Currently, the bills on procedural, organizational and digital efficiency are undergoing parliamentary processing. The bill on organizational efficiency of the public justice service is aimed at (i) updating the justice services, and (ii) achieving a more efficient management and organization by creating three key entities: (i) the instance courts, (ii) the judicial office, and (iii) the justice offices in municipalities. The bill for procedural efficiency, in addition to introducing procedural-technical improvements under the Code of Civil Procedure and a reform of the cassation appeal, establishes measures to strengthen the adequate dispute resolution methods (“MASC”), particularly the consideration of their exercise as a procedural requirement. Lastly, the bill for digital efficiency promotes the digitalization of the justice service, regulating the technological services available to citizens, including measures such as holding online hearings and proceedings. Although these bills were expected to have been approved in 2022, they are still undergoing parliamentary processing and are expected to be approved this year.
Private enforcement trends
In recent years, consumer associations and specialized law firms, receiving financing from investment funds with greater frequency, are increasingly focusing on this type of litigation. After the judgment by the Court of Justice of the European Union (CJEU) of June 22, 2022 (case C-267/20), covering issues relevant to this area, we expect to see extensive litigation in this area, whether through individual claims filed by consumers and professionals or through collective claims. Also, the recent CJEU judgment of February 16, 2023 (case C-312/21), containing relevant rulings on the court assessment of damages and legal costs, will set trends in this field.
In 2023, we expect to see extensive litigation in this area in different economic sectors. Regarding large-scale litigation, significant developments are also expected in the truck case, given (i) that the Supreme Court will soon issue the first judgments on that; and (ii) the increase in disputes relating to the car case, still in the initial phase.
Trends in collective action
In January 2023, the draft bill transposing Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers was published, after having been subjected to a short process of public information and consultation.
This draft bill, aimed at facilitating these actions, includes a new heading in the Spanish Code of Civil Procedure setting out the specific regulation of those actions with a new ad hoc procedure, thus replacing the different rules currently existing. Representative actions include injunctive and redress measures and can be exercised by entities authorized in Spain and by entities authorized in other EU countries. The draft bill expressly foresees third-party funding in these procedures, as well as other aspects including the regulation of a certification process of the “class” for bringing redress measures or settlement agreements.
It is expected that this bill will lead to a considerable increase in these types of actions and affecting all types of economic sectors, including telecommunications and digital services, financial services, ecommerce and transport. As the deadline for transposition was December 25, 2022, the draft bill is being processed under the urgent procedure.
Given the global economic uncertainty this year, conflicts are expected to emerge in different sectors. One of the main sectors affected will be the energy sector, where it is expected that most of the arbitrations involving construction and infrastructure, whether private or public, will be related to energy generation and distribution. Also, the war in Ukraine will most likely result in new arbitrations concerning disputes over gas distribution agreements. In addition, we expect disputes to arise in the mining industry related to commercial transactions and major projects that were implemented before the pandemic and which are delayed due to supply chain disruption.
Disputes related to climate change actions are not new and will continue to arise in relation to existing and future projects. The public entities and states signatory to the Paris Agreement are likely to establish new obligations for private parties, which would lead to new situations of conflict.
In relation to mergers and acquisitions, disputes related to investment agreements and letters of intent are already on the table. In 2023, financial institutions are likely to exercise step-in rights under financing agreements, and sponsors, contractors and equity partners may, in turn, bring new claims against contractors and operators to protect their position within the project.
Trends in insolvency
The approval of the 2022 insolvency reform (Act 16/2022) has led to an in-depth review of our insolvency system, particularly of the pre-insolvency instruments (for more details, see our publication: Key issues of Spanish insolvency reform). After its entry into force in September 2022 (January 2023, in the case of the special procedure for micro-companies), debt restructuring and the sale of business units will benefit from a more flexible system which will undoubtedly encourage the execution of these transactions throughout the year.
Two aspects regarding restructuring that will be key are (i) the formation of classes, and (ii) the role of the experts in the restructuring. We expect the courts to rule on these matters. In fact, relevant judgments have already been given on these matters, such as judgment by Commercial Court No. 2 of Barcelona on December 2, 2022 (ECLI:ES:JMB:2022:13363), on the role of the court in relation to the formation of classes and order by Commercial Court No. 2 of Barcelona of November 7, 2022, on the legal basis for its challenge. We expect to see more judgments given in 2023.
This year will see the processing of the new proposal for a directive harmonising certain aspects of insolvency, aimed at reducing the differences between the insolvency regimes in the different Member States to (i) create common standards across the UE, and (ii) facilitate crossborder investment. Its approval in its current wording would lead to the mandatory adaptation of our insolvency laws again, particularly if the provisions regarding creditors’ committees, a concept not present in our system, or regarding clawback actions are maintained, as they correspond to a conceptually different system especially in relation to the effects.
Also to be transposed into the Spanish legal system in 2023 is EU Directive 2021/2167, which lays down a common framework and requirements for credit servicers and credit purchasers (investors). The primary aim is to reduce the current stocks of NPLs and to prevent excessive build-up in bank portfolios in the future. The directive imposes authorization and registration requirements on servicers and, furthermore, credit servicers authorized in a Member State will be entitled to carry out their activities in other Member States under their home regulatory framework.
Trends in criminal compliance
On March 13, Act 2/2023 will come into force, regulating the protection of persons who report regulatory breaches and the fight against corruption, transposing Directive (EU) 2019/1937, known as the Whistleblowing Directive. This act strengthens a key tool under compliance systems, i.e., the whistleblowing channel, and we expect that there will be more internal investigations. For more information, see our publication Companies in Spain obliged to have an internal reporting system in 2023.