Understanding the CISG is essential for any company or professional involved in cross-border trade, as it may determine the applicable law to their sales contracts and, ultimately, how potential disputes will be resolved.

1. What is the Vienna Convention (CISG)?

The CISG is an international treaty that establishes a uniform set of rules for contracts for the international sale of goods. Its main purpose is to facilitate international trade by providing a common legal framework, thus avoiding the need to determine which national law governs a contract. Currently, over 90 countries are parties to the Convention, including Spain.

2. When does the CISG apply?

The CISG applies automatically to contracts for the sale of goods between parties whose places of business are located in different States that are Contracting States to the Convention. It may also apply when the private international law rules of the forum lead to the application of the law of a Contracting State, even if one of the parties does not have its place of business in a Contracting State. However, some countries have made reservations regarding this basis of application, so its applicability must be assessed on a case-by-case basis.

It is essential to note that the parties may exclude the application of the CISG, in whole or in part, or modify its effects, through an express clause in their contract. If they do not do so, the Convention will apply by default.

3. What matters are governed by the CISG?

The CISG covers the following key aspects of contracts for the international sale of goods:

• Formation of the contract: It governs the offer, acceptance, and the moment the contract is concluded.
• Obligations of the seller: It includes the delivery of the goods, their conformity with the contract, and the obligation to transfer ownership.
• Obligations of the buyer: It encompasses payment of the price and taking delivery of the goods.
• Passing of risk: It determines when the risk of loss or damage to the goods passes from the seller to the buyer.
• Breach of contract and remedies: It establishes the consequences of breach and the parties’ rights, such as avoidance of the contract, damages, or specific performance.

It is important to note that the CISG does not govern the validity of the contract or the effects of the contract on the property in the goods (except for the passing of risk), nor does it regulate liability for death or personal injury caused by the goods. These aspects are governed by the applicable national law.

4. Advantages of applying the CISG

Applying the CISG offers several advantages:

• Uniformity and predictability: It provides a clear and uniform set of rules that reduce legal uncertainty and the costs associated with determining the applicable law.
• Neutrality: As an international treaty, it avoids the application of one party’s domestic law, which can be perceived as more fair and balanced.
• Flexibility: It allows the parties to adapt their contractual terms to their specific needs, provided that they do not contravene the fundamental principles of the Convention.
• Promotion of trade: By simplifying the legal framework, it facilitates international transactions and reduces trade barriers.

5. How does the CISG affect contract drafting?

Since the CISG applies automatically unless expressly excluded, familiarity with it is essential when drafting international sales contracts. Here are some key considerations:

• Exclusion clause: If the parties wish for a specific national law to apply instead of the CISG, they must include a clear and explicit clause in the contract. For example: “This contract shall be governed by Spanish law, with the express exclusion of the United Nations Convention on Contracts for the International Sale of Goods (CISG).”
• Consistency with the CISG: If the parties intend for the CISG to apply, it is advisable that the contractual clauses be compatible with its provisions to avoid contradictions.
• Contracts with non-signatory parties: If one of the parties is located in a country that is not a Contracting State to the CISG, the choice of the applicable law becomes even more relevant.

6. Conclusion

The Vienna Convention (CISG) is a fundamental pillar of international trade, providing a harmonized legal framework that simplifies cross-border transactions. For any company operating internationally, understanding its principles and knowing how it affects sales contracts is crucial to avoid surprises and ensure a smooth and secure commercial operation.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

NEED HELP?

At Gamero & Bravo Abogados, we have a team of experts in resolving commercial disputes, designing complex contracts, and representing clients in international arbitrations. Write to us, and we will be happy to assist you.

La entrada Vienna Convention (CISG): What is it and how does it affect your international contracts? se publicó primero en Gamero & Bravo Abogados.

Whether we are talking about ad hoc arbitration or institutional arbitration, understanding how this tool works and how to draft it properly is essential to protect our interests.

Let’s take a detailed look at what an arbitration clause is, why it should be included in contracts, what it must contain, and how to draft it properly, using practical examples and references to the ICC Rules, one of the most recognised internationally.

1. What is an arbitration clause?

An arbitration clause, also known as an arbitration agreement, is a provision included in a contract that establishes that any dispute arising between the parties shall be resolved through arbitration, instead of resorting to ordinary courts.

Unlike other methods such as mediation, the decision issued in an arbitration proceeding has binding and enforceable effect on the parties, just as a judicial ruling does.

Thus, this clause defines the parties’ prior agreement to submit to arbitration in the event of a dispute, which means that the parties agree not to bring such disputes before the ordinary courts, except in the legally established cases such as judicial assistance, interim measures, or the challenge of the arbitral award.

2. Types of arbitration: Ad hoc vs. Institutional

There are two main types of arbitration: ad hoc arbitration and institutional arbitration. Both options have advantages and disadvantages, but the important thing is that the arbitration clause clearly specifies which route the parties have chosen.

