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Arbitration

The Barcelona Court of Appeals recently issued a ruling in a case concerning an action to set aside an arbitral award issued by the Barcelona Court of Arbitration. The arguments of the annulment action were based on the Insolvency Act and the Civil Procedure Law

The recently passed Law 11/2011 has amended the Arbitration Law and has introduced, among other things, an obligation for arbitrators and arbitral institutions to take out an insurance policy in order to cover their potential liabilities. This update discusses the conflict between the Insurance Law and this new requirement for an obligatory insurance policy in connection with arbitrators' liability under Spanish law.

The Barcelona Court of Appeal has issued a ruling in a case concerning the evaluation of the validity of a submission to arbitration. It confirmed a lower court ruling that it is the arbitral tribunal itself which should decide whether it is competent, and its potential decision not to solve a certain dispute does not affect its competence to solve subsequent disputes between the parties.

This update looks at two key issues: the legal privilege and state secret exceptions to the general discovery obligation set down in the International Bar Association Rules on the Taking of Evidence in International Arbitration, and the creation of a specialist arbitration court in Madrid. It is hoped that the specialisation of courts will later be confirmed and extended to other major business locations.

Proposals in a draft amendment to the Arbitration Act include the reallocation of jurisdiction for the support of arbitral proceedings and an arbitration-friendly change on setting aside awards on public policy grounds. It also introduces a groundbreaking arbitration procedure for disputes within the public administration. Only a few issues have failed to attract the general approval of Spain's arbitration practitioners.

Madrid Court of First Instance 74 considered that the award in a recent case included declaratory relief, but not condemnatory relief. According to Article 521 of the Civil Procedure Law, declaratory and constitutive relief are unenforceable. Article 559.1.3 of the law also states that an award that includes no condemnatory relief is unenforceable. It therefore appears that in this case the award was unenforceable.

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Aviation

A new amendment to the Law on Air Navigation expressly recognises the rights of owners of premises in the vicinity of such airports to be indemnified for any damages arising from aircraft noise. It obliges the state to guarantee that noise quality standards are respected and to implement any necessary action plans whenever a noise easement is approved that allows an increase in those standards.

A new royal decree governs the grant, renewal, amendment and revocation by the Spanish aviation safety agency of licences granted to air navigation services providers. Meanwhile, the Autonomous Community of Madrid has been given exclusive control over airports and heliports suitable for practising aerial sports and those where commercial activities do not take place.

The provisions of Royal Decree 1919/2009 on security in civil air shows apply to all civil air shows that offer an exhibition or performance during a public event, no matter whether the show is open to the general public or has restricted access, as well as to flights that are not included in the official programme, but which are conducted to promote the show.

In a recent case the plaintiffs purchased two flight tickets to travel from Barcelona to Mexico City via London. The flight to London took off late and the plaintiffs missed their connecting flight to Mexico City. The first instance court partially accepted the plaintiffs' claim that the airline had breached its obligations and the Barcelona Provincial Court confirmed the amount of compensation determined at first instance.

Aeronautical inspection regulations have recently been passed to implement Law 21/2003. These regulations have developed the concept of safety within the law, which no longer refers to extraordinary security controls, but rather implements audit structures to assess the suitability of the safety systems and procedures continuously. The regulations provide a framework for aeronautical inspection activities.

Royal Decree 714/2009 recently entered into force, transposing into law an EU directive regarding the criteria for the conduct of ramp inspections at EU airports. The decree applies to third-country aircraft landing at airports in Spain that are open to international air traffic.

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Banking

The Bank of Spain recently made public its calculations of the additional capital needed by a number of banks in order to comply with the provisions of Royal Decree-Law 2/2011 on the strengthening of the Spanish financial system. The list comprises 12 banks that must increase their capital to a total aggregated amount of €15.15 billion. However, in the opinion of certain independent analysts, Spanish banks still need much more capital.

In recent years Spanish saving banks have suffered, particularly as a result of massive lending to real estate developers during the housing boom. As an alternative way of supporting savings banks without affecting their regional nature and social character, the Spanish Central Bank set up the institutional system of protection, according to which the liquidity and credit risk of different financial institutions is shared among them.

In early 2009 Parliament approved a draft of the Payment Services Law. It will implement in Spain the EU Directive on Payment Services, the aim of which is "to establish at Community level a modern and coherent legal framework for payment services". The Spanish implementation of the directive will remove the barriers which have restricted the complete development of the Single Euro Payments Area.

