Your first prize: escape from Hollywood

The San Sebastian festival is international but with a European bent, which is a relief from the industry grind. By Demetrios Matheou

SAN SEBASTIAN is one of the undiscovered gems of the film festival circuit. Each year, after the feeding frenzies of Cannes and Venice, the journalists and industry marketeers that dominate those festivals turn westwards, towards Toronto and New York - ignoring the cinematic (not to mention culinary and social) pleasures offered by this beautiful Basque coastal town on the edge of the Pyrenees.

That, as it happens, is great news for ordinary film-goers. San Sebastian is notable for the unusual preference it shows towards an enthusiastic, well-informed local audience. Moreover, the adoration heaped on the likes of Antonio Banderas - the former Almodovar stalwart making a hero's return with The Blade of Zorro - or French actress Jeanne Moreau, or directors Bernardo Bertolucci and Bigas Luna, and Banderas's Zorro co-star Anthony Hopkins - who was awarded the festival's Donastia Award for his body of work - marks San Sebastian out as an international festival with a European bent, rather than one simply in thrall to the US.

In fact, Hollywood came in for quite a bashing, even from one who could, at a stretch, be deemed one of its own. When John Malkovich, who collected the other Donastia Award, admitted in inimitably deadpan style that he was "disillusioned about the business" he was clearly alluding to the US industry.

"When I started it did sort of matter if the film was good. Even with studios," he said. "Now I think it only matters if a film makes money. If you have a movie star, you just put them in a toilet and sell the toilet."

An American movie did open the festival, but Your Friends and Neighbours, Neil LaBute's follow-up to his debut In the Company of Men, was a suitably bold reflection of festival director Diego Galan's preference for films demonstrating "a love of adventure, of the unexpected". While it misses the sheer shock value of his earlier film, LaBute's portrayal of the kind of friends you wouldn't wish on your worst enemies is another fine, unflinching glimpse at society's nastier inclinations.

Many of the subsequent competitors took equally bleak views of the world. The excellent Barrio, from Spain's Fernando Leon de Aranoa (voted best director), is La Haine transposed to the suburbs of Madrid, following three 15-year-olds whose poverty and boredom lead them towards criminal activity. A La Place De La Coeur, like Frenchman Robert Guediguian's previous film Marius et Jeanette, is set in his hometown of Marseilles, where a cross-cultural romance is threatened by the racism of local police.

Mortality and memory were the themes of two of the most impressive films. Fin Aout, Debut Septembre, by Irma Vepp director Olivier Assayas, is about the effect a man's death has on his friends and lovers. In Hirokazu Kore- Eda's Afterlife, the most visually beautiful and resonant movie in competition, the dead have a week to decide on their favourite memory, which is archived on film and sent with them to heaven.

The winner of the festival's Concha De Ora (Golden Seashell) surprised many, perhaps because it was rather jolly compared to its rivals. The title El Viento Se Llevo Lo Que (Wind with the Gone) reflects the eccentricity of the film, about an isolated village in Patagonia whose only contact with the world is through a picture house which shows movies back-to-front, unhinging its audience in the process.

Despite the lack of British films it was a good year for the Brits. Alongside Hopkins, Ian McKellen won the best actor award for his portrayal of James Whale, the creator of the first Frankenstein movies, in the American film Gods and Monsters; and a retrospective of Terry Gilliam's films, by extension, seemed partially a homage to Monty Python. The other retrospective underlined San Sebastian's ability to confound. In showing the 40-odd surviving films of the Japanese director Mikio Naruse, it provided many with their first glimpse of one of the masters of Japanese cinema, whose modernity, liberalism and sublime story-telling rivalled almost anything else on display.

Next year San Sebastian opens a new cinema and conference building, by the architect Rafael Moneo, which will match the Palais du Festival in Cannes for size and far exceed it in style. Perhaps then Donastia will get the attention it deserves.