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.
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.
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 new National Commission on Markets and Competition merges into a single authority the functions and powers previously exercised by the now defunct National Competition Commission and the regulators of some of the country's most strategic economic sectors. Its stated aim is to focus on promoting competition by developing ex ante regulation and by enforcing antitrust rules.
To date, the application of the Spanish leniency programme has been consistent with the European Commission's practice. However, certain aspects of its practical application were unclear and thus created confusion among applicants. A new competition authority notice on the programme aims to increase clarity, certainty and legal security in this regard.
More than a year after the government announced that the National Competition Commission would merge with up to six other sector regulators to create a new institution – the National Commission on Markets and Competition – an act implementing this change has been approved by Congress. However, it has been argued that the efficiencies envisaged by the act could have been obtained without unifying the regulators' functions.
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.
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.