For years, several European capitals – particularly Paris, Geneva, London and Stockholm – have dominated the international arbitration scene. Few would bet on Madrid joining them. But the city’s lawyers are determined. “Our aim is to make Madrid a key venue for international arbitration,” says David Arias of Perez-Llorca.
He’s got his work cut out. In The American Lawyer’s most recent arbitration report – listing over 100 commercial disputes worth over $200 million – not a single case was being heard in the Spanish capital.
But he’s not alone. Madrid’s community has thrown its weight behind this goal. They’ve set up the Club Español de Arbitraje – Spanish Arbitration Club – to promote it. The city’s merits have been advertised in a special feature in The Washington Times. “Experts unanimously agree that Madrid has all the qualities required to become a venue for international commercial dispute resolution,” it claims.
The big hitters of the Spanish legal profession are on board. José Maria Alonso, managing partner of Garrigues, believes Madrid’s time has come. “We’re doing everything in our power to tell the world that Madrid is the place for Spanish and Portuguese-speaking disputes,” he explains.
The appeal is focused on the growing number of commercial arbitrations from Latin America. “More and more Spanish companies are investing abroad in the region,” Alonso notes. “But they don’t always feel secure with the local courts. Madrid offers a safe, Spanish-speaking alternative.”
All the requirements for a successful arbitration venue, Arias argues, are in place. Spain adopted the model law in 2004, and the courts are no longer seen as suspicious towards arbitration. “We’ve been holding seminars together with the courts; they’re eager to know how they can help develop arbitration,” he outlines. “They've proven extremely co-operative, supporting arbitration where necessary.”
The government, too, is supportive. It has set a building aside for arbitration in the forthcoming ‘City of Justice’, a 50-acre courthouse campus near Madrid airport. “A year from now, we’ll have a space dedicated to arbitration in the biggest justice campus in the world,” says Alonso.
Still, there are some significant obstacles still to overcome if Madrid is to carve out a niche for itself. For one, the city is saddled with a chaotic array of arbitration institutions. It boasts no less than eight arbitration courts, each with its own unique rule sets.
Some of these rules would baffle many arbitration practitioners. In the Civil and Commercial Court, for example, if parties are unable to agree on an arbitrator, the selection is made automatically from a list without detailed consideration of any particular expertise required.
The institutions are taking steps towards developing a unified model similar to that employed in Switzerland. “The main actors acknowledge that something has to be done if we want an international institution that can be used by foreign parties,” explains Miguel Virgós of Uría Menéndez, another supporter of the campaign. “But it will take time to convince the boards of the institutions to come along.”
For now, Madrid’s focus is on acting as a venue for disputes administered by international institutions such as the International Chamber of Commerce. Here too, though, there is a mountain to climb. Last year Madrid was the venue for a mere seven of the 593 arbitrations referred to the ICC.
Practitioners outside Madrid are sceptical about the city’s chances. “Everyone would like to go and live there,” said one Paris arbitration lawyer. “But they’ve got a long way to go as a venue. They’ve had a reformed law for three years – that’s not long enough to build up an arbitration culture.”
While Madrid’s proponents are eager to emphasise the courts’ enthusiasm for arbitration, some observers counsel caution. “Their recent reforms have been widely accepted as good law,” observes Fernando Mantilla-Serrano of Shearman & Sterling. “But whether the judges will apply it correctly is the real question. I haven’t seen a significant shift towards Madrid in my own practice yet.”
Simply having a positive attitude to arbitration is not enough. “Supporting arbitration is one thing, but the courts must also be functioning effectively,” notes Patricia Nacimiento of Nörr Stiefenhofer Lutz. “Otherwise related litigation, for example seeking interim relief, can be much more difficult.” But concerns remain over the efficiency of many Spanish courts.
Some observers argue that Madrid’s strategy of focusing on Latin American disputes is a mistake. “Spanish investment in Latin America has certainly increased,” observes one practitioner. “But parties almost invariably seek a neutral ground for an arbitration venue. Why would Latin American parties agree to an arbitration on the other side’s home turf?”
Madrid may have more chance procuring disputes between Latin American parties. But it faces stiff competition. Houston, Miami and Mexico City currently gobble up the majority of such disputes, and are eager for more. “We still have some work to do to encourage Latin American parties to select Madrid,” admits Virgós. “But we are committed – and confident we’ll succeed.”
So will Madrid achieve its ambitious goals? “We’re already seeing more arbitration clauses selecting Madrid as the venue,” asserts Virgós, “although it will take some time for that to translate into disputes.”
David Arias remains optimistic. “We believe Madrid can be a world centre for arbitration involving Latin American parties, especially in cases with European counterparties.
“We have a long way to go – Madrid is not yet a popular destination – but we're working hard.”
PromoMadrid’s site promoting Madrid as an arbitration venue can be found at www.madridarbitraje.com/en/madrid_sede_de_arbitraje_internacional.