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Following a 2020 defined by the effects of COVID-19, 2021 is primed to be a year of recovery and hope. The scope of business activity will be affected by significant developments: new methods, new challenges, new problems, new rules and new approaches. We at Uría Menéndez would like to share our expectations for 2021 regarding the potential focal points of business-related judicial and arbitration practice in the Iberian market.
1. Effects on contracts of measures resulting from COVID-19: force majeure and rebus sic stantibus
One of the key concerns for legal practitioners since the first measures adopted by the public authorities in relation to COVID-19 has been the potential effect of those measures on existing contracts. This has brought the concepts of force majeure and the rebus sic stantibus clause to the fore of analysis. Since the introduction of these measures, various court rulings in Spain have applied these concepts to certain types of contract in which the measures may have a significant impact on the performance of and balance between the parties in agreements relating to areas such as leases, supply, financing, works and insurance policies. Disputes are expected to come before the courts and arbitral tribunals concerning this issue during the coming year, and there may be new rulings that contribute to shaping the application of the traditional concepts to the singular situation with which we are faced.
In Portugal, pursuant to specific legislation approved in the context of COVID-19, several extraordinary mechanisms have been approved that to an extent apply these concepts to certain types of contracts. For instance, moratoriums have been applied to financing and lease agreements.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 2. Collective actions
Companies that supply goods and services to a range of clients face collective actions seeking injunctions against allegedly unfair practices, as well as multi-case claims, both in the form of groups of individual actions joined in a single proceeding and via the simultaneous filing of individual claims before various courts.
Spain announced this year the parliamentary processing of the Measures for Judicial Efficiency Bill (Proyecto de Ley de Medidas de Eficiencia Judicial), which includes provisions to regulate “witness lawsuits”, initially made on a limited basis for trying individual actions regarding general contractual terms and conditions.
Additionally, both Spain and Portugal are anticipating the transposition of the recently approved Representative Actions Directive, pursuant to which the European Union is seeking to organise recourse to collective actions for damages or restitution (which the Directive describes as redress actions). Depending on how the legislation addresses issues such as the extension of standing to file collective redress actions or the financing of litigation, this regulation could entail substantial changes to the practice of litigation in Spain and Portugal.
Below are links to some of the publications by Uría Menéndez in this area.
- “Directiva (UE) 2020/1828 del Parlamento Europeo y el Consejo relativa a las acciones de representación para la protección de los intereses colectivos de los consumidores” Uría Menéndez, December 2020
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“Algunas pautas para regular adecuadamente las acciones colectivas” ><
Alex Ferreres Comella. Actualidad Jurídica Uría Menéndez, no. 45, 2017
- “Las limitaciones del sistema de tutela colectiva de intereses individuales homogéneos dispuesto en nuestra Ley de Enjuiciamiento Civil. Una propuesta inicial de sistemas alternativos de resolución de conflictos”
Alex Ferreres Comella, Álvaro López de Argumedo. Actualidad Jurídica Uría Menéndez, Especial reformas estructurales (Structural Reform Special), no. extraordinario, 2012
- “Las acciones de clase (class actions) en la Ley de Enjuiciamiento Civil”
Alex Ferreres Comella. Actualidad Jurídica Uría Menéndez, no. 11, 2005
- “Portugal: The Class Actions Law Review”
Nuno Salazar Casanova, Madalena Afra Rosa. The Class Actions Law Review, 4th edition, Camilla Sanger (Editor), London, Law Business Research, 2020
^ Back to top 3. New arbitration rules
The world’s leading international courts of arbitration (including the ICC and the LCIA) have amended their rules to incorporate updates mainly intended to regulate remote hearings (the use of which has significantly grown during the pandemic) and to increase procedural transparency and efficiency in arbitration proceedings. Many of these institutions have also published protocols for these remote hearings (the protocol prepared by Uría Menéndez can be accessed at following link). At the beginning of 2021, the International Bar Association (IBA) will publish a new version of its rules on the taking of evidence in international arbitration (which will update the last version from 2010), which will ensure that the taking of evidence in international arbitration continues to take place in a standardised and predictable manner. All of this will undoubtedly foster an improvement in the efficiency of arbitration proceedings and will probably boost their use as a preferred international dispute resolution mechanism and as an essential infrastructure for international investment and trade.
In Spain, the Madrid International Arbitration Center (MIAC) – recently created to integrate the international practice of the Madrid Court of Arbitration, the Civil and Commercial Court of Arbitration of Madrid and the Spanish Court of Arbitration, and which the Court of Arbitration of the Madrid Bar Association has joined as a strategic partner – represents a new option for administering international arbitrations in accordance with current best practices in the arbitration community.