In light of the current economic climate, financial entities with exposure to Spanish borrowers which are suffering the consequences of the credit crunch must analyze the resources that they have in their facility agreements and the terms under which the relevant security scheme was set in place.

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Capital Markets

Overview
Including: Clearance and Settlement System; New Investor Guide; Internal Regime Regulation; Regulation on Preferred Securities.

As a result of the ongoing Eurozone sovereign debt crisis, and in accordance with recent European Council measures intended to reinforce the equity of large credit institutions and to give such institutions easier access to medium and long-term financing, the Spanish government has passed a law which establishes a programme that guarantees credit institutions' debt issues by up to €100 billion.

The lower house of Parliament has approved the reform of the Collective Investment Undertakings Law, with the main objective of implementing various EU directives, particularly the EU Undertakings for Collective Investment in Transferable Securities IV Directive, into Spanish law. The reform will also introduce other amendments to bolster the competitiveness of the Spanish financial services industry.

The lower house of Parliament has approved a reform of the Securities Market Law relating to the securities clearing, settlement and registry system. In light of the fact that post-trading activities are to be carried out against a backdrop of greater integration at EU level, the reform seeks to modernise such activities, allowing the process to be simplified and costs to be cut.

A new circular of the CNMV, the Spanish securities market regulator, came into force on July 1 2011. It specifies the information that must be submitted by foreign collective investment schemes that are registered with the CNMV. Other developments to streamline the Spanish regulatory framework are still pending.

New Law 6/2011 amends the Spanish regulations on hybrid instruments for credit institutions. The new law follows the EU Capital Requirements Directive which, adopted against the backdrop of the global financial crisis, aims to adjust the failings in the prudential regulation of credit institutions by establishing new conditions for acceptance of hybrid capital instruments as own funds.

The Comisión Nacional del Mercado de Valores has published its latest report on the reform of the Spanish system for the clearing, settlement and registration of securities. The report focuses on the introduction of central counterparty clearing houses, and on alternative models for the registration and safekeeping of securities via a settlement system.

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Commercial Property

Overview
Including: Purchase of Real Estate; Ground Lease; Mortgages over Real Estate; Other Security Rights over Real Estate Property; Lease of Business Premises.

A recent amendment to the Insolvency Act lifts certain barriers to the sale of real estate during bankruptcy proceedings. As well as relaxing the requirements that prevented receivers from selling real estate without court approval, the new law allows for the sale of property that is subject to special privileges (eg, mortgages) at a lower price than that agreed when the relevant security was created, provided that it matches the market value.

The Spanish mortgage protection system is considered to be sound in terms of affording legal certainty to users. However, it is often criticised for failing to reflect the reality and needs of today's shifting financial landscape. The General Directorate of Registries and Notaries has issued new guidance in relation to the legal foundations of mortgages which should create greater flexibility for the financing of developments.

Future occupiers of buildings which are still under development should consider changing their role and partnering in the development by sharing ownership with the landowner, rather than taking a lease. By becoming a ground tenant, rather than merely a tenant, the occupier will share in the construction costs, but in principle can freely depreciate this investment in its corporate income tax return.

A turnkey project would usually involve a pre-letting agreement with the end user, which would take the future building on an operational lease for a minimum compulsory period that allows the landowner to obtain the return of its investment. Forthcoming changes to lease accountancy will require the end user to account for the entire rent due in such contracts as 'assets' and 'liabilities'.

Unsure as to whether to safeguard banks' funds or allow citizens to offer their homes in payment for the cancellation of mortgage debts, and unable to come down on either side, the government has enacted a royal decree-law entitled "Measures to Support Mortgage Debtors". While offering property in payment will not always clear debts, it will cost banks 10% more to acquire such properties through foreclosure.

The issue of whether credit institutions should assume liability for the mortgages they give to finance the purchase of a home has recently come to the fore. Of particular concern is whether they should agree not to receive more than the value at which they appraised the dwelling or take the dwelling for that value. Consideration focuses on Article 140 of the Mortgage Law - arguably the most under-used article in Spanish law.

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Company & Commercial

Overview
Includes: Legislative Framework; Forms of Businesses; Corporate Forms Used By Foreign Investors; Alternative Forms of Establishment; Other Internal Regulatory Matters; Corporate Governance; Contracting; Recent Developments.

The Interdepartmental Working Group on Market Unity, under the supervision of the Ministry of Commerce, is developing a Guaranteed Market Unity Act. The act aims to reduce the regulatory burden faced by businesses and increase legal certainty by eliminating legal contradictions. Ultimately, the goal is to provide businesses with fewer and better laws that facilitate and encourage economic activity.

