A Font e Hijos 2005, S.L. v. CaixaBank, S.A.

At a glance

Parties

A. Font e Hijos 2005, S.L. v. CaixaBank, S.A.

Case no.

STSJ CAT 5729/2019; Judgment No. 38/2019; Arbitrajes 15/2018 (annulment); arbitral file No. 1883/14

Court

Tribunal Superior de Justicia de Cataluña, Civil and Criminal Chamber, Section 1 (Barcelona)

Underlying award(s)

Award of 18 September 2018 by sole arbitrator Tomás Gui Mori, Tribunal Arbitral de Barcelona (TAB)

Forum and rules

Annulment action under Article 41.1(f) of the Spanish Arbitration Act 60/2003

Treaty

Arbitration clause in interest rate swap contracts

Court

José Francisco Valls Gombau (President), María Eugènia Alegret Burgués (reporting judge), Jordi Seguí Puntas

Sector

Banking; financial derivatives (interest rate swaps)

Outcome

Award annulled for serious defects of reasoning amounting to a breach of public policy; no order on costs; no appeal available.

Amount

The four swap contracts together exceeded EUR 4 million.

The dispute

A. Font e Hijos 2005, S.L. signed four interest rate swap contracts with CaixaBank on 23 July 2008, together worth more than EUR 4 million. It asked for the contracts to be declared void on four alternative grounds: lack of consent, mistake vitiating consent, breach of mandatory rules, and lack of cause. In the further alternative it claimed damages for how the bank had marketed the product. It first sued in the Barcelona courts on 17 December 2012. Those courts declined jurisdiction because of the arbitration agreement, so it filed the same claims with the Tribunal Arbitral de Barcelona on 25 July 2014. The arbitrator dismissed every claim as time-barred, by prescription or caducidad (a time limit that, unlike prescription, cannot be interrupted), and also rejected them on the merits. The company then sought annulment on public policy grounds. CaixaBank argued that the application did not properly attack the award's ratio decidendi, which was the finding that the claims were time-barred.

Key holdings

1. The annulment review is limited to the award's ratio decidendi, which was the finding that the claims were time-barred by prescription and caducidad. The arbitrator's further reasoning on the merits was unnecessary. Disagreement with Supreme Court case law is not by itself a ground for annulment. FJ 3, ¶¶ 1–3
2. Serious defects in an award's reasoning fall within the public policy ground of Article 41.1(f) of the Arbitration Act. This covers reasoning that is absent, only apparent or arbitrary, and reasoning based on an arbitrary choice of the applicable law. The court must review the coherence and sufficiency of the reasoning, but there is no right to a correct decision. FJ 4, ¶¶ 3–7
3. The arbitrator's reasoning on prescription was insufficient and arbitrary. He applied prescription to all four nullity claims, including the absolute-nullity claims for which CaixaBank had raised no time-bar. He did not explain why the time limits he cited (Commercial Code art. 945, Catalan Civil Code art. 121-21(a) and (d), Civil Code arts. 1966.3 and 1968.2) applied. He dismissed with a bare "no es de recibo" both the claimant's argument that time ran from the swaps' maturity in December 2011 and its argument that the 2012 court claim interrupted prescription, even though Catalan Civil Code art. 121-11(a) provides for such interruption. FJ 5, ¶ 1
4. For the contractual damages claim, the arbitrator applied caducidad without explaining why, when CaixaBank had pleaded prescription. He also identified neither the legal rule nor the time limit he applied. Prescription and caducidad are not interchangeable: they differ in their time limits, in when time starts to run, and in whether time can be interrupted. FJ 5, ¶¶ 2, 5
5. The arbitrator did not reasonably depart from Supreme Court Judgment 89/2018 of 19 February 2018. That judgment holds that time under Civil Code art. 1301 runs from the swap's maturity, not from the negative settlements. The arbitrator claimed to follow it while misrepresenting its content. The resulting "mere arbitral voluntarism" breached public policy, and the award was annulled. FJ 5, ¶¶ 3–4, 6
6. No order on costs. The defects lay in the award itself, and the bank had reasonably defended its validity (art. 394 of the Civil Procedure Act). FJ 6

Procedural history

1. 23 July 2008The four swap contracts are signed.
2. 17 December 2012The claimant sues in the Barcelona Courts of First Instance. The court upholds the bank's objection based on the arbitration agreement (order of 6 May 2013), and the Audiencia Provincial confirms it (order of 7 February 2014).
3. 25 July 2014The same claims are filed with the Tribunal Arbitral de Barcelona.
4. 18 September 2018Award: all claims dismissed as time-barred and, in addition, on the merits.
5. 29 November 2018Annulment application filed. It is admitted on 30 November 2018, and CaixaBank answers on 5 February 2019.
6. 23 May 2019The High Court of Justice of Catalonia annuls the award, with no order on costs and no appeal available.

Tribunal, counsel and experts

Decided by

• José Francisco Valls Gombau Judge, Tribunal Superior de Justicia de Cataluña (presiding judge)
• María Eugenia Alegret Burgués Judge, Tribunal Superior de Justicia de Cataluña (reporting judge)
• Jordi Seguí Puntas Judge, Tribunal Superior de Justicia de Cataluña

For the claimant

Pablo Camprubí Garrido · Anna Camps Herreros

For the respondent

Francesc Torres Vallespí · Ramon Feixó Fernández-Vega

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Keywords

• annulment
• public policy
• duty to state reasons
• defective reasoning
• prescription
• caducidad
• limitation periods
• interest rate swaps
• CaixaBank
• Tribunal Arbitral de Barcelona
• Spanish Arbitration Act 60/2003
• Article 41.1(f)
• Catalan Civil Code
• Article 1301 Civil Code
• STS 89/2018
• mistake in consent
• banking

Summary generated with AI from the published documents — refer to the award for the authoritative text.