There are two matters that come to mind when reference is made to the effectiveness of arbitration proceedings, namely, the adoption of interim measures in arbitration proceedings and the enforcement of both international and domestic arbitration awards. The regulation of these matters in each country is often a relevant factor for the parties entering into an agreement when deciding whether or not the disputes arising from the agreement will be submitted to arbitration or to the jurisdiction of the courts.

Traditionally, the regulations on these matters in Spain have been insufficient and this has been considered to be one of the main obstacles for the development of arbitration in Spain. However, recent legislative developments have brought about significant improvements. In particular, it is worth citing the new Spanish Civil Procedure Act of January 7, 2000 (in force since January, 2001), which supersedes the old Civil Procedure Act dating back to 1881; and the new Spanish Arbitration Act of December 23, into force in March, 2004, which replaces the former Arbitration Act of 1988. The main regulations contained in this Law were discussed from a general point of view in a previous article by Javier García Sanz from Uría & Menéndez, released in Mondaq on January 19, 2004.

The purpose of this article is to focus on the most outstanding developments regarding interim measures and the enforcement of arbitration awards.

1. Interim measures regarding arbitration proceedings

Before the enactment of the Acts mentioned above, interim measures could only be sought to guarantee the effectiveness of an arbitration award when an action for its annulment had been filed before the Courts. However, there were no specific provisions under Spanish Law regarding the possibility of granting interim measures prior to the commencement of arbitration proceedings, or during those arbitration proceedings prior to the final award being delivered by the arbitral tribunal. Therefore, according to Spanish Law, no interim measures could be granted prior to the delivery of the final award. Clearly, this situation did not help promote the submission of disputes to arbitration.

It is common knowledge that, in the past, certain Spanish Courts have adopted interim measures relating to arbitration proceedings regardless of the absence of specific provisions under Spanish Law. However, these were rare exceptions.

The situation began to change with the passing of the Spanish Civil Procedure Act of 2000. Pursuant to the new provisions on interim measures established in this Act, judicial courts may directly implement interim measures relating to arbitration proceedings in the following cases: (i) arbitration proceedings carried out in Spain, upon the request by one of the parties in these proceedings or by the party who has applied for the judicial appointment of the arbitral tribunal, when the parties do not reach an agreement regarding the appointment of such tribunal; and (ii) international arbitration proceedings, in accordance with the applicable International Treaties and Conventions, upon request by one of the parties in these proceedings, provided that the Spanish courts do not have exclusive jurisdiction to decide on the matter.

Finally, the possibilities of adopting interim measures regarding current arbitration proceedings have been extended by the new Spanish Arbitration Act of 2003. According to this Act, and unless otherwise agreed upon by the parties, the arbitral tribunal may also adopt interim measures. This is one of the most important developments introduced by the new Arbitration Act. Interim measures granted by the arbitral tribunal shall be enforced by the ordinary courts.

2. Enforcement of arbitration awards

In so far as the enforcement of arbitration awards is concerned, a distinction must be drawn between domestic and international arbitration proceedings. According to the new Spanish Arbitration Act, international arbitration proceedings are defined as those in which one of the following conditions is met: (i) at the time the arbitration agreement was entered into, all the parties’ domiciles were in different countries; (ii) the place of arbitration, the place of fulfilment of a substantial part of the obligations contained in the relationship giving rise to the dispute, or the place where the dispute has the closest relationship are located in a country other than the countries where the parties are domiciled; or (iii) the relationship causing the dispute affects international commerce. The Arbitration Act defines proceedings where none of the mentioned conditions is fulfilled as domestic arbitration proceedings.

a) Enforcement of arbitration awards delivered in domestic arbitration proceedings

Prior to the enactment of the new Arbitration Act, domestic arbitration awards could not be enforced if an application to set aside such award was pending before the judicial courts. In other words, it was only possible to obtain the enforcement of an award if it had not been challenged before the courts or, if it had been challenged, the application to set aside the award had been rejected.

If an application to set aside the award was pending, the only way to guarantee the effectiveness of the award was if the courts adopted interim measures at the request of one of the parties, as explained above.

The new Arbitration Act has significantly improved this situation. The award is now immediately enforceable, even if an application to set aside the award has been submitted to the judicial courts. The enforcement procedure follows the existing rules to enforce judicial decisions provided in the Spanish Civil Procedure Act. Nevertheless, the defendant may apply for the temporary suspension of the enforcement, provided that a guarantee is offered covering the amount granted by the award and the estimated damages which could originate from the suspension of the enforcement of the award.

b) Enforcement of arbitration awards rendered in international arbitration proceedings.

As a general rule, the recognition and enforcement in Spain of international arbitration awards is carried out through exequatur proceedings, subject to the rules of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards, made in New York, on June 10, 1958, unless there are more favourable provisions applicable to the recognition and/or enforcement established by other treaties (bilateral or multilateral) in which Spain and the country where the award was issued are Contracting States. This general rule follows the common practice established by Spanish case law.

The most relevant development in this context is that the Spanish Supreme Court will no longer be the competent court to deal with the recognition and enforcement of international arbitration awards. The Courts of First Instance are now the competent courts provided that other applicable international treaties do not provide otherwise. The reason for this amendment has been said to be that the Courts of First Instance are the ordinary courts for the enforcement of internal judicial decisions and arbitration awards. Thus, it appears to be advisable to merge the competence relating to the enforcement and recognition of both judicial decisions and arbitration awards within the same courts, regardless of whether they are domestic or international. The same rule applies to the recognition and enforcement of judicial decisions.

This new rule may have both favourable and adverse effects. In theory, a positive effect would allow proceedings for the recognition and enforcement of foreign arbitration awards to be processed in a shorter space of time than before. Firstly, because the Courts of First Instance do not have as much of a workload as the Supreme Court. Secondly, because First Instance Courts are more regularly involved in enforcement proceedings.

However, the mentioned new rule could have adverse effects. In view of the large number of Spanish Courts of First Instance, they are likely to have different and even contradictory criteria in connection with the recognition and enforcement of foreign arbitration awards. Pursuant to the Spanish Civil Procedure Act, decisions rendered by the Courts of First Instance cannot be appealed to the Supreme Court. Therefore, the Supreme Court will not issue any further case law on this subject that would bring together the criteria established by the Courts of First Instance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.