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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain


Archive for the ‘Litigation’ Category

Coronavirus Crisis: How are legal deadlines affected?

March 17th, 2020

Coronavirus Crisis: Deadlines on Ongoing Legal and Administrative Procedures further to Spain’s State of Alarm (Royal Decree 463/2020) BelegalBLogCoronaVirus

The decree approved by the government on Saturday has immediately locked down the country, limiting the movement of citizens across the entire territory. Besides the mandatory measures implemented by the Government, the standstill the country has come to will impact contracts, Court deadlines, tax applications, administrative matters, residency applications etc.

Let us see what the most important legal implications:

  1. Courts: Court deadlines are delayed, and specific terms provided for in the procedural laws for all jurisdictional orders are suspended and interrupted. Time periods will resume as and when the royal decree ceases to be in effect or, as the case may be, any extension thereto.
  2. Statute of Limitations: any time limitations to bring a case against within the criminal or civil courts will be stayed, as above.
  3. Government Taxes or any Administrative Matter of any nature: If you have a tax deadline or need to submit a writ or allegation in any administrative procedure, do not worry: all deadlines or terms are interrupted until this royal decree ceases to be in effect. Notwithstanding the immediate suspension, it will be possible to submit applications on any aspect of administrative law provided the procedures can be done online even if all deadlines are, by operation of law, are extended.
  4. Immigration Matters: As above (C), all deadlines will be interrupted. This includes applying for residency renewals, fingerprint appointments, collection of residency cards, tourist visa deadlines (if someone is in Spain and needs to leave within a specific period, they will not be in violation of Spanish immigration laws) etc.
  5. Private Contracts: Ongoing private contracts or agreements are not dealt with by the Royal Decree; however, the principle of “force majeure” or superior force can and must be applied by parties to a private contract when, in the event of an extraordinary event or circumstance beyond the control of the parties (plague), it prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeur. Our advice here is for parties to renegotiate terms and conditions of the agreement, adapting to the exceptional Coronavirus situation where they are working together and not against each other with a view to find constructive solutions that suit both parties.


Legal Practise, Litigation

Unregulated Isle of Man Companies To Face Trial In Spain

April 30th, 2019

The View From Douglas Head, Isle Of Man..jpg

(Photo by Jim Linwood)

For financial and insurance companies based in the Crown Dependencies (Isle of Man, Guernsey and Jersey), the advent of the long-awaited Brexit will have no impact whatsoever as these territories are not part of the European Union (EU) and are not included within the scope of the UK’s membership of the EU.

Because but for those very companies, whether “brexiteers” or “remainers”, operating within the EU was never a problem despite not being licensed, authorized or regulated. But how so?

If we take the example of Spain, the likes of Old Mutual International, RL 360º or Generali have operated with infinite impunity for years, selling all manner of unregulated single- premium life insurance policies or, rather fancifully described, investment-linked assurance schemes (“ILAS”) through equally unregulated brokers.

It is believed that British expats in Spain have tens of millions deposited in a vast array of financial and investment products that these insurance platforms peddled for years, in exchange for substantial fees for managers and brokers. Many of these victims have lost substantially, and some have nothing to show for it. In these crown dependencies, the word “consumer” has no space.

Fortunately, Spain thinks differently and in the first of its kind, a case for civil fraud against Old Mutual International Isle of Man is going to trial in Marbella, on the 20/5/2019. Not even the best lawyers money could buy has saved this company from being closer to having its best-preserved secret aired publicly: that they were illegally selling insurance in Spain, for years, with absolutely impunity.

If the Court of First Instance rules that Old Mutual did indeed operate in Spain unregulated, hundreds -thousands perhaps- could follow suit and trigger yet another scandal in the already dubious Isle of Man, where insurance represents 14% of the economy (and financial services more than 32%).

To be updated on this case you can call or email us and of course, feel free to attend the public trial should you wish.

Litigation , , ,

Dealing with unregulated Spain-based Independent Financial Advisors.

