The Madrid High Court of Justice sets aside two arbitral awards on the grounds that their lack of reasoning is contrary to public policy.

El Tribunal Superior de Justicia de Madrid estima dos acciones de nulidad de laudos por infracción del orden público debido a su falta de motivación.

Despite the recent constitutional caselaw, the Madrid High Court of Justice has recently ruled in favour of two applications to have arbitral awards set aside on the grounds that their lack of reasoning undermines public policy.

The first case, Judgment 30/2023 of 12 September, finds in favour of the application to set aside, holding that ‘in the initial application by the claimant to set aside and in the application for clarification filed before the consumer arbitration body, with regard to the delay in having his gas supply connected and the inconvenience caused, there were no findings in the final Award, and therefore such a flagrant omission constitutes arbitrariness equivalent to a lack of decision, a lack of consideration of the evidence adduced for this purpose, and ultimately a contravention of procedural public policy in matters of proof, and consequently this appeal must be allowed in part, with the Award in question being set aside so that it can address this point that it has previously overlooked’.

The Court goes on to consider that ‘the lack of decision regarding the claim for damages for non-material losses deriving from the inconvenience and delays incurred by the claimant in the connection of the gas supply is contrary to procedural public policy, and as such the claim that has been filed is upheld in part’.

The second case, Judgment 38/2023 of 19 October, upholds the application to set aside, and finds that there is a ‘[s]erious lack of reasoning contrary to procedural public policy’ with regard to the ‘copious body of evidence held in the casefile as to whether or not loss of profit has been found to exist’, on the basis of three premises:


  1. With regard to proving loss of profit, that ‘the argument in the Award can be summarised as follows: I say there is no evidence of the alleged loss of profit, but I do not examine the evidence put before me, nor do I explain why not’;
  2. That it would be unjustifiable for the Court of Arbitration to refuse ‘the application for a face-to-face meeting between the expert witnesses – which Procedural Order no. 8 expressly provides for – sought by [one party] so that their differing opinions can be compared’ ‘on the grounds that this has been adequately established’ and ‘despite the fact that the time limits for such a meeting to take place are not pressing’;
  3. And (said to be the ‘most relevant’) that the rejection by the new Chairman of the Court of Arbitration (appointed following the resignation of the first) of a fresh request for a face-to-face meeting, and furthermore the fact that he did not personally attend to hear the expert evidence being given, ‘which is undoubtedly evidence of a personal nature, according to caselaw that is now contested’, ‘[w]ould make it difficult for this member of the Arbitral College to assess this evidence in accordance with the necessary requirement of propinquity under art. 24.2 of the Spanish Constitution’.


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