This country-specific Q&A provides an overview of Litigation in Spain.
It will cover methods of resolving disputes, details of the process and the proceedings, the court and their jurisdiction, costs and appeals and opinions on future developments.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-dispute-resolution/
What are the main methods of resolving commercial disputes?
Litigation is a very common method of resolving commercial disputes. Alternative dispute resolution methods are also provided for in the Spanish Civil Procedure Act and have been gaining popularity in recent years. These mainly consist of mediation and arbitration.
What are the main procedural rules governing commercial litigation?
For procedure in litigation, the main Spanish laws are the Spanish Civil Procedure Act (or Ley 1/2000, de Enjuiciamiento Civil) and the Basic Law on the Judicial Power (or Ley Orgánica 6/1985, del Poder Judicial).
When it comes to mediation, the Spanish Civil and Commercial Mediation Law applies (or Ley 5/2012, de Mediación en asuntos civiles y mercantiles).
Arbitration is essentially governed by the Spanish Arbitration Law (or Ley 60/2003, de Arbitraje).
There are, however, a number of other laws on commercial litigation. For instance, the Law on International Judicial Cooperation in Civil Matters (or Ley 29/2015, de Cooperación Civil Internacional en materia Civil) or the Voluntary Jurisdiction Law (or Ley 15/2015, de Jurisdicción Voluntaria).
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Since the creation of Commercial Courts (or Juzgados de lo Mercantil) in 2003, these courts have exclusive jurisdiction over a list of commercial matters set forth in the Basic Law on the Judicial Power including, amongst others, bankruptcy, unfair competition, antitrust, industrial property and intellectual property.
However, despite their name, Commercial Courts do not hear all commercial claims. Commercial matters not included in the abovementioned list are heard by First Instance Courts (or Juzgados de Primera Instancia), which have general jurisdiction over civil and commercial claims not attributable by law to other jurisdictional bodies.
The structure and organisation of First Instance Courts and Commercial Courts is similar. Each local court has one Judge or Magistrate and one Court Clerk (or Letrado de la Administración).
First Instance Courts are seated in the capital of the corresponding judicial district (or partido judicial), whereas Commercial Courts are seated in the capitals of the Spanish provinces. Smaller or less populated provinces may sometimes not have their own Commercial Court. In those cases, one of the First Instance Courts located in the capital of the province is empowered to examine the commercial matters which fall under the scope of Commercial Courts.
First Instance and Commercial courts’ resolutions may be appealed to the Provincial Court (or Audiencia Provincial), which also receives all commercial appeals in the province, with the final appeal court being the Civil Chamber of the Supreme Court.
How long does it typically take from commencing proceedings to get to trial?
Timing may vary greatly from one court to another, especially depending on the workload. In Barcelona, for instance, trial usually takes place between 6 and 12 months after the claim is filed.
The average period of time taken by a commercial court to issue a decision (which may be subject to provisional enforcement even if appealed) is about a year and 14 months.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Hearings are generally held in public. Nevertheless, they may be held in a closed session if the court, having previously heard the parties, finds it necessary for the protection of public order, national security, the interests of minors, the privacy of the parties, or for the protection of other rights and liberties; or when the court considers that holding the hearing publicly might not be in the interests of justice.
When it comes both to documents and the status of court proceedings, they are generally available to any person who can prove that they have a legitimate interest in them, always at their own expense, and as long as they have not been declared restricted or confidential. The Judge will examine if each person has a legitimate interest.
What, if any, are the relevant limitation periods?
The statute of limitations under Spanish law establishes a wide range of periods, to be found not only in the Spanish Civil Code but also in a number of other laws (eg, the Spanish Patents Law).
Note that there is a general 5-year limitation for contractual and 1-year limitation for non-contractual liability.
It should also be highlighted that some of Spain’s northernmost autonomous regions have historical civil regulations of their own (ie Aragón, the Balearic Islands, the Basque Country, Catalonia, Galicia, and Navarra), so limitation periods may vary in those regions.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
As a general rule, claims can be filed without any previous action required. Nevertheless, it may be convenient to notify or, at least, request that the other party fulfil or comply with their obligation as otherwise, if a claim is filed and the defendant acquiesces to it, the claimant will not have any right to recover the costs of the litigation as the proceedings could have been avoided.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial proceedings normally begins with the filing of a claim. Interim mesures (or medidas cautelares) may be adopted before the claim is filed and some other actions can also be carried out before such filing, ie preliminary proceedings (or diligencias preliminares) and conciliation.
Service is necessary and is done either by civil servants of the court or by a party-appointed court representative (or procurador) whenever the party filing a claim chooses that option.
How does the court determine whether it has jurisdiction over a claim?
The court determines whether it has jurisdiction over a claim analysing two elements: whether it has objective jurisdiction (ie jurisdiction over the dispute, there is a list of matters the hearing of which is exclusively attributed to commercial courts, including, amongst others, bankruptcy, unfair competition, antitrust, industrial property and intellectual property) and territorial jurisdiction (ie geographic jurisdiction).
