Madrid Court of Appeal affirms optional dispute resolution clause

On 18 October 2013, the Madrid Court of Appeal (the Court of Appeal) affirmed the validity of an optional dispute resolution clause which provided for disputes to be resolved either before an arbitration tribunal or national courts.

The Court of Appeal also affirmed, in line with earlier case law of the Court of Justice of the European Union  (CJEU) and jurisprudence of the Spanish Supreme Court, that EU competition law issues can validly be submitted to arbitration (i.e., they are arbitrable).

Background

In 2003, a Spanish truck dealership and a Dutch truck manufacturer and its Spanish subsidiary entered into several contracts containing an optional dispute resolution clause (collectively, the Parties). The clause permitted the Parties to choose to submit disputes under the contracts to either arbitration under the Arbitration Rules of the Netherlands Arbitration Institute or litigation before the courts of the Dutch city of 's-Hertogenbosch.

Disputes relating to unfair competition and antitrust issues arose between the parties and in 2010 the Spanish truck dealership brought the case before the Spanish courts. The Dutch manufacturer and its Spanish subsidiary objected to the jurisdiction of the Spanish courts on the basis of the dispute resolution clause.

In 2011, the Court of First Instance of Madrid declined jurisdiction to hear the case and ruled that, pursuant to the dispute resolution clauses: (a) disputes relating to unfair competition issues were to be submitted to the courts of 's-Hertogenbosch or arbitration in the Netherlands Arbitration Institute; and (b) antitrust law issues were to be determined exclusively by the courts of 's-Hertogenbosch.

The Spanish truck dealership appealed the decision.

Decision of the Court of Appeal

The Court of Appeal dismissed the appeal. The Court upheld the validity of optional arbitration clauses under Spanish law, finding a valid arbitration agreement within such clause and affirming the Spanish courts lack of jurisdiction to hear the claim. The Court of Appeal also ruled that disputes involving anti-trust issues were arbitrable.

In its decision, the Court of Appeal affirmed that it was international practice for parties to combine arbitration agreements with other alternatives, such as mediation or recourse to the courts of a determined jurisdiction, noting that a claiming party could choose its forum or pursuant to the clause, depending on the nature of the dispute, that one forum or another would have jurisdiction.

In determining the arbitrability of antitrust issues, the Court of Appeal held that neither article 6 of Regulation CE 1/2003 nor articles 3.6 and 5.a Regulation 44/2001 as relied upon by the Spanish truck dealership, supported the allegation that such issues were not arbitrable.

In its analysis of the preamble and article 6 of Regulation CE 1/2003, which regulates the implementation of the rules of competition contained in the Treaty on the Functioning of the European Union, the Court of Appeal found that there was nothing in the Regulation to prevent parties from referring EU antitrust issues to arbitration. The Court of Appeal also found no public policy grounds preventing such disputes from being referred to arbitration. The Court of Appeal noted that as the parties had not waived or disposed of their rights arising out of EU law, an arbitral tribunal was required to apply EU antitrust law to a dispute involving such issues as if not, any arbitral award rendered would have cause for annulment. This decision was consistent with previous case law of the CJEU and Spanish Supreme Court.

The Court of Appeal also considered the parties' decision to submit its disputes to the courts of a particular jurisdiction, i.e., 's-Hertogenbosch in the Netherlands in the context of EC Regulation 44/2001. The Court of Appeal held that this decision was valid and in accordance with international norms.

Relevance of this judgment

This judgment constitutes the first decision of a Spanish higher court expressly deciding whether optional dispute resolution clauses are valid or not. The Court of Appeal answered this question – decidedly – in the affirmative.  As such, the Spanish court has adopted a more flexible approach to optional dispute resolution clauses than that adopted by their counterparts in other jurisdictions, such as France, Poland and Russia.

The decision also expressly reaffirms EU and Spanish jurisprudence that EU competition law issues are arbitrable.

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