A Ministry of Justice report on the modernisation of legal language was published in 2011. Recent surveys have revealed that citizens consider existing language to be unduly complicated. The government has introduced various statutes to remedy this, including the draft Law on Transparency, Access to Public Information and Good Governance and a draft bill on the removal of licences for small businesses.

Under Spanish law, vacancies on the board of directors can only be filled by using a cooption mechanism. Through availing of this mechanism, the board of directors can appoint a shareholder to fill the vacancy until the next general shareholders meeting is held. However, problems can arise if the number of members of the board falls below that required for a quorum.

Spanish law establishes the capital increase requirements necessary to deprive shareholders of the right to take out an option on new shares in proportion to their shareholding. For such action to be undertaken, a company interest must be at stake. Mere application of the formal requirements for determining such interest can lead to results which contravene the spirit of the law.

A new bill aims to increase the transparency of corporations and reinforce the rights of shareholders. In other news, the Supreme Court has declared a shareholders resolution invalid because a special public debenture bond was omitted from the financial statement, and the annual accounts thus did not give an accurate picture of the company's financial situation.

A Senate committee has proposed a major reform of the regulations on family companies. Family companies will be allowed to seek new types of financing, including investment through the issue of non-voting shares. They will also be required to draw up and register a family protocol delineating the relationship between the family company and its ownership.

Competition

The retail petrol sector has been in the sights of the National Competition Commission (NCC) for the past five years. Following numerous public warnings from the NCC, the government recently decided to introduce new legislation aimed at tackling the alleged lack of effective competition in the sector. However, questions remain as to whether the new measures are the best way to achieve this goal.

The Competition Authority's concerns regarding the competitiveness of the food sector have finally prompted the government to trigger reforms in the legal framework. The enactment of new legislation and the authority's determination to continue promoting effective competition in the food production sector will doubtless have a positive impact on a sector that is not as competitive as it potentially could be.

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Corporate Finance/M&A

Overview
Including: Share and Asset Deals; Tax Implications; Transfer of Employees; Injecting Funds in SPVs; Financial Assistance; Consistency with International Practice; Regulatory Filing Obligations; Goodwill.

Venture capital regulation and the role of authorities in the supervision of venture capital entities have changed considerably in recent years. New legislation has relaxed the administrative regime regarding incorporation, creating simplified venture capital entities.

Courts are rarely involved in corporate finance transactions, as final court decisions - even if favourable to the company - are unlikely to be issued in time to make the transaction possible. Moreover, the authorities leave little space for court intervention, as bringing courts into the game is likely to damage the market and be detrimental to the shareholders of target companies.

Law 25/2005, which regulates private equity entities and their management companies, will come into force on December 25 2005. The new law aims to provide Spain with a favourable legal framework to foster the development of the private equity sector, based mainly on two pillars: the improvement of the administrative regime and the relaxation of investment rules.

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Corporate Immigration

The term 'Sephardi' originates from a Hebrew word and refers to the descendants of Spanish and Portuguese Jews who lived or live in the Iberian Peninsula. Those of Sephardic Jewish origin have the right to apply for nationality after two years of legal residency in Spain. Applicants must provide evidence of their Sephardic status.

New agreements were recently introduced regarding border control when visitors travel from Brazil or Mexico to Spain. Among other things, a new procedure has been agreed for direct communication between consular authorities and airport border patrol when travellers are denied entry at the Spanish or Brazilian border; and Mexican consular representatives will now be present at Spanish airports to provide assistance when flights arrive from Mexico.

A new decree-law has amended the rules for EU citizens wishing to reside in Spain. Every citizen of an EU member state or a state that is party to the European Economic Area Agreement has the right to reside in Spain for a period exceeding three months if he or she fulfils certain conditions – for example, if he or she works or is self-employed in Spain.

Foreigners wishing to visit Spain for private travel purposes must obtain a letter of invitation as part of their visa application. The letter is an invitation to visit from a relative or close friend who is a citizen or legal resident of Spain. The person issuing the invitation must provide housing for the foreigner for the duration of his or her visit.

Derivatives

A new royal decree aims to improve competitiveness and bring the Spanish secondary market regulations into line with other international markets. It offers an increase in the number of products that can be traded and registered in these markets, and hopes to reduce systemic risk associated with contract settlement by allowing the governing company to offer central counterparty services.

