Análisis y proyecciones para 2021 en litigación y arbitraje en el mercado ibérico


Following our publication launched at the start of 2021, here we set out the main developments and trends that could affect litigation and arbitration in the Iberian market in 2022.

1. Significant legislative developments expected in civil litigation

The Spanish Ministry of Justice has publicly stated that the aim is for these reforms to be approved in 2022. If approved, they will bring about highly significant developments in key aspects of civil litigation procedure.

First is the Draft Basic Law on organisational efficiency of the public justice system (Anteproyecto de Ley Orgánica de Eficiencia Organizativa del Servicio Público de la Justicia). This bill envisages the creation of three new institutions: the first-instance courts, the Digital Office of the Court (Oficina Judicial Digital) and the Municipal Offices of Justice (Oficinas de Justicia en el municipio). The first-instance courts would replace the current first-instance structure based on single-judge bodies with the widespread implementation of collegiate first-instance bodies. The Office of the Court would be transformed to adjust to the changing digital world. The Municipal Offices of Justice would assume responsibility for communication – cooperating with the Civil Registry, providing support in implementing appropriate means of dispute resolution and attending to citizen requests related to the justice system.

Second is the Draft Law on measures for procedural efficiency of the public justice system (Anteproyecto de Ley de Medidas de Eficiencia Procesal del Servicio Público de la Justicia). One of the stated aims of this bill is to promote appropriate means of alternative dispute resolution by requiring that claims in civil and commercial proceedings be submitted along with evidence that an attempt has been made to reach a negotiated solution. The reform also impacts several aspects of civil procedural law. Notable developments include an increase in the cases in which oral rulings can be issued, an extension of the scope of oral hearings, the introduction of the concept of “witness lawsuits”, an extension of effects in the context of mass litigation, and reform of cassation appeals to accurately reflect their extraordinary nature. Finally, the bill also envisages reforms linked to the digital transformation of justice, which partly coincide with the changes envisaged in the bill described below.

Lastly, the Draft Law on the digital efficiency of the public justice system (Anteproyecto de Ley de Eficiencia Digital del Servicio Público de Justicia) is intended to strengthen the use of technology in the justice system, particularly as regards document identification, communication and management, as well as to consolidate and extend the opportunities for remote court proceedings.

In addition to these three bills, the anticipated transposition of the Representative Actions Directive may also imply significant changes for litigation practice. Through this Directive the European Union is seeking to better organise recourse to class actions for damages or restitution (which the Directive describes as “redress actions”).

In Portugal, before the dissolution of the Parliament in December 2021, the parliamentary deputies proposed an amendment to the Portuguese Procedural Code (Código de Processo Civil) aimed at increasing the agility of the Portuguese civil procedure and the quality of civil justice. One of the proposed amendments is an incentive to agree to witness cross-examination by halving the legal costs. This would allow both the claimant’s and the defendant’s witnesses to be questioned by the respective lawyers, who would be responsible for preparing the minutes to be delivered to the court.

Other proposed amendments in Portugal incentivise the parties to discuss all procedural requirements in writing before the preliminary hearing with the judge. There is an expectation that, with the election of the new members of parliament, this proposal will be resumed.

Finally, the Portuguese legislation approved in response to COVID-19 contained several extraordinary measures inspired by the concepts of force majeure and rebus sic stantibus. For instance, moratoriums have been applied to financing and lease agreements. These measures have expired gradually throughout 2021 and will no longer be available in 2022.

Meanwhile Portuguese courts have, on occasion, ruled that the COVID-19 pandemic constituted a “change of circumstances” that justified applying the general rebus sic stantibus provision of articles 437 to 439 the Portuguese Civil Code. Although one may say that this is an indication that Portuguese courts are inclined to acknowledge arguments in favour of application of the said regime to a modification of circumstances as a result of the COVID-19 pandemic, such decisions shall always be dependent on a case by case analysis of the legal requirements of the rebus sic stantibus institute.

Below are links to the above-mentioned bills making their way through the legislative process in Spain:

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2. International arbitration

Spain and Portugal will continue to strengthen its position as a top-tier seat of international arbitration. The Spanish Constitutional Court’s confirmation of the scope and scale of actions for annulment, which has boosted trust in the reliability of the system, will undoubtedly contribute to this process. So too will the creation of the Madrid International Arbitration Centre (MIAC). These milestones have not gone unnoticed by the international community, with the Global Arbitration Review (GAR) recognising them in 2021 and naming Spain the jurisdiction that had made the greatest progress in the area of international arbitration.

