Employment Arbitration in Spain: A Lacking System or a Safe Haven for Workers’ Rights?

This article is written in collaboration with the IE Arbitration Club.

By Louiza Apostolidi

[Arbitration is a formal alternative dispute resolution mechanism available to parties in dispute. It involves the intervention of a neutral third party (single arbitrator or arbitral tribunal) who hears the case and produces a binding decision on its merits. As opposed to a state court trial, the parties may choose an expert to adjudicate their case. The main appeal of arbitration lies in the confidentiality of the proceedings, voluntary submission of the parties, significant time saving and expertise of the arbitrators.]

The resolution of legal disputes has consistently and primarily preoccupied the courts and tribunals in any one jurisdiction; nevertheless, the rise of purely interest-centered disputes has necessitated the creation of Alternative Dispute Resolution (ADR) mechanisms, including, but not limited to, mediation and arbitration.¹ In the realm of labour relations, specifically, such mechanisms constitute an integral aspect of conflict resolution between employees and employers. As per Recommendation No. 92 of the International Labour Organisation, voluntary conciliation and arbitration must be made readily available by the authorities, ‘to assist in the prevention and settlement of industrial disputes between employers and workers.’² Despite an enthusiastic international response to employment arbitration, in Spain, alternative labour dispute resolution remains considerably undeveloped in comparison to the global legal landscape.³ 

The issue traces back to the 1950s, amidst Francisco Franco’s forty-year-old dictatorship, where the emergence of ADRs was regarded negatively due to a growing consensus viewing conflict resolution and settlement to be solely under the State’s jurisdiction.⁴ Further, a lack of cross-border relations stemming from the country’s foreign isolation-inspired policies led to minimal ADR activity.⁵ It was in this climate that the Arbitration Act of 1953 was enacted. Nevertheless, the dispute resolution proceedings that dominated in the following decades did not have the structure and essence that we understand today as key features of ADR. Non-judicial dispute resolution at the time translated to State-led ‘administrative’ resolution, a practice which dominated the Spanish legal system until the 1980s.⁶ ADR with regard to labour matters was never actually regulated during that period – the latest version of the Spanish Arbitration Act (Ley 60/2003, de 23 de diciembre, de Arbitraje) to this day excludes labour matters from its scope.⁷ It wasn’t until the 1990s that regional and national cross-sectoral agreements on the non-judicial resolution of labour disputes emerged.⁸ 

The most prominent of the aforementioned agreements was signed in January 1996 between Spain’s largest workers’ unions (Unión General de Trabajadores – UGT, Comisiones Obreras – CCOO) and prominent employers’ associations (Confederación Española de Organizaciones Empresariales – CEOE, Confederación Española de la pequeña y mediana empresa – CEPYME) by virtue of Article 83 (3) of the Spanish Statute of Workers (RD 2/2015, de 23 de octubre).⁹ The resulting Agreement on the Autonomous Resolution of Disputes (ASAC) regulates mostly collective labour disputes whose geographical scope encompasses at least two different autonomous regions of the country.¹⁰ Perhaps the most significant outcome of the ASAC was the establishment of the Interconfederal Mediation and Arbitration Service (SIMA), an institution aimed at administering the procedures laid down in the Agreement. Thereby, SIMA has the capacity to accept or reject any application for mediation/arbitration in line with Article 6 (6) ASAC. It follows that the procedures that the ASAC permits are mediation, which is obligatory in most cases, and arbitration, which is voluntary and must be requested by both parties in their application.¹¹ The resulting decision, or arbitral award, has res judicata effect and can only be challenged before a tribunal under very exceptional circumstances.¹² 

Albeit a significant development in the field of ADR, the ASAC primarily deals with collective labour disputes, and therefore the realm of individual labour arbitration remains mostly unchecked and undeveloped in Spanish litigation.¹³ Many scholars have reasoned that such scepticism towards individual labour arbitration is a result of the ‘authoritarian and interventionist […] labour relations system’ during Franco’s dictatorship.¹⁴ Others base it on the fact that litigation before Spanish labour courts is mostly an inexpensive and fast process, especially for workers and their representatives who are entitled to free legal assistance.¹⁵ Finally, the obvious employee-focused approach taken by most courts in an attempt to protect the interests of the weaker party has a deterring effect on any worker from seeking ADR.¹⁶ 