2.1 Ad hoc arbitration

This type of arbitration is not administered by any specific institution. The parties are responsible for organising the entire procedure, from selecting the arbitrators to establishing the procedural rules.

This form offers greater flexibility and can be more economical, but it also entails certain risks, especially if every procedural aspect has not been properly addressed in the arbitration clause. It is essential for the parties to include supplementary procedural rules (for example, the UNCITRAL Rules), as the absence of an organising entity may lead to delays or disputes on how to proceed if procedural disagreements arise.

2.2 Institutional arbitration

This is managed by a specialised entity, such as the ICC, the Madrid Court of Arbitration, or the International Centre for Settlement of Investment Disputes (ICSID). These institutions have pre-established rules and administrative structures that support the procedure.

Although it may involve slightly higher costs, it offers a guarantee of order, efficiency and professionalism. Furthermore, the institutions act as a neutral support, helping to resolve procedural conflicts.

3. Why include it in my contract?

The main reason to include an arbitration clause in a contract is efficiency. Arbitration can be faster than ordinary court proceedings, and it offers confidentiality—something highly valued in commercial disputes.

Another advantage is specialisation: arbitrators are often experts in the subject matter of the contract, which allows for more in-depth technical analysis in a specific sector than a generalist judge might provide.

Moreover, if the contract has an international dimension, an international arbitration clause helps avoid jurisdictional conflicts between courts of different countries, offering greater legal certainty.

The arbitral award, in turn, is enforceable in most countries thanks to the 1958 New York Convention, which facilitates its enforcement.

4. What should an arbitration clause contain?

A model or well-drafted arbitration clause should contain at least the following elements:

• Clear agreement of the parties to submit to arbitration.
• Type of arbitration: institutional or ad hoc.
• Chosen arbitral institution, if applicable.
• Seat of arbitration, that is, the place where the award will be deemed legally issued and whose procedural law shall govern the procedure (lex arbitri).
• Language of the arbitration.
• Number of arbitrators and method of appointment.
• Procedural rules applicable to the arbitration (especially in ad hoc arbitration).
• Law applicable to the substance of the dispute, either in the arbitration clause or in the main contract. If the lex arbitri differs from the substantive law, it is advisable to expressly establish the law applicable to the arbitration agreement itself, in accordance with the “principle of separability.”

It is important to avoid ambiguities, because a poorly drafted clause can become ineffective and provoke additional disputes. Therefore, each element must be clearly defined.

5. How to draft an arbitration clause?

5.1 Common errors when drafting an arbitration clause

One of the main errors when drafting an arbitration clause is being vague or overly generic. For example, phrases such as “the parties shall submit to arbitration” without defining the scope of the clause may create uncertainty regarding the procedure and, consequently, disputes over how the arbitration should be carried out or what matters are subject to arbitration.

Another common error is failing to designate the seat of arbitration, since the seat determines not only the physical location but, more importantly, the procedural law applicable to the arbitration and the jurisdiction that may review the validity of the final award. Likewise, the language of the arbitration is often omitted, which is crucial, especially in international contracts, to avoid misunderstandings and unforeseen translation costs.

Similarly, failing to define the number of arbitrators or the method of appointment is also a risky omission. For example, in complex disputes, it may be necessary to have a tribunal of three arbitrators instead of a sole arbitrator, and this should be clearly stated.

5.2 When is an arbitration clause invalid?

An arbitration clause may be declared invalid for various reasons. The most obvious is if it breaches public policy provisions or contradicts mandatory rules of the country whose law governs the contract.

It may also be invalid if it lacks essential elements such as the clear consent of the parties, or if the subject matter of the dispute is not arbitrable (e.g., criminal or family matters in many countries).

In addition, a poorly drafted or contradictory clause may generate such a degree of ambiguity that a court could declare it unenforceable.

Another aspect to consider is the compatibility between the arbitration clause and the main contract. However, pursuant to the “principle of separability” recognised in Article 22.1 of the Spanish Arbitration Act, the arbitration clause may survive even if the main contract is declared null and void, unless such nullity also affects the clause itself.

6. Conclusion

The drafting of an arbitration clause in a contract should not be taken lightly, as it is a strategic decision that can significantly impact how future disputes are resolved. If a party wishes to ensure legal certainty, resolve disputes more quickly, and maintain confidentiality and control over the process, including an arbitration clause is essential. It is therefore advisable to seek sound legal advice on arbitration matters to safeguard the interests of a project or contract—especially if international in scope—both now and in the future.

La entrada The Arbitration Clause in Contracts: What Factors to Consider and How to Draft It Correctly se publicó primero en Gamero & Bravo Abogados.

