Clients remain sceptical about arbitration in Spain – Linklaters

Some international companies still have concerns that arbitrators in Spain are not impartial and that there are problems with corruption

Despite the fact alternative dispute resolution (ADR) remains attractive to clients seeking to avoid long and costly legal battles, a slight mistrust of local arbitration persists in Spain with many foreign companies seeking to use international arbitrators, according to Francisco Málaga, head of litigation at Linklaters in Madrid.
Málaga expects the use of ADR will increase in future as Spain’s economy recovers. However, as yet, there has not been widespread use of domestic arbitration in Spain. Meanwhile, international companies and banks are sometimes mistrustful of the Spanish arbitration system, according to Málaga.
He believes certain international entities have a perception that arbitrators in Spain are not impartial and that cronyism and corruption exists. “We find clients that do not want to carry out arbitration in Spain, and would rather seek it abroad, or prefer to seek resolution in a tribunal,” Málaga says.
But he adds this perception is unfounded as the situation has improved significantly, with the Madrid arbitration court, for example, having done important work to clean up the image of arbitration and “show the world that arbitration in Spain is thoroughly trustworthy and effective”, according to Málaga.

Banks want arbitration clauses
Arbitration has often been applied to disputes arising in the financial sector, partly because banks are keen to include arbitration clauses in their products. However, arbitration, as well as other forms of ADR, is also frequently employed in the construction, real estate engineering and aeronautics sectors.
The financial crisis led to an increase in the use of arbitration, and while demand for ADR, in general, has fallen somewhat, there is still much demand for arbitration in the financial sector. Clients are also increasingly keen for arbitration to take place in Spain, particularly as they are eyeing costs and are keen on finding a law firm that has local expertise, in addition to being trustworthy, impartial and efficient.