A. LEGISLATION AND RULES
A.1 Legislation
There have been no relevant legal developments on arbitration in Spain during 2024.
A.2 Institutions, rules and infrastructure
A.2.1 Approval of the Arbitration Rules of the Spanish National Markets and Competition Commission
On 3 September 2024, the Spanish National Markets and Competition Commission (CNMC) approved its arbitration rules for arbitrations related to competition law or sectors subject to CNMC regulation or supervision. Although the CNMC has already administered arbitral proceedings since its creation in 2013, the approval of these arbitration rules aims to provide greater transparency and predictability to the arbitration administered by the CNMC and to promote this dispute resolution mechanism among economic operators. Among the most important aspects are: (i) the provision of an expedited procedure, which will be applied by decision of the CNMC Council, without the parties being able to oppose it, to claims of lesser complexity or matters with a value not exceeding EUR 100,000, and establishes a time limit for rendering the final award of four months, extendable by one additional month, from the filing of the statement of defense; and (ii) the cost-free of the arbitration, either for administrative expenses or arbitrator’s fees.
B. CASES
B.1 Award annulment proceedings: The submission of a dispute to jurisdiction implies a tacit waiver of the arbitration clause, even if the judicial proceedings were withdrawn (Judgment of the Madrid High Court of Justice no. 17/2024, dated 9 April 2024)
Two parties entered into a lease agreement, which included an arbitration clause. Due to the non-payment of the rent by the lessee, the lessor filed for an eviction and rents claim before the Court of First Instance of Móstoles.
The lessee appeared before the court and opposed the claim on substantive grounds. However, the lessor’s attorney failed to appear to the trial, and the court dismissed the proceedings due to the withdrawal of the lessor (which, under Spanish legislation, does not imply the rejection or waiver of the claim on the merits). Subsequently, the lessor initiated arbitration proceedings for the same dispute that had been previously submitted to the Courts of First Instance of Móstoles.
The lessee filed an exception to the arbitrator’s jurisdiction alleging that, by previously submitting the same dispute to jurisdiction, the parties had waived arbitration. The arbitrator dismissed this exception and confirmed his jurisdiction, since the withdrawal of the judicial proceedings had no res judicata effects. Therefore, the arbitrator rendered an award on the merits, ordering the lessee to vacate the property and to pay the lessor the unpaid rents.
The lessee filed an action for annulment of the award on the grounds of the arbitrator’s lack of jurisdiction. The Madrid High Court of Justice ruled in favor of the lessee and annulled the award, considering that, by previously submitting the same dispute to jurisdiction without the lessee raising a motion challenging jurisdiction, both parties had implicitly waived arbitration and, therefore, the arbitrator lacked jurisdiction to resolve that matter.
B.2 Exequatur Proceedings: High Court of Justice of Madrid confirms arbitral award (Judgment No. 10/2024, dated 18 June 2024)
This case revolves around the recognition and enforcement of a foreign arbitral award issued by the ICSID Arbitral Tribunal in Washington DC. The proceedings were initiated by the corporation STRABAG SE against the State of Libya, seeking the exequatur of the award issued on 29 June 2020. This award stemmed from breaches of several construction agreements signed between the parties.
The High Court of Justice of Madrid took on the task of examining whether the formal requirements outlined in the New York Convention and the International Legal Cooperation Act of 2015 were met. The court verified that the documentation submitted, including the award and the arbitration agreement, adhered to the necessary standards of authenticity and translation. Furthermore, it was determined that Libya could not claim immunity from jurisdiction due to the Reciprocal Promotion and Protection of Investments Agreement signed between Austria and Libya. The court also ensured that there was no violation of Spanish public policy, concluding that the arbitration proceedings respected all fundamental procedural guarantees.
A notable aspect of the judgment is that the State of Libya, despite being duly notified, did not file an opposition and was declared in default. The Public Prosecutor’s Office supported the application for recognition of the award, stating that there were no grounds for refusing exequatur under article V of the New York Convention. Consequently, the court granted the exequatur, allowing the enforcement of the award in Spain and ordering Libya to pay the procedural costs.