A newly-emerging trend in employment law in the last couple of years, however, threatens this surety of workers. Mandatory arbitration clauses in employment contracts have increasingly been adopted in many jurisdictions around the world, essentially making arbitration the sole dispute resolution mechanism a condition for the conclusion of such contracts. Although this does not seem as an immediate threat to workers’ rights in Spain, given the still-developing nature of individual arbitration for labour disputes, one cannot help but acknowledge the issues it could bring forth. Having its legal basis on Article 1255 of the Spanish Civil Code, which envisages that ‘(t)he contracting parties may establish any covenants, clauses and conditions deemed convenient, provided that they are not contrary to the laws, to morals or to public policy’, the establishment of mandatory arbitration clauses in employment contracts may become a reality. This is evidenced specifically through recent legislative acts, such as the Spanish Royal Decree 6/2023 (RD 6/2023, de 19 de diciembre, por el que se aprueban medidas urgentes para la ejecución del Plan de Recuperación, Transformación y Resiliencia en materia de servicio público de justicia, función pública, régimen local y mecenazgo). Article 104 of the aforementioned decree envisages the modification of the Spanish Law on Social Jurisdiction Regulation (Ley 36/2011, de 10 de octubre, reguladora de la jurisdicción social), requiring that conciliation or mediation proceedings become mandatory aspects of labour litigation, among others. Hence, the concept of mandatory arbitration clauses in employment contracts does not seem as implausible as it once did.  

The question that, therefore, arises is what will be the response of the Spanish labour courts and lawmakers in such circumstances – will they declare said clauses abusive, arguing that they have the potential to erode workers’ rights given that they require the relinquishing of their right to pursue legal claims in court?¹⁷ And if they do accept them, would that entail for the development of individual arbitration of labour disputes in the long run? Whatever the answer to the aforementioned questions, one thing is for certain: Spanish labour arbitration, albeit shaped by an unconventional history, promises a future that demands close attention by the legal community and beyond.  

Bibliography

1. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 233
2. ILO Recommendation R092: Voluntary Conciliation and Arbitration Recommendation (No.92), ( 34th Conference Session Geneva 29 June 1951)
3. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 233
4. Fernández Aguado, J. I. (n.d.). International Arbitration Law and rules in Spain. CMS Expert Guides. https://cms.law/en/int/expert-guides/cms-expert-guide-to-international-arbitration/spain
5. Id.
6. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 233
7. Article 1 (4), Spanish Arbitration Act 60/2003, https://www.boe.es/buscar/act.php?id=BOE-A-2003-23646
8. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 233
9. Almendros, F. (1997) Conciliation, mediation and arbitration in Spain. European Foundation for the Improvement of Living and Working Conditions. https://www.eurofound.europa.eu/en/resources/article/1997/conciliation-mediation-and-arbitration-spain
10. Fundación SIMA-FSP (2020) VI Agreement on Autonomous Resolution of Labour Disputes, https://www.fsima.es/wp-content/uploads/VI-ASACenglish.pdf
11. Id.
12. Almendros, F. (1997) Conciliation, mediation and arbitration in Spain. European Foundation for the Improvement of Living and Working Conditions. https://www.eurofound.europa.eu/en/resources/article/1997/conciliation-mediation-and-arbitration-spain
13. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 234; Almendros, F. (1997) Conciliation, mediation and arbitration in Spain. European Foundation for the Improvement of Living and Working Conditions. https://www.eurofound.europa.eu/en/resources/article/1997/conciliation-mediation-and-arbitration-spain
14. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 234
15. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 235
16. Gómez Abelleira, F.J. (2012). Handbook on Spanish Employment Law. Grupo Anaya Publicaciones Generales, p. 236
17. Mogensen, J. (2023). The Pros and Cons of Employment Arbitration Agreements. M3 Insurance. https://m3ins.com/pros-and-cons-of-employment-arbitration-agreements/

Featured image courtesy of Unsplash.com