Doing business in Spain

What are SLJ Abogados’ areas of expertise and the typology of matters and clients?

SLJ Abogados is an international litigation firm that specialises in resolving disputes, whether through litigation or arbitration. We select a restricted number of cases where our involvement can truly have an impact. We have extensive expertise in various areas, including civil and commercial litigation, white collar, bankruptcy matters, antitrust damages, etc. We also help in foreign proceedings to Spanish clients that have disputes in other jurisdictions.

Our clients are mainly large organisations in the financial, hotel, IT, and real estate etc, sectors that need an independent firm to resolve a dispute in Spain. Most of our cases have an international component and we regularly work with other international firms.

How does Spain’s legal system handle contract disputes, and what should we be aware of when entering contracts with Spanish parties?

Spain’s legal system operates under civil law, which is code-based and mainly guided by written statutes and laws. In the case of contract disputes, parties generally have the option to resolve their issues through mediation, arbitration, or litigation. If parties opt for litigation, the matter will be taken to court, where the dispute will be resolved according to the principles and statutes stipulated in the Spanish Civil Code, along with other relevant laws and European Union regulations.

Key aspects to be aware of when entering contracts in Spain:

  1. Governing law: while it’s possible to stipulate a choice of law in international contracts, for contracts between parties situated within Spain, Spanish law is typically the governing law.
  2. Notarisation: some contracts may require notarisation to be legally binding.
  3. Force majeure: this clause may have particular interpretations in Spanish law. Make sure to explicitly detail the conditions under which this clause can be invoked.
  4. Termination: the conditions under which a contract can be terminated should be outlined clearly. Spanish law generally allows for contract termination in the case of a breach, among other circumstances.
  5. Liability: limitations on liability should be clearly spelled out, keeping in mind that Spanish law may have certain restrictions on limiting liability for willful misconduct or gross negligence.
  6. Dispute resolution: the contract should specify the mechanism for resolving disputes (eg arbitration, court litigation), and in which jurisdiction the dispute will be resolved.
  7. Data protection: be aware of the obligations imposed by the EU’s General Data Protection Regulation (GDPR) if the contract involves personal data.
  8. Consumer protection: if your contract is with consumers, be aware that Spanish consumer protection laws are quite stringent and can supersede contract terms that are unfavourable to consumers.

In case of any legal disputes or litigation, what is the typical legal process in Spain, and what are the alternatives to litigation, such as arbitration or mediation?

Litigation in Spain follows a structured process that encompasses several stages: the filing of the claim, the defense, the pre-hearing, and, if necessary, a trial. This culminates in the issuance of a court judgment. Parties have the option to appeal to a higher territorial court, and a final appeal to the Supreme Court is also possible. However, legal proceedings in Spain can be protracted, often taking several years to reach a resolution, which can be a source of frustration for the parties involved.

With regards to ADR, while the practice of dispute resolution through mediation is not as prevalent in Spain as in other countries, there is a growing trend toward alternative means of resolution. Increasingly, parties are opting for negotiation through their respective legal representatives before resorting to judicial intervention. Mediation has gained popularity in Spain as an effective and less costly way of resolving disputes compared to traditional court proceedings. The boost towards mediation has been reflected in Spanish legislation in the creation of mediation bodies in different regions of the country. In addition, Spanish courts also promote mediation as an option for resolving disputes before resorting to formal litigation.

In 2020, a new arbitration institution was created in Spain, CIAM, dedicated exclusively to administering international arbitrations and aiming to make Spain one of the main hubs for international arbitration. The court has been gaining prestige and increasing the number of arbitrations it handles.

Have measures been taken in Spain to streamline the processing of proceedings and to incorporate new technologies, including artificial intelligence?

Yes, to address these challenges, the Spanish government introduced a bill aimed at enhancing procedural efficiency within the public justice service. However, the bill’s progress has been stalled due to the current political climate, particularly following the elections on 23 July 2023.Once a new government is in place, the legislative process for this bill will recommence. The draft law encourages the use of ADR mechanisms in civil cases. To be considered admissible, a claim must have previously undergone some form of ADR – be it mediation, conciliation, or a neutral expert opinion. The goal is to shift from a culture of litigation and judicial conflict resolution to one that prioritises negotiation and agreement, thereby reducing the overall volume of cases in the Spanish courts.

With regards to the incorporation of new technologies, Spain has implemented significant measures to promote the development and adoption of emerging technologies, including artificial intelligence, in various fields. At present, the justice system is involved in a transformation process towards digitisation, with the electronic case file.

In which area of law do you expect litigation to grow in the coming years?

We expect an increase of litigation in many areas but specially in the areas of technology and cybersecurity, as well as antitrust damages claims.

The number of antitrust-related litigation cases in Spain is expected to increase for several reasons:

  • Competition authorities in Spain, such as the Comisión Nacional de los Mercados y la Competencia (CNMC), have increased supervision and enforcement of antitrust and competition laws. This has led to increased detection of anti-competitive practices and the initiation of investigations and legal proceedings. For instance, the milk and truck cartels.
  • Last June 2023, the Supreme Court handed down 15 rulings in the truck cartel case that clarified many legal issues that have arisen in these types of cases. Moreover, the Supreme Court’s rulings are very favourable to plaintiffs. There is a strong interest from large litigation funds to enter Spain and finance these types of cases.
  • The European Damages Directive (2014/104) has been implemented by Royal Decree 9/2017 in Spain and establishes powerful new tools for plaintiffs, such as the presumption of damages, access to the defendant’s sources of evidence, etc.

We therefore anticipate an explosion of antitrust damages claims, which is already occurring.