Spain / May 23 2024
A bill discussed in Congress proposes that parties first attempt ADR before filing a legal claim
Congress is currently examining a bill that aims to improve the efficiency of the Public Justice Service and introduce collective actions to safeguard the rights and interests of consumers and users. This bill covers various aspects, including alternative dispute resolution (ADR). Under it, legal claims will only be allowed to proceed if there is evidence of an attempt to resolve a dispute through alternative means. The following highlights the main changes associated with this concept.
Requiring ADR for claims to be admitted
ADR, as specified by the draft bill, encompasses any negotiation activity where the involved parties genuinely attempt to reach an out-of-court resolution to the dispute, either independently or with the involvement of a neutral third party.
The draft bill includes ADR as a mandatory step in civil and commercial claims, with few exceptions. This means that ADR will be required before initiating a lawsuit in the civil courts. An appropriate justification for using an adequate dispute resolution method and, if applicable, a brief description of the negotiation process must be submitted with the claim.
Likewise, and for a case to be admissible, there must be a connection between the subject of the negotiation and the subject of any subsequent litigation, even if the claims brought to court are different.
Once the legal proceedings have started, the parties can enter into negotiations using one of these processes. In this case, the proceedings would be temporarily paused according to the Civil Procedure Act.
Types of ADR
ADR refers to any negotiation activity provided for in the draft or other laws. In any case, the draft focuses on mentioning a few specific activities:
- Negotiation between the parties or between their lawyers.
- Mediation regulated by Law 5/2012.
- Conciliation, which can occur before a lawyer, solicitor, notary, or approved mediator.
- A confidential and private offer that is legally binding. The party making the offer must fulfil its obligation if the other party accepts it. The offer must be notified to the other party, and its contents must be accurately documented to be valid. This information is private and shall not be used as evidence in future legal matters or relied upon. Legal attendance is necessary when the disputed amount exceeds €2,000 unless a specific law exempts this requirement.
- Impartial expert opinion. If both parties agree, they can choose a neutral expert to give a non-binding assessment of the matter. After the assessment, the parties can share their thoughts and suggestions and decide whether to accept it. Once again, the assessment will be kept confidential.
Deadlines and ADR
If 30 calendar days have passed since the other party received the proposal, without any initial meeting or contact to reach an agreement, or if no written response has been received, the negotiation process will be concluded without an agreement. At this point, the matter may be taken to court. The same applies if three months have elapsed since the initial meeting without reaching an agreement or if one party informs the other in writing that the negotiations are being terminated.
The action must be brought before the court within one year. This period starts from the date the proposed solution is received or, if no agreement is reached, from the date the negotiation process ends -or is deemed to have ended-.
Effects of ADR
The parties must adhere to the agreement and cannot pursue legal action on the same issue. Legal action for annulment is only allowed if the contracts are deemed invalid (without prejudice of the eventual objections that may be raised during enforcement proceedings). Furthermore, for the agreement to be enforced, it must be documented in a public record or approved by a court when applicable.
Duty of confidentiality
The negotiation process and documentation are confidential, except for information about the dispute and whether the parties participated in the initial negotiation attempt. Generally, the parties and, if relevant, any neutral party involved are not allowed to disclose or provide documentation related to the negotiation process. Disregarding this duty of confidentiality will lead to legal liability.
New developments in the field of costs
ADR also introduces changes to the rules concerning legal expenses. A key update involves considering “abuse of the public service of justice” as a circumstance that deviates from the standard objective win criterion. This implies that parties who unreasonably refuse to use a dispute resolution method when required may have to cover legal expenses.