In order to encourage the development of arbitration in Portugal, the Commercial Arbitration Centre of the Portuguese Chamber of Commerce and Industry is proposing the adoption of five new sets of rules (arbitration rules, business arbitration rules, administrative arbitration rules, mediation rules and dispute board rules), the public consultation period for which ended on 2 December 2020.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 4. Mediation and other alternative dispute resolution mechanisms
Alternative dispute resolution mechanisms including arbitration and mediation will be increasingly widely used, as a result of circumstances such as the excessive workload that our courts face (particularly following the pandemic) and the backing that governments have decided to give these dispute resolution procedures.
In Spain, the Procedural Efficiency Measures in the Public Service of Justice Bill (Anteproyecto de Ley de Medidas de Eficiencia Procesal del Servicio Público de Justicia), which will undergo the legislative process during 2021, establishes an obligation to engage in mediation (or, as the bill itself describes them, to other adequate dispute resolution mechanisms, such as conciliation, negotiation or neutral-expert assessment) before the commencement of court proceedings. This obligation is being introduced, moreover, as a requirement for admissibility. There is not yet a similar general bill in Portugal, although the legislator has consistently encouraged alternative dispute resolution mechanisms throughout the last decade and in 2019 made consumer conflicts relating to sums not exceeding EUR 5,000 subject to mandatory mediation or arbitration, where the consumer chooses this option.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 5. Internal investigations
In the context of financial crime, in recent years – particularly in 2020 – internal investigations have been introduced and expanded as tools for companies to defend themselves against potential criminal risks. It is foreseeable that this upward trend will continue in the coming years, in which companies with activities in Spain and Portugal can be expected to maintain these investigations and related procedures (such as forensic processes and e-Discovery technologies). One reason for expecting the consolidation of this trend is that numerous companies have now adopted crime prevention templates as provided for in article 31 bis of the Spanish Criminal Code; these companies normally envisage conducting internal investigations in certain circumstances.
In 2021, we will also have the opportunity to observe the reactions of Spain’s public prosecutor and criminal courts to significant internal investigations the outcomes of which have started to be disclosed in the respective criminal proceedings. It will also be a year for monitoring the potential reform of the Spanish Criminal Procedure Law and its possible impact on the development of internal investigations (for example, as a means of cooperation or a path toward reaching an agreement that avoids or reduces the punishment to be imposed on the corresponding entity). Although it seems that this reform will be subject to a vacatio legis period of several years, it is highly likely that it will influence actions by authorities even before coming into force.
Below are links to some of the publications by Uría Menéndez in this area.
- “La protección del whistleblower tras la Directiva (UE) 2019/1937. Análisis del nuevo marco jurídico desde la perspectiva del Derecho laboral, público, penal y de protección de datos”
Enrique Rodríguez Celada, David Martínez Saldaña, Laia Reyes Rico, Javier Abril Martínez. Actualidad Jurídica Uría Menéndez, no. 53, 2019
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“Spain. The e-Discovery and Information Governance Law Review”
Enrique Rodríguez Celada, Reyes Bermejo Bosch, Sara Sanz Castillo. The e-Discovery and Information Governance Law Review, 2nd edition, London, Law Business Research, 2020
- “¿Qué han dicho nuestros tribunales sobre la responsabilidad penal de empresa?”
Patricia Leandro Vieira da Costa. Actualidad Jurídica Uría Menéndez, no. 48, 2018
- “The International Investigations Review. Portugal”
Fernando Aguilar de Carvalho, Adriano Squilacce. The International Investigations Review, 7th edition, chapter 20, Ed. Nicolas Bourtin (Editor), London, Law Business Research, 2017
^ Back to top 6. Remote hearings
The measures adopted by authorities as a result of COVID-19 have produced a major breakthrough in the use of electronic means to hold court and arbitration hearings. Various arbitration institutions have adjusted their rules to encourage and regulate these kinds of proceedings.
In the judicial context in Spain, Royal Decree Law 16/2020 of 20 April established this system as the preferred mechanism. This has been extended by Law 3/2020 of 18 September on procedural and organisational measures to address COVID-19 within the justice system.
In Portugal, Law 1-A/2020 of 19 March provides for court hearings to be held by electronic means when they cannot be held in person but it is possible and appropriate to hold them remotely. However, the Portuguese regulation establishes that statements from defendants and witnesses are always to be made before the court unless agreed otherwise by the parties.