One of the most relevant is the proportional appointment system of directors, provided for in Article 243 of the Ley de Sociedades de Capital (LSC, Spanish Companies Act), whose purpose is to facilitate the representation of minority shareholders on the Board of Directors of Sociedades Anónimas (S.A., public limited companies). In the case of Sociedades Limitadas (S.L., private limited companies), this mechanism does not apply by default and is only possible if it has been expressly agreed in the company’s bylaws.

What is a Board of Directors?

The Board of Directors is a collegiate management and representative body of the company, whose existence must be provided for in the bylaws. It is more common in Sociedades Anónimas, where its regulation is more detailed, whereas in S.L.s simpler forms of management are more frequently used (sole director, joint or several directors).

The members of the board (directors) are appointed by the general meeting of shareholders. In S.A.s, the board itself may also provisionally appoint new directors to fill vacancies through the mechanism of co-option (Art. 244 LSC).

What is the proportional appointment system?

Article 243 LSC grants minority shareholders of an S.A. the right to appoint directors if they group together a number of shares equivalent to the capital required to obtain a seat on the board, according to a proportional formula.

Its operation is as follows:

Shareholders may pool their shares until they reach at least the percentage of the share capital resulting from dividing the total capital by the number of board members. Once this threshold is reached, they are entitled to directly appoint a number of directors proportional to the capital they represent.

Example:

In an S.A. with share capital of 500,000 euros and a board of 10 members, the threshold to appoint one director would be 50,000 euros (500,000 / 10).

A group of shareholders that aggregates that amount may appoint one director. If they reach 100,000 euros, they may appoint two.

The law does not require a minimum number of directors to apply this system, but its practical effectiveness increases in larger boards, where the capital needed to appoint a representative is lower.

This mechanism ensures pluralism in management, allowing minority shareholders to access key information, participate in strategic decisions, and exercise more effective oversight over management.

What rights does a minority shareholder have?

Minority shareholders have a set of rights recognised by the LSC, aimed at balancing power within the company and preventing abuses by the majority shareholder. Among the most relevant:

• Right to information (Arts. 196 and 197 LSC): access to documentation to be submitted to the meeting and, in some cases, to additional information relevant to the company’s management.
• Right to request the convening of a general meeting (Art. 168 LSC): provided they represent at least 5% of the share capital, both in S.L.s and S.A.s.
• Right to request the appointment of an auditor by the Mercantile Registry (Art. 265.2 LSC): when the company is not subject to mandatory audit and a 5% minority requests it.
• Right to bring a corporate liability action (Art. 239 LSC): when directors breach their legal or statutory duties.
• Right to challenge corporate resolutions (Arts. 204 et seq. LSC): when they are contrary to the law, the bylaws or harm the corporate interest in favour of majority shareholders or third parties.

What happens when the minority is blocked?

In practice, it may happen that the minority shareholder, despite these rights, suffers systematic blocking by the majority. Common examples include:

• Unjustified refusal to provide relevant information.
• Repeated exclusion from dividend distribution.
• Difficulties in exercising their right to proportional representation (in S.A.s).
• Adoption of resolutions harmful to the corporate interest.
• Approval of transactions for the exclusive benefit of the majority shareholder.

In such situations, the minority shareholder has legal and corporate actions available to protect their rights. Among others, they may demand judicial access to information, challenge harmful corporate resolutions, bring liability actions against directors, or even judicially claim the recognition of their right to appoint directors under Art. 243 LSC.

Conclusion

The proportional appointment system of directors is an essential instrument to strengthen balance and transparency in the management of Sociedades Anónimas. Although it does not apply automatically to Sociedades Limitadas, it can be provided for in the bylaws to offer minority shareholders an effective avenue of representation. Having a seat on the board not only enables oversight but also strengthens the minority shareholder’s bargaining power in strategic decisions. Acting with knowledge and professional support is key to enforcing these rights and avoiding internal conflicts escalating into litigation that is difficult to reverse.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

NEED HELP?

At Gamero & Bravo Abogados, we have a team of experts in resolving commercial disputes, designing complex contracts, and representing clients in international arbitrations. Write to us, and we will be happy to assist you.

La entrada Board of Directors: How does the proportional appointment system of directors for minority shareholders work? se publicó primero en Gamero & Bravo Abogados.

What is an appeal before the CAS?

The CAS may act as an appellate tribunal for decisions issued by sports federations, leagues, Olympic committees, or other sporting bodies. In these cases, parties may file an appeal in accordance with the CAS Code of Sports-related Arbitration, within 21 days of receiving the reasoned decision.

Such appeals aim to review the legality of the decision, its consistency with applicable regulations, and compliance with due process. Appeals may involve misapplication of sports rules, errors in evidentiary assessment, or procedural violations.

Who can appeal?

