What grounds can a court refuse the recognition and enforcement of foreign arbitral awards in Spain?
Based on Article 41 (§ 1) of the Spanish Arbitration Act, an award may be set aside due to the following grounds:
An award may be set aside only if the applicant alleges and furnishes proof:
a) that the arbitration agreement does not exist or is not valid;
b) that the applicant was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
c) that the award contains decisions on questions not submitted to arbitration;
d) that the appointment of arbitrators or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with an imperative provision of the act, or, failing such agreement, was not in accordance with this act;
e) that the subject-matter of the dispute is not apt for settlement by arbitration;
f) that the award is in conflict with public policy.
At the request of the party against whom the award is invoked, the enforcement of a foreign arbitral award may be resisted pursuant to Article V of the New York Convention, based on the following grounds:
- parties were under some incapacity, or said agreement is not valid under the law to which the parties have subjected it;
- The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
- The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced;
- The composition of the arbitral authority or the arbitral 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;
- The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Article V (2), other grounds for resisting the recognition and enforcement are:
- The subject matter of the difference is not capable of settlement by arbitration under the law of that country;
- The recognition or enforcement of the award would be contrary to the public policy of that country.
In other words, the recognition and enforcement of foreign arbitral awards can be refused based on grounds alleged by the parties or those which have been ex officio verified by the Spanish Court. With regard to the first ground, Article 9 (§ 6) of the Spanish Arbitration Act states: ‘ In international arbitration, the arbitration agreement will be valid and the dispute arbitrable if the requirements laid down in any of the following are met: the legal rules chosen by the parties to govern the agreement; the rules applicable to the substance of the dispute; or the rules laid down in Spanish law.’
With regard to the second ground, Article 41 of the Spanish Arbitration Act is important. Article 41 states that a foreign arbitral award should not be contrary to public policy. Based on case law, it can be said that the Court of Appeal- in line with other Courts- takes the following stance: (…) meaning to analyze the compatibility of the effects of foreign arbitral awards with the essential principles of the (Spanish) legal order, more concrete, those stipulated in the Spanish Constitution (…). In other words, public policy should not be contrary to the Spanish legal principles.
Conclusion
Foreign arbitral awards are recognizable and enforceable in Spain. There are various grounds for refusal. However, for a successful commercial exequatur proceeding and the enforceability of a foreign arbitral award, it is necessary that the following points are fulfilled:
- requirements of the New York Convention;
- requirements of enforcement under the principle of reciprocity, based on the various bilateral conventions Spain has signed;
- requirements of public policy.
With the narrow interpretation of public policy and the lax requirement for obtaining the recognition and enforcement of a foreign arbitral award, there are limited grounds for a court to refuse recognition and enforcement.
Charline Hoever & Alberto Álvarez
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