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Arbitration

Spain

On March 22 2006 the Madrid Court of Appeal ruled that an arbitration award is not deemed to be issued until it has been written down and signed by the arbitrators. A mere vote on the outcome of the award cannot be deemed to constitute an award. The arbitrators are free to vote on the award as many times as they see fit and no principle of law obliges them to stick to their first decision.

The Supreme Court has ruled on a case concerning the scope of an arbitration agreement in a company's bylaws. The Supreme Court decided that a dispute between the company and a shareholder did not have to be resolved by arbitration because two agreements were in place: the company bylaws, which contained an arbitration agreement, and the founding contract, which did not.

Unlike its predecessor, the new Arbitration Act states that unless an agreement to the contrary has been reached by the parties, either of them is entitled to amend or add to its claim or defence while the arbitration is underway, provided that the arbitrators do not deem this non-admissible due to the delay in doing so.

The new Spanish Arbitration Act regulates the form of arbitration agreements pursuant to the United Nations Commission on International Trade Law Model Law. However, it departs from the Model Law by stating that the written form requirement is fulfilled when the arbitration agreement is recorded and remains available for further consultation in electronic form or equivalent.

Spain's new Arbitration Act is based on the United Nations Commission on International Trade Law Model Law, which balances the civil and common law arbitration traditions. Where the parties do not state whether the arbitration should be decided in law or according to the principles of what is right and good, the act provides that the issue must be decided in law.

The Spanish Supreme Court has revoked an earlier decision that allowed an arbitration case to be heard in Spain even though the relevant contract provided that contractual disputes would be heard in London. The Supreme Court held that nothing in Spanish law prevented the arguments from being submitted to a foreign arbitration panel.

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Banking

Spain

The government has recently introduced rules that affect the free movement of capital directly. Order EHA/1439/2006 of the Ministry of Economy and Treasury establishes the obligation to declare cash movements of €10,000 of more when entering or leaving Spain in accordance with the EU Control of Cash Regulation, and cash movements of €100,000 or more within the Spanish territory.

The government has failed to meet the deadline for transposition of the EU Markets in Financial Instruments Directive. However, the directive will come into force for entities carrying out investment services on November 1 2007. In order to alleviate the lack of domestic regulation, the Spanish Securities and Exchange Commission is considering leaving room for self-regulation in the banking industry.

Being a compliance officer in the banking sector in Spain is becoming a tough task. In addition to the general regulations to which banks are subject, the autonomous regional governments have recently passed legislation on the use of local languages and the protection of consumers, which is applicable to financial institutions.

The legislation on anti-money laundering was recently amended in order to reflect the latest international trends regarding the prevention of money laundering and terrorist financing. Comparatively, the Spanish legislature has established stronger prevention measures than most EU member states. Moreover, Spain is actively engaged in the implementation of the recently approved EU Third Money Laundering Directive.

The Royal Decree Law 5/2005 has implemented the EU Financial Collateral Directive. This new regulation has been welcomed by the Spanish financial industry, as it gives financial players a high level of comfort when entering into the transactions covered by the decree. The new framework establishes a more flexible enforcement regime and increases legal certainty for winding-up proceedings.

In May 2005 the Madrid Provincial Court handed down a decision declaring the nullity of eight clauses that credit institutions usually include in client contracts. This ruling is significant because it is binding not only on the defendant banking institutions, but also on all financial institutions in Spain.

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Corporate Finance/M&A

Spain

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.

Insurance & Reinsurance

Spain

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.

Litigation

Spain

Overview
Including: Ordinary Proceedings; Special Proceedings; New Rules

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.

The Supreme Court has revisited the conflicting relationship between the 'pro actione' principle and the principle of extinction of the right of action due to expiration of the term for filing a brief of appeal. The court found that the filing of an inadmissible appeal against a judgment cannot be deemed a valid reason for extending the period of time to file an appeal established by law.

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