Arbitration is a system offering an alternative to state courts for the resolution of commercial disputes.
In resorting to arbitration, the parties in conflict (generally companies) submit their dispute to a third party, the arbitrator, who resolves it by means of a decision, the arbitral award, which has effects equivalent to a court ruling.
Arbitration offers companies an attractive formula to resolve the disputes that inevitably arise during their ordinary course of business.
The attraction of arbitration essentially lies in its suitability for resolving conflicts on an impartial, flexible and efficient basis; in short, it generates trust between the parties and thereby facilitates voluntary compliance with the award rendered.
- Impartiality. The parties are free to choose the arbitrator who will resolve their dispute, the arbitral institution that will administer the arbitration, the rules applicable to the procedure, the law applicable to the substance and the language to be used. Arbitration is hence a naturally neutral forum, thanks to being freely shaped by the parties.
- Flexibility. The open nature of arbitration enables the parties to adapt the rules governing the procedure (oral and written pleadings, admission of evidence, hearings, formulation of closing arguments, etc.) to the specific circumstances of the case and, accordingly, to the enormous range of business issues that companies regularly face in a modern, complex and globalised economy.
- Efficiency. One of the main strengths of arbitration lies in the possibility of appointing arbitrators who are experts in the matter subject to dispute and available to dedicate the time required by the circumstances of each case to the arbitration. This results in higher-quality and more sophisticated solutions. Moreover, arbitral awards are enforceable and final, and they acquire the effect of res iudicata from when the arbitrators render them. Arbitration is therefore a sole-instance system in which, unlike in court litigation, the parties have no opportunity to make an appeal for the review of the decision on the substance of the dispute.
Arbitration is an instrument of business competitiveness. There is a clear and direct correlation between (i) the effectiveness of arbitration as a dispute solution mechanism, (ii) the legal certainty that business activity requires, and ultimately (iii) the competitiveness of the economy.
Arbitration has experienced highly significant development in recent years in Spain. The growth of arbitration in our country is the result of efforts made in various areas, and hence of a range of factors. The following three elements can be particularly highlighted:
- First, Spain benefits from a regulatory framework that is very favourable to arbitration, introduced by the Arbitration Law (Ley de Arbitraje) of 2003, based on the UNCITRAL Model Law.
- Second, our country has a modern court infrastructure to support and oversee arbitration, designed to provide greater uniformity to judicial decision-making patterns relating to arbitration and to ensure greater legal certainty.
- Finally, Spain has a vibrant and sophisticated arbitration community, mainly revolving around the Spanish Arbitration Club (Club Español de Arbitraje). The CEA, as it is known due to its initials in Spanish, is a not-for-profit association dedicated to promoting the use of arbitration as a conflict resolution method and developing arbitration in the Spanish and Portuguese languages or with an Ibero-American element. Created in 2005, the CEA has more than 1,000 members from 43 countries across Europe, America, Asia and Africa.