Contributed By Lopez-Ibor Abogados
Once a judgment has been passed, Spanish procedural legislation requires the defendant to disclose to the court that its assets are sufficient to satisfy the claim. Failure to comply with such a requirement will result in the imposition of fines, and may give rise to a criminal offence.
If the defendant persists in this conduct, the claimant may request that the court requires any bank, public body or registry, and any natural or legal persons the claimant so designates, to disclose whatever goods, money or assets belonging to the defendant of whose existence they may be aware. In its request, the claimant must succinctly justify the reasons that led them to believe that the required person or institution may have information relating to the asset position of the defendant.
The ownership of landed property is publicly available information in Spain. The information relating to the ownership of other assets is not public, but must be revealed by the person that is aware of its existence if they are required by a court to do so in the manner outlined above. The intermediation of a court once a judgment has been rendered is the sole legal means whereby a party may identify another party’s asset position.
The following domestic judgments or non-judicial titles involve enforcement:
Different types of domestic judgments are available, as follows:
The legal framework for the civil and commercial enforcement of domestic judgments is governed by the Civil Procedural Act (CPA). The specific rules that apply to enforcement proceedings depend on the relief granted in the judgment.
Options Available to Enforce Judgments
When enforcing domestic judgments or authenticated public documents, general rules are applied; specific rules will only apply depending on the type of relief that is granted (monetary obligations or specific performance). Special enforcement rules are only to be used when enforcing the first notarial copy of a mortgage deed (non-judicial title). The main difference is based on faster mortgage foreclosure proceedings and the action in rem that is exercised in mortgage foreclosure.
General proceedings (Procedimiento de ejecución Ordinario) enforce judgments with monetary and non-monetary obligations, such as specific performance, third-party debt order, etc. Therefore, in monetary obligations, all assets of the defendant are suitable to be targeted and used to pay for the debt being claimed. In money judgments, a court’s enforcement order will include the attachments of all or part of the debtor’s assets identified in the writ of enforcement. Otherwise, further means of investigation should be carried out by the court to trace a debtor’s potential assets to attach.
The monetary or non-monetary nature of the obligation to be enforced will determine the way coercive measures will be used by courts.
To enforce judgments ordering payment of monetary obligations when the opposition writ to enforcement is dismissed requires the following court actions:
To enforce judgments related to non-monetary obligations (ordering the defendant to perform certain actions, to refrain from performing such actions or to undo actions already performed) when the opposition writ to enforcement is dismissed requires the following enforcement actions:
Enforcement proceedings start with an application (ex parte or in audita parte) to enforce the judgment, without hearing the defendant or the debtor object to the enforcement. The application for an enforcement order should be filed before the Court of First Instance where the judgment has been rendered (Article 545 of the CPA), where the award has been rendered or, as a general rule for non-judicial documents (Articles 50 and 51 of the CPA), where the residence of the defendant is located or where the asset is located or the obligation has to be performed.
No security for cost is needed when starting enforcement proceedings. The Enforcement Court’s order together with the enforcement application are served on the defendant. The defendant then has up to ten business days to oppose the order based on applicable grounds for opposing final judgments, provisional judgments, or mortgage enforcements (Articles 556, 528 and 695 of the CPA).
The court order declaring the initiation of enforcement proceedings cannot be appealed, only opposed or objected to, in order to avoid unnecessary delays. Opposing (objecting to) the court order of enforcement takes place before the First Instance Court that dictated the order, and will not stay the proceeding, as a general rule. It is only possible for the court to decide to stay proceedings in exceptional circumstances (see 2.5 Challenging Enforcement of Domestic Judgments).
When the opposition motion is served on the party seeking to enforce the judgment, fast-track proceedings will take place. The judge will render a ruling within the next five days after the hearing, declaring the following:
This ruling can be appealed but it will not stay the enforcement actions already taken, except in very limited cases, as listed in 2.5 Challenging Enforcement of Domestic Judgments.
Domestic judgments and judicial decisions are immediately enforceable, as a general rule, regardless of any appeal, as follows:
Representation by lawyers and court agents in enforcement proceedings is legally mandatory if the economic value of the enforcement process is over EUR2,000.
Typical Costs Involved
As a general rule, the debtor that is the target of the enforcement will bear the costs of proceedings for not complying voluntarily with the judgment within 20 days of it being rendered, and thereby forcing the creditor to start enforcement proceedings (Article 539.2 of the CPA).
