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Spanish Constitutional Court Reinforces Pro-Arbitration Stance in Annulment Proceedings
Spanish Constitutional Court Reinforces Pro-Arbitration Stance in Annulment Proceedings
Introduction:
The Spanish arbitration landscape has witnessed significant developments in recent years, particularly concerning the annulment of arbitral awards. The role of regional High Courts of Justice, especially the High Court of Justice of Madrid (TSJM), has been pivotal in shaping arbitration jurisprudence. However, recent decisions by the Spanish Constitutional Court (SCC) have redefined the parameters of annulment proceedings, reaffirming Spain's reputation as a pro-arbitration jurisdiction.
The Annulment Regime under Spanish Law:
The Spanish Arbitration Law (SAL), modelled on the UNCITRAL Model Law, provides six grounds for annulment of arbitral awards, including infringement of public policy. Parties seeking annulment must present their case before a regional High Court of Justice, which decides based on written pleadings and, if requested, an oral hearing. The decision of the High Court of Justice is final, with the possibility of appeal only through a constitutional protection appeal (recurso de amparo) before the SCC.
The SCC's Intervention:
In response to concerns within the arbitration community regarding the TSJM's high annulment rates on public policy grounds, the SCC intervened with a series of decisions starting in 2020. These decisions emphasized that regional High Courts of Justice should refrain from reopening the merits of a dispute and that public policy arguments should be invoked only in highly exceptional cases.
Reversal of Annulment Trend:
The SCC's rulings have profoundly impacted annulment proceedings before the TSJM. Statistics reveal a significant decrease in annulment requests, indicating a shift in approach influenced by the SCC's doctrine. Parties are now more reluctant to challenge awards based on public policy grounds, recognizing the stringent criteria set by the SCC.
TSJM's Adherence to SCC Doctrine:
Recent decisions by the TSJM reflect its adherence to the SCC's doctrine. The majority of annulment requests based on public policy grounds have been dismissed, with the TSJM citing the SCC's guidance. The TSJM has emphasized the need for clear and reasoned decisions, but it has also demonstrated a commitment to respecting the autonomy of arbitral proceedings.
Exceptions to the Rule:
While the TSJM generally dismisses annulment requests based on public policy grounds, there have been exceptions. In rare cases, where the TSJM finds a radical lack of reasoning affecting procedural public policy, it may uphold an annulment request. However, even in such instances, dissenting opinions within the TSJM indicate ongoing debate regarding the application of the SCC's doctrine.
Conclusion:
The recent interventions by the Spanish Constitutional Court have brought clarity and consistency to annulment proceedings in Spain. By emphasizing the exceptional nature of public policy arguments and the autonomy of arbitral proceedings, the SCC has reinforced Spain's pro-arbitration stance. This development should instil confidence in international arbitration users considering Spain as a seat for their disputes, underscoring the country's commitment to maintaining a robust and arbitration-friendly legal framework.
- The Spanish Arbitration Law (SAL), modeled on the UNCITRAL Model Law, provides six grounds for annulment of arbitral awards, including contravention of public policy.
- These decisions emphasized that regional High Courts of Justice should refrain from reopening the merits of a dispute and that public policy arguments should be invoked only in highly exceptional case
- The TSJM has emphasized the need for clear and reasoned decisions, but it has also demonstrated a commitment to respecting the autonomy of arbitral proceedings.