Any party affected by a sporting decision that recognises CAS jurisdiction may file an appeal, including:

• Athletes sanctioned for doping or disciplinary offences;
• Clubs subject to sporting or contractual sanctions;
• Federations contesting decisions by international or supranational bodies;
• National Olympic Committees;
• Licensed agents or representatives with standing to appeal.

CAS appeal procedure

The appeal process involves several stages:

1. Notice of appeal: Filed within 21 days, identifying the parties, the contested decision, and the scope of the appeal.
2. Appeal brief: A formal submission detailing the legal grounds and evidence.
3. Appointment of arbitrators: According to the CAS Code.
4. Oral hearing or written proceedings: Depending on the complexity of the case.

Costs of the procedure

Proceedings before the CAS may be:

• Free of charge in certain cases (e.g. amateur doping matters), pursuant to Article R65 of the CAS Code;
• Standard proceedings, with a CHF 1,000 filing fee, plus arbitrators’ fees, legal representation, and procedural costs.

Estimated duration

In general, a CAS appeal is resolved within 90 to 180 days. Expedited procedures are available for urgent cases, such as during ongoing competitions.

Appeals against CAS awards: Review by the Swiss Federal Tribunal

In principle, CAS awards are final. However, under Article 190(2) of the Swiss Private International Law Act, it is possible to file a motion to set aside the award before the Swiss Federal Tribunal. This is not an appeal on the merits, but a review limited to fundamental procedural guarantees:

• Improper constitution of the arbitral tribunal;
• Lack of jurisdiction;
• Decision beyond the scope of the request for relief;
• Violation of the right to be heard;
• Incompatibility with Swiss public policy.

Such grounds must be raised within 30 days from the notification of the award.

Conclusion

Filing an appeal before the CAS or seeking to set aside one of its awards is a highly specialised process. Understanding the applicable time limits, legal grounds, and procedural requirements is key to maximising the chances of success. Expert legal representation in international sports arbitration is essential in these situations.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

NEED HELP?

At Gamero & Bravo Abogados, we have a team of experts in resolving commercial disputes, designing complex contracts, and representing clients in international arbitrations. Write to us, and we will be happy to assist you.

La entrada CAS: How to Appeal a Decision Before the CAS and When It Is Possible se publicó primero en Gamero & Bravo Abogados.

Many business owners are unaware that paying a director’s salary without following this procedure may be treated as a non-deductible gratuitous payment, with significant financial and legal consequences.

The question of how much a director should earn must also be addressed from a legal and market-based perspective. It is not merely about assigning a number, but about justifying the amount based on the level of responsibility, the size of the company, and alignment with market standards, always within the limits approved by the general meeting. It is also essential to apply the correct income tax withholding to avoid problems with the tax authority and ensure the process is legally sound.

What does a company director do?

A company director is responsible for the management and legal representation of the business. This includes signing contracts, representing the company before public authorities, and ensuring full legal compliance. The director plays a central role in guiding the strategic direction of the company and overseeing its daily operations.

This position entails not only leadership but also significant legal and financial liability. In cases of mismanagement or legal breaches, the director’s personal assets may be at risk. The position may be unpaid or remunerated, but if the remunerated nature of the role is not expressly set out in the company’s articles, any payment will be invalid under commercial law and non-deductible for tax purposes.

Types of governance structures in a private limited company

A private limited company in Spain may be managed under various governance models:

• Sole director: One person holds all management and decision-making powers. This is the most common model for small businesses.
• Joint and several directors: Two or more directors may each act independently on behalf of the company.
• Joint directors (acting jointly): Two or more directors must act together to bind the company, increasing internal control but slowing down operations.
• Board of directors: A collegiate body with at least three members, which makes decisions by majority and may delegate executive functions to one or more managing directors.

Each model has different implications for decision-making and director remuneration, which must always comply with the articles of association and resolutions of the general meeting.

How much does a director earn?

There is no standard answer. The director’s remuneration depends on the company’s size, the scope of responsibilities, the time commitment required, and — most importantly — what is provided in the articles and approved by the shareholders.

The amount must be reasonable and proportionate to the responsibilities and the company’s financial situation.

Special attention must be given to retired directors. In general, receiving remuneration for an active directorship is incompatible with claiming a retirement pension, except in limited situations such as “active retirement.” A prior legal analysis is essential to avoid losing pension entitlements or incurring penalties.

How should director remuneration be structured?

This is one of the most complex and error-prone areas. Director remuneration is not a matter of free choice; it is subject to legal and judicial requirements.

1. The “link theory”: always a commercial relationship

When a person is appointed as a company director, their relationship with the company is legally considered commercial, not employment-based. If the same person also performs executive or managerial functions, Spanish case law (the “link theory”) considers that the commercial relationship overrides and absorbs any employment relationship.

