First Arbitration Study in Spain

Madrid, March 15, 2018.- Roca Junyent, Comillas ICADE and the Association Corporate Counsel Europe (ACC) have introduced today the First Arbitration Study in Spain, which discusses this extra-judicial procedure for resolving legal disputes as an alternative in the determination of disputes between companies. 

The study shows that arbitration is becoming an established dispute resolution method in Spain, although it still has a long way to go if we consider its use in other jurisdictions. Nevertheless, while 53% of surveyed companies still prefer to turn to ordinary jurisdiction, arbitration is now an extensive practice in the remaining 47% of companies either as a single instrument or in conjunction with other alternative resolution methods. The main arbitration users are large companies, i.e., those with turnover greater than €5 billion. These companies belong predominantly to the energy sector and use this practice in a majority manner in international disputes.

The main supporter of the report, Marlen Estévez, Litigation & Arbitration Partner at Roca Junyent, points out regarding the nature of the study that “it is essential to identify the main benefits and advantages of arbitration, as well as to recognise fields of improvement in this practice in order to adapt it to the real needs of its targets, the companies.” Moreover, Javier Ramírez, Member of ACC Europe’s Board of Directors and Chair of Advocacy, adds that “this first arbitration study in Spain is very important because it identifies strengths and areas for improvement, not from the point of view of arbitrators, office attorneys or arbitration institutions, but from the perspective of the primary users of arbitration, companies, on which the decision of whether or not to use this alternative dispute resolution method actually depends.” 

In this sense, the survey results indicate that companies perceive as the main benefits of this practice the expertise and technical knowledge on the matter which is the object of arbitration, the qualification required from the arbitrator, as well as the speed of the procedure. However, companies also identify disadvantages, amongst which they highlight the high cost of the procedure, the usual tendency of arbitrators to make wise decisions and the absence of case law that can be used in other disputes. 

Arbitration institutions are the primary body in the execution of this practice, and in this regard the choice of one institution over another depends largely on the data submitted by the study, the institution’s experience in the administration of arbitrations, the guarantee of fairness and independence in the appointment of arbitrators and the specialisation of the arbitration institution in the particular dispute type. 

Most companies tend to choose an arbitration court rather than opt for the election of a sole abritrator, the main reason being that in their opinion it is necessary for the arbitator to gather knowledge of applicable law, technical issues and legal standing. This shows that what companies value most when opting for arbitration is the ability to choose arbitrators who specialise in the matter that is the subject of the dispute. 

The effectiveness of arbitration in Spain is confirmed by the data that the study points to. In this sense, most companies indicate that the percentage of success of opposition proceedings in the execution of a decision and annulment of a decision is less than 10%. The most common reason for requesting an annulment of a decision is a violation of public order. 

Iñigo Navarro, Dean of Comillas ICADE highlights that “arbitration has a tremendous appeal, especially for resolving international conflicts, as it gives parties greater confidence regarding the process and the rules that apply, offering greater security in the end result in addition to saving time.” 

In terms of arbitration courts, it is worth noting that the most widely used in Spain are the Arbitration Court in Madrid, the Civil and Commercial Arbitration Court and Spanish Arbitration Court, but internationally the most commonly used is the CCI. It is also worth noting that in general international courts have been better reviewed than domestic ones by their users, perhaps because for companies the most important elements when choosing a given arbitration court are the institution’s experience overseeing arbitrations, ensuring fairness and independence in the appointment of arbitrators and the specialisation of the arbitration institution in the particular type of dispute. 

89% of companies believe arbitration is the ideal method for resolving international disputes. In addition, a vast majority of participants (78%) see the future of arbitration in Spain in a positive light, a percentage that increases to 81% amongst companies who have engaged in arbitration proceedings in the last five years. Hence, the authors of this study understand that it is the right time to enhance initiatives such as the one consisting of creating a Spanish international arbitration court of reference.