I. Legal nature of arbitration

The legal nature of arbitration has been widely debated in Spain, as in other jurisdictions. Three main groups of theories have been put forward with regard to this issue:

- contractual theories: arbitration is a contract based on the will of the parties, who agree to be bound by the free decision of a third party (the arbitrator);

- jurisdictional theories: arbitration is a legal process where the arbitrator is invested with jurisdictional authority to resolve a dispute through a decision (award) that has the same effectiveness as a court judgment (res judicata); and

- eclectic theories: arbitration is both contractuallybased, insofar as it derives from an agreement between the parties, and a legal process; these theories thus reconcile those of the previous two groups.1

Although the theories belonging to the last group are probably the best balanced, I have always been attracted by the contractual theories, probably as a consequence of my early professional dedication to contract law. For this reason, I would like to 'take an excursion' through the 2003 Spanish Arbitration Act in order to highlight the large number of arbitration matters over which the parties can exercise their autonomy.

II. Party autonomy in the Spanish Arbitration Act

The Spanish Arbitration Act2 (hereinafter 'the Act') recognises that the regulation of arbitration derives primarily from party autonomy and that the principle of the parties' contractual freedom is one of the essential features of arbitration in Spain. [Page543:]

The first paragraph of part VI of the Explanatory Memorandum (Exposición de motivos) that accompanies the text of the Act states :

The Act is based on the principle of party autonomy and provides as the only limits to this principle and to the activities of the arbitrators the right of defence of the parties and the principle of equality, which are fundamental values of arbitration as a legal process. Provided these basic rules are respected, the provisions of the Act relating to the arbitration proceedings are suppletory and are therefore applicable only if the parties have not agreed anything directly or by submitting to institutional arbitration or a set of arbitration rules. As such, the legal policy options that underlie these rules are always subordinated to the free will of the parties.

This essay will analyse the scope of party autonomy in the Act, from the arbitration agreement to voluntary performance of the award.

III. Manifestations of party autonomy in the Spanish Arbitration Act

1. Freedom to enter into arbitration

Although the Act makes no mention of this, it is obvious that Spanish arbitration is based not only on the free will of the parties to enter into an arbitration agreement, but also on the prior decision each makes to submit disputes to arbitration. The primary manifestation of the parties' free will is their deciding to opt out of ordinary litigation and to submit their disputes to arbitration.

2. Arbitration agreement (Article 9)

The arbitration agreement, which is paramount, shall express the will of the parties to submit to arbitration all or some disputes which have arisen or may arise between them with regard to a specific legal relationship, whether contractual or noncontractual (Article 9.1).3

The agreement must be in writing and may be expressed in various forms: a) in a document signed by the parties (the most common method); or b) in an exchange of letters, telegrams, telexes, faxes or any other means of telecommunication that provides a record of the agreement. The Act therefore contemplates several alternatives and allows for the use of new telecommunications [Page544:]

technologies to make an arbitration agreement. The Act states that an arbitration agreement shall be deemed valid when it appears and is accessible for subsequent consultation in an electronic, optical or any other type of format.

The Act allows an arbitration agreement to be made by reference, that is to say when it is contained in a document to which the parties have referred using one of the means mentioned above. This is a widespread practice in international commerce, where it is common for reference to be made to clauses and general terms in standard agreements providing for the submission of disputes to arbitration (charter party, general conditions, bill of lading, insurance, banking contracts and contracts through mediators, brokerage, etc.).

3. Testamentary arbitration (Article 10)

The parties can submit to arbitration in a testamentary disposition to resolve disputes between beneficiaries or legatees in matters relating to the distribution or administration of the estate.

4. Notifications, communications and calculation of time (Article 5)

The Act regulates in detail the form in which notifications or communications are to be made, the times and places at which they are to be made, and when they are to be received. It also regulates the way in which periods of time are calculated. However, the provisions on these issues are applicable only if the parties have not agreed otherwise.

5. Number of arbitrators (Article 12)

The parties are free to determine the number of arbitrators, provided they choose an odd number. In the absence of any agreement between the parties, a sole arbitrator will be appointed. This position has been taken for economic reasons, as stated in part IV of the explanatory memorandum accompanying the Act.