Practical effect: All payments received, whether for directorship or management functions, are treated as director remuneration and must follow commercial law requirements. It is not legally valid to receive a salary under an employment contract for managerial duties while also being paid separately as a director.

2. Tax and social security treatment

• Income tax (IRPF): The director’s remuneration is subject to a flat-rate withholding: generally 35%, or 19% for companies with a turnover under €100,000 in the previous year.
• Social security: A director who exercises effective control and management of the company (often through shareholding) must be registered under the self-employed social security regime.
• No invoicing allowed: A director cannot invoice the company for their management or executive services. This practice is considered irregular by the tax authorities.

Articles of association and legal requirements

Two key conditions must be met for director remuneration to be valid and tax-deductible:

• Articles provision: The articles of association must clearly state that the role is remunerated and specify the method of remuneration. Generic or vague clauses are not sufficient.
• Shareholder approval: The general meeting must approve, each year, the maximum total amount that the company may pay to its directors. Without this resolution, any payment may be classified as a non-deductible gratuitous benefit.

How to check if someone is a company director

The official way to confirm whether a person is a registered director is to request a company extract from the Companies Registry in the province where the company is domiciled. For the appointment to have legal effect against third parties, it must be properly registered.

The appointment should also appear in the company’s incorporation deed or in the minutes of a shareholders’ meeting. This is especially important since, as noted above, directors can face personal and even unlimited liability in certain situations.

Conclusion

Director remuneration is a key element of corporate governance. Ensuring transparency, strict compliance with the company’s articles and shareholder resolutions, and proper structuring under commercial law is critical — not only for legal and tax validity, but also for the company’s financial integrity and professional standards.

In today’s increasingly regulated environment, it is essential to understand the applicable tax and social security rules, as well as the personal liability directors may face. Early legal advice is the best way to avoid penalties, protect the director, and strengthen the legal and financial health of the company.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

NEED HELP?

At Gamero & Bravo Abogados, we have a team of experts in resolving commercial disputes, designing complex contracts, and representing clients in international arbitrations. Write to us, and we will be happy to assist you.

La entrada Director’s Remuneration in a Spanish Private Limited Company se publicó primero en Gamero & Bravo Abogados.

This article examines how foreign judgments and arbitral awards are recognised and enforced in Spain, distinguishing between arbitral awards, judgments from EU Member States, and those from third countries.

What is an arbitral award and how is it enforced in Spain?

An arbitral award is the decision that concludes an arbitration proceeding, rendered by one or more arbitrators appointed by the parties. According to Article 43 of the Spanish Arbitration Act (Law 60/2003, of 23 December), final awards have the same enforceability as a final court judgment.

Enforcement of domestic arbitral awards

If the award was issued in Spain, it is enforced under the rules established in the Spanish Civil Procedure Act (Ley de Enjuiciamiento Civil, or “LEC”). The enforcement process begins before the Court of First Instance of the place where the award is to produce legal effects, through the filing of an enforcement petition accompanied by the original or an authenticated copy of the award.

Enforcement of foreign arbitral awards: the exequatur process

To enforce an arbitral award issued outside Spain, prior judicial recognition is mandatory through the exequatur procedure, governed by:

• The 1958 New York Convention.
• Article 46 of the Spanish Arbitration Act.
• Supplementarily, the Spanish Civil Procedure Act.

Phase 1: Recognition (Exequatur)

Recognition must be requested before the Civil and Criminal Chamber of the High Court of Justice (Tribunal Superior de Justicia, or TSJ) of the Autonomous Community where the award is to take effect (Article 8.6 of the Arbitration Act).

Phase 2: Enforcement

Once recognised, the award may be enforced before the competent Court of First Instance (Article 545.3 LEC), as if it were a judgment rendered by a Spanish court.

What is the exequatur?

The exequatur is the judicial procedure by which Spain recognises the legal effectiveness of decisions issued by foreign courts or arbitral tribunals. Its purpose is to ensure that such decisions respect public policy, reciprocity, and fundamental rights, in accordance with the requirements of the Spanish legal system.

How are foreign court judgments recognised and enforced in Spain?

The applicable procedure depends on whether the judgment originates from an EU Member State or a third country.

Judgments from EU Member States

Regulation (EU) No. 1215/2012 (Brussels I bis) abolished the exequatur requirement between EU Member States. Judgments from other EU countries are automatically recognised and can be directly enforced in Spain as if they were national judgments.

Judgments from non-EU countries

In these cases, the exequatur procedure is required under Law 29/2015, on international legal cooperation in civil matters, unless a bilateral treaty exists that exempts the judgment from this requirement.

Who is responsible for handling the exequatur procedure?

How long does the process take?

The duration of the procedure depends on:

• Whether an exequatur is required.
• Whether there is opposition.
• The workload of the competent court.

