enforceable regardless of whether it is final, and article VI determines that the request for suspension, or the pendency, of the nullity proceedings against an award, does not prevent the exequatur.

In addition, the High Court of Justice analyzes Panamanian legislation and concludes that, accordingly, the award complied with requirements for the extension of its effects to third parties and that the courts should refrain from deciding on issues that fall within the scope of arbitration agreements. Furthermore, the High Court emphasizes that there is no identity between the issues decided upon by the Veracruz courts and those of the arbitration proceedings. The High Court of Justice also considers that, although the award deals with matters that may constitute a crime, it only establishes the civil consequences of such conduct, without assessing its criminal relevance.

In view of the above, the Catalonia High Court of Justice denies that a public policy infringement had been committed since the award respects the fundamental rights and freedoms guaranteed by the Constitution, as well as other essential principles.

B.8       Impossibility for courts to give indications on how to proceed in an arbitration dispute in the event that the award is annulled. High Court of Justice of Catalonia Judgment No. 51/2021 dated 14 October 2021.

In this judgment, the High Court of Justice of Catalonia clarifies that the action for annulment of an arbitral award has a rescissory nature, which aims to attack the effectiveness of the res judicata granted to the decision. Therefore, the consequence of the annulment is limited to declaring the award null and void, in whole or in part, but courts cannot resolve the matter by issuing a new decision to replace the award. Likewise, the High Court of Justice of Catalonia establishes that courts cannot give instructions or indications on how the arbitration proceedings should develop after the annulment, which essentially differentiates the annulment action from a judicial appeal.

B.9       Exequatur proceedings: Personal loan with a 15% monthly interest rate is unenforceable due to a public policy infringement according to Spanish Civil Law. Ruling of Madrid High Court of Justice No. 4/2021 dated 17 February 2021

The case relates to a personal loan agreement executed by two individuals, subject to arbitration by the Permanent Arbitration Court of Kherson (Ukraine). Due to the borrower’s breach, the lender filed arbitration proceedings against the defendant, who did not appear in proceedings, despite having been served in the domicile set forth in the agreement (located in Ukraine) and, consequently, in accordance with the rules of the relevant arbitration court. The award, issued in default, upheld the claim but was not voluntarily complied with by the defendant.

The plaintiff requested the exequatur of the award in Spain, to which the defendant objected, alleging that both parties resided in Spain, that it was never aware of the proceedings, and that the arbitration clause was not valid, as the competent court should be a Consumer Arbitration Court. The defendant also refused that the lender had acted as a financial professional or businessman towards the borrower acting in their capacity as a consumer.

The Madrid High Court of Justice considers that, as the defendant freely agreed to receive notices at a specific address and undertook to notify any change, the clause is valid, and the service was completed when made to its address in Ukraine.

However, the tribunal points out an additional cause for exequatur challenge ex officio. In particular, it analyzes whether the monthly interest rate of 15% could be null and void and, having considered the applicable law and case law, it concludes that the said interest rate is excessive and qualifies as a “usurious” action, which undoubtedly contravenes Spanish public policy and also the scope of European Union law. On this basis, the Madrid High Court of Justice states that the award is unenforceable in Spain.

B.10     Validity and efficacy of a submission to private law arbitration by a municipal company, which is afterward succeeded by a Public Administration. Supreme Court (Contentious-Administrative Section). Judgment No. 1346/2021 dated 17 November 2021.

A temporary business association (Unión Temporal de Empresas) and a municipal public company entered into an agreement for the construction of a sports complex that was referred to private law arbitration. However, when the dispute arose, the municipal public company was extinct and the defendant was the City Council of Leioa, which challenged the competence of the arbitrator.

However, the Supreme Court declared that the contract was granted by an entity that had the status of contracting authority, but was not considered a Public Administration, which means that it was a private agreement. Therefore, its interpretation, effects, performance and termination are governed by private law.