B.3 Award annulment proceedings: The noncompliance with the stipulated period for issuing the award is not a ground for annulment, unless it results in a denial of due process to any of the parties (Judgment of the Madrid High Court of Justice no. 13/2024, dated 12 March 2024)
The defeated party in an arbitration filed an action for annulment of the award for violation of public policy, under article 41.1.f of the Spanish Arbitration Act, as the award was issued outside the time limits imposed by the Arbitration Rules of the Madrid Court of Arbitration.
The Madrid High Court of Justice stated that the grounds for annulment of the award are limited and that, although the violation of certain essential procedural guarantees may be a ground for annulment, for a procedural defect to justify the annulment on an award, it must have caused a real and effective impairment of the party’s defense opportunities, which had not occurred in that case.
The court also established that, although the former Spanish Arbitration Act (not applicable to that case) provided for the issuance of an award out of time as a ground for annulment, this was not included in the current Spanish Arbitration Act, as article 37.2 of this establishes that failing to issue the award within the stipulated period shall not affect the effectiveness of the arbitration clause nor the validity of the award.
In view of the above, the court dismissed the action for annulment of the award, considering that not every procedural breach must result in the annulment of the award, but only those that entail an effective denial of due process for one of the parties, which had not occurred with the mere non-compliance with the stipulated period for issuing the award.
B.4 Exequatur Proceedings: High Court of Justice of Madrid upholds arbitral award (Judgment No. 11/2024, dated 18 June 2024).
This case refers to a charter party agreement governed by English law between XO SHIPPING, S.A. (“Appellate“) and CEMCO CEMENT TRADING, S.L. (“Respondent“). The agreement stipulated that any disputes would be resolved through arbitration in London, United Kingdom. Specifically, when the Respondent breached the contract, the Shipper initiated arbitration, resulting in three awards addressing jurisdiction, the merits of the dispute, and costs. Consequently, the Appellate sought the exequatur of these awards from the High Court of Justice of Madrid to enforce them in Spain.
Firstly, the court dismissed the Respondent’s appeal against the first award, as it was filed late despite proper notification. Secondly, the court examined whether the second and third awards, rendered in the Respondent’s absence, violated Spanish public policy under article V.2 of the New York Convention due to irregular service of the arbitral claim. The court found no such violation, noting that the Respondent was fully aware of the proceedings, and upheld the application for exequatur.
Finally, the court recognized and enforced the arbitral awards, finding no grounds against them, and ordered the Respondent to pay the procedural costs.
B.5 Award annulment proceedings: The request for rectification of an award that rules on matters not submitted to arbitration is a prerequisite for filing the subsequent action for annulment (Judgment of the Galicia High Court of Justice no. 23/2024, dated 30 April 2024)
A consumer initiated arbitration proceedings against his electricity supplier for excessive billing. The supplier opposed the claim on the grounds of the arbitrator’s lack of jurisdiction, alleging that the excessive billing was not attributable to them but to the electricity distributor, and that the arbitration clause excluded consumer claims that were not attributable to the supplier.
However, the arbitrator confirmed his jurisdiction and ordered the supplier to compensate the consumer for the overpaid amount. The supplier filed an action for annulment of the award, alleging that the arbitrator had ruled on a matter excluded by the arbitration clause, in accordance with article 41.1.e of the Spanish Arbitration Act.
The Galicia High Court of Justice established that, before filing the action for annulment, the electricity supplier should have sought the remedy provided in article 39.1.d of the Spanish Arbitration Act, which allows the parties to request the arbitrator to rectify the award when the arbitrator has ruled on matters not submitted to their decision. Therefore, as the supplier had not fulfilled this prerequisite before filing the action for annulment, the court dismissed the action.