The debate on the regulation of derivative products has always existed and remains unresolved. However, without underestimating the importance of regulation and the usefulness of adequate external control, strict internal control is essential to prevent new financial scandals as experts warn of a lack of understanding of financial instruments and a tendancy to focus on the product, not the customer.

The EU Directive on Eligible Assets for Undertakings for Collective Investment in Transferable Securities has been transposed into Spanish law. Among other things, the order clarifies in detail the types of financial derivative instrument that are considered eligible for financial collective investment schemes and addresses the classes of assets capable of underlying financial derivative instruments.

E-commerce

Overview
Including: Important Issues; Regulating E-commerce; Domain Name Regulation; Electronic Signatures; Personal Data Protection; Information Society Service Providers

The Supreme Court recently issued two judgments on the interpretation of the 'actual knowledge' concept set out in Article 16 of the Information Society Services and Electronic Commerce Law in order to provide exemptions to service providers that carry out data hosting services.

The Law on Information Society Services and E-commerce implements EU law. It aims to promote the development of the information society in Spain through the creation of a safe framework for electronic relations. The government hopes this will spark a technological revolution in Spain and place it on an equal footing with its European neighbours.

A proposal for a Digital Signature Law aims to increase consumer confidence in transacting over the Internet. The digital signatures proposed will be facilitated by certification service providers, which will issue electronic certificates certifying the identity of the digital signature. Further, certain validated certificates will have the same effect as written signatures.

A new registration scheme for the '.es' country code top-level domain was recently enacted which aims to open up the existing procedure. The new regime creates a number of third-level domains, introduces a tender process for the allocation of domain names of significant market value and allows individual to register their names in the second-level domain.

A new regulation on domain name registration aims to ensure that the assignment system can adapt to the specific needs of '.es' domain names, so as to facilitate the growth of e-commerce in Spain. It seeks to establish an adequate balance between reliability and flexibility, and to this extent is based on common registration practice.

The European Commission recently rated the Spanish government as one of the most technologically advanced in Europe, although a recent conference has highlighted weaknesses in key areas of its e-government development. Spain was the one of first countries to recognize electronic signatures, and also offers advanced internet tax initiatives.

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Employment & Labour

During 2011 demand for employment reform increased due to a breakdown in negotiations between employers and trade unions, soaring unemployment and an ailing economy. In response, Royal Decree 3/2012 and Law 3/2012 on urgent measures for reform of the labour market were forced through and enacted in February 2012. The reforms introduce new regulations in relation to collective employment matters.

Under the latest reforms to the labour law, public administrations can now carry out collective redundancies on economic, technical or organisational grounds, similar to companies. The amendments will affect the 700,000 people employed by public administrations throughout Spain, as well as the employees of companies with more than 50% public ownership.

A new law on urgent measures for labour market reform has reinforced the right of workers to receive training, with the clear aim of improving their employability through ongoing training. The training must relate to the employer's activity and must be specifically designed to address any processes of change, reorganisation or restructuring.

Legislative Royal Decree 3/2012 has replaced the term 'working from home', contained in Article 13 of the Worker's Statute, with the term 'distance working'. 'Distance working' is where working activity is performed principally in the worker's home as an alternative to the worker being physically present in the company's workplace.

Long-awaited labour market reforms were recently published. A primary objective is to promote 'flexicurity' – a concept which combines flexible working conditions with job security. Among other things, companies with fewer than 50 employees can sign a new type of open-ended contract with a one-year trial period for full-time workers, which enjoys considerable tax incentives.

The Spanish social security system was recently overhauled to take account of factors such as increased life expectancy, declining birth rates and the prevailing economic turmoil. Among other things, the retirement age has been increased to 67 and early retirement is now restricted to cases where it can be proved that social security contributions have been made for at least 30 years.

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Energy & Natural Resources

A new royal decree has introduced significant changes to the financial regime relating to power generation through solar photovoltaic technology. Although the new decree applies only to plants that did not obtain final registration in the Administrative Special Register on or before September 29 2008, a second additional provision has raised concerns due to its potential retroactive application.

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Environment

The new Land Law, which was approved by the House of Deputies last year, has recently been enacted, with few departures from the original wording. Among other things, the law sets forth economic and environmental principles for the use of land, as well as the responsibilities of the relevant public entities.

The new draft Environmental Liability Law aims to bring Spanish law into line with the EU Environmental Liability Directive. The draft law will implement to the largest possible extent the 'polluter remedies' principle; the law aims mainly to restore natural resources damaged by economic or professional activities to their original state on an objective liability basis.