6. Institutional arbitration (Article 14)

The parties may entrust the administration of arbitral proceedings and the appointment of arbitrators to: a) public corporations empowered by their governing legislation to exercise arbitral functions, including, in particular, the Tribunal for the Defence of Competition; and b) nonprofitmaking associations and entities whose bylaws provide for the exercise of arbitral functions (normally chambers of commerce or lawyers' associations). [Page545:]

7. Appointment of arbitrators (Article 15(2))

The parties may freely agree on the procedure for the appointment of arbitrators, provided they respect the principle of equal treatment.4 Any person is eligible to be designated as arbitrator, provided he or she is in full possession of his or her civil rights and is not legally prevented by his or her profession from acting as an arbitrator. Arbitrators who act in domestic arbitrations that are not to be decided in equity must be practising lawyers.

If three arbitrators are to be appointed and no agreement has been made on the appointment procedure, each party shall nominate one arbitrator. Where there are multiple claimants or respondents, the former shall nominate one arbitrator and the latter a second arbitrator and the two arbitrators thus appointed shall nominate the third arbitrator.

8. Acceptance by arbitrators (Article 16)

Unless the parties have agreed otherwise, each arbitrator has fifteen days from being informed of the nomination in which to confirm his or her acceptance to whoever made the nomination, failing which the arbitrator will be deemed not to have accepted.

9. Challenge procedure (Article 18)

The parties shall be free to agree on the procedure for challenging arbitrators due to a lack of independence or impartiality.

10. Revocation of arbitrators (Article 19)

The parties can agree upon the removal of an arbitrator from office when he or she cannot or does not act diligently.

11. Determination of rules of procedure (Articles 25-30)

The parties may freely agree on the procedure to be followed by the arbitrators and the parties when conducting the proceedings.5

The Act specifically provides that the parties may freely agree on the following:

(a)the place of arbitration (Article 26); [Page546:]

(b)the commencement of the arbitration (Article 27);

(c)the language or languages to be used in the arbitration (Article 28);

(d)the items to be included in the statements of claims (Article 29);

(e)the time allowed for the arbitrators to accept their nomination (Article 16).

(f)whether oral hearings shall be held for the presentation of arguments, the taking of evidence and the submission of conclusions or whether the proceedings shall be conducted solely in writing (Article 30);

(g) the termination of the proceedings (Article 38(2)(b));

(h)the period allowed for requesting correction, clarification or a supplement to the award (Article 39);

(i)the use of specific arbitration rules (first paragraph of part VI of the explanatory memorandum accompanying the Act);

(j)no appointment of experts by the arbitrators (Article 32);

(k)no ordering of interim measures by the arbitrators (Article 23);

(l)the form of decisionmaking by a panel of arbitrators (Article 35(1));

(m)the length of time during which procedural documents shall be conserved by the arbitrators (Article 38(3)).

12. Rules applicable to the substance of the dispute (Article 34)

The parties can authorise the arbitrators to decide in equity. In international arbitrations, the arbitrators shall decide the dispute in accordance with such rules of law as are chosen by the parties.

13. Award by agreement of the parties (Article 36)

If the parties reach an agreement that puts an end to all or part of the dispute submitted to arbitration, they can request the arbitrators to record the settlement in the form of an arbitral award on the agreed terms.

14. Time, form and notification of the award (Article 37)

The parties can agree on the following points:

(a)whether the arbitrators may decide the dispute in an single award or in as many partial awards as they may consider necessary (Article 37(1));

(b)the time within which the dispute should be decided (otherwise, six months) (Article 37(2));

(c)to extend the time allowed for deciding the dispute and issuing the award (Article 37(2)); [Page547:]

(d)that the reasons for the award do not have to be stated (Article 37(4));

(e)that the arbitrators shall decide on the costs of the arbitration in their award (Article 37(6));

(f)the form and time of notification of the award to the parties (Article 37(7)).

In addition, any party may request that the award be formalised before a notary public before being notified.

IV. Conclusion

The number and scope of the parties' powers show the importance of party autonomy in arbitration in Spain and the prominence of the contractual aspect of arbitration. [Page548:]

1
Some commentators, e.g. J.D.M. Lew, L.A. Mistelis & S.M. Kröll, Comparative International Commercial Arbitration (2003) at 71, distinguish four theories: jurisdictional, contractual, mixed or hybrid, and autonomous.

2
Law 60/2003 enacted on 23 December 2003.

3
Despite their importance, arbitration clauses are often badly drafted. They generally appear at the end of the contract and are discussed towards the end of negotiating a transaction when the parties are tired. Usually, the parties are more interested in the commercial aspects of the deal and are reluctant to discuss remedies to disputes. It is like discussing divorce proceedings at the marriage ceremony.

4
The Arbitration Act is here seeking to prevent the situation in which a party imposes appointment procedures that are disadvantageous to the other party.

5
Article V(1)(d) of the New York Convention provides that an award may be refused recognition if the 'procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place'.