Pursuant to the Spanish Civil Procedure Act, defendants can claim that the court before which the lawsuit has been filed lacks authority to hear the case by filing a motion to dismiss for lack of jurisdiction (or declinatoria). The motion must be submitted within the first ten working days within the time limit of twenty working days to respond to the lawsuit from the service of the lawsuit. Once the motion is filed, the time limit to respond to the claim and the main proceedings are automatically suspended until this motion is ruled on.
How does the court determine what law will apply to the claims?
Commercial courts respect the choice of law agreed by the parties, except in those matters mandatory subject to Spanish law.
When it comes to disputes in which there is an international element involved, Private International Law should be taken into account, since the EU has enacted various Directives and Regulations, namely Rome I and Rome II, as well as some national rules, mainly the Spanish Civil Code.
By virtue of the iura novit curia principle, the court is obliged to know national laws. This principle, however, does not apply to foreign law. Therefore, if the parties have stipulated that foreign law will be applied, they will have to prove that the rules they are basing their claims upon exist, that they are in force, and that their interpretation is the one they are claiming it is, unless both parties agree on these premises.
In what circumstances, if any, can claims be disposed of without a full trial?
Litigants are empowered to dispose of the matter at issue in the proceedings at any given time, unless doing so is prohibited or restricted for reasons of general interest or to benefit a third party.
Both parties may agree to submit themselves to mediation or arbitration, thus disposing of the court proceedings, or reach agreements in court or out-of-court settlement procedures.
The claimant may waive its action or right, or abandon the claim. The defendant may acquiesce to or accept all of the plaintiff’s claims.
What, if any, are the main types of interim remedies available?
The main types of interim remedies are detailed in the Spanish Civil Procedure Act, amongst others:
- Provisional attachment
- Court control or administration to secure profitable properties in litigation
- Deposit of movable assets
- Inventory of the defendant’s assets
- Precautionary record of the claim in the relevant Land Registry and other public registries
- Court resolution ordering the temporary suspension of an act or activity
- Stay of resolutions adopted either at the company’s shareholders’ meeting or by its board of directors
The list contained in the Spanish Civil Procedure Act is not an exhaustive list and, therefore, other interim measures can be adopted as long as they comply with the legal requirements and are useful for securing the future ruling. Moreover, specific laws, such as the Spanish Patents Law, include other specific interim measures.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
In comparison with other systems such as the US, Spanish legal proceedings are quite front-loaded.
Written documents (including, amongst others, documents or opinions proving the value of the subject of the dispute, reports concerning relevant facts and expert opinions which the parties base their claims) must be submitted with the claim or statement of defence. Exceptionally, if the parties do not have the documents when submitting the claim or statement of defence, they may designate the file, protocol or place where they can be found. The claimant, if admitted by the relevant court, may also submit documents the interest or relevance of which has become evident as a result of the allegations made in the response during the pre-hearing.
Likewise, and also provided the court admits their submission, other documents may be submitted at a later stage if they are produced subsequent to the filing of the statements, or they were unknown or unavailable at the time of the filing.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
There is no general disclosure requirement under Spanish law.
However, in some limited circumstances, a party can request the disclosure of evidence provided that the requested documents are relevant and material to the case and presumed to be in the counterparty’s possession. The party requesting the disclosure must include a copy of the document requested or, if that is not possible, a precise description of it.
Recently, a new and specific regulation on access to the sources of evidence applicable only to the procedures of claims for damages derived from antitrust infringements has been incorporated to the Spanish Civil Procedure Act by the amendment introduced transposing into Spanish law Directive 2014/104/EU on claims for damages arising from antitrust infringements.
Likewise, if some requirements are met, privileged information the publicity of which could harm the company, or relating to intellectual property can be redacted from documents, so that the other party can defend itself and this information can still be kept private.
According to the Spanish Lawyers’ Code of Conduct and Ethics (or Código Deontológico de la Abogacía Española), as a general rule attorney - client communications are privileged as well as communications between counsels.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Witness evidence is regulated in the Spanish Civil Procedure Act. Witnesses must give oral evidence during the trial, individually, under oath, and without being able to hear other witnesses’ statements. Due to illness or other relevant circumstances, the court may sometimes allow witnesses to give testimony at their domicile, in the presence of court officials, the parties and their lawyers.
If the witness is a legal person or public entity, however, it may be allowed to give a written response.
Cross-examination is also regulated in the Spanish Civil Procedure Act. Once the party that proposed the witness has asked all their questions, other parties may pose questions of their own. The court will reject irrelevant or useless questions. The court may also pose questions to the witness to obtain clarifications and additional information.