November 7th, 2017

The collapse of Continental Wealth Management (CWN), an Alicante-based advisory firm, has left tens -possibly hundreds- of investors worried sick.  CWM was not regulated to provide investment advice in Spain and was loosely regulated to provide insurance advice, through German-based Trafalgar international (who also does not appear to be registered in Spain).

In the world of the investment ‘smoke and mirrors’ expat business, where few things are what they appear to be and what`s real is often portrayed to be something else, clarifying concepts becomes a necessity.

So, let’s get under the bonnet of these clandestine firms (this article does not allude to properly regulated advisory companies) to know what are the real chances of victims caught by the lack of scruples of runaway bogus consultants:

  • Most of the IFAs currently operating with the expat market in Spain are not regulated.
  • Equally, some of insurance or pension providers have never been regulated to operate in Spain (Old Mutual Isle of Man, Premier Group Isle of Man, Generali Worldwide Insurance Guernsey, RL 360º etc.), thus falling foul of Spanish laws that declare all such policies in violation of national laws and consequently, null and void.
  • Very often, investments are carried out via ‘life-insurance/assurance companies’ that provided wrappers, whole-of-life or unit-linked policies. These policies are linked to an investment portfolio.
  • Whether offered validly in Spain or not, life insurance policies linked to an investment are being declared void by the Spanish Supreme Court because they do not consider them life insurance policies. The reasons? Well, the calculation of the premium and payout lack ‘actuarial’ methodology, there is no transfer of risk from insured to insurer and it is irrelevant for the insurer if the insured party lives over a certain date, or dies.
  • Courts ruling on the nullity and voidness of a life insurance policy will order the company to reimburse the premium in full (minus any surrenders made), plus annual legal interest and without detraction of fees or commissions charged.
  • Financial or insurance mis-selling can be said to be automatic where the agents are not regulated (nobody can provide valid advice if not regulated). This violation of mandatory laws implies the responsibility of the principal (i.e. insurance or pension providers).
  • Claimants should aim for Insurers, Investment Funds and Pension Providers.
  • Lawyers should be able to identify the best way forward, always aiming for compensation (and not retribution).

Litigation , , , , , ,

Supreme Court to Protect Spanish Off-Plan Property Buyers’ Without Bank Guarantees

May 18th, 2016


A couple of days ago, BBC News readers woke up to a tantalizing headline for failed Spanish property investors: “up to 100,000 UK investors in Spanish homes could get payout”. The BBC quoted a Barcelona-based law firm, Spanish Legal Reclaims (SLR), on the round figure of investors who could in line for a full refund.

A fortnight ago, we almost anticipated the BBC’s article when stating various 2015 Supreme Court rulings had confirmed its support for banking, insurance and, notably, off-plan property consumers:

Off-plan property deposits: In May 2015, and the in December 2015, the SC ruled that property developers are responsible “in any event” of down payments made by consumers on off-plan properties, provided the bank was aware of the purpose of the payments.

The ruling, along with two prior ones, addressed the issue of bank’s duty of care towards consumers, in line with the provisions of the 1968 Act on Deposit Guarantees on Off-Plan Properties.

But whilst the rulings are encouraging for anyone caught in the 2008 off-plan property debacle, not every investor will qualify.

As a rule of thumb, investors will have the right to claim from banks who failed to guarantee deposits in the following circumstances:

  1. That the bank was aware the deposits were for the purpose of building off-plan property; proving ‘awareness’ is pretty simple inasmuch as banks ought to have known that hundreds of thousands of Euros going through developer’s accounts were from property investors. There have been cases where funds were remitted to UK accounts operated by real estate or intermediary companies, a situation that complicates matters. The “Ocean View Properties” off-plan property scandal comes to mind here.
  2. That the properties we not completed or, if completed with delay, that the buyer had formally exercised his right to terminate the contract for breach of contract before the developer had obtained the license of occupancy. Banks–and Courts for that matter- are aware that many thousands who were no longer interested in completing on finished properties will file claims for the return of their deposits.
  3. That the buyer was not a property investor i.e. buying several units for reselling, in which case he/she will not be classed as a consumer under the 1968 Act.