Estimated average: between 6 months and 1 year for the exequatur. Enforcement thereafter is usually processed more swiftly.

Conclusion

Both foreign arbitral awards and court judgments can be enforced in Spain, provided that the appropriate legal procedures are followed. Proper identification of the applicable regime (direct enforcement or via exequatur), thorough preparation of the required documentation, and the involvement of experienced legal professionals are essential to ensure the enforceability of foreign decisions within Spanish jurisdiction.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

NEED HELP?

At Gamero & Bravo Abogados, we have a team of experts in resolving commercial disputes, designing complex contracts, and representing clients in international arbitrations. Write to us, and we will be happy to assist you.

La entrada How to Enforce an Arbitral Award or a Foreign Judgment in Spain se publicó primero en Gamero & Bravo Abogados.

Nevertheless, its exercise is regulated by law to ensure it is used legitimately and not abusively, thereby also safeguarding the corporate interest.

Below, we analyse the scope of this right, its legal framework under the Spanish Companies Act (Ley de Sociedades de Capital, “LSC”), and the circumstances under which it may be restricted or exempted.

What Is the Shareholder’s Right to Information?

The right to information is an essential entitlement recognised by law, enabling shareholders to access certain information regarding the operation of the company in which they hold an interest. Its legal basis lies in Article 93(d) of the LSC, which includes it among the core rights of shareholders.

Although Article 93 LSC enshrines this right, its specific content, scope, and the manner and timing of its exercise are governed by other provisions of the Law, mainly those relating to the calling and holding of general meetings (Articles 196 and 197 LSC) and the right to examine documentation concerning the annual accounts (Article 272 LSC). It is therefore not an abstract right to request any information at any time.

This right is particularly significant for minority shareholders, as it provides a tool for overseeing management and ensuring that directors act diligently and loyally, in accordance with the law and the company’s articles of association.

What Is the Legal Framework for the Right to Information at the General Meeting?

The primary regulation of the right to information in the context of general meetings is found in Articles 196 and 197 of the LSC, with differences depending on the type of company:

• Article 196 LSC (Private Limited Companies – S.L.):

“Shareholders may request in writing prior to the meeting, or orally during the meeting, such reports or clarifications as they deem necessary regarding items included on the agenda.

The administrative body is required to provide the information, unless, in its judgement, disclosure of such information could be detrimental to the company’s interests (this exception does not apply if the request is supported by shareholders representing at least 25% of the share capital).”

• Article 197 LSC (Public Limited Companies – S.A.):

“Shareholders may request information or clarifications regarding items on the agenda, or submit written questions in advance: up to the seventh day prior to the scheduled date of the meeting. The directors must respond in writing by the date of the meeting.

During the meeting, shareholders may orally request information or clarifications regarding the same matters. If it is not possible to respond at that time, the directors must do so in writing within seven days following the conclusion of the meeting.

Refusal to provide information is more restricted in S.A.s: it is only permitted if the information is unnecessary for the protection of the shareholder’s rights, if there are objective reasons to believe it could be used for purposes unrelated to the company, or if its disclosure could harm the company or its affiliates (Article 197.3 LSC). Refusal is not permitted if the request is supported by shareholders holding at least 25% of the capital (or the lower percentage set by the articles, with a minimum of 5%).”

It should be noted that the LSC does not recognise a general right to inspect documents in S.A.s similar to that which may exist in S.L.s under certain conditions (Article 272.3 LSC regarding supporting documents for the annual accounts).

When Can the Right to Information Be Exercised?

The right to information is mainly exercised in the following legally established contexts:

• Before and during General Meetings: As detailed above, shareholders may request information and clarifications on specific agenda items, in accordance with Articles 196 and 197 LSC.
• Approval of Annual Accounts: Article 272 LSC grants any shareholder the right to obtain, free of charge and immediately from the time of the meeting notice, the documents submitted for approval (accounts, management report, audit report if applicable). In addition, in S.L.s, shareholders holding at least 5% of the capital may examine supporting documentation for the accounts at the company’s registered office.
• Other cases: Outside these scenarios, access to specific information or documentation (e.g. detailed accounting, specific contracts, etc.) is not automatic. If a shareholder believes they require further information, for instance in the event of well-founded suspicions of irregularities or to assess specific transactions, they must request it from the administrative body. If the board refuses (arguing, for example, detriment to the corporate interest or lack of standing), the shareholder may seek judicial relief to assess the appropriateness of the request, provided they can demonstrate a legitimate interest and the relevance of the information.
• The specific right to request an audit (Article 265.2 LSC): It is important not to confuse the right to information with the right granted to shareholders holding at least 5% of the share capital in companies not required to have their accounts audited. These shareholders may request the Commercial Registrar of the registered office to appoint an auditor to review the accounts for a specific financial year, provided no more than three months have elapsed since the financial year-end. This is a specific and independent action, distinct from the general right to information.

