The Law of Arbitration, law 60/2003 of 23 December, regulates international arbitration for the first time in Spain. The law includes many of the principles of the legal framework of the United Nations, as well as those contained in the New York convention.
As a consequence, we are able to confirm that Spain now finds itself in an enviable position from which it can become a centre for international arbitration. During the work of the Commission of Arbitration at the Valencia College of Lawyers (which we are a member of), we participated in the drafting of the Statutes of the Court of Arbitration.
This commitment to arbitration has received the important endorsement that Valencia has become designated as a centre for the European Court of Arbitration for Mediterranean and Middle Eastern countries.
There are several advantages offered by international arbitration:
(i) The possibility of airing questions inherent in practices and customs of international commerce, unknown to the Courts of Justice.
(ii) To deal with those agreements that are the result of foreign investments, so that the companies are able to defend their rights without recourse to the defensive mechanisms provided by their States.
(iii)To permit a quick and effective solution in issues containing a foreign component, such as joint ventures, or investment projects such as infrastructure or concessions, avoiding the possibility that the courts of the country where the works are carried out will be biased towards the contracting country. For example, in a recent matter with a value of approximately 20 million euros resulting from a contractual dispute between a Spanish business and a Dutch company, the Court of Arbitration took six months to resolve a question in favour of our client. In this case, if the same argument had taken place before the Courts of Justice, it would have taken years to resolve the matter.
(iv) The possibility of the resolution of conflicts by a specialist body, through the use of expert judges in these areas.
(v) The confidentiality of judgments, which in a global economy can affect, for example, the share price of one of the parties to the conflict; in contrast to matters raised before the Courts of Justice, which can attract significant media coverage.
Naturally, there are also disadvantages, the most important defect of arbitration being the cost. Insofar as it is certain that litigating before multiple tribunals is assumed to be more expensive, it’s also true that arbitration means that the parties subsidise all the costs.
In order to avoid this negative effect, we propose these draft solutions, which we believe can reduce the cost and increase the speed of the arbitration:
(i) Choose one arbitrator.
(ii) Use video-conferencing when the location of the arbitration is different to that of the parties.
(iii)Use e-mail for notifying the judgments in the proceedings. (iv)Reduce formalities: for example, if written judgments are given, the parties should not attend a further hearing, in order to avoid extra cost.
(v) Limit the range of the evidence, in particular with respect to live witnesses, and use videoconferencing to avoid their travel costs.
Interventionism by the legislatures of Latin American and North African countries has reduced arbitration’s efficacy when it comes to being able to recognise and enforce arbitration judgments. Nevertheless, in Spain, it is permitted to enforce foreign judgments that are in a state of annulment before the courts of the countries where the arbitration took place.
Equally, the existence of several jurisdictions for anti-suit injunctions complicates not only the recognition, but also the execution of judgments. Complications which are aggravated when there’s an attempt to enforce a judgement against a country, enforcement against assets of that country or a related company being especially difficult, and all of this with the added problem of determining which assets are considered ius gestionis or ius imperi.
Nevertheless, there exist more advantages than inconveniences, and we are going to point out some questions of interest for Spain:
(i) To make the most of the common nexus of language, we think we should promote arbitration between Spanish-speaking countries.
(ii) The promotion of the use of arbitration in key sectors of the economy like the energy sector, and finance of the telecommunications sector.
For these reasons, in our view, even though international arbitration still has a long way to go in Spain and Latin America, it is certain and clear that globalisation and the existence of a common denominator of language should promote this type of conflict resolution.