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The Pérez-Llorca/IE Commercial Law Chair analyzes the constitutional doctrine and the annulment of arbitration awards

Cátedra Pérez-Llorca | IE Law School

In their most recent seminar, the Pérez-Llorca/IE Commercial Law Chair analyzed the recent constitutional doctrine relating to the annulment of arbitration awards, regarding the concept of public policy.

The conference was opened by Soledad Atienza, Dean of IE Law School, and moderated by Silvia de Paz, Litigation and Arbitration lawyer at Pérez-Llorca. The speakers were Cándido Conde-Pumpido, Magistrate of the Constitutional Court; Ana Serra e Moura, Deputy Secretary General of the International Court of Arbitration at the International Chamber of Commerce (ICC) and Master of Laws (LL.M.) professor in the field of International Dispute Resolution; and Ignacio Santabaya, Litigation and Arbitration Partner at Pérez-Llorca and professor at IE Law School.

Cándido Conde-Pumpido began by outlining fundamental clauses from the recent Constitutional Court rulings 46/2020 of June 15, and 17/2021 of February 15, stipulating the annulment of arbitration awards. These have led to the consolidation of the jurisprudential doctrine on the subject. The magistrate explained the background that has given rise to this doctrine and, specifically, the line of case law adopted by the Madrid High Court of Justice on the annulment of awards. This laid the foundation for an extensive interpretation of the concept of public policy as a ground for annulment, going so far as to review the merits 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. According to this doctrine, the judicial control carried out by the annulment court cannot consist of a review of the legal analysis carried out by arbitrators. Instead, it must be limited to verifying that the award complies with formal guarantees, public policy (understood as fundamental rights and freedoms based on the Constitution), and other essential principles accepted at the international level. In other words, a restrictive interpretation must be taken with regard to the concept of public policy as applied to annulment of awards. If not, excessive intervention by the annulment court would run the risk of altering the arbitral institution, given that parties have wanted to settle their disputes by means of arbitration and not via the courts.

Ana Serra e Moura then elaborated on Spain’s position in international arbitration, highlighting the importance of ensuring judicial support, legal certainty and enforceability of awards. For the ICC, these are key elements when choosing the place of arbitration (in the event that it has not been chosen by the parties). She also explained Spain’s importance in the global rankings for parties involved in ICC arbitration, ranking at third place with 125. However, the number of ICC administrated cases based in Spain, and in Madrid specifically, has remained stable with 11 cases in 2020. Serra e Moura mentioned that it is too early to conclude whether the Madrid High Court of Justice’s doctrine has affected the choice of Madrid as a place of arbitration, but the possibility that this may have been the case cannot be ruled out. In addition, she expressed her feeling that the recent rulings of the Constitutional Court will improve the valuation of Madrid as a place of arbitration, suggesting the role these rulings might play in restoring confidence among participants in arbitral proceedings.  With regard to the motivation of arbitral awards, the Deputy Secretary described the strict requirement for motivation and substantiation of arbitral awards in the ICC’s scrutiny of them.

For his part, Ignacio Santabaya analyzed the debate sparked by the doctrine of the Madrid High Court of Justice and its negative effects for Madrid as a place of arbitration. The Pérez-Llorca partner highlighted the positive reception to the Constitutional Court’s recent rulings, and their possible contribution to increasing the number of arbitrations held in Madrid. He also took a stand on the concept of public policy, considering it a necessary outlet for ensuring that the awards comply with their matching jurisdictional role, regardless of whether or not the other established grounds for annulment concur.

The presentation ended with a debate about whether it would prove convenient to modify the annulment system to establish a possible appeal against the rulings of Madrid High Court of Justice. Cándido Conde-Pumpido and Ana Serra e Moura were clearly opposed to this idea, due to the need for speedy arbitration. On the other hand, the speakers agreed on the necessity and convenience of maintaining a constant and fluid dialogue between jurisdictional bodies and the arbitration community.

Following these presentations, Silvia de Paz led an interesting informal discussion during which the speakers responded to questions raised by attendees.