The enforcement creditor will only bear the cost of incidental questions (ie, substantiating objections to enforce the judgment by the creditor) in the following cases:
The enforcement debtor will even bear enforcement costs if payment is made at the time of the request or prior to the dispatch of the enforcement order, unless they demonstrate that, for reasons not attributable to them, they were unable to make the payment before the enforcement creditor lodged the writ of enforcement, according to Article 583 of the CPA.
Estimated Length of Time
The time it takes to enforce domestic judgments depends on how easily the defendant’s assets could be converted into cash money. Attaching the defendant’s bank accounts is the easiest and fastest way to pay the debt. Unfortunately, such accounts do not normally cover the total debt, and an auction of the defendant’s assets will have to be carried out, delaying the payment of the debts, especially if there are third parties who claim ownership of the attached or seized assets (tercería de dominio o de mejor derecho – Articles 595 and 614 et seq of the CPA).
Most Efficient Option
The most efficient option consists in seeking enforcement of mortgage notarial deeds, as mortgage enforcement procedures are faster than the common ones. Therefore, banks seeking the enforcement of notarial deeds (ie, first notarial copy of the mortgage deed) are recommended to use this option of enforcement, but only if there are no potentially “unfair terms” included in the mortgage contract (clauses of early termination based on trivial grounds of breach of contract, etc).
The post-judgment procedure for determining the defendant’s assets is described in Article 590 of the CPA (judicial investigation of the state of the enforcement debtor).
The defendant’s assets must be identified by the judgment debtor in the enforcement claim (Article 549 of the CPA), but if there are concerns that the value of the debtor’s assets will not cover the amount for which the enforcement has been ordered, further search and investigation by the court should be required.
At the expense and request of an enforcement creditor who cannot designate sufficient assets of the enforcement debtor, the court clerk shall issue an order to move the proceeding forward (Article 590 of the CPA). The following measures will be contemplated in the order:
As a general rule, the enforcement court’s orders can be challenged on the following grounds:
These grounds of opposition differ depending on whether the domestic judgment or non-judicial enforcement document is:
Common grounds to stay enforcement proceedings based on domestic judgments or non-judicial enforcement documents are as follows:
Specific grounds to challenge provisional judgments (Article 528 of the CPA) are the same as those listed for final judgments, plus grounds based on the impossibility to reverse the situation created by the provisional enforcement of a judgment that is not final, but potential serious damages could arise when enforcing a provisional judgment (Article 525 of the CPA). The burden of proof remains with the party seeking to stay enforcement, and they should provide security to cover any potential losses of the party seeking to enforce the judgment.
There are specific grounds to challenge mortgage enforcement proceedings (Article 695 of the CPA). As a general rule, enforcement proceedings will not be stayed, despite the filing of the writ of opposition to enforce the notarial document (ie, mortgage deed). As an exception to the general rule, mortgage foreclosure may be stayed when:
Once proceedings are stayed, precautionary measures such as attaching/seizure assets could be enforced or remain operative if they were already in force.
Rulings on motions to stay enforcement can only be appealed on the following grounds (Article 695.4 of the CPA):
Provisional judgments are unenforceable in the following matters:
Final judgments are unenforceable in the case of:
There is no specific judgment debtor register, but it is possible to make a note or inscription in the suitable public registry (Land Property Registry, Public Bankruptcy Registry, etc), declaring the starting of enforcement proceedings. Once the debt is paid (in the case of a monetary obligation), the inscription in the registry will be cancelled. To provide evidence to the Property Registrar that the enforcement judgment has been complied with, the defendant needs to provide the appropriate court ruling stating the satisfaction or settlement of the claim.
The principal legal issues relating to enforcing a foreign judgment in Spain depend on the foreign country issuing the judgment, because different legal instruments will be applied and, therefore, an automatic recognition and enforcement will or will not be applied.
Automatic Recognition and Enforcement Without Any Declaration of Enforceability or Exequatur Proceedings for EU Member States (Except Denmark)
The general rule is that approval and enforcement are automatic, without any need of an exequatur, according to Article 36 (recognition), Article 39 (enforcement) and Article 66.2 of EU Regulation No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Recast Brussels Regulation”) Chapter III, sections 1, 2, 3 and 4, notwithstanding a potential opposition to the recognition and enforcement of the judgment on the ground of Article 45 of the Recast Brussels Regulation.
For the recognition and enforcement of judgments on specific matters not included in the scope of the Recast Brussels Regulation, the following EU Regulations will apply aside from international treaties to which Spain is a signatory:
Recognition and Enforcement Applicable to Third Countries That Are Not Members of the EU
In this context, the following treaties are worth mentioning.