B.6 Exequatur Proceedings: High Court of Justice of the Valencian Community grants enforcement of arbitral award (Judgment No. 8/2024, dated 25 March 2024)
This judgment revolves around the recognition and enforcement of a foreign arbitral award rendered in Latvia by the Eastern European Arbitration Court, based in Riga. The application for exequatur was filed due to a private loan agreement between two individuals, resulting in an arbitration award that ordered the debtor to pay EUR 1.1 million. The applicant provided authenticated copies of the award and the loan agreement, along with their sworn translations into Spanish.
The High Court of Justice of the Valencian Community scrutinized whether the formal requirements set forth in the New York Convention and the International Legal Cooperation Act of 2015 were met. The respondent opposed, claiming lack of proper notice and arguing that the dispute was not arbitrable, as it allegedly involved maintenance payments for minor children. However, the court dismissed these objections, concluding that the notices were properly served and that the matter was entirely arbitrable, as it concerned a loan agreement signed by both parties.
The court also verified the authenticity of the submitted documents and confirmed that the formal requirements of the New York Convention were satisfied. Additionally, it determined that there was no violation of the defendant’s rights of defense, as the notices were sent to the correct address and the defendant did not present any arguments during the arbitration proceedings. Ultimately, the court granted the exequatur, allowing the enforcement of the award in Spain and ordering the respondent to pay the procedural costs.
B.7 Award annulment proceedings: The two-month expiration period for filing the action for annulment of the award is neither suspended nor interrupted by filing the action before an incompetent court (Judgment of the Balearic Islands High Court of Justice no. 2/2024, dated 26 July 2024)
The defeated party in an arbitration filed an action for annulment of the award before the Court of First Instance of Palma de Mallorca, within the two-month period from its notification, as required by article 41.4 of the Spanish Arbitration Act. However, eight months later, the Court of First Instance of Palma de Mallorca dismissed the proceedings due to its lack of jurisdiction, since, in accordance with article 8.5 of the Spanish Arbitration Act, jurisdiction over award annulment proceedings corresponds to the High Courts of Justice.
Subsequently, the losing party filed the action for annulment before the Balearic Islands High Court of Justice, alleging that, despite two months having elapsed from the issuance of the award, the action had neither expired nor been prescribed because the period for filing the annulment action had been interrupted by the filing the action before the Court of First Instance of Palma de Mallorca. The defendant opposed this, alleging that the time limit for filing the annulment action is one of expiration, not limitation, and therefore is not subject to suspension, not even by filing the action before an incompetent court.
The Balearic Island High Court of Justice accepted the defendant’s arguments and dismissed the action for annulment, considering that the time limit for exercising the action for annulment is of a civil nature, and not procedural, and that it is one of expiration and not limitation. Therefore, it is not subject to interruption or suspension, even when it has been exercised within the established time limit but before an incompetent court, as in the present case.
B.8 Award annulment proceedings: The court hearing the action for annulment of the award cannot examine the suitability, sufficiency, or adequacy of the reasoning of the award, but only verify its existence (Judgment of the Madrid High Court of Justice no. 44/2024, dated 12 November 2024)
In this case, the claimants sought the annulment of an award alleging that it was contrary to public policy because the arbitral tribunal’s assessment of the evidence that would be decisive for the resolution of the dispute, consisting of a recording of a conversation held between the parties, was illogical and arbitrary.
The Madrid High Court of Justice established that courts cannot examine the suitability, sufficiency, or adequacy of the award’s reasoning, but only verify its existence. Therefore, while the award must be reasoned, according to article 37.4 of the Spanish Arbitration Act, in those cases where the arbitral tribunal provides reasoning for its decision, the court cannot review its adequacy to the applicable law or whether the evidence has been correctly assessed.
In view of the above, the court dismissed the annulment action of the award, considering that the assessment of the evidence conducted by the arbitral tribunal was well-reasoned and cannot be deemed arbitrary, illogical, absurd, or irrational. Therefore, it concluded that there was no violation of the principles governing procedural public policy.