Royal Decree 1370/2006 has approved the National Plan for the Allocation of Emission Rights for Greenhouse Gases for the period from 2008 to 2012. This is the second plan produced within the framework of the EU Emissions Trading Scheme and the first that coincides with the commitment period established by the Kyoto Protocol.

The House of Deputies has approved the initial draft of a new Land Law. Among other things, the draft law aims to ensure sustainable urban development based on prior environmental impact assessments. It focuses heavily on measures intended to prevent air and soil contamination and protect the environment against the damaging impact of uncontrolled urbanization projects.

The government has enacted Royal Decree 679/2006, which aims to reduce the environmental impact of industrial oils and ensure their proper management. The royal decree also aims to reduce the generation of used oils, or at least facilitate the possibility of adding value to used oils through regeneration or other recycling processes.

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Franchising

Overview
Including: The Basic Law; Developing the Law; Franchisor Registry; Contracts; New EC Regulation

A draft green paper by the Commission on Industry, Tourism and Commerce provides that Parliament will review the draft Distribution Agreements Act, which will regulate the relationships between agents involved in the distribution sector. The act will apply to and protect any party involved in the commercial distribution sector and will regulate all types of distribution agreement, including franchising.

The government has recently modified the rules applicable to the Franchisors' Registry. The government aims to promote the registry as a tool to obtain accurate and updated information. It also aims to clarify the definition of 'franchise' and differentiate franchising activities from other commercial activities that are often confused with franchising.

Royal Decree 378/2003 on block exemptions, specific authorizations and the Competition Registry entered into force in April 2003. Among other things, the law authorizes certain agreements between two or more companies operating at different levels of the production or distribution chain that relate to the conditions under which the parties may purchase, sell or resell certain goods or services.

The franchising legislation has been criticized for, among other things, failing to enforce the obligations imposed on franchisors. Therefore, the government has proposed an amendment to the legislation. However, franchising experts believe that the proposal does not resolve any fundamental practical problems and creates even more confusion.

Most franchisors seek to protect their control over their business to the fullest extent possible and include numerous supervisory mechanisms in their contractual agreements with franchisees. When expanding their networks in Spain, franchisors must pay attention to domestic legislation, particularly if the franchisee is unable to negotiate the conditions of the agreement.

Spanish law requires franchisors and master franchisees to disclose certain pre-contractual information to potential franchisees. However, the parties to a master franchise agreement may be reluctant to provide sensitive information to parties who are not bound by any contract. Solutions to this problem include confidentiality agreements and the granting of indemnities.

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Healthcare & Life Sciences

The Ministry of Health, Social Services and Equality recently presented a draft royal decree regulating clinical trials, ethics committees for drug research and the registration of clinical studies. The decree sets down the basis for the new Clinical Trials Register, which aims to promote transparency in clinical drug studies and make it easier to access complete and accurate information about them.

The Madrid Court of Appeal recently confirmed that inventions consisting of the use of a known substance for the treatment of a known disease, where the novelty lies only in the dosage regime, can be patented provided that the novelty and inventiveness requirements are met. The judgment closely follows decisions already issued by the European Patent Office with regard to dosage patents.

The Barcelona Court of Appeal recently handed down a judgment regarding unfair competition and the risk of imminent patent infringement relating to the inclusion of a generic drug in the National Health System's reference pricing system. This judgment and its reasoning are important as it is the first decision dealing with this issue handed down by an appeal court in main proceedings.

Information Technology

The Parliament of Catalonia recently passed Law 5/2002, which creates the Data Protection Agency of Catalonia. The legislation affects databases created by the government of Catalonia, entities involved with local administration, universities and public entities connected to the Catalonian government.

The EU Directive on Data Protection has been incorporated in Spain under the Data Protection Law. However, following the allocation of competence in the Spanish Constitution, the autonomous community of Madrid has enacted its own Law on Data Protection.

A new domestic law gives effect to an EC directive. Its aim is to provide security for electronic communications that use electronic signatures.

A new regulation requires public and private bodies to act urgently to implement new security measures to protect personal data.

Insolvency & Restructuring

Since the economic crisis hit Spain, numerous property developers have filed for insolvency in the commercial courts. A key issue is the continuity of the contracts that were in the course of being performed at the time when the petition for insolvency was filed. The problem is particularly serious for property companies with houses or flats under construction for which they have signed contracts of sale with buyers.

