Interim measures in English seated arbitrations - do they measure up?
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This is the second article in Clyde & Co’s international arbitration series covering the availability of interim measures across various European jurisdictions. In this piece, associate Marta Cerrada Pérez from our Madrid office provides the Spanish legal and procedural perspective.
The adoption of interim measures in arbitration has and will continue to play a major role in the regulatory development of the practice of arbitration in Spain. It is relevant not only in the Spanish domestic sphere, but in national rulings that have international relevance.
As is well known, one of the advantages of arbitration is that it can be a quicker and more flexible process than litigation. Despite this, it is essential in some cases to adopt measures to ensure that a decision or an arbitral award can be effectively enforced.
In order to respond to this need, and to avoid differences between litigation and arbitral proceedings which could be detrimental to the right to effective judicial protection of the parties, interim measures must also be obtained in arbitration proceedings.
The passing of the Civil Procedure Act No. 1/2000 (the “Spanish Civil Procedure Act”) provided for the first time the possibility of adopting interim measures in arbitration. The act provides that any person who can prove to be a party to an arbitration agreement, or to arbitration proceedings pending in Spain or abroad, can request interim measures before the ordinary courts.
Although the adoption of interim measures by the courts has become a very frequent and commonly accepted practice in Spain, the legislation on this topic initially begged a number of questions. Did arbitrators have the power to adopt interim measures? Could judicial cooperation be requested to adopt an interim measure prior to the initiation of arbitral proceedings? If so, how?
Now these questions have been answered with the entry into force of the Spanish Arbitration Act No. 60/2003 (the “Spanish Arbitration Act”), which puts Spain in the same position as its neighbours and represents a step forward in terms of cooperation between judicial and arbitral bodies. As amended, the Spanish Arbitration Act recognises the power of arbitrators to adopt any type of interim measure in arbitration proceedings (Article 23), as well as the power of the parties to request the adoption of such measures even before the arbitration proceedings are initiated (Article 11).
Whilst it is possible to request interim measures before the initiation of arbitration (confirmed by the Spanish courts in numerous cases, such as Judgment no. 946/2005 of the Malaga Provincial Court of 19 September), certain practical questions remain and are the subject of some controversy.
For example, the Spanish Civil Procedure Act requires interim measures to be maintained for as long as the requesting party carries out “all the actions aimed at setting the arbitration proceedings in motion” (Article 730). However, unlike litigation (where legal action must be brought before the court within 20 days for interim measures to be maintained), the act does not set a specific time limit within which the applicant must initiate an action.
The Spanish Arbitration Act also does not provide an answer to the question of who should receive the request for the interim measures in cases where the applicant does not wish to go to the ordinary courts and the arbitration proceedings have not yet commenced. In these circumstances, the tribunal has not yet been appointed.
This question can be answered easily in cases where the parties have agreed to submit the management of the proceedings to an arbitral institution. In these scenarios arbitral institutions located in Spain, such as the Madrid Court of Arbitration or the Spanish Court of Arbitration, have provided in their rules for the role of an Emergency Arbitrator who, at the request of the parties, will decide on the adoption of interim measures.
However, this issue becomes more complicated in ad hoc arbitrations, given the difficulties that could arise in reaching an agreement as to who should decide on the adoption of interim measures or the appointment of an emergency arbitrator. In these cases, intervention by the courts might be the only viable option to preserve the applicant's right to effective judicial protection (Article 24 of the Spanish Constitution), especially given the risks that any delay in the adoption of interim measures could entail.
Although both arbitrators and courts can order interim measures (in the alternative and concurrently), there are differences in the way they exercise this power.
As recognized in the Explanatory Memorandum of the Spanish Arbitration Act, arbitrators only have a declaratory power to grant interim measures. Therefore, in the event of non-compliance, arbitrators do not have the executive power to guarantee performance, in which case they must request assistance from the courts. For this reason, it is most effective to obtain interim measures directly from a Spanish court where there are doubts as to the voluntary compliance with ordered measures.
Arbitrators’ lack of executive power constitutes the main difference in this context. However, there are no significant differences regarding the type of interim measures that arbitrators and judges may order under Spanish law.
Although the Spanish Civil Procedure Act lists a series of interim measures that the courts may order (such as seizure of assets, preventive annotation of the claim or suspension of corporate agreements reached, (Article 727)), this list is not exhaustive. Therefore, parties may request any measure they consider appropriate, regardless of whether it is listed, and it is for the court to decide, at its discretion, which is the most appropriate measure according to need and convenience.
In this liberal regime parties are free to request interim measures from either the tribunal, the court or both, in order to exercise their right to effective judicial protection.
Spanish courts can go even further, and order interim measures to enforce foreign awards, as well as orders for interim measures made in arbitrations abroad. This arbitration-friendly approach means that courts acknowledge their own jurisdiction and power to order interim measures to secure the enforcement of a foreign award, when such interim measures are required in Spain (Supreme Court Judgment of 19 April 2006 and Order of the Provincial Court of Cadiz of 12 June 1992).
One area where there is continuing uncertainty, however, is the enforcement of interim measures ordered by arbitrators abroad. This is not a straightforward issue with a clear solution under the Spanish legal system, but the majority view is that such enforcement is possible, provided that the foreign decision adopting the measures is the subject of a prior exequatur procedure.
This presents considerable practical challenges and might even limit the utility of the interim measures ordered by arbitrators abroad. By way of example, it should not be overlooked that the competent body to hear the exequatur proceedings would be the corresponding High Court of Justice (Article 8.6 of the Spanish Arbitration Act), while the jurisdiction for the enforcement of such a decision would be attributed to the Courts of First Instance (Article 8.4 of the Spanish Arbitration Act). In other words, for the interim measure adopted by the foreign arbitrator to be enforced in Spain, it would be necessary to initiate two consecutive court proceedings that could last for years.
In the last decade there has been gradual change in relation to the interim measures that are available in Spain in the context of arbitration proceedings. This process culminated in the entry into force of Arbitration Act No. 60/2003, which recognized the concurrent jurisdiction of courts and arbitrators to order interim measures in arbitration proceedings, and the power of the parties to request such measures even before the arbitration proceedings are initiated.
Despite these important legislative advances, there is still a long way to go. It is not without consequence that the Spanish Arbitration Act is silent on issues such as the procedure for the adoption of interim measures by the arbitrators or the role of the emergency arbitrator. These issues are particularly problematic in ad hoc arbitration proceedings where there are no institutional rules to fill these gaps.
That said, Spanish courts have been in favour of adopting and enforcing interim measures not only in national but also in international arbitration proceedings, and have also tried to circumvent some of the practical problems that have arisen by adopting a flexible interpretation of the rules in favour of arbitration.
This series will continue next week with the England & Wales perspective on interim measures in international arbitration.