Andorra has embraced arbitration as an alternative dispute resolution mechanism relatively recently. While the Act on Arbitration in the Principality of Andorra (AAA), 47/2018, was adopted on 18 December 2014, it was not until 2018 that the Arbitral Tribunal of the Principality of Andorra (ATPA) was established through the 13/2018 Act.
In Andorra, there is a concerted effort to champion arbitration as the dominant dispute resolution method. Many Andorran businesses and key figures are gravitating towards arbitration due to its efficiency, specialisation, and the advantages it offers. Indeed, long before the approval of the AAA and the creation of ATPA, arbitration in equity was already used as an alternative dispute resolution method in Andorra. Arbitration clauses have been included in many documents governing relationships between private parties, such as shareholders’ agreements, prenuptial agreements, homeowner’s associations bylaws, or employment agreements, among others. Likewise, the Andorran Courts have consistently enforced arbitration clauses.
Further, since the approval of the new Civil Procedure Code, which entered into force on 1 May 2021, arbitral awards are automatically enforceable before the Andorran courts, resulting in quicker and easier enforcement of awards.
To date, it is difficult to assess which industries are experiencing significant international arbitration activity.
The institution used for international arbitration is the ATPA, which was created by Act 13/2018 of 31 May 2018. No other arbitration institutions have been created since.
In the Principality of Andorra there are no specific courts designated to hear disputes related to international arbitration. Nevertheless, the Andorran Superior Court is specifically competent for the recognition and enforcement of foreign arbitral awards as well as hearing motions to set aside an arbitral award.
In Andorra, both local and international arbitration are governed by the AAA.
The AAA is not based on the United Nations Commission on International Trade Law (UNICITRAL) Model Law, but was inspired by it, based on the need to promote commercial relationships and to have a faster and more specialised alternative dispute resolution mechanism.
There have been no significant changes to the AAA in the past year nor is there pending legislation that may change the arbitration landscape in Andorra.
International arbitration is a flexible process to resolve disputes, and the parties are free to agree on the law that will apply and the procedure to be followed by the arbitral tribunal.
The arbitration agreement will be valid, and the dispute will be subject to arbitration as long as the requirements agreed upon by the parties to govern the arbitration agreement or, in their absence, the requirements set forth by Andorran law, are met.
The legal requirements for an arbitration agreement to be enforceable are set out in Article 10 of the AAA. Pursuant to this article, the requirements are as follows:
The arbitration agreement will be valid and the dispute subject to arbitration when the rules and requirements agreed upon by the parties to govern the arbitration agreement and the applicable requirements set forth by the AAA are met.
The AAA stipulates that any issues freely decided upon by the parties can be subject to arbitration, with the explicit exception of labour and consumer matters.
To date, there is no case law in Andorra on the law governing the arbitration agreement or on the enforcement of arbitration agreements.
According to Andorran law, an arbitration clause is valid even when the contract containing such clause is declared invalid. Thus, its validity is not linked to the effectiveness of the rest of the contract.
Indeed, the independent nature of the arbitration clause with respect to the contract containing it is expressly provided for in Article 10.8 of the AAA: “The arbitration agreement is independent of the contract of which it forms part, or to which it refers, and a decision by the arbitral tribunal to declare the contract void shall not void ipso jure the arbitration agreement”.
Therefore, Andorran law applies the rule of separability to arbitration clauses contained in invalid agreements.
The AAA allows the parties to either directly appoint the arbitrator(s) or to agree on the procedure to appoint them.
However, there are limits on the parties’ autonomy to select arbitrators, set forth in Article 14 of the AAA:
In the absence of an agreement as to the number of arbitrators, a sole arbitrator will be appointed.
If the method chosen by the parties for the selection of arbitrators fails, Andorran law provides for the following procedures.
If the parties fail to reach an agreement, or the appointed arbitrators fail to appoint a third arbitrator within the legally prescribed period of time, the appointment shall be made by the arbitral institution designated by the parties.
If no arbitration institution has been appointed by the parties, the court shall appoint the arbitrator upon the request of any of the parties.
If the parties cannot agree on the number of arbitrators, the arbitration tribunal will be composed of one arbitrator.
According to the AAA, the court may intervene in the selection of arbitrators. The court will list three names for each arbitrator to be elected. It must bear in mind the requirements set forth by the parties or, in the absence thereof, the requirements foreseen in the law, undertaking all means to ensure the independence and impartiality of the arbitrators.
The court’s decision on the appointment of an arbitrator cannot be appealed except when the court rejects the request to appoint an arbitrator because the non-existence or invalidity of the arbitration agreement can be inferred from the documentation.