The United Kingdom
Since the end of the transition period on 31 December 2020, the Recast Brussels Regulation and the other European regulations mentioned above no longer apply for the recognition and enforcement of UK judgments in Spain.
Since 1 January 2021 onwards, the recognition and enforcement of UK judgments will no longer have the benefit of a direct recognition and enforcement process. Joining the Lugano Convention 2007 was an alternative for the UK due to its similar advantages of quasi-automatic recognition and enforcement of judgments that were applicable between EU Members States at the time under the Brussels I Regulation 44/2001.
On 8 April 2021, the UK applied to accede to the Lugano Convention in its own right.
On 4 May 2021, the European Commission published a diplomatic note informing that it was not able to consent to the UK’s application.
France opposed the application, Germany was undecided and Spain, Portugal, Ireland and the Netherlands were in favour.
On 18 November 2021, the European Parliamentary Research Service issued a briefing confirming the Commission’s grounds for rejecting the UK application, stating that accession to the Lugano regime is bound up with the notion of close economic integration and interconnection based on the four freedoms. For the EU, the Lugano Convention is a flanking measure of the internal market and relates to an EU-EFTA/EEA context: “The UK is a third country without a special link to the internal market. Consequently, the Hague conventions should provide the framework for future co-operation between the EU and the UK in the field of civil and judicial co-operation.”
It must be highlighted that the regime of the Hague conventions is less effective than those of the Recast Brussels Regulation or the Lugano Convention.
The Hague Choice of Court Convention 2005 is narrower in scope because it is only applicable to exclusive jurisdiction agreements. Therefore, contracts with asymmetric jurisdiction clauses will fall outside the scope of this convention. Interim protective measures such as injunctions, and consumer, employment and IP disputes are beyond the scope of this convention.
The Hague Judgments Convention 2019 has a wider scope than the Hague Choice of Court Convention 2005 because no exclusive jurisdiction clauses are required in order for it to apply. Employment and consumer contracts fall within its material scope.
However, only five States have signed the Hague Judgments Convention 2019. This situation could change when the EU and the UK accede to it, because then free movement of judgments between the UK and the EU will be effective in some civil matters.
Legal Co-operation Act
Previously, the recognition and enforcement of UK judgments in the EU and EU judgments in the UK were governed by the national law of the UK and EU Member States and the Hague Choice of Court Convention 2005, where applicable.
However, since 1 January 2021, the recognition and enforcement of UK judgments in Spain have been governed by an old bilateral treaty: the Convention on Civil and Commercial Procedure, signed in London on 27 June 1929. Matters not covered by this bilateral convention in Spain come under the provisions of the Legal Co-operation Act. The Legal Co-operation Act distinguishes between the two steps of recognition and enforcement, which will make procedures last longer.
Only final UK judgments can be recognised in Spain. With respect to UK injunctive relief, it is worth noting that UK “ex parte” orders or orders dictated with due process of law will not be recognised in Spain.
The Legal Co-operation Act also requires a reasonable connection between UK jurisdiction and the litigated matter. A reasonable connection is deemed to exist if the judgment of the UK court is based on similar criteria as those followed in the Organic Law 1/1985. The Spanish criteria are very similar to those provided by the Recast Brussels Regulation. In practical terms, this means that UK judgments dictated as a result of forum presentiae will not be accepted by Spanish Courts.
Spain is not a member of the Convention of 30 June 2005 on Choice of Court Agreements.
After Brexit and its transition period, Regulation Rome I and Regulation Rome II on choice of law will remain applicable by Spanish judges, since their application is universal (EU Member States apply these regulations to third countries).
Notice of claims, demands and other judicial documents
Finally, Spain will apply the provisions of the Hague Convention of 1965 to notices and documents coming from UK courts, which in essence requires service through the Spanish Ministry of Justice as Central Authority and local court of the domicile of the defendant, a procedure that takes considerable time to be completed.
As a result of all these changes, the English jurisdiction is expected to become a less attractive route for deals involving Spanish enforcement. Therefore, as an alternative solution, some international businesses are considering including arbitration clauses in their contracts, as arbitration does not come within the scope of the Recast Brussels Regulation or the Lugano Convention.
With 168 signatory states, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 is a valuable alternative.
Judgments from EU Member States differ from those from third countries, as they do not need to be final in order to be enforceable.
