Litigation & ADR annual report
Clients remain sceptical about arbitration in Spain
Some international companies still have concerns that arbitrators in Spain are not impartial and that
there are problems with corruption
Francisco Málaga
Despite the fact alternative dispute
resolution (ADR) remains attractive to
clients seeking to avoid long and costly legal
battles, a slight mistrust of local arbitration
persists in Spain with many foreign
companies seeking to use international
arbitrators, according to Francisco Málaga,
head of litigation at Linklaters in Madrid.
Málaga expects the use of ADR will
increase in future as Spain’s economy
recovers. However, as yet, there has
not been widespread use of domestic
arbitration in Spain. Meanwhile,
international companies and banks are
sometimes mistrustful of the Spanish
arbitration system, according to Málaga.
He believes certain international
entities have a perception that arbitrators
in Spain are not impartial and that
cronyism and corruption exists. “We
find clients that do not want to carry out
arbitration in Spain, and would rather
seek it abroad, or prefer to seek resolution
in a tribunal,” Málaga says.
But he adds this perception is
unfounded as the situation has improved
significantly, with the Madrid arbitration
court, for example, having done important
work to clean up the image of arbitration
and “show the world that arbitration
in Spain is thoroughly trustworthy and
effective”, according to Málaga.
Banks want arbitration clauses
Arbitration has often been applied to
disputes arising in the financial sector,
partly because banks are keen to include
arbitration clauses in their products.
However, arbitration, as well as other forms
of ADR, is also frequently employed in the
construction, real estate engineering and
aeronautics sectors.
The financial crisis led to an increase in
the use of arbitration, and while demand for
ADR, in general, has fallen somewhat, there
is still much demand for arbitration in the
financial sector. Clients are also increasingly
keen for arbitration to take place in Spain,
particularly as they are eyeing costs and are
keen on finding a law firm that has local
expertise, in addition to being trustworthy,
impartial and efficient.
Courts need system of ´binding decisions´
If judges are given a lot of discretion
then the concept of “legal certainty” –
which is what clients want – is difficult
to achieve, Joaquín García Bernaldo
de Quirós, partner at Ramón y Cajal
Abogados, says. He adds that, while the
judicial system does include measures
aimed at increasing the likelihood of
legal certainty, it is time to change the
system because it is now outdated.
Bernaldo de Quirós acknowledges
Joaquín García Bernaldo de Quirós that this problem has already been
identified and there have been attempts
to provide a solution by making some
judgments of the higher courts binding.
However, there is still a great deal of
diversity in judicial decisions and there
is a strong need to standardise decisions
and it is crucial that interpretations of
the law are unified. )5