The Supreme Court considers that the submission to arbitration was valid due to the fact that the Administration was not the one who originally awarded the contract, but has subsequently occupied the legal position of a contracting authority that is not a Public Administration. Furthermore, the Supreme Court establishes that, if the arbitration is initiated prior in time to the exercise by the Public Administration of its faculty of ex officio revision of the adjudication of the agreement, the arbitral award will not be able to be overruled by the Public Administration by exercising said faculty.

B.11     Impossibility of submitting to arbitration prior to the opening of the estate after the decease of the testator. High Court of Justice of Extremadura Judgment No. 1/2021 of 1 February 2021.

The arbitration reviewed by this judgment refers to an inheritance dispute arbitration. The testament established that any dispute relating to the succession and the adjudication of the assets of the estate would be submitted to arbitration in equity. The claimant, a successor, initiated arbitration proceedings before the death of the testator, which ended with the rendering of an arbitral award that adjudicated the assets of the estate between the parties of the arbitration.

The High Court of Justice of Extremadura annulled the arbitral award on the basis that the matter was not arbitrable, since the arbitration was initiated before the death of the testator. In this sense, the High Court of Justice of Extremadura differentiated three scenarios: (i) before the opening of the inheritance, the testator may agree to submit to arbitration any future inheritance dispute, but no arbitration could be initiated since it is not possible to dispose of the unopened inheritance due to the express prohibition of the Spanish Civil Code; (ii) at the time of death, the heirs or legatees may initiate arbitration for any inheritance dispute; and (iii) after the adjudication of the inherited assets, arbitration may be freely initiated by the successors.

In the case at hand, as the arbitration was initiated before the death of the testator, the High Court of Justice of Extremadura annulled the award by understanding that the matter was not arbitrable. The non-arbitrability of the matter should be upheld, although the defendant did not allege such circumstance in the arbitration, since the non-arbitrability of the dispute could be appreciated ex officio by the arbitral tribunal or the court.


Victor Mercedes is a member of the Dispute Resolution team at Baker & McKenzie in Barcelona. Víctor Mercedes co-heads the Firm’s Litigation & Insolvency Practice Group in Barcelona and has more than 12 years of legal experience. He is also an associate professor at University Pompeu Fabra, teaching business litigation, corporate and arbitration law in different business programs. Mr. Mercedes has authored and co-authored various publications on procedural and public law, tax and administrative law. Prior to joining the Firm, Mr. Mercedes worked in the State Advocate-General’s Office in Tarragona and later served as State Advocate in Barcelona during which time acted for over 2000 disputes before different courts (Civil, Commercial, Criminal and Administrative). He was also a member of the National Administrative Observatory for Tax Crime, Contraband and Punishable Insolvencies of the Spanish Ministry of Economy and Finance. He is ranked and recommended as a leading lawyer in dispute resolution, restructuring and insolvency and corporate crime in Best Lawyers, Chambers Europe (2012,2013,2014) and Chambers Global (2012,2013,2014) and in Legal 500. Victor Mercedes can be reached at and + 34 93 206 08 38.


José Ramón Casado is a Partner of the Dispute Resolution Practice in Baker McKenzie's Madrid office.


Carmen Alonso is a partner in the Dispute Resolution Practice Group in Baker McKenzie's Madrid office. She has undertaken legal counselling and procedural defense of both national and foreign companies in litigation, arbitration (both domestic and international), out-of-court claims and settlement agreements. She specializes in the area of energy, mining and infrastructure, where she has extensive experience in advising top companies in all kinds of complex projects and contracts, before both national and international courts (ICC, LCIA). She also serves regularly as an arbitrator in the most renowned arbitration courts in Spain (Spanish Arbitration Court and Madrid Bar Arbitration Court). She was named “Rising star” by The Legal 500 (2023) and recognized as the best Spanish Arbitration Lawyer in the "Forty under Forty" awards by Iberian Lawyer in 2022.


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