As with most legal matters, a case-by-case analysis will be required to establish the feasibility of a legal claim.

Litigation , ,

Madrid Courts Rule in Favour of British Investors Against Spanish Banks

January 29th, 2016

shutterstockSpanishPropertyDevelopmentBanco Popular, BBVA, Banco Mare Nostrum and Valencian Building Society S.G.R. have been ordered to pay over 2 million Euros, plus interest, to 40 British investors represented by Lawbird Legal Services.

The rulings were received on the same day and refer to investors who had paid large deposits on off-plan properties in El Pinet, in Alicante, and Costa Palatinum, in Murcia.

Court number 1 in Madrid wrote the following arguments on deciding the outcome:Banco Popular had issued two bank guarantees, one for 19 mm Euros and a further one for 4.4 mm Euros.

  • S.G.R. had too issued a guarantee for 5 mm Euros.
  • Banco Pastor had offered the developer a counter-bank guarantee which, according to the Judge, amounted to a collective policy to insure off-pan deposits.

For its part, the Appeal Court in Madrid (Section 25) held, in support of the investors, that:

  • A recent Supreme Court ruling had concluded that for the 57/1968 Act to apply, the off-plan property should be used for family living accommodation purposes, whether temporary, accidental or circumstantial. This includes “touristic apartments” as they are to be used by the owners as holiday homes, irrespective of their use as an investment for the most part of the year.
  • The developer had voluntarily submitted to the 57/1968 Act by producing a general bank guarantee that specifically referred to the Act.
  • Off-plan property buyers in Spain have an “inalienable right” to have their off-plan deposit underwritten, rights that cannot be waived by banks who, having issued a collective insurance cover failed however to grant individual policies to buyers.

 Banks have been ordered to pay the Courts the designated amounts, or face enforcement proceedings.

Both rulings are available to readers who so request a copy (less information deemed confidential at Lawbird’s discretion).

Litigation, Property , , , ,

Alicante Court Orders Banco Popular to pay €2.1 million to 60 British off-plan property investors

November 8th, 2015

A Court in Alicante has ordered Banco Popular to pay €2.1 million Euros to British investors, plus interest since payment of the deposits, following a failed property investment. According to the ruling issued a 10 days ago the investors, all of them from the United Kingdom, bought off-plan properties in the development known as Fortuna Golf, promoted and built by Promociones Eurohouse 2010 S.L., currently in the process of being wound up.

Buyers paid a deposit of around 30% of the purchase price but, when completion was due, units were only half built and works had been indefinitely halted.

Accordingly, buyers decided to claim from guaranteeing bank Banco Popular, who had issued a collective bank guarantee but given individual guarantee certificates to only some investors.

In their defense, the bank argued that the collective guarantee had been limited by quantum and therefore, any claims exceeding this limit could not be –legally- met.

Lawbird Legal Services S.L. argued that the invocation of qualifying conditions or limitations was against consumer protection regulations, namely Act 57/1.968, and that deposits should be guaranteed in any event and regardless of private conventions reached between developer and bank.

For instance, the ruling confirms that it is beyond logic and abusive to subject the validity of the collective guarantee to the issuing of an individual guarantee certificate as, by not meeting this obligation, the bank would be able to easily deny liability.

The Court also stresses that “it was clear that the intention of the Banco Popular and Promociones Eurohouse S.L. was to underwrite customers’ deposits in the event of default and this is exact what happened”.

Lawbird-based lawyer Luis Gonzalez Ordoñez had personally visited the site on occasion of the filming of a TV programme, Comando Actualidad, aired on state-owned television channel TVE-1.

The case has been extensively covered by national press.

The ruling can been appealed.

Litigation , , , , , ,

Abusive Language and Name-Calling in Spain

October 2nd, 2015

Using threatening, abusive or insulting language against a person can be a costly exercise if your ‘victim’ decides to see you in court.

Repetitive use of bad language, the specific circumstances in which it is hurled (private or public) and, more importantly, your choice of words may all aggravate the outcome.

But how do law courts evaluate the level of seriousness and what are the words that will secure a fine, or even a conviction, if reported to the courts and/or the police?

