Reforms to the 2003 Spanish Arbitration Act
With the aim of promoting arbitration, the present law begins to carry out the resignation of the judicial functions in relation to arbitration, both the support functions, as well as the knowledge of the action of annulment of the award and the exequatur of foreign awards, which would give more uniformity to the system by means of a “rise” in the determined functions. In particular, it deals with the those relating to the judicial appointment and removal of arbitrators, the knowledge of the action of annulment of the award and the competency to determine the exequatur of foreign awards, which is now attributed to the Civil and Criminal Courts of the High Courts of Justice, maintaining the competency of execution in the Courts of First Instance. These changes have led to a new wording to Article 8 of Law 60/2003 of Arbitration, dated 23rd December, as well as amending the Code of Civil Procedure of 3rd February, 1881.
The Law also clarifies, by means of including two new provisions in the Law of Arbitration 60/2003 of 23rd December, the existing gaps in relation to statutory arbitration in corporations. The amendment recognises the arbitrability of disputes that arise, and in line with the security and transparency that in general guides the reform. It requires a reinforced legal majority to introduce a clause providing for arbitration in the bylaws. Together with this, it establishes that the submission to arbitration, of the challenge of partnership agreements, requires the administration and appointment of arbitrators by an arbitral institution.
Other amendments to the Law of Arbitration 60/2003 of 23rd December, seek to increase both the legal certainty as well as the effectiveness of these procedures in light of the experience of recent years. Through this, the aim is to improve the conditions in order to permanently establish international arbitration in Spain, without disregarding that it is a collective regulation which will also favour internal arbitration. In the same way, we proceed to reinforce the role of arbitral institutions, as well as an improved structure in the appointment of arbitrators, opening the range of professionals, with legal expertise that may be involved, when it relates to arbitration as a right. However, explicitly foreseeing, that the intervention of other professionals is possible, not necessarily belonging to that field of knowledge, as, the international experience fully established advises the said reform, and without forgetting that in this manner, a greater link is created to "free competition" which the European Union institutions currently maintain. It also establishes the inconsistencies in relation to the intervention in mediation, and regulates the need to ensure responsibility.
With regard to the development of arbitration proceedings, a new system is articulated regarding the language of arbitration, which increases the guarantee of the procedure, in recognising the possibility of the correct language being used by the parties, witnesses and experts, and by any third party involved in the arbitration. Regarding the award, the changes have focused on the timing and type of award. Thus, it modulates a solution, in favor of arbitration, in cases in which the award is out of time, without prejudice of the responsibility of the arbitrators. It also specifies the formalities and always requires the reasoning for the awards. Moreover, it establishes a specific remedy in order to be able to rectify the partial limit of the award when it has ruled on issues not put forward in reaching a decision or for matters not susceptible to arbitration.
The annulment and review of the award is also subject to the reform. The action for annulment receives a significant change: as of this moment, it progresses to a better articulation of the procedure. On the other hand, after the reform, the distinction between the firm and final award is eliminated, establishing that the award has the effect of res judicata, although the action of annulment and review is exercised against it, which means it can be executed necessarily if voluntary compliance is not met.
The importance of the only additional provision of this Act should be reconsidered, whereby it regulates a procedural channel of an ordinary and institutional basis to resolve internal conflicts between the General Administration of the State and its instrumental entities, exceeding the current de facto mechanisms, outside the legal severity and objectivity that are essential in an organization that, by as per the constitution, must be governed by the Law and act in the public interest under the authority of the government. The unquestionable nature of public law of organizational relationships within the Administration are fundamental to an ordinary resolution of conflicts such as the one that has been set, beyond merely partial solutions such as those offered by a particular route of jurisprudence that has been denying the autonomous organisms legitimacy to challenge the actions of the original administration; a route that today is legally confirmed in Article 20.c) of Law 29/1998 of 13th July, Regulatory Administrative Courts.
It is understood that such conflicts should be resolved by the Government. To this effect, it entrusts a Committee whose chairmanship is given to the Minister of the Presidency, in its role as coordinator of the General Administration of the State, being ex officio members of the Minister of Economy and Finance and the Minister of Justice. Its secretary is the responsibility of the Ministry of Justice in regard to the functions and the appointment of the Legal Services of the State.
Additionally, Article 722 of Law 1 / 2000 of 7th January, of the Civil Procedure is amended, in the sense of permitting the application for precautionary measures to those who prove to be a party to an arbitration agreement before the arbitration proceedings, thereby enabling a greater compatibility between what is stated in the arbitration and in the said law.
To conclude, the reform of Law of Arbitration 60/2003 of 23rd December is linked to the reform of Article 52.1 of Law of Insolvency 22/2003 of 9th July. The new version is tailored to the solutions of the Member States in the field and eliminates the existing inconsistency so far between the two paragraphs of Article 52. It is intended to maintain the validity of the arbitration agreement provided that it projects above mere civil actions, that, although it may result in having patrimonial implications against the debtor in bankruptcy, could have arisen irrespective of the declaration of insolvency. This applies, among others, to actions relating to the existence, validity or amount of a loan, for the recovery of debts for the debtor, the actions claiming ownership over property of a third party in possession of the debtor in bankruptcy and litigation relating to reorganization plans reached between the debtor and its creditors before the opening statement. Notwithstanding the aforementioned, it authorises the competent court to suspend the effects of the arbitration agreements or agreements previously signed, if it understood that it could be detrimental to the bankruptcy procedure.