Enforcement for EU Judgments
In civil and commercial matters, the procedure for recognising and enforcing judgments or authentic instruments from EU Member States is standardised, provided they are enforceable in the Member State of origin (per Chapters III and IV of the Recast Brussels Regulation). No distinction is made between different types of judgment. Recognition and enforcement may be suspended according to Article 38 of the Recast Brussels Regulation if the EU judgment is challenged in the Member State of origin.
Enforcement for Third-Country Judgments
There is no distinction between different types of judgments from third countries: they are all considered foreign judgments, regardless of the state of origin. In order to enforce third-country judgments, it is necessary to apply the following:
In principle, only final judgments coming from third countries are enforceable in Spain. Interim orders dictated by third-country courts can only be enforced if refraining from enforcement will run against the principle of due process of law (tutela efectiva), and provided such foreign measure was not adopted ex parte.
The following paragraphs list and categorise the foreign judgments that are not suitable to be enforced, depending on the grounds alleged for the refusal of recognition and enforcement.
Categories of EU Judgments
Grounds for refusal of recognition
Despite the automatic recognition of any EU judgments, the following judgments will be refused enforcement, according to Article 45 of the Recast Brussels Regulation:
Grounds for refusal of enforcement
According to Article 46 of the Recast Brussels Regulation, enforcement of a judgment shall be refused where one of the grounds for refusal listed in Article 45 is found to exist.
Categories of Third Countries
If no bilateral treaty is applicable, grounds for not enforcing third-country judgments are subject to the provisions of the Legal Co-operation Act.
The grounds for refusal of enforcement according to Article 46 of the Legal Co-operation Act are very similar to the grounds in Article 45 of the Recast Brussels Regulation. As an additional ground for refusal of enforcement, the Legal Co-operation Act includes the following: where Spanish courts have exclusive jurisdiction or, in respect of other matters, if the jurisdiction of the court of origin is not based on a reasonable connection.
As a general rule, declaratory judgments are not enforceable.
Process when Enforcing an EU Judgment
The steps that need to be taken can be summarised as follows:
Process when Enforcing a Third-Country Judgment
According to Articles 44 to 55 of the Legal Co-operation Act, the requirements are very similar to the Recast Brussels Regulation; however, there are extra requirements, such as a certificate issued by the court of origin declaring the following:
These steps are common in both proceedings. Once the defendant is served, they have 30 days in which to file their opposition to enforcement. The defendant can appeal the decision to the Appeal Court and to the Supreme Court.
EU judgments by means of application of the Recast Brussels Regulation provide for faster recognition and enforcement proceedings. In the event of an uncontested monetary claim, the fastest way to enforce a judgment is by application of Regulation 805/2004 and not the Recast Brussels Regulation.
In the case of EU protective measures, it is faster to apply for the order directly to the addressed court, rather than through the recognition and enforcement of a protective measure issued by the Member State of origin.
Dealing with judgments of third countries is a longer process due to the need to start a declaration of enforcement proceedings, which is not necessary with EU judgments.
When international or bilateral treaties are silent in relation to judgment enforcement and recognition costs, the CPA’s enforcement costs provisions will be applied in accordance with Article 50.2 of the Legal Co-operation Act.
In general terms, costs associated with the enforcement of third-country judgments are higher due to the length of the proceedings, by virtue of the required declaration of enforceability.
Once the defendant is served, they have 30 days in which to file their opposition to the enforcement. The grounds for challenging the enforcement of an EU or third-country judgment are set out in 3.3 Categories of Foreign Judgments Not Enforced. The defendant can appeal the decision to the Appeal Court and to the Supreme Court.
Under Spanish law, and a result of Regulation Rome I on the law applicable to contractual obligations, the time limitation for contractual claims will be determined by the governing law of the contract, which can obviously be a law other than Spanish law. The Spanish time limitation for contracts is five years. This substantive limitation will be applicable to judgments coming from EU countries. However, in the case of third-county judgments, bilateral treaties should apply. If there is no applicable bilateral treaty, Article 50.2 of the Legal Co-operation Act provides that the limitation period for the enforcement of third-country judgments is governed by the CPA. Article 518 of the CPA also establishes a five-year limitation period.
The European Parliamentary Research Service briefing and the Commission’s grounds for rejecting the UK application to the Lugano Convention 2007 have no impact on the recognition and enforcement of arbitral awards, nor does Brexit, because arbitration does not come within the scope of the Recast Brussels Regulation or Lugano Convention.
Arbitral awards in Spain may be enforced on equal terms as court rulings. It must be noted that arbitral awards cannot be challenged based on substantive reasons (ie, on account of the legal reasoning of the award).
