Madrid Court of Arbitration Releases Updated Rules

On 2 February 2022, the new Rules of Arbitration of the Madrid Court of Arbitration (the CAM) (the 2022 Rules), approved in January 2022 by the plenary session of the Court, entered into force. The 2022 Rules, which replace the prior set of rules released in 2020, aim to streamline and modernize arbitrations administered under by CAM, including provisions relating to virtual proceedings, third party funding and transparency.

CAM, founded in 1989, is a leading Spanish arbitral institution, having administered more than 3,000 cases. Today, the CAM administers domestic proceedings, following the creation of the Madrid International Arbitration Center (the CIAM). The CAM, the Civil and Commercial Court of Arbitration and the Spanish Court of Arbitration agreed to transfer all international arbitration activity to the CIAM as of 1 January 2020, consolidating the management of international proceedings previously administered by all three entities in a single institution.

Significantly, the 2022 Rules clarify what constitutes an “international” arbitration, in effect demarcating the types of proceedings that may be administered by CAM, and those that are properly administered by the CIAM. The Final Provision of the 2022 Rules defines an “international” arbitration as (i) a proceeding with the characteristics set out in Article 1, paragraphs 3 and 4, of the UNCITRAL Model Law on International Commercial Arbitration (i.e., (a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; (b) the agreed-upon place of arbitration or the place with which the contract or dispute is most closely connected is situated outside the State in which the parties have their places of business; (c) or the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country) and/or (ii) when it is a non-Spanish domestic arbitration (i.e. domestic proceeding not seated in Spain).

Key developments in the 2022 Rules include:

• Explicit contemplation of virtual hearings as an available and acceptable means of conducting hearings (Rule 31.7).
• Electronic submission of submissions and correspondence via e-mail, with the possibility of dispensing with hard copies altogether through party agreement (Rule 3.1, 3.8).
• In an effort to foster greater transparency, parties are required to disclose whether a third party is financing their arbitration as well as any potential conflicts of interest and further information as requested by (Rules 9 bis and 55).
• To encourage the timely issuance of awards, a penalty of up to 10% of the arbitrator’s total fees will be imposed where the draft award is not submitted in a timely manner absent appropriate justification (Annex I: arbitration costs -other provisions).
• In terms of costs, the fees for administrating proceedings have been revised upward (Annex I: arbitration costs -other provisions). These costs have not been updated since 2011 and the increase remains below inflation.

In addition, in fast-track proceedings, there is a preference for a sole arbitrator (absent party agreement to the contrary), and the ceiling for the amount in dispute for which the Madrid Court of Arbitration will automatically apply the expedited procedure has been raised to €600,000 (Rule 52).

The Spanish arbitration community has welcomed these changes, which are in line with the provisions adopted by leading international arbitral institutions. The 2022 Rules reinforce Spain’s position as a burgeoning and increasingly attractive forum for arbitration.