Litigation & ADR Annual Report
Arbitrary challenges
Often heralded as a worthy alternative to litigation, the Spanish arbitration system, however,
has some peculiarities that can create obstacles to its use
Gonzalo Serrano Fenollosa
Arbitration has many supporters, however,
in Spain, the relevant legislation creates
hurdles that make the process less
attractive than its litigation counterpart,
according to Gonzalo Serrano Fenollosa,
Civil and Commercial Litigation Partner at
Roca Junyent.
He points to the high front-end costs of
arbitration as parties have to pay various
fees in advance, which can be problematic
for small companies if the other side decides
not to pay the provision of funds.
“When we are talking about a conflict
between multinationals or big companies,
the defendant normally has no problem
in making good on the payment, but
things become tougher when the economic
resources of the claimant are limited,”
Serrano Fenollosa explains. “When David
is fighting Goliath, the battle can be aborted
due to an economic issue.”
This can, however, be avoided by
including a preventative provision in the
arbitration agreement, he adds. This should
include the provision that, in the event that
any of the parties does not fulfil the economic
obligations, the other party will be entitled to
either make good the payment or leave with
no effect the arbitration clause and appear
before a determined ordinary Court.
Serrano Fenollosa says the second
challenge is that, unlike litigation when a
court ruling obliges the loser to pay, Section
45 of Spanish Arbitration Act states the
enforcement of the award can be suspended
by the defendant under two criteria. First,
that when it has filed before the ordinary
Courts an action asking for the nullity of
the award, and second that it offers a bond
or caution for the amount set forth in the
award plus interests.
“Obviously this consideration might
not be shared by the defendant who has
been condemned,” Serrano Fenollosa
summarises, “but in my understanding this
situation makes arbitration slower than it
is supposed to be and, consequently, less
attractive”.
New dependency on litigation
Fernando González
Spanish companies are currently forgoing
prosecuting debtors in favour of concentrating
on purely commercial matters, says Fernando
González, Head of Dispute Re