When Is the Exercise of the Right to Information Considered Abusive?

The exercise of the right to information is limited by the corporate interest and the principle of good faith. It is considered abusive when a shareholder uses it for purposes other than those provided by law, such as:

• Making repeated, excessive or indiscriminate requests with the aim of obstructing management;
• Seeking access to sensitive information (industrial secrets, commercial strategies) for purposes unrelated to the company, such as providing it to competitors;
• Using the right as a tool for coercion or blackmail against management or other shareholders.

In such cases, the board may refuse the requested information, providing justification based on the protection of the corporate interest (Articles 196.2 and 197.3 LSC). The burden of proof for the abusive nature of the request or the harm to the corporate interest lies with the board if the shareholder challenges the refusal. Whether abuse has occurred is a matter of judicial assessment and depends on the specific circumstances.

Considerations Regarding Related-Party Transactions and the Duty of Loyalty

At times, the right to information is exercised to monitor transactions that may involve conflicts of interest, such as a transaction between the company and one of its directors. In such cases, beyond the shareholder’s right to information, specific rules come into play, such as:

• The directors’ duty of loyalty (Articles 227 et seq. LSC), which requires them to prioritise the corporate interest over their own;
• The prohibition on participating in the deliberation and voting of resolutions in which a conflict of interest exists (Article 228.c LSC);
• The rules governing related-party transactions, which are particularly stringent in listed companies (Article 529 vicies et seq. LSC).

The right to information allows shareholders to obtain data to verify that such transactions are conducted on arm’s length terms and in compliance with directors’ fiduciary duties.

Conclusion

The right to information is an essential tool for shareholders, but its exercise is defined and limited by the Spanish Companies Act. It is crucial to understand the procedures, timing, and limits established in Articles 196, 197 and 272 LSC to exercise it legitimately and effectively, and to distinguish it from other mechanisms such as the request for an audit under Article 265.2 LSC.

In case of doubts about its scope or if the company refuses to provide information, it is advisable to seek specialised legal advice in Madrid to assess the appropriate course of action.

ABOUT GAMERO & BRAVO ABOGADOS

Gamero & Bravo Abogados is a firm specializing in commercial law, commercial litigation, and arbitration, focusing exclusively on advising businesses. We offer strategic legal solutions tailored to sectors such as construction, real estate, finance, sports industry, and logistics, both in Spain and in international projects.

If you want to learn more about our services or need personalized legal advice, feel free to contact us at info@gamerobravo.com.

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La entrada The Shareholder’s Right to Information Under Spanish Law: Scope, Limitations, and Legitimate Exercise se publicó primero en Gamero & Bravo Abogados.

In an increasingly globalized world, international expansion is a strategic necessity for many companies seeking to capitalize on new business opportunities in foreign markets. However, this process is not without its risks and challenges, particularly when it comes to resolving contractual disputes. The differences in legal, cultural, and economic systems between countries can significantly complicate the protection of commercial interests abroad. In this context, international arbitration emerges as an indispensable tool for investment protection and ensure legal stability in cross-border commercial transactions.

What is International Arbitration?

International arbitration is an alternative dispute resolution mechanism designed to avoid going to court. Instead of submitting their disputes to the jurisdiction of a national court, the parties to an international transaction agree to resolve their disputes through arbitration, in which one or more independent and neutral arbitrators make a final and binding decision, known as an arbitral award.

Unlike other systems like mediation, it is important to clarify that the arbitrator’s decision is binding and has the same effect that a court judgment, which can be enforced coercively.

One of the main advantages of international arbitration is the neutrality of the forum. Unlike litigation in national courts, where one party might perceive bias in favor of the national counterpart, arbitration allows the parties to select a neutral tribunal. This neutrality is particularly valuable in international contracts, where differences in legal systems, languages, and regulatory frameworks can create uncertainty.

Moreover, international arbitration is supported by a robust and recognized legal framework, such as the 1958 New York Convention, which facilitates the enforcement of arbitral awards in over 160 countries, providing legal certainty rarely found in national courts.

The Arbitration Agreement: The Cornerstone of the Process

The success of international arbitration largely depends on the strength and clarity of the arbitration agreement that the parties establish. This agreement, which can be included in a clause within the main contract or in a separate agreement, sets the foundation for how disputes will be resolved.