However, arbitral awards may be set aside if the applicant alleges and furnishes due proof that:
Awards may be enforced even when an action has been brought to set them aside. Nevertheless, in such cases, the party may request the suspension of the enforcement from the competent court, provided that they provide security for the value of the sentence plus damages that stem from the delay.
Spanish legislation does not distinguish between different categories of arbitral awards, so the provisions relating to the enforcement of these resolutions are applicable regardless of their nature.
The only arbitral awards that may not be enforced are those that by the nature of their adopted decision are not subject to enforcement. Therefore, arbitral awards that dismiss the case or merely grant a declaration devoid of material orders may not be enforced.
The enforcement of awards may be suspended if the corresponding action to set them aside has been brought forth, and if the interested party provides security for the value of the sentence, as well as damages stemming from the delay resulting from the suspension.
In the first place, a claim to enforce the arbitral award must be filed before the lower courts of the place where the award must have its effects. The deadline is set at five years from the arbitral award being notified, otherwise the action of enforcement may no longer be brought. Spanish procedural legislation establishes that no enforcement of arbitral awards may be initiated until 20 days have elapsed.
Once the court has examined the request and if it deems that the request meets all the applicable requirements, it dictates that the enforcement procedure shall be carried out and notifies the affected party.
The affected party may oppose the enforcement of the award within ten days on the grounds that the payment has already been met, or that an agreement between debtor and creditor has been reached. It may also oppose the enforcement in view of procedural defects.
The claimant is subsequently granted five days to allege whatever it deems opportune regarding the opposition, and the court finally renders its verdict.
The enforcement of arbitral awards may only be suspended in very special cases, such as when insolvency proceedings have been initiated before the respective Commercial Court. The enforcement of the arbitral award shall be completed once the creditor has been paid in full.
Unless otherwise agreed by the parties, arbitrators shall decide on the dispute within six months of the date of submission of the writ of defence or by the expiration of the time limit for submitting the writ, according to Article 37.2 of the Spanish Arbitral Law Act 2003. Arbitration proceedings can be extended for a maximum period of two months, unless otherwise agreed by the parties.
Arbitration costs will include the following:
In general terms, the grounds for challenging awards (domestic or foreign) do not include revision on substantive matters of law applied or the proper applicable law to the arbitration.
Grounds for challenging domestic and foreign arbitral awards are different, as are the actions and procedural rules established to challenge them.
Nevertheless, the grounds for challenging foreign awards under the New York Convention 1958 (the “NY Convention”) and the grounds for challenging domestic awards under the Spanish Arbitral Law Act 2003 (AA) are very similar. The aim is to provide flexible enforcement proceedings for foreign awards, due to the undeniable extent and use of the NY Convention.
Foreign awards share the same standing as domestic judgments; they are categorised as similar to judicial titles, and can be enforced without any exequatur proceedings.
Domestic awards can be challenged in two different ways:
Foreign awards can be challenged through exequatur proceedings on the grounds of Article V of the NY Convention or on grounds established in another international or bilateral treaty ratified by Spain.
Grounds for challenging foreign arbitral awards are split into two different proceedings:
Recognition proceedings are known as exequatur and only final awards are subject to recognition or enforcement.
Once the foreign award is recognised, it could be enforced as a domestic judgment (Article 46.2 of the AA) under the domestic enforcement procedure established in the Spanish CPA.
Grounds for challenging foreign awards are subject to international treaties and bilateral treaties signed by Spain. The main such treaties are as follows:
The NY Convention is the most commonly used international treaty, due to its natural tendency to facilitate the recognition and enforcement of foreign awards. Therefore, in most cases, a foreign award could be challenged on the following grounds in application of Article V of the NY Convention:
The grounds in Article V (2) can be examined ex officio and, therefore, can be examined even if the request for enforcement is unopposed. They are:
Special consideration has to be taken when defining “public policy”, which is an abstract concept linked with national sovereignty and jurisdiction as designated in the domestic Constitution. The Spanish Supreme Court defines “public policy” as grounds causing “real and substantive constitutional breach of rights” (lack of impartiality of the arbitrator, lack of reasoning of the award, res iudicata or non bis in idem, etc).
The AA identifies what legal issues are suitable to be settled by arbitration:
In relation to time limits to challenge the awards, domestic awards should be challenged no later than two months after the notification of the award (Article 41.4 of the AA). The time limit for challenging foreign awards depends on the specific content of each international treaty signed by Spain. The NY Convention is silent on this matter, so domestic laws should be applied to establish the limitation period for challenging or enforcing the foreign award under the NY Convention.