Press release

The Pérez-Llorca/IE Chair analyses the constitutional doctrine and annulment of arbitration awards

15/07/2021

The Pérez-Llorca/IE chair analysed the recent constitutional doctrine on the annulment of arbitration awards, in relation to the concept of public policy.

The session was opened by Soledad Atienza, Dean of the IE Law School, and moderated by Silvia de Paz, a lawyer from Pérez-Llorca’s Litigation and Arbitration practice area. Speakers at the event included Cándido Conde-Pumpido, judge of the Constitutional Court, Ana Serra e Moura, Deputy Secretary General of the International Chamber of Commerce (ICC) International Court of Arbitration and lecturer at the IE Law School and Ignacio Santabaya, Litigation and Arbitration partner at Pérez-Llorca and lecturer at the IE Law School.

Cándido Conde-Pumpido began by outlining the Constitutional Court’s recent judgements, 46/2020 of 15 June, and 17/2021 of 15 February, on the annulment of arbitration awards, and which have consolidated the case law doctrine on the matter. The judge set out the background that led to this doctrine and, specifically, the case law adopted by the High Court of Justice of Madrid on the annulment of awards, which provided an extensive interpretation of the concept of public policy as grounds for annulment, even going so far as to carry out a substantial review of arbitration awards. In response to this extensive interpretation of the concept of public policy, Cándido Conde-Pumpido explained the doctrine of the Constitutional Court in this regard: the judicial oversight carried out by the annulment court cannot consist of a review of the legal analysis carried out by the arbitrators, but must be limited to verifying that the award complies with formal guarantees; and with public policy, understood as the fundamental rights and freedoms based on the Constitution, and other internationally accepted essential principles. In other words, a restrictive interpretation must be given to the concept of public policy as it applies to the annulment of awards. Otherwise, there could be a risk that excessive intervention by the annulment court would distort the nature of the arbitral institution, since the parties have intended for their dispute to be resolved through arbitration, and not by the courts.

Next, Ana Serra e Moura explained Spain’s position on international arbitration and stressed the importance of guaranteeing judicial support, legal certainty and the enforceability of the awards as key elements when choosing the seat of arbitration on behalf of the ICC (in the event it has not been chosen by the parties). Likewise, she explained Spain’s significance in the global ranking of parties involved in ICC arbitration, where it places third, with 125. However, the number of cases administrated by the ICC with a seat in Spain, and particularly in Madrid, has remained stable with 11 cases in 2020. Serra e Moura mentioned that it is too soon to tell whether the High Court of Madrid’s doctrine has had an effect on the choice of Madrid as a seat of arbitration, but this cannot be excluded. She also stated her impression that the recent rulings of the Constitutional Court will improve the value of Madrid as the seat of arbitration and the role that they can play in re-establishing users’ confidence. With regard to the motivation of arbitration awards, the Deputy Secretary General described the strict requirement for motivation and substantiation of arbitration awards when they are scrutinised by the ICC.

Next, Ignacio Santabaya analysed the debate generated by the High Court of Madrid’s doctrine and its negative effects for Madrid as the seat of arbitrations. The Pérez-Llorca partner highlighted the positive reception enjoyed by the Constitutional Court’s recent judgements and their potential contribution to an increase in the number of arbitrations held in Madrid. He also gave his view on the concept of public policy, considering it to be a necessary escape valve to ensure that awards comply with their role of jurisdictional equivalent, regardless of whether or not other established grounds for annulment are present.

Lastly, the talk ended with a debate on whether it would be appropriate to modify the annulment system in order to establish a potential appeal against the High Court’s judgements, something that Cándido Conde-Pumpido and Ana Serra e Moura strongly opposed, due to the need for speedy arbitration. Elsewhere, the speakers agreed on the need for and desirability of maintaining a constant and fluid dialogue between the courts and the arbitration community.

The event ended with an interesting Q&A session directed by Silvia de Paz.

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