Originially from: World Arbitration and Mediation Review (WAMR)

Commercial Arbitration
1988 LAW MAKES SPAIN WELL-POSITIONED
TO BE COMMERCIAL ARBITRATION CENTER
By Calvin A. Hamilton, J&B Cremades & Associates, Madrid
On December 7, 1988, a new arbitration law came into effect in Spain,
replacing the statute on Private Law Arbitration of 1953. The effect of the law is
to make Spain a more attractive forum for arbitration.
The 1953 law, universally considered antiquated and out of step with modern
Spain, made the practice of international commercial arbitration nearly impossible
for the following reasons: 1) it drew a distinction between the arbitration clause
and the arbitration agreement in such a way that a breach of the agreement gave
rise only to damages and did not obligate the parties to arbitrate; 2) the parties
were prohibited from agreeing to arbitrate future disputes or from entrusting the
arbitration to institutional third parties; 3) the effectiveness of the arbitration
proceedings depended heavily on the Spanish judicial system; 4) the parties were
able to seek judicial review of the award; and 5) there was no reference to
international arbitration.
The 1988 statute has done away with these shortcomings. Indeed, the new law
makes special reference to the fact that international commercial arbitration falls
within its ambit. The law also has the following benefits: it abolishes the
distinction between the arbitration clause and the arbitration agreement; it allows
parties to agree to arbitrate future disputes and to entrust the arbitration to
institutions; it regulates domestic and international arbitration in the same text
without distinguishing between them; and it keeps judicial intervention to a
minimum.
Before enactment of the 1988 statute, Spain had signed and ratified the 1958
New York Convention and the 1961 Geneva Convention (European Convention
on International Commercial Arbitration), and had entered into a number of
bilateral treaties on international commercial arbitration. These treaties became an
integral part of Spanish domestic law.
Moreover, since 1981 the Spanish courts had been recognizing and enforcing
these treaties, thereby effectively creating a dual system, as the 1953 statute
continued to exist alongside a growing body of case law considerably more
favorable to international arbitration,
Outline of the Statute
The 1988 statute contains 10 titles. Title I identifies the areas that may be the