Crossing Borders丨Civil liability of arbitrators
Article 21 of the Spanish Arbitration Act (AA), governing the civil liability of arbitrators, has been receiving considerable attention since early 2017 as a result of the Supreme Court Judgment 102/2017 of the civil liability suit fled by PUMA SE.The aforementioned Article 21.1 of the AA significantly reformed Article 16.1 of the former AA of 1988, which had provided that arbitrators could be held liable for damages caused by negligence or willful misconduct in the performance of their duties in arbitration proceedings. The introduction of this new provision limited their liability to cases involving “bad faith, recklessness or negligence”. The motivation behind this reform was to avoid the previous exorbitant liability system, based on any type of fault which could in practice result in a situation with a real effect on the impartiality and independence of the arbitrators or even in arbitrators refusing to accept arbitrations for fear of becoming the target of such broad liability. The ultimate aim of this reform was to codify the concept of “freedom to judge”, enshrined in the principle of “immunity” as existing in Anglo-Saxon legislation, and which solely allowed for liability in those cases in which the conduct of the arbitrators was guided by willful misconduct or inexcusable negligence.