The Spanish Criminal Code, for obvious reasons, has not compiled a list of offending language but has left it to the general public and society to quantify the degree of the insult. As the courts speak for society in this respect, let’s see what they say:

Cordoba Court: Levied a €60 fine for a name-caller who labelled the victim ‘conceited’, ‘manipulating’, ‘blackmailer’, ‘arrogant’ and ‘a bumpkin.’

Burgos Court: Fined a drunken reveler €60 for calling someone ‘lowlife’, ‘son of bitch’ and‘scumbag’.

Barcelona Appeal Court: Fined an ex-wife for hurling abuse at her former husband. Her choice of words – ‘fucking coward’, ‘shyster’ and ‘crook’ – secured her a €100 fine.

Ciudad Real Court: Slapped a €900 fine on a bill sticker for posting notices in strategic points of a village with the following wording: ‘Juan the crook, Juan the swindler, Juan the thief. He claims poverty and buys himself a new car.’

Supreme Court: Fined a policewoman €1,600 and ordered payment of €6,000 in moral damages for calling a colleague a ‘family tradition whore who has secured promotions thanks to her leg-opening skills’.

Supreme Court: Ordered three regular guests attending aTelecinco gossip show to pay €120,000 to a celebrity for hurling the following colourful words and phrases: ‘two-faced’, ‘embittered’, ‘clown’, ‘coward’, ‘swindler’, ‘clumsy’, ‘son of a bitch’, ‘daft’, ‘lacking in class’, ‘pork parents deliver swines’ (Spanish saying), ‘villager’, ‘illiterate’, ‘silly cow’, ‘hustler’. The size of the compensation was in proportion to the prime time exposure enjoyed by the show.

In the following case, a disgruntled litigant who was serving a prison sentence sent a letter to the deciding Judge with the following content: ‘Complaint directed to the Magistrate so that everyone knows that you are one drug-trafficker, arms smuggler, corrupt queer, I would kill you for free if I could you son of a bitch.’

The level of the fine – €360 – was in sharp contrast to the 15-month term of imprisonment also imposed for the death threat, with publicity, as the sentencing Judge understood that the letter was openly distributed in prison, where the felon was already serving time.

Litigation , , , ,

Notes On Spanish Judicial Activity During 2014

July 14th, 2015

When one thinks about litigation in Spain and the time it takes to get a case through the Courts, we automatically think in terms of years, not months.

And yet we could all be very wrong if we are to believe the findings of the 2014 report issued by the supervisor for the judiciary, the General Council of Judicial Power (CGPJ).

According to report published this year, Court cases are taking months rather than years to be resolved. This and other interesting ‘judicial’ data available online can be summed up in the length of my column:

1.    Courts issued rulings in the following average time:

  • Civil cases: 7.6 months
  • Civil appeal cases: 7.5 months
  • Divorce mutually consented: 1.9 months
  • Divorce not mutually consented: 9.5 months

2.   Foreclosure proceedings are a different story: on average, it took the Courts 28 months to finalize these cases.

3.    Percentage of rulings that are appealed:

  • Courts of First Instance rulings: 11.7%
  • Appeal Court rulings: 4.8%

4.    Ratio of court rulings upheld vs. reversed on appeal:

  • Upheld: 63.6%
  • Reversed: 19.5%
  • Partially reversed: 16.0%

5.    Number of court cases in a year: In all of Spain, last year just over 8.6 million court cases were filed, around 8.8 million were finalized and just over 1.6 million rulings were passed. Andalusia is the most belligerent regional community in 2014, with 230 court cases per 1.000 inhabitants. The least is La Rioja, with 136 (wine must have had something to do with it!)

6.    Number of cases per Court: On average, 1.669 cases per year.

7.   Number of complaints: In 2014, approximately 16,000 complaints were lodged in relation to the dispensation of justice. Of these, 200 complaints were received in the Law Societies.

8.  Compensation granted for courts’ responsibility for defective operation: in 2014, approximately €6 million were awarded in compensation for defective or dysfunctional dispensation of justice.

