Engasa Eólica SA v Vestas Eólica SAU (Judgment No.15/2018)
In a decision dated 5 April 2018, but only recently published, the Madrid High Court of Justice set aside an award issued by the majority of an arbitral tribunal constituted under the rules of the Spanish Civil and Commercial Arbitration Court, for violation of public policy.
The court unanimously held that the arbitral tribunal arbitrarily issued an award having irrationally assessed the evidence. In particular, the tribunal had failed to examine all of the documentary evidence and excluded evidence that could have been crucial to revealing the true intention of the parties when signing an Engineering, Procurement and Construction (EPC) agreement and, therefore, to the outcome of the dispute.
The judgment demonstrates that arbitrators should be mindful of the core principles enshrined in Article 24 of the Spanish constitution. Although the decision has received criticism from some quarters, in the authors' view, the arbitrators failed to draft an enforceable award and the court took the correct approach to uphold its duty to protect due process rights. The arbitral tribunal should have examined all the documentary evidence provided by the parties, at least to mention that, in its view, those documents did not sufficiently prove that the parties intended to sign a real turnkey agreement. Had the majority done so, the court would not have concluded that the award was arbitrary and would have upheld the majority's decision.
The case also suggests that arbitral rules that provide for the award to be reviewed before being finalised are wise and may avoid decisions that do not satisfy minimum legal requirements. (Engasa Eólica SA v Vestas Eólica SAU (Judgment No.15/2018), 5 April 2018.)