Under Andorran law, an arbitrator may be challenged only when circumstances arise that might cast doubt on the arbitrator’s impartiality or independence.
Arbitrators may also be challenged when the conditions agreed by the parties or set forth by law are not met.
The parties may agree on the procedure to challenge arbitrators. Alternatively, they must follow the procedure set forth in the AAA.
An arbitrator appointed by a party can only be removed by that party for reasons of which it has become aware after the appointment.
Arbitrators may also be removed if they are prevented from exercising their duties or if their duties are exercised with undue delay, and whenever the parties agree to it.
Arbitrators appointed by the parties must remain independent and impartial during arbitration and therefore cannot have any personal, professional or commercial relationship with any of the parties.
An arbitrator shall disclose any circumstances that prevent them from being impartial or independent. Prior to the acceptance of the appointment, the arbitrator must reveal all facts and circumstances that may cast doubts regarding their independence and impartiality before accepting their appointment.
The arbitrator must not have previously acted as mediator in respect of the same dispute, unless the parties agree otherwise.
The parties may request the arbitrators’ removal when the requirements of independence or impartiality are not met, or if the arbitrator does not comply with their duty of confidentiality.
Article 3.1 of the AAA stipulates that any issues freely decided upon by the parties can be subject to arbitration, with the explicit exception of labour and consumer matters.
Article 27 of the AAA expressly recognises the principle of competence-competence, which provides for the power of the arbitral tribunal to decide on its own jurisdiction, as well as on the following matters:
Should a judicial procedure be initiated in violation of an arbitration agreement, the Andorran courts can rule on the jurisdiction of an arbitral tribunal. If the existence and validity of an arbitration agreement are established, the courts will declare that they do not have competence over the matter.
Arbitral awards will only be reviewed by the courts if an action for annulment is brought against the award as set forth in Article 56 of the AAA, or when an appeal is lodged.
The parties have the right to challenge the jurisdiction of the arbitral tribunal in court once the decision on jurisdiction is rendered.
For questions on admissibility and jurisdiction, the court will accede to a deferential review.
Under the AAA, when a party commences court proceedings in breach of an arbitration agreement, the court may declare that it does not have competence and will uphold the arbitration agreement, unless it finds the arbitration agreement to be invalid. One of the parties must request the court to uphold the arbitration agreement, at the latest when filing their plea.
The Andorran law does not allow an arbitral tribunal to assume jurisdiction over third parties.
To date, there is no specific case law in Andorra on this matter.
Unless otherwise agreed by the parties, the arbitral tribunal may grant the interim relief it deems necessary as per any of the parties’ request. In this sense, the arbitral tribunal may order one of the parties to:
The applicant for interim measures must prove the following before the arbitral tribunal:
The arbitral tribunal cannot impose interim measures on third parties who are not parties to the arbitral proceedings.
Under the AAA, the existence of an arbitration agreement does not prevent the parties from requesting that the courts adopt interim measures, either before or during the arbitration proceedings. Neither the petition for nor the adoption of such measures has an impact on the validity of the arbitration agreement.
Any interim relief adopted by the arbitral tribunal is binding and must be immediately executed.
The power of the courts to grant interim measures in arbitral proceedings is not affected by the country in which the arbitral proceedings are taking place. The court proceeds according to its own procedures.
Under the Andorran Code of Civil Procedure, interim measures include but are not limited to freezing orders, deposits, inventory and comments in public records.
The arbitral tribunal may require the party requesting an interim measure to provide adequate security for the measure requested in order to prevent possible damages that may be caused by the adoption of the measure.
The procedure of arbitration in Andorra is governed by the AAA.
However, the parties are free to establish the procedure applicable to their agreement, the parties and the other participants in the arbitration proceedings.
In any case, the procedure established by the parties must respect the fundamental principles of due process, equality, rebuttal and the right to be heard.
The parties have full discretion to determine the procedure to be followed by the arbitral tribunal, the parties and all other participants in the procedure. If the parties do not agree on a specific procedure, the arbitral tribunal may stipulate the rules that will govern the arbitration procedure in the manner they deem the most appropriate. This includes the power to decide on the admissibility, relevance and usefulness of evidence.
The Andorran legal framework does not determine the powers and duties of arbitrators in an exhaustive manner. However, from a detailed reading of the AAA, it can be concluded that the most relevant powers and duties of arbitrators include the following.
No specific requirements or qualifications are requested for the intervention of legal representatives within an arbitration process in Andorra. However, they must prove they are fully empowered to act on behalf of any of the parties.