The Cabinet has approved the draft bill reforming the Insolvency Act. The reforms will encourage banks to refinance debts and provide liquidity for businesses in difficulty so that they can avoid bankruptcy, thus reducing the workload of the commercial courts. The reforms also aim to streamline and improve procedures in order to reduce costs.

The Ministry of Justice recently drafted new legislation to amend the Insolvency Law. Although this reform bill is still at an early stage, if adopted the new legislation will introduce more flexibility in key areas of insolvency law and will modify provisions based on the experience developed by local courts.

The principal aim of the Insolvency Act is the survival of a company - although in 95% of cases this is not achieved. The only way for an insolvent company to continue in business is to come to an agreement with its creditors on the payment of its debts. This is known as a scheme of arrangement. If no arrangement can be agreed, the company must be wound up.

The financial crisis has resulted in new litigation involving derivatives, including a significant number of related issues arising in the context of Spanish insolvency proceedings. Derivatives products were sold widely by banks during the prolonged period of prosperity and highly leveraged companies were encouraged by banks to enter into swaps as part of the overall bank financing of their projects.

An important innovation of the Insolvency Act was to give commercial courts handling insolvency proceedings exclusive powers over employment matters to the exclusion of the social courts, which normally deal with such matters. One particular employment aspect which the act attributes to the insolvency courts relates to the suspension and termination of senior management contracts.

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Insurance & Reinsurance

The Supreme Court has clarified the way in which interest accrues against insurers for unjustified late payment of claims. The court ruled that interest shall accrue at the statutory rate increased by 50% from the date of the loss until the end of the second year as of the date of the loss; after the two-year period has expired, interest shall accrue at a rate of 20%.

The legislature has implemented the provisions of the EU Insurance Mediation Directive through the enactment of the Insurance and Reinsurance Mediation Law. The new law is based on three fundamental ideas, including the regulation of new types of insurance intermediary (eg, insurance agents tied to several insurance companies, reinsurance brokers and bank-insurance operators).

Under the new Spanish Insolvency Law, it is not entirely clear whether liquidators and the courts can order the estimation of long-tail claims in insolvent run-offs, and whether doing so obliges the reinsurer to pay in commutation for future liabilities. However, principles of equitable treatment and judicial restraint would seem to prevent the practice.

Draft legislation to implement a number of EU insurance directives has been placed before Congress. The draft seeks to ensure the mutual recognition of reorganization and winding-up measures taken in other EU member states. It also proposes to increase the solvency margin required by insurers and introduces new formal requirements for the distance marketing of insurance products.

Intellectual Property

Commercial Court No 4 of Barcelona has upheld a non-infringement action filed by Vileda against Taiwanese company Dikai International Enterprise Co Ltd and Italian company Orlandi SpA, the owner and licensee respectively of Utility Model ES 1069292. As the commercial court upheld Vileda's first petition of non-infringement, it did not analyse the subsidiary petition of invalidity.

The Supreme Court's role in an appeal is to apply the law to facts which have already been established by a trial court. Therefore, analysis of the likelihood of confusion in relation to trademarks is precluded, as it is considered a question of fact. However, a Supreme Court judge recently issued a dissenting opinion in a case which considered potential infringement of the EU Community Trademark Regulation.

The European Court of Justice (ECJ) recently issued a much-anticipated judgment in which it was asked by Alicante Commercial Court No 1 to interpret the EU Community Trademark Regulation. The ECJ held that a Community trademark proprietor must be able to prevent a proprietor of a later Community trademark from using that later mark, thus clarifying that the regulation must be interpreted in light of the priority principle.

The Barcelona Court of Appeal recently accepted an appeal filed by a private prosecutor against a judgment issued by Barcelona Trial Court No 28. At first instance, the defendant had been convicted of a crime against IP rights, but had been acquitted of having to pay compensation to the rights holder. This ruling consolidates in the criminal jurisdiction the jurisprudence adopted by certain Supreme Court judgments.

Barcelona Commercial Court No 4 recently dismissed an action filed by Lundbeck against companies that commercialise escitalopram generics, for alleged infringement of the supplementary protection certificate (SPC) derived from the basic patent. Lundbeck filed a revised translation of the patent in 2006. However, the court concluded that the SPC continues to confer a process protection only – not a product protection.

The Spanish Community trademark court, diverging from previous case law on immunity through registration, has rejected a claim that a defendant's later trademark constituted grounds to exclude the prima facie analysis of trademark infringement in the interim injunction proceedings. It remains to be seen whether the European Court of Justice will follow suit when considering the same issue.

