Arbitrators ordered to pay back fees for excluding third arbitrator (...)

In a unanimous decision dated 15 February 2017, the Spanish Supreme Court ordered two arbitrators to pay one of the parties in the arbitration, Puma, EUR750,000 each (the amount paid to them by Puma as fees in the arbitration) for having acted recklessly by issuing a final award, excluding Puma's appointed arbitrator from their deliberations.

Every jurisdiction recognises to a greater or lesser extent the immunity of arbitrators because they consider the arbitral function to be of a jurisdictional nature. However, the degree of arbitral immunity varies between common law and civil law jurisdictions. The former recognises almost complete immunity to arbitrators. However, the latter limits the immunity of arbitrators depending on the seriousness of the misconduct.

It should be noted that the Supreme Court, in making this judgment, did so on the basis of the facts established as true in the first instance and in the appeal. If, as proved in the lower courts, the excluded arbitrator did not attempt in any way to obstruct the normal course of the arbitration proceedings, the behaviour of the remaining two arbitrator defendants satisfied the standard of recklessness provided for in Article 21.1 of the Spanish Arbitration Law. (Judgment number 102/2017 of February 15, 2017.)

Practical Law UK, 01-Mar-2017.