A well-drafted arbitration agreement is essential to ensure an efficient and fair process. Below are some of the most important elements that should be included in an arbitration agreement:

• Scope of Arbitration: It is crucial to clearly define the disputes that will be subject to arbitration. A clear scope of the arbitration agreement avoids ambiguities regarding its applicability to certain disputes.
• Number of Arbitrators and Selection Process: The parties must decide whether the arbitration will be conducted by a sole arbitrator or by a tribunal of three arbitrators. It may also be advisable to agree on a fair and transparent selection process, although this may be unnecessary if an arbitration rule is chosen that addresses this issue.
• Seat of Arbitration: The seat of arbitration determines the applicable procedural law and affects the ease with which the arbitral award can be enforced. It is crucial to choose a jurisdiction with a solid reputation for supporting arbitration that is neutral to both parties.
• Applicable Rules: The parties must specify the procedural rules that will govern the arbitration, whether those of a recognized institution or a set of ad hoc rules. Most reputable arbitration institutions have arbitration rules that facilitate the conduct of the proceedings for both the parties and the arbitrators.
• Language of Arbitration: It is important to agree on the language in which the arbitration will be conducted, as this can have a significant impact on the costs and accessibility of the process.
• Governing Law: The parties must agree on the substantive law that will govern the dispute, which can be the law of one of the countries of the parties involved or a neutral law.
• Confidentiality: Arbitration allows the parties to maintain the confidentiality of the process and the final decision, which should be guaranteed in a specific clause in the arbitration agreement. Most arbitration rules also establish the confidentiality of the arbitration.

The Arbitration Procedure and the Award

Once the arbitration process is triggered, it follows a series of steps designed to ensure a fair and efficient resolution.

• Commencement of the Procedure: The arbitration formally begins when a party files a request with the arbitration institution or directly with the designated arbitrator.
• Constitution of the Arbitral Tribunal: Arbitrators are selected according to the terms of the arbitration agreement, ensuring that they possess the necessary experience and neutrality.
• Exchange of Written Submissions: The parties present their cases in writing, setting out their legal arguments and documentary evidence.
• Oral Hearing: In many arbitrations, a hearing is held where the parties present oral arguments, examine witnesses, and submit evidence.
• Deliberation and Arbitral Award: After the hearing, the arbitral tribunal deliberates and issues the arbitral award, which is the final and binding resolution of the dispute. The award, in most cases, cannot be appealed, except in exceptional situations.
• Enforcement of the Award: One of the advantages of international arbitration is the ease of enforcing the award, guaranteed by the New York Convention, which allows it to be enforced in nearly any country in the world.

Conclusion

International arbitration is an essential mechanism for companies seeking to expand globally and protect their investments in jurisdictions outside their home base. It offers a neutral and efficient forum for resolving disputes, backed by a solid legal framework that provides legal certainty in a complex global environment. To maximize the benefits of international arbitration, it is crucial to have a well-structured arbitration agreement that addresses all relevant aspects. With the right legal advice, companies can ensure that their interests are protected and that any disputes are resolved fairly and efficiently in their international operations.”

La entrada International Arbitration: key to protecting and expanding business globally se publicó primero en Gamero & Bravo Abogados.

The Civil and Criminal division of the Supreme Court of Justice of Madrid (the “TSJM“) had delivered a judgment on 8 January 2018, in a proceeding for the annulment of an arbitral award, declaring nullity of the award ex art. 41.1 f) of Law 60/2003, of 23 December 2003 on Arbitration (the “LA“).

The TSJM based the annulment of the award on the grounds of violation of public policy due to resulting from the infringement of the right to effective judicial protection ex art. 24.1 of the Spanish Constitution (the “CE“), due to the failure to state reasons for the award, as well as to a wrong assessment of the evidence.

An application for amparo before the Constitutional Court (the “Constitutional Court”) was submitted against the decision declaring the nullity of the arbitral award. The Constitutional Court decided to uphold the application for amparo, annulling the decisions delivered by the TSJM in its ruling of 15 February 2021 (application for amparo nº 3956-2018), whose reporting judge was María Luisa Balaguer Callejón (the “Ruling“).

1. Grounds for the amparo application

The application for amparo is based on the following grounds: (i) Art. 41 LA does not include among the reasons for the annulment of the award the control of the grounds of the arbitral award, therefore, the argumentation of the award is not a matter of public policy; (ii) court has imposed the canon of control of the duty to state reasons that is applicable to judicial decisions on the awards; and (iii) arbitration is not based on the principle of effective judicial protection (art. 24.1 EC).

2. Grounds for the Decision

The TC establishes in the Ruling that arbitration is an alternative dispute resolution mechanism that finds its constitutional basis in the principle of freedom of choice of the parties enshrined in art. 10 of the CE, which must be subject to minimal intervention by the courts:

“[I]n the recent STC 46/2020, of 15 June, FJ 4, to which we now refer, we have pointed out that arbitration -as it is configured by the Arbitration Law- is a dispute settlement mechanism, to which the minimum intervention of the jurisdictional bodies is consubstantial due to the due respect for the freedom of choice of the parties (art. 10 CE), […]”

In addition, in line with its recent ruling nº 46/2020, of 15 June, the TC confirms the criterion set out in the aforementioned