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Litigation

Overview
Including: Ordinary Proceedings; Special Proceedings; New Rules

Spanish law provides that Spanish courts have jurisdiction to decide on disputes taking place within Spanish territory and involving Spanish and foreign nationals. The only exceptions to this are in cases of either immunity from jurisdiction or immunity from enforcement as established in public international law. Notwithstanding this general rule, there are certain exceptions in case law.

The Supreme Court recently confirmed that a plaintiff has a duty to submit all relevant documents when filing its claim. Even when those documents are in the possession of another court, the burden is on the plaintiff to obtain copies of them and attach them to its claim at the time of filing.

The Supreme Court has recently clarified the limits that the courts must observe when deciding on claims for damages. The court held that the civil courts are not allowed to award damages in excess of what has been requested by the claimant, as this would jeopardize the right to defence.

The Supreme Court has issued a judgment in an unusual case where the plaintiff was a minor. It upheld the court of appeal decision ordering the defendants to pay a sum of money to the plaintiff, on the grounds that the defendants had failed to raise the issue of her age on appeal and the appearance in court of her parents overrode her lack of capacity.

The Madrid Court of Appeal has ruled on whether non-compliance by a judge of first instance with the term established by law during which a defendant may appear in court from the day of summons violated the constitutional right to due process. The court declared the process null and void on the grounds that the defendant had been deprived of its right to due process.

The Supreme Court has settled the issue of which legal criteria qualify a case for appeal before it. The court distinguished between two types of case: where the amount at stake has been determined, the right to appeal is conditional on this amount being in excess of €150,000; where the amount has not been determined, the right to appeal is conditional on the case having a special interest.

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Media & Entertainment

The Constitutional Court has declared that hidden camera documentaries contravene the Constitution by breaching the right to personal privacy and one's own image. Despite this type of documentary being aired for many years in Spain, this is the first time that the Constitutional Court has had the chance to analyse the legal dilemmas surrounding this controversial method of journalism.

Product Liability

Overview
Includes: Legal Framework before the EU Product Liability Directive; Liability for Damages Caused by Defective Products Act; Proof of Defectiveness; Indemnities for Corporal Damages.

Although the Liability for Damages Caused by Defective Products Act came into force several years ago, there is still some confusion about the applicability of the Consumer Protection Act to product liability cases. In a recent case the Supreme Court failed to avail itself of the opportunity to declare that the Liability for Damages Caused by Defective Products Act has shifted the burden of proof.

Manufacturers supplying products to EU markets are subject to increasingly demanding levels of product regulation. Manufacturers must implement practices in line with the EU General Product Safety Directive, which has been implemented in Spain through Royal Decree 1801/2003. The decree establishes the general obligation of manufacturers to ensure that products placed on the market are safe.

The discovery of asbestos-related illnesses has triggered changes in Spanish legislation. However, to date, none of the civil liability claims brought by affected individuals were based on the defective product legislation. Directive 2003/18/EC, which lowers the threshold of airborne concentration of asbestos particles, had to be implemented by the member states by April 15 2006.

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Projects & Procurement

The Public Sector Contracts Act, which implemented the EU Public Sector Procurement Directive, has introduced a new category of public contract in Spain - the public-private collaboration contract. This innovation has sparked debate among authors and commentators. Such contracts can be entered into only once the alternative models have been explored and rejected.

The Supreme Court recently found event default clauses to be null and void as they oblige the lessee to prepay the total amount of a loan early.

Securitisation & Structured Finance

Article 27 of the new Royal Decree-Law on Measures to Boost Economic Recovery and Employment has amended existing law to provide that asset securitization funds and mortgage securitization funds can own property resulting from the execution of guarantees ancillary to their collection rights or from the accord and satisfaction of such collection rights.

Pursuant to several recent royal decrees and other resolutions approved by an inter-ministerial commission, the designation of the company that will manage the Electricity Tariff Deficit Asset Securitization Fund has been announced. Titulización de Activos SGFT SA will be the management company responsible for the fund.

Spanish securitizations, particularly mortgage securitizations, have grown spectacularly in the past decade. The passing of a royal decree to complete the legislative overhaul of the Spanish mortgage market is expected to make Spanish mortgage-backed securities and Spanish securitizations more competitive once the international markets recover.

Parliament's Lower House recently approved the bill amending Law 2/1981 which regulates the mortgage market and other provisions of the mortgage and financial system. The law seeks to modernize the refinancing formulae used by credit institutions when issuing covered bonds and to consolidate the market for such securities by making regulatory and technical improvements.