Depositions are, in principle, not permitted.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted can be either appointed by the court or by the parties. Experts must have the relevant knowledge to assess the contested facts or circumstances (ie they must hold an official qualification in the subject or must be well acquainted with the subject concerned), and their opinion must be issued under oath. Expert opinions must be formulated in writing and be accompanied by other materials to sustain said opinions, regardless of the possibility of having those experts appear at the trial or hearing if it is requested by any of the parties.
Expert evidence must generally be submitted when filing the claim or statement of defence. If that is not possible, parties must indicate their intention to use expert evidence when submitting either of those documents.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Both interim and final decisions can generally be challenged or appealed.
Interim court decisions and orders can be challenged for reconsideration before the same Commercial Court within five days after the notice of the decision. Orders of the Court Clerk (or Letrado de la Administración) can also be challenged for reversal before the Court Clerk themselves within the time limit of five working days.
Final decisions issued by Commercial Courts can be appealed within the time limit of twenty working days after the notice of such decision. The Appeal Court (or Audiencia Provincial) has the authority to decide on the appeal and, consequently, uphold or modify the Commercial Court judgment. The Appeal Court decision can also be challenged before the Supreme Court within the time limit of twenty working days after the notice of such decision by means of extraordinary appeals (namely cassation appeals and extraordinary appeals due to infringement of procedural rules).
There are also other extraordinary remedies such as, for instance, extraordinary appeals in the interest of law.
What are the rules governing enforcement of foreign judgments?
The recognition and enforcement of foreign judgments is first subject to EU regulations (mainly, the Recast Brussels Regulation). Moreover, other bilateral or multilateral treaties, the Spanish International Cooperation Law (or Ley 29/2015, de Cooperación Civil Internacional en materia Civil) and the Spanisch Civil Procedure Act have to be examined.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Costs are generally borne by the unsuccessful party unless the court considers that the case posed serious de iure or de facto issues. In the event of partial success, each party will bear its own costs.
Cost of litigation that can be recovered include, amongst others, (i) the fees of attorneys and court representatives; (ii) expert fees; and (iii) specific expenses incurred during the proceedings, such as witnesses’ travel expenses. If the dispute has no monetary value or its value is reduced, the costs recovered may only partially cover the parties’ expenses since the fees of attorneys and court representatives payable are calculated with the guidelines set by the relevant Bar Association and according to the amount under dispute.
What, if any, are the collective redress (e.g. class action) mechanisms?
Spain has a judicial collective redress mechanism called ‘collective action’. It is an opt-out system in which procedural standing is not attributed to a member of the class but to certain consumer associations or to the public prosecutor. Collective actions can involve either a determinate or indeterminate number of parties.
However, it would be misleading to assume that this system is in any way similar to the US collective redress mechanisms, as there are no strict requisites nor is there a class certification process.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
The participation of third parties in ongoing proceedings is expressly regulated in the Spanish Civil Procedure Act. While proceedings remain pending, anyone who can prove a direct and legitimate interest in the case may be admitted as a claimant or defendant, especially when it comes to consumer proceedings. A request to join the ongoing proceedings does not suspend them in any way and, when admitted, there will be no retroactive action.
There is also a specific mechanism by virtue of which one of the parties may force a third party to intervene in the proceedings provided such intervention is expressly authorised an regulated under Spanish law. In this particular case, the request does suspend ongoing proceedings until the third party responds or the time limit has passed.
The joinder of ongoing proceedings is also regulated in the Spanish Civil Procedure Act. Proceedings can generally be consolidated on the grounds that the judgment to be issued in one of the proceedings may undermine the other, or that the matters at issue are connected and handling them separately may lead to contradictory decisions.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Third-party funding is not covered by the Spanish Civil Procedure Act, nor by laws governing alternative dispute resolution. As it is not regulated at all, it is not forbidden either, and it is, principle, possible for a third party to fund a proceeding although there is no tradition.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
The main disadvantage of commercial litigation in Spain might be the strictness of the procedural rules governing court litigation (eg the general obligation to submit all the evidence with the claim or the statement of defence). Complex causes have recently highlighted the need to simplify the procedural rules and the latest amendments of the Spanish Civil Procedure Act already went in that direction, although yet far from having a proper case management. In any event, this can easily be solved by resorting to alternative dispute resolution methods, namely mediation and arbitration.
The most remarkable advantage is the average high quality of the resolutions issued by Spanish First Instance and Commercial judges and magistrates as well as their efficiency and speed in resolving cases.
What, in your opinion, is the most likely growth area for disputes for the next five years?
Following recent events, the most likely growth area in Spain is consumer litigation, mainly regarding financial and securities disputes. Other potential growth areas include product liability, tort law, private enforcement or damage claims and very notably competition law.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
Spanish litigation has been greatly affected by technological advances, mainly with the adoption of the LEXNET (ie, a digital court system for document submission and notifications). Its use will probably encompass more areas.
There are already some ongoing projects regarding technology and litigation, such as a very recent proposal to serve claims through e-mail.