9.  Money lodged within Courts’ bank accounts: during 2014, Santander bank (officially appointed by the Spanish judiciary) had an average balance in its accounts of €3.4 billion.

Litigation , , ,

Buying Property in Spain: When the Liability Falls on the Lawyer.

March 26th, 2015

Spanish lawyers assisting investors in the purchase of property have been regularly charging the fairly standardized fee of 1% plus Vat. For many, this is an unnecessary expense that can easily be avoided by getting one of the following to help in the process: a family friend, a local “gestor” or even the real estate agency. Their arguments are varied: lawyers charge too much for what they do, they are bad in communicating with clients and if something goes wrong, they don’t want to know.

To a certain extent, I can sympathize with detractors of legal professionals who represent property buyers; they reckon that because we have Notary Publics and a Land Registry system, investors should be protected and minor legal guidance should suffice. In an ideal world probably, but not elsewhere.  

I naturally advocate using lawyers to buy property, and so does the claimant in civil liability case that was brought against a firm of lawyers based in Marbella and their insurers. For this client, the fee of 1% plus Vat has possibly turned out to be the best investment ever made for he has recovered, from the Law Society insurers (Caser Seguros), €107,000 paid in year 2000 -plus interest since that date- on 2 failed off-plan apartment.

The mistake made by these property conveyance lawyers was not small: when they demanded bank certificates guaranteeing the investments, mandatory under Spanish law, the property developer managed to get away with flogging them fake insurance policies issued a shelf company, Compagnies del Guaranties, run by an Italian fraudster.

There was actually no need to run through the lengthy bogus document which had, I must admit, an air of “officialness”. Just by searching the words “Compagnies Des Guaranties” one would have seen them prominently featuring on a blacklist compiled by the Dirección General de Seguros.

Granted, do you don’t need to pay a lawyer to do this simple job. But honestly, how many investors would have noticed that these were spurious policies? Very few, as it happened, when you realize the nationwide dimension of the con. At least, in a quirk of fate, those who hired a negligent lawyer will get paid!


Legal Practise, Litigation , , ,

Property Auction Rigging in Spain: Nationwide Fraud Unchallenged

January 15th, 2015

Example of Real Auction in Spain

Auction rigging, commonly known as bid rigging, is a form of collusion between real estate speculators whereby they conspire to illegally rig the bidding process. This fraud at public real estate foreclosure is a criminal offence and in some countries (U.S), each bid-rigging carried a maximum penalty of 10 years in prison a $1 million fine.

According to a U.S. Department of Justice note, “over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.”

Spain’s Courts have been equally responsive when dealing with this problem: we can recall one famous bid-rigging fraud case in the Valencia Courts where 42 individuals (on appeal 27 were acquitted) received lengthy sentences, two of which got 10 years each. The only difference with the US is the last high profile case took place in… 1995. And since, very little Government activity to curb this plague.

This is not the only unusual thing: in this country, possible to witness firsthand how these fraudsters operate. All you have to do is attend a busy auction dealing with a coveted property.

Let’s take the Marbella Courts as an example where a selected group of “subasteros” (a mix between a speculator, opportunist, outright fraudster and a liar) operate with worrying impunity; these guys are familiar faces, “dummy bidders” that turn up day in day out to boycott auction procedures by chasing away legit bidders –occasionally with threats-, demanding money from serious contenders in exchange for not participating (as well as offering them money to refrain from doing so), or escalating the bids to force out any newcomer.

The boss of this Mafiosi syndicate used to be a bold (bald too) overweight individual (names withheld); he had experience, money and contacts in Courts, and led the rest in their nefarious activities. It appears he has now taken a step back, perhaps his prominence was beginning to mirror his physique and got that timely feeling that it was just the right moment to retire. The rest unfortunately remain, as so do many other hundreds operating throughout Spanish Courts.

Sadly, lawmakers have not yet noted the flaws of the current system nor the simplest solution for this instance of corruption: first-price sealed-bid auctions in which bidders place their bid in a sealed envelope and simultaneously hand them to the auctioneer, the Court in this instance.

Litigation , , ,