Disputes among shareholders are a natural part of business life, especially in closely held companies or joint ventures. However, when these conflicts escalate, they can undermine decision-making, delay operations, and even lead to the collapse of a profitable enterprise.
In response to the growing need for faster and more flexible commercial dispute resolution, Spain has recently updated its arbitration framework. The 2023 amendments to Spain’s Arbitration Law (Ley de Arbitraje) aim to reinforce arbitration as an efficient alternative to litigation, particularly in corporate governance and shareholder matters.
This article explores how shareholder disputes can now be resolved through arbitration under Spanish law, the benefits of this route, and practical considerations for businesses operating in Spain.
Common Types of Shareholder Disputes
In Spanish companies, shareholder conflicts typically arise from
- Disagreements over dividend distribution or capital increases
- Conflicts of interest between majority and minority shareholders
- Breaches of shareholder agreements or abuse of voting rights
- Disputes over management decisions, valuations, or exit terms
Traditionally, these issues were addressed through civil litigation, often a lengthy and costly process. Arbitration now offers an attractive alternative.
Key Changes to Spain’s Arbitration Law (2023–2024). Spain’s Arbitration Law 60/2003, as revised in late 2023, includes updates aimed at making arbitration more accessible, transparent, and aligned with modern commercial needs. Notably:
Shareholder and corporate governance disputes are explicitly arbitrable, provided that the necessary documentation is available in accordance with the legal system.
The revised law confirms that internal corporate matters, including shareholder disputes, voting rights, and director liability claims, may be submitted to arbitration if parties have agreed to it.
This closes prior legal gaps where the arbitrability of certain corporate disputes was questioned.
Institutional Arbitration Is Promoted
The law encourages the use of recognized arbitral institutions (e.g., Corte Española de Arbitraje, ICC, or CAM), ensuring procedural consistency and impartiality.
Fast-Track Procedures and Interim Relief
Parties may now opt for expedited procedures in lower-value disputes, and arbitrators are explicitly authorized to grant interim measures, such as injunctions or asset freezes, similar to court powers.
Advantages of Arbitration in Shareholder Conflicts
For business owners and investors, arbitration provides several advantages over traditional court proceedings:
- Confidentiality – All proceedings are private, protecting sensitive financial or strategic information from becoming public record.
- Specialized Arbitrators – Disputes can be resolved by professionals with expertise in commercial law, corporate finance, or governance, unlike generalist civil judges.
- Flexibility and Speed – Timelines are generally shorter than court litigation. Parties may also choose procedural rules that suit their needs.
- Cross-Border Enforceability – Under the New York Convention, arbitral awards are enforceable in over 160 countries, a major benefit for international shareholders.
However, it is crucial to keep in mind the costs associated with arbitration, as they may be as high as the cost of litigation. Another significant aspect is the lack of possibility of challenging the final award, unless it is preliminarily specified in the rules.
Best Practices for Businesses in Spain
To take full advantage of arbitration under Spain’s revised law, businesses should:
- Include a well-drafted arbitration clause in shareholder agreements and company bylaws
- Specify the arbitral institution, seat, and language of the arbitration
- Define the scope of arbitrable disputes clearly
- Ensure minority shareholders are informed and agree to the arbitration terms
Failure to address these issues can lead to challenges to the enforceability of the clause or delays in proceedings.
How ARKOS Management Can Help
At ARKOS Management, we support Spanish and international businesses with:
- Drafting and reviewing shareholder and partnership agreements
- Structuring arbitration clauses that comply with Spanish and EU law
- Assisting in the selection of neutral arbitral institutions
- Coordinating with legal counsel during arbitration procedures
- Managing the accounting, tax, and valuation aspects of shareholder buyouts or exits
We work closely with our legal partners to deliver strategic, multidisciplinary solutions that protect shareholder rights and preserve business continuity.
Conclusion
As Spain modernizes its commercial dispute framework, arbitration is becoming a preferred mechanism for resolving shareholder disputes efficiently and privately. With proper planning and expert guidance, businesses can turn a potentially destructive conflict into a manageable process and preserve value in the long run.
Need help preparing your shareholder agreements or navigating a corporate dispute in Spain?
Reach out to ARKOS Management Team for personalized, cross-functional support.
References
- Ley 60/2003 de Arbitraje – BOE
- Real Decreto-ley 5/2023 – Reforma de la Ley de Arbitraje (BOE)