Although the implementation of remote hearings is not yet widespread owing to the need for technical resources that guarantee the full effectiveness of the parties’ rights, this implementation is undoubtedly far broader now than it was only a few months ago. We will see this approach to court and arbitration hearings becoming increasingly common in 2021 and beyond, requiring judges, arbitrators, lawyers and parties to make adjustments to their participation in proceedings.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 7. Insolvency law
2021 will undoubtedly be a critical year in the context of the business downturn. It is commonly known that Spain has established that debtors in situations of insolvency will not be obliged to declare insolvency until 14 March 2021, while this obligation has been suspended in Portugal and no date has been set for lifting the suspension and reinstating the obligation. This means that many companies might be operating on an insolvent basis without having filed for the opening of insolvency proceedings. A very significant increase in the number of insolvency declarations is thus expected in 2021, with the resulting impact on the time taken to process matters by the commercial courts in Spain and Portugal. Added to this in Spain are problems involving the interpretation and application of regulatory amendments introduced by the restated text of the Insolvency Law, which came into force as from 1 September 2020. The issues affect aspects as important as pre-insolvency law, the disposal of production units in insolvency and the classification phase of insolvency proceedings. Significant legislative amendments to pre-insolvency and insolvency law are expected in Portugal as a result of the transposition of Directive (EU) 2019/1023 of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 8. Corporate law developments
Highly important emergency regulations have been enacted during the health crisis in relation to the operation of companies in Spain. The main developments affect the time periods and form of the call to and holding of meetings of decision-making bodies, preparing annual accounts, allocating profits and losses and the liability of directors for company debts. In particular, provisions regarding the exercise of the right of withdrawal due to non-distribution of dividends and liability for company debts related to the existence of grounds for dissolution during the first state of emergency and to grounds for dissolution based on losses occurring in 2020 and 2021 may be focal points for conflict at companies struggling as a result of the pandemic’s effects.
By contrast, there have not been significant changes to the Portuguese corporate law framework, except for the emergency regulation allowing meetings of corporate bodies to be held by electronic means, even (apparently) when prohibited under the company’s articles of association.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 9. Cybersecurity conflicts
Measures restricting mobility have accelerated the growth in use of information technology tools across all commercial and professional activities. Added to the digital transformation that has been underway for some time, developments such as the spread of remote working have meant that electronic exchanges of information are now dominant across the majority of economic sectors. This situation has simultaneously led to an increased risk of security attacks on the tools used to exchange and store information, with potentially devastating effects in terms not only of enterprise but also of corporate reputation and the protection of fundamental rights. At the same time as systems of attack and defence have become increasingly sophisticated from a technical point of view, the law has also been driven to respond to this situation. Issues such as internal prevention and reaction plans, the prosecution of cyberattacks as a criminal offence, insurance coverage and the preservation of information are now essential parts of corporate legal strategy and will give rise to an increasing number of judicial and arbitration disputes and criminal proceedings.
^ Back to top 10. Third-party funding
The consolidation and growth of third-party funding will continue in 2021 for both domestic litigation and international arbitration, particularly into fields where it has not yet reached a significant proportion of the total number of disputes. The causes that may drive this growth include a lack of liquidity of potential claimants owing to the economic and health crises, new opportunities for mass litigation, improvements in risk analysis techniques and potential profitability in funding litigation or a group of litigation actions, as well as some companies seeking increased financial efficiency. However, we also anticipate increased regulation of this practice in both the national and international contexts. The areas that are already being regulated or which we expect to be regulated in the future include an obligation to disclose the existence and identity of third-party funders, attorneys’ professional conduct duties with respect to their clients and the arbitration tribunal, and measures to safeguard recovery of procedural costs by the non-funded party.
Below are links to some of the publications by Uría Menéndez in this area.
^ Back to top 11. Damages arising from infringements of competition law
2020 was an intense year in terms of litigation relating to damages arising from infringements of competition law. Follow-on actions (which for the time being relate to few issues, but have resulted in numerous judicial proceedings) have continued to grow and have gradually reached the Spanish national high courts, which have started to issue their first rulings. Claimants have so far filed these actions in a highly atomised and fragmented manner that may have been inherited from the past and is more suited to other matters and experiences. Together with the impact of the measures adopted to address the COVID-19 crisis and the cessation of judicial activity between March and June 2020, this realisation has raised awareness of the urgency of targeting reforms to develop more of a case-management culture; that is, increased flexibility and better dialogue in the management, organisation and subsequent oversight of proceedings. Progress will definitely be seen in 2021 in terms of judicial practices in this area, which will hopefully be adequately supported by the adoption of new procedural measures. The Court of Justice of the European Union is also expected to issue a number of rulings this year in respect of a growing number of references for preliminary rulings, and the Spanish Supreme Court is expected to issue its first rulings. All of this will be important in determining the outcome of pending cases in lower courts regarding issues including standing, prescription, scope and handling of previous decisions and standards of proof.
As a whole, 2021 will offer a clear opportunity to modernise and streamline the processing of pending cases, which will facilitate the achievement of an appropriate focus when managing the many judicial and arbitration cases and out-of-court claims that will follow.
Below are links to some of the publications by Uría Menéndez in this area.
- “El nuevo régimen de reclamación de daños en España por ilícitos de competencia"
Patricia Vidal Martínez, Agustín Capilla Casco, Cristian Gual Grau. Actualidad Jurídica Uría Menéndez, no. 47, 2017
- “Aspectos sustantivos de la transposición al ordenamiento español de la Directiva de daños por infracciones del Derecho de la competencia”
Patricia Vidal Martínez, Tomás Arranz Fernández-Bravo. La Ley Mercantil, no. 38, 2017
- “A transposição em Portugal da Diretiva sobre Indemnizações por Danos Decorrentes de Infrações ao Direito da concorrência”
Alexandre Mota Pinto, Joaquim Caimoto Duarte. Actualidad Jurídica Uría Menéndez, no. 47, 2018
^ Back to top 12. Insurance-related conflicts
Increased levels of insurance-related litigation are anticipated as a direct or indirect result of the COVID-19 pandemic. In particular, it is reasonable to expect a rise in claims on general or liability insurance policies on this ground, as well as in potential supplementary coverage for matters such as business interruption.
The digital transformation and increased remote working will also give rise to disputes relating to coverage of insured losses under cyber-risk policies, which are an increasingly common part of the corporate risk insurance programme. The possibility cannot be ruled out that various premium-related problems may come before the courts owing to the effects of COVID-19 and depending on the type of insurance. These may include reductions in insured risk and, if applicable, the existence of potential refunds of premiums.
Below are links to some of the publications by Uría Menéndez in this area.
- “Reciente práctica judicial del Tribunal Supremo en materia de seguros: valor jurisprudencial e importancia en el mercado asegurador”
Julio Iglesias Rodríguez, Francisco Caamaño Rodríguez. Retos y desafíos del contrato de seguro: del necesario aggiornamento a la metamorfosis del contrato (Civitas, 2020
- “The Insurance Disputes Law Review. Spain”
Julio Iglesias Rodríguez, Francisco Caamaño Rodríguez. The Insurance Disputes Law Review, 2nd edition, chapter 13, Law Business Research Ltd., 2019
- “The Insurance Disputes Law Review. Portugal”
Pedro Ferreira Malaquias, Hélder Frias. The Insurance Disputes Law Review, 2nd edition, chapter 20, Law Business Research Ltd., 2019
^ Back to top 13. General terms and conditions and consumer law
Recent years have seen intense litigation activity in relation to consumers, which has been highly focused on the financial sector. The courts have been resolving the main causes of disputes in Spain, particularly the Spanish Supreme Court and the Court of Justice of the European Union. There has also been legislative intervention in the form of Law 5/2019 of 15 March on Real Estate Credit Agreements. The provisions of this legislation should reduce litigation in the financial industry. The situation is similar in Portugal following the entry into force of Decree Law 74-A/2017 of 23 June.
Pockets of conflict persist in the same industry (for example, in relation to arrangement fees and revolving credit agreements and cards). There are also data suggesting that litigation relating to consumer protection law is spreading to other sectors of activity.
Below are links to some of the publications by Uría Menéndez in this area.
- “Las transacciones sobre cláusulas suelo”
Fernando Pantaleón. Almacén de Derecho | Civil, 13-07-2020
- “La comisión de apertura, el Tribunal de Justicia y el Tribunal Supremo (I)”
Fernando Pantaleón. Almacén de Derecho | Civil, 14-09-2020
- “La comisión de apertura, el Tribunal de Justicia y el Tribunal Supremo (II)”
Fernando Pantaleón. Almacén de Derecho | Civil, 20-09-2020
- “Implicaciones económicas de la cláusula IRPH”
Fernando Pantaleón. Almacén de Derecho | Civil, 26-09-2020
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“The Consumer Finance Law Review. Portugal”
Hélder Frias. The Consumer Finance Law Review, 4th edition, chapter 7, Law Business Research Ltd., 2020.
^ Back to top 14. Brexit
The expiry on 31 December 2020 of the transition period following the United Kingdom’s exit from the European Union will undoubtedly impact on the potential conflicts facing companies with trans-national trade relationships. Any new regulations that are enacted may affect the performance of contracts with United Kingdom entities, particularly taking into account that some issues may be expected to evolve in the coming months (for example, through an agreement with the European Union) and in other areas it is not entirely clear how the UK-EU relationship will work. Moreover, Brexit will affect the legislation applicable to the recognition and enforcement in Spain and Portugal of court rulings issued in the United Kingdom, since the relevant EU Regulations will be replaced, subject to certain conditions, by the Hague Convention of 30 June 2005.
Below are links to some of the publications by Uría Menéndez in this area.
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