The order on the securitization of future collection rights has been published a year after its announcement. It allows Spanish securitization funds to securitize future collection rights in addition to current collection rights. Moreover, under Law 23/2005, securitization bonds issued by a Spanish securitization fund and traded on regulated markets enjoy the tax benefits applicable to preferred participations.

Securitization transactions in Spain have increased in number and asset volume, and are acquiring more and more importance in Europe. The rise in activity is all the more significant as it is the first year in which International Accounting Standards have applied to financial institutions and listed corporations, and the new Basel Capital Accord on credit institutions' capital is about to be implemented.

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Shipping & Transport

In a recent ruling on both-to-blame collisions, the Supreme Court clarified that for the purposes of collision liability, the concept of a ship comprises not only craft with an ability to navigate, but also floating devices capable of being moved. It further confirmed that the concept of collision extends to cases where there has been no direct physical contact between the ships.

The Law on Contracts for the Land Transport of Goods is designed to modernize the legal framework governing contracts for land transport by road and rail. It will also apply to river transport and, subsidiarily, transport by post. The new law also introduces carriers' liability. The liability framework is based on the presumption of carrier's liability where an event giving rise to liability occurs.

The Supreme Court has clarified the law on the supplementary application of general insurance default interests to marine insurance contracts. Should parties fail to provide for a regulation on the interests applicable to indemnity in case of late payment by the insurer and unless the parties have expressly excluded the application of the Law on Insurance Contracts, the loophole will be filled by Article 20 of the law.

This update looks at the power granted to insolvency judges regarding the termination of a shipbuilding contract when, at the time the insolvency proceedings are initiated, obligations of both parties are still pending (ie, the shipyard for construction of the vessel and the shipowner for the payment of instalments).

The provisions of the 1952 Brussels Convention on the Arrest of Seagoing Ships were ratified by Spain in 1953. They apply to vessels flying any flag pursuant to Articles 1, 2 and 3 of the Law on the Precautionary Arrest of Foreign Seagoing Vessels. The Spanish rules regarding interim and precautionary measures such as arrest are governed by Articles 721 to 747 of the Civil Procedure Act.

The Supreme Court has recently considered the requirement for timely notice to the carrier of loss or damage to cargo carried between two non-international ports, confirming the informal interpretation of the carrier pursuant to the second paragraph of Section 952(2) of the Commercial Code.

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Telecommunications

The draft of the new General Telecommunications Law received approval on December 28 2012. Among other things, the draft aims to facilitate network roll-out and broadband penetration, and abolishes the licensing and permit system with the aim of eliminating unnecessary administrative hurdles.

The Telecommunications Market Commission is completing its assessment of the 18 electronic communications markets that have been identified by the European Commission. The resolutions imposing specific conditions on operators with significant market power in those markets will be implemented during Spring 2006. So far the Telecommunications Market Commission has published five reports.

In December 2005 the Telecommunications Market Commission submitted to the European Commission its draft report on the market for access and call origination on public mobile telephone networks. The report states that dominant mobile telephone operators must offer third-party access to their networks. This should allow mobile virtual network operators to obtain access under reasonable terms.

On September 29 2005 and October 13 2005, following a market analysis procedure, the Telecommunications Market Commission published reports on access to mobile telephony networks in various markets. The reports aim to ensure compliance with a new EU framework. This update reviews the commission's conclusions with regards to the various markets.

In July 2005 the Telecommunications Market Commission launched a competition analysis procedure in the market for access to mobile telephony networks, as required by the new EU regulatory framework. The commission detected important legal and structural barriers to entry into this market and recommended that the dominant operators offer third-party access to their networks.

The Spanish government recently approved the Electronic Communication Services Regulation, which sets out the conditions applicable to the provision of electronic communication services with regard to universal service and consumer protection. It also modifies certain aspects of the rules on the use of the radio-electric spectrum which were approved in 2000.

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White Collar Crime

The Organic Law Amending the Spanish Criminal Code on Transparency and Combating Tax and Social Security Fraud was recently passed. For the first time in Spanish law, political parties and unions will be subject to criminal liability in the same way as private legal persons. In addition, the new law sets down ways in which liability for tax fraud can be considerably reduced.

Legal reforms introduced at the end of 2010 played a significant part in regulating the criminal liability of legal persons for the first time in Spanish law. The general public prosecutor has since circulated interpretive guidelines in this area. Among other things, they specify the activities for which legal persons may be held liable, clarify the penalties to which they may be subject and address the issue of mitigation.