Regarding the collection and submission of evidence, the parties’ freedom to determine the procedure includes the power to set the applicable rules of evidence, which are subject to the principles of equality, review and rebuttal, at any stage of the procedure.
Articles 44 and 45 of the AAA set forth the rules of evidence. The parties must provide, alongside their pleadings, all documents they deem appropriate, as well as any other means of evidence they wish to provide.
Unless otherwise agreed by the parties, the arbitral tribunal decides whether to hold hearings to present pleadings, evidence or oral conclusions, or whether the proceedings are to be conducted on the basis of documents and other written evidence without the need for a hearing.
The arbitral tribunal will summon the parties in advance to hold hearings and meetings to examine goods and documents. The parties may intervene personally or through their representatives and the hearing must always be documented.
Videoconferencing is permissible, provided the parties agree and the arbitral tribunal grants its approval.
A copy of all documents, expert reports and other information or evidence must be given to the parties. If a party possesses evidence, the arbitral tribunal may request the party to produce it.
Arbitrators are invested with the power to request any of the parties to produce the evidence they may have in their possession.
The arbitral tribunal, or any of the parties with the prior approval of the arbitral tribunal, may request the assistance of the Andorran courts to execute any means of evidence admitted by the tribunal.
Judicial assistance may consist of:
The responsibility of assisting in evidence execution falls to the civil section of the court.
Confidentiality is one of the main principles of the arbitration procedure. However, with regard to international arbitration, the law provides that the parties must expressly agree for it to be confidential.
Pursuant to Article 52 of the AAA, unless otherwise agreed by the parties, an arbitral award must:
The arbitral tribunal may award compensatory damages, rectification and injunctions. Punitive damages are not allowed.
The AAA does not expressly provide for the possibility of recovering costs arising from the arbitration proceedings. The arbitral award must set the costs to be borne by each party, unless the parties have previously agreed otherwise.
The arbitral tribunal may order the defeated party to pay the costs of the arbitration proceedings. The costs include the fees and expenses of the arbitrators, as well as the fees and expenses of the parties' defence or representatives and any other expenses incurred in the arbitral proceedings.
Article 55 of the AAA foresees the res judicata effect of the arbitral award.
An arbitration award may only be set aside by the Civil Chamber of the High Court of Justice in the following cases.
The motion to set aside an arbitral award must be brought within two months of the date of notification of the award.
All documents certifying the adequacy of the claim must be attached to the petition as well as all means of evidence considered necessary. The decision of the Superior Court of Justice is binding and cannot be challenged on appeal.
The AAA does not expressly foresee the possibility of excluding or expanding the scope of the appeal brought against the arbitral award. Grounds for appeal are numerus clausus.
The standard of review is deferential. The Andorran courts may review any challenges set forth by law but cannot review the merits of the case.
On 19 June 2015, the Principality of Andorra ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards without any reservations.
The procedures and standards for enforcing an award are set forth in the AAA as well as in the Civil Procedure Act.
The arbitral decision is enforceable even if a petition to set it aside has been filed. However, the executed party may request the suspension of the execution as long as a bond or guarantee is offered.
Once the petition to set aside a decision is dismissed, the court will enforce the decision. At that time, the executor may request compensation for the damages caused by the delay in execution.
The arbitration award is enforceable even when a motion to set it aside has been filed. However, the award may be suspended if the party seeking to suspend the award offers sufficient security.
On many occasions, the Andorran courts have acknowledged their inability to analyse the essence of the dispute submitted to arbitration. Regarding the enforceability of an arbitration award, the court must limit its duties to those attributed by law and can only justify denial of the enforceability of an award for the reasons legally foreseen.
Therefore, the execution of an arbitral award can only be rejected when any of the conditions set forth in Article 56 of the AAA are met. This same article empowers the court to set aside ex officio an arbitral award and deny its executions when:
There is currently no legislation in Andorra that expressly provides for class actions or group arbitration.
There is no specific ethical code that is directly applicable to counsel or to the members of the arbitration tribunal.
In this sense, according to Article 39 of the AAA, any arbitration procedure shall respect the principles of equality, hearing, confidentiality and contradiction.
Additionally, arbitrators are expected to act with independence and impartiality. Failure to comply with any of these requirements may lead to the arbitrators being challenged or removed.
To date, there are no provisions or restrictions on third-party funders.
There are no specific provisions on consolidation of arbitration proceedings. However, the parties may agree to the consolidation of separate proceedings.
The scope of the award is limited only to the parties who were involved in the negotiation and the arbitration process.
As such, the consequences of the arbitration proceedings cannot be extended to third parties outside the arbitration proceedings.
Furthermore, Article 29.3 of the AAA prohibits the extension of interim measures to third parties.