1. Litigation versus arbitration in Spain
Both litigation before the Spanish courts and arbitration before Spanish arbitration institutions are widely used in Spain. Spain has a highly developed court system on a par with its other European counterparts. While proceedings may be somewhat simpler than in the United States, the courts, due to excessive workload, do tend to be slow in reaching judgments. Cases can typically last over one year or more prior to final judgment, and if appeals are made they can drag on for much longer. This is one of the reasons parties often resort to commercial arbitration under the auspices of an established arbitration institution which administers the arbitration. A number of these exist in Spain and while our experience with them has been quite favorable, they do represent an additional cost as compared to going before the Spanish courts. Like all arbitration institutions they charge a fee for the administration of the case and the parties must also pay the fees of the arbitrators. One of the more established arbitration institutions in Spain is that of the Madrid Chamber of Commerce. Their rules of arbitration, administration costs and arbitrator fees can be seen at http://www.arbitramadrid.com/web/guest/general-description-of-the-court. Note that although parties can always agree to arbitrate after a dispute arises, usually arbitration proceedings are based on an arbitration clause in the contract from which the dispute arises.
2. Attorneys and “Procuradores” Litigants must be represented by both an attorney (“abogado”) who directs the overall litigation, drafts pleadings and argues the case, and another legal professional (“procurador”) who acts as the administrative interface with the court, particularly as regards the receipt and delivery of pleadings and other documentation. A litigant must grant powers of attorney to both the attorney and the “procurador” in order to defend or bring his case. There is no official fee structure for attorneys and fees are freely negotiated between the attorney and his client. However, in the case of “procuradores”, they are subject to a mandatory fee structure which is largely dependent on the amount in dispute. Lawyers, while usually admitted to a particular geographically-centered bar association, are free to bring and argue their cases throughout Spain. In contrast, “procuradores” are closely tied to a provincial or even municipal areas. Whereas an attorney based in Madrid, can bring and argue his case in Valencia, he must work with a Procurador from Valencia. The procurador from Valencia can only work with the courts in that particular area. Finally, given their more active involvement in preparation and carrying out of the litigation, attorneys fees are usually much higher than those of “procuradores” though there are situations, for example in the case of enforcement proceedings when large amounts are involved, that the fees of procuradores can be quiet significant.
3. Commercial litigation proceedings
Ordinary Commercial litigation is divided into 3 distinct and phases:
i. Submission of the complaint and response. The preparation and submission of the complaint are the cornerstone of a successful claim. Unlike US litigation, the vast majority of evidence must be submitted with the complaint. Spanish litigation is very much “front-ended” in the sense that the case has to be much more complete at the time of submission than its US
equivalent where the basis of the complaint can evolve during the proceedings based on an ongoing procedure of “discovery”. Subsequent to the submission of the complaint, in Spain the claimant can only obtain further evidence, usually subject to judicial order, if such evidence was not available to it at the time of submitting the claim. This front-ending of the procedure is similarly applicable to the response to the claim, although there is some additional flexibility due to the fact that the defendant only has one month to prepare its arguments and evidence.
ii. Pre-trial hearing. This hearing is held before the judge and is meant to narrow the focus of the subsequent trial or even block it from going forward. At this hearing the parties are encouraged to reach a settlement, permitted to raise reasons why the trial should not go forward ( e.g. “res judicata”), determine whether the litigation can be decided exclusively on the basis of documentation submitted or whether it is simply a question of law and not conflicting facts, examination of proposed evidence and its admissibility, etc.
iii. Trial. Once the focus of the dispute has been narrowed, the trial is held. The principal purpose of the tria is to determine the questions of fact upon which the judge will apply the law in his final sentence. While most documentary evidence has typically been submitted at this stage, the parties themselves, the witnesses and experts are subject to examination and cross examination.
4. Protective Measures
Protective measures (i.e. injunctions, restraining orders and the like) are usually brought prior or in parallel with commercial litigation in a separate hearing or procedure and they may be critical in ensuring that there are assets to enforce a judgment once a favorable judgment is obtained. For further information see our section on protective measures.