Meanwhile, the pandemic will continue to have a significant influence in 2022 on both the nature of disputes (there has been a considerable increase in litigation in the construction and energy sectors) and how arbitration proceedings are managed (e.g. use of remote mechanisms). The widespread use of virtual or remote hearings will continue, at least during 2022, and institutions and users will continue to adjust to this new reality. All participants have appreciated the usefulness of remote hearings for case-management sessions. However, there is less consensus regarding the suitability of customarily holding remote hearings on substantive issues. In our opinion, the end of the pandemic will see the return of in-person hearings for these matters, while remote hearings will continue to be used for procedural or case-management issues.

Finally, in relation to the increase in construction litigation, it is worth noting the initiatives that emerged in the Spanish arbitration community in 2021 to promote the use of the various forms of dispute boards. The Dispute Board Committee of the Spanish Arbitration Club (Club Español de Arbitraje) is playing a particularly important role. We expect these alternative dispute-management mechanisms to gain ground in 2022.

In Portugal, the Commercial Arbitration Centre of the Portuguese Chamber of Commerce and Industry (Centro de Arbitragem Comercial da Câmara de Comércio e Indústria Portuguesa (CAC)) adopted new sets of rules in April 2021 on mediation and fast-track, pre-contractual, administrative and corporate arbitration. These new sets of rules are aligned with the best practices in the arbitration community and will help consolidate arbitration as the preferred dispute resolution mechanism for commercial matters and expand it further into corporate and public tender matters.

Below are links to some recent publications by Uría Menéndez lawyers in this area:

  • “Spain”
    Gabriel Bottini, Álvaro López de Argumedo, André del Solar Garzón, Julia de Castro Velasco. European Arbitration Review 2022 - Portugal and Spain. Global Arbitration Review, Law Business Research Ltd, 2021.
  • Interaction between the IBA Guidelines on Conflicts of Interest of Arbitrators and the ICC Arbitration Rules
    Álvaro López de Argumedo Piñeiro. Clear Path or Jungle in Commercial Arbitrators’ Conflict of Interest? Chapter 13, ASA Special Series No. 48, Wolters Kluwer, 2021.
  • “How the Rules on Taking Evidence in International Arbitration Have Changed”
    Álvaro López de Argumedo Piñeiro. International, 9 June 2021.
  • “Intra-European Union Investment Protection: what now?”
    Enrique Arnaldos Orts, Jana Lamas de Mesa. Uría Menéndez, Investment Arbitration Outlook, Issue 8, 2021.
  • “Dispute boards ¿una alternativa en auge?” (“Dispute Boards: A Growing Alternative?”)
    Alfonso Gómez Rodríguez, Julia de Castro Velasco. Spain Arbitration Review, 42, 2021.
  • “El arbitraje en España y su pleno reconocimiento en la doctrina constitucional. A propósito de la Sentencia del Tribunal Constitucional 17/2021, de 15 de febrero” (“Arbitration in Spain and its full recognition in constitutional case-law: Constitutional Court judgment 17/2021 of 15 February”)
    Jesús Remón. El proceso arbitral en España a la luz de la doctrina del Tribunal Constitucional (The arbitration process in Spain in light of Constitutional Court case-law), Wolters Kluwer, Madrid, 2021.

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3. Corporate criminal law and investigations

Internal investigations have continued to gain ground in recent months. An increasing number of companies in Spain and Portugal are turning to these investigative procedures as an internal mechanism to respond to evidence of potential criminal activity within the company. They are also being conducted with a view to using the outcome of the investigation in (parallel or future) criminal proceedings to prove the existence of a compliance culture at the company.

Despite this ongoing increase in use, there remains a shortage of clear legal and case-law reference points in Spain regarding the possible effects of this type of investigation on the legal person’s defence in criminal proceedings. As a result, we may see more on this issue over the course of this year. However, Portugal saw out 2021 with the publication on 20 December of Law 93/2021, which implemented protection for whistleblowers, transposing Directive (EU) 2019/1937 of the Parliament and the Council on the protection of persons who report breaches of Union law. This includes mandatory internal whistleblowing channels for corporations with 50 or more employees, which we expect to create increased awareness and lead to more reports of infringements, as well as potentially contribute to additional growth in a sector that has been very dynamic over the last few years.

In Spain, there have been significant developments regarding the effectiveness of compliance programmes in releasing legal persons from criminal liability. Various rulings have been issued in the context of high-profile criminal investigations before the National Court where claims against entities under investigation have been dismissed for reasons including the existence of an adequate and effective criminal risk prevention programme. The ruling that started this trend was the Order of 23 March 2021 issued by Central Criminal Investigations Court 6 in the Operación Púnica investigation, which was subsequently confirmed by the Fourth Section of the National Court’s Criminal Chamber in Order 405/2021 of 8 July.

Both rulings emphasise that a case in respect of a legal person must be dismissed at the investigation stage if the investigations show that the entity had implemented an effective and adequate “regulatory compliance system” to prevent the conduct under investigation and respond appropriately to it before the commission of the alleged criminal offence. The rulings therefore focus not only on the purely preventive aspect (i.e. the efforts made by the company to mitigate the risk of a criminal offence being committed) but also on the entity’s actions after learning of the alleged criminal offence. Both rulings also place particular weight on the existence of third-party audits conducted to verify the adequacy of the compliance system.

Below are links to some recent publications by Uría Menéndez lawyers in this area:

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4. Digital law

2021 continued the 2020 trends in terms of technology and digitalisation. Business digitalisation and remote working have been genuinely necessary – not merely optional – in order to ensure business continuity. In managing the crisis created by the pandemic, companies have learned to dedicate significant efforts to fostering digitalisation and implementing new tools and technologies.

In this context, there has also been a considerable increase in technology-related risks, including those arising from cybersecurity incidents, technology gaps and personal data breaches. This has sparked an increase in both internal and regulatory cybersecurity and data protection investigations as a result of incidents and breaches in 2021, which is expected to continue in 2022. There has also been an increase in the amount of litigation and arbitration related to the potential liability of technology service providers as a result of clients suffering disruption in recent months.

Risks concerning privacy-related class actions are another trend being seen in the technology and digital sector. The General Data Protection Regulation (GDPR) introduced the possibility of filing class actions in data protection matters, where permitted by local procedural regulations. A number of cases involving this type of action have already been filed in various EU jurisdictions, including Spain and Portugal.

Finally, the strengthening of new digital rights for citizens and workers may also give rise to new litigation. Some of these rights had already been recognised in Spain under Basic Law 3/2018 of 5 December on personal data protection and digital rights guarantees, but in 2021 the Spanish Government approved a new Digital Rights Charter. This Charter is expected to inspire future legislation in Spain to strengthen citizen and worker rights in relation to technologies such as artificial intelligence, geolocation and other related tools.

Below are links to some recent publications by Uría Menéndez lawyers in this area:

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5. Insolvency law

2022 is set to be a key year for insolvency in Spain for two main reasons. First, although the successive moratoriums on insolvency that were introduced as a result of the pandemic came to an end on 31 December 2021, the suspension of the duty to file for insolvency has been extended for a further six months until 30 June 2022. This final moratorium is intended to coincide with the definitive transposition of the Directive on restructuring and insolvency, which we refer to below. Despite this exceptional regulation, the rate of declared insolvencies continued to rise in 2021, although many came from natural persons and small businesses.

The second important milestone will be the transposition into Spanish law, probably around the middle of the year, of Directive (EU) 2019/1023 of the European Parliament and of the Council 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. The relevant draft law has already been reported on by the relevant bodies and the bill itself is currently being fast-tracked through Congress.

This transposition process is intended to bring about a far-reaching reform of the Restated Text of the Spanish Insolvency Law, which would go far beyond the requirements of the Directive and substantially affect many insolvency institutions and professionals, as well as existing pre-insolvency institutions. Under the reform, refinancing agreements and pre-insolvency communications to negotiate with creditors would be bolstered by new restructuring plans affecting both liabilities and assets of businesses and their production units.

If this process ultimately goes as planned, it will be one of the most ambitious and significant reforms in the history of Spain’s modern insolvency legislation.

In Portugal, significant amendments were introduced to pre-insolvency and insolvency law, as a result of the transposition of the abovementioned Directive (EU) 2019/1023. The amendments will come into force on 11 April 2022. Meanwhile, despite the fact that no date has been set for the reinstatement of the obligation to declare insolvency, which has been suspended since March 2020, a significant increase in the number of restructuring proceedings and insolvencies is expected in 2022 due to the end of the COVID-19 moratorium.

Below are links to some recent publications by Uría Menéndez lawyers in this area:

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6. Consumers: general conditions and litigation

Some doubts have now been resolved in Spain (such as the validity of mortgage reference index clauses, with the Supreme Court judgments of 27 January 2022), but particular key issues await resolution during the year, before both the Spanish Supreme Court and the Court of Justice of the European Union. These issues include the validity of clauses regarding loan arrangement fees and how to determine the start date of the limitation period for actions seeking restitution of sums paid by execution of an unfair clause (in particular, clauses concerning mortgage loan costs). There has been also an increase in litigation over revolving credit cards, where a preliminary ruling by the Court of Justice of the European Union is also awaiting.

An increase in litigation relating to the consumer-protection regulations in the telecommunications, energy and residential property rental industries has also been observed.

Meanwhile, the reforms introduced by Royal Decree-Law 7/2021 of 27 April on consumer rights came into force on 1 January 2022. These reforms include the extension of consumer protection regarding conformity and guarantees concerning goods and digital content and services.

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7. Developments and trends in litigation related to corporate and competition law

In terms of pandemic-related regulation, a decision has been made to maintain the freeze on directors’ liability for corporate debts. Together with the extension of the insolvency moratorium until 30 June 2022, this situation is focusing attention on general corporate remedies for holding company directors liable. Individual actions may play a key role when seeking payment of a company’s unpaid debts where it is in financial distress or has ceased activity.

Law 5/2021, amending the Spanish Companies Act (Ley de Sociedades de Capital) in order to transpose Directive 2017/828, is also highly significant. It introduces important changes to aspects including regulation of the duty of loyalty of directors and the consequences of its breach, the possibility of collective decision-making bodies holding remote meetings and the framework governing loyalty shares.

In Portugal, the Government is preparing an amendment to the corporate law framework, even though it is not yet possible to anticipate its scope.

In banking law, it is expected that the new banking activity code proposal will still be discussed with the new government which is to be appointed following the recent parliamentary election in 30 January 2022 and the public consultation carried out at the end of 2020 by the Bank of Portugal. The new code proposal, which will fully replace the current one, considerably increases the powers of the Bank of Portugal in prudential and sanctioning matters, providing for compulsory pecuniary measures and establishing that penalties imposed on legal persons may be increased to 10% of their total annual net income turnover for the financial year prior to the date on which the decision to impose a penalty was issued.

As regards competition law, in Spain there was an increase in litigation involving claims for damages arising from unfair competition in 2021. It is foreseeable that this trend will intensify in 2022 alongside expected Supreme Court decisions that may clarify important issues in this developing area.

In Portugal Courts have witnessed an unprecedented surge in private enforcement class actions against large corporations for breaches of competition law, with several multi-million-euro damages claims. More class actions are expected to materialise in the wake of recent fines imposed by the Portuguese Competition Authority (Autoridade da Concorrencia (AdC)) on companies in several sectors, including banking and food & beverage.

Below is the link to the above-mentioned Portuguese bill proposing amendments to the corporate law framework:

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8. Insurance conflicts

The increase has been particularly in relation to damage insurance and potential coverage of losses owing to business interruption.

There have also been an increasing number of judicial proceedings related to coverage of claims and civil liability (professional and D&O civil liability), as a result of both the hardening of the insurance market in these sectors and the economic effects of the pandemic.

In the current environment of digital transformation and increased remote working, it has also become more important to analyse coverage for losses insured under cyber-risk policies, which are seeing an increasing number of claims.

Below are links to some recent publications by Uría Menéndez lawyers in this area:

  • “El seguro de manifestaciones y garantías: cuestiones prácticas de interés” (“Representation and warranty insurance: relevant practical issues”)
    Guillermo San Pedro Martínez, Guillermo del Río Ciriza. Manual de fusiones y adquisiciones de empresas (Corporate mergers and acquisitions handbook), pp. 483-514, La Ley, 2021.
  • “Reciente práctica judicial del Tribunal Supremo en materia de seguros: valor jurisprudencial e importancia en el mercado asegurador” (“Recent Supreme Court practice regarding insurance: case-law value and its importance in the insurance market”)
    Julio Iglesias Rodríguez, Francisco Caamaño Rodríguez. Retos y desafíos del contrato de seguro: del necesario aggiornamento a la metamorfosis del contrato (Challenges in insurance contracts: from the need for renewal to the metamorphosis of the contract), chapter 13, Civitas, 2020.

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The information contained in this Newsletter is of a general nature and does not constitute legal advice