SPAIN Law and Practice Contributed by: Pablo Silván and Fernando Manzanedo, Ramón y Cajal Abogados, S.L.P.
The Spanish Arbitration Act (Law 60/2003) does not prescribe a fixed rule for cost allocation and tribunals have broad discretion to allocate costs “as they deem appropriate”. 8.4 Mitigation of Damages Under Spanish law and international investment arbi- tration principles, an investor has a duty to mitigate its losses. This duty is not always explicitly stated in treaties, but it is widely recognised by arbitral tribu- nals and rooted in general principles of law – including those applicable in Spain. Spanish civil law incorporates the principle that a party must act reasonably to limit its damages. This is aligned with good faith obligations under the Span- ish Civil Code, which influence contractual and tort- based claims. If an investor fails to take reasonable steps to reduce its losses, compensation may be reduced or denied. Tribunals often apply Article 39 of the ILC Articles on State Responsibility, which states that compensation should be adjusted if the injured party contributed to its own loss. This includes contributory fault (eg, neg- ligent conduct) and failure to mitigate (eg, ignoring opportunities to reduce harm). Spain follows a structured and internationally aligned approach to enforcing arbitral awards, shaped by its domestic law, treaty obligations, and public interna- tional law principles. Spain is a party to both the ICSID Convention and the New York Convention, which govern the enforcement of investor–state awards depending on the arbitration forum. • ICSID Awards – under Article 54 of the ICSID Convention, Spain must recognise and enforce ICSID awards as if they were final judgments of its own courts. The enforcement is automatic, subject only to procedural formalities and no review of the merits or jurisdiction is permitted. 9. Enforcement of Awards 9.1 Enforcement Procedure
• Non-ICSID Awards (eg, UNCITRAL) – enforce- ment is governed by the New York Convention and Spain’s Civil Procedure Act and Spanish courts may refuse enforcement on limited grounds: (a) lack of valid arbitration agreement; (b) violation of due process; (c) award exceeding scope of submission; (d) award is not yet binding or has been set aside; or (e) enforcement would violate Spanish public policy. If an award is annulled by courts at the seat, Span- ish courts will typically refuse enforcement, especially under the New York Convention (Article V (1)(e)). How- ever, for ICSID awards, annulment must occur through ICSID’s own internal process – not national courts. Spanish courts do not enforce ICSID awards annulled by ICSID ad hoc committees, but they do not defer to annulments by domestic courts outside ICSID. When an award is under challenge, but not yet annulled, Spanish courts may suspend enforcement proceedings pending resolution at the seat or proceed with enforcement if the challenge appears frivolous or unlikely to succeed (this is a discretionary decision, and courts weigh the strength of the challenge, the urgency of enforcement and the potential prejudice to the parties). Spain, like other states, may invoke sovereign immu- nity at the enforcement stage – but with limited suc- cess as under Spanish law and international practice waiver of immunity is implied when a state consents to arbitration and Spanish courts follow the principle that jurisdictional immunity is waived by treaty-based arbitration clauses. However, execution immunity (eg, seizure of state assets) may still apply, especially for non-commercial assets like embassies or central bank reserves. Recent cases in UK, US, and EU courts have reject- ed Spain’s immunity claims in enforcement of ICSID awards, affirming that Article 54 of the ICSID Conven- tion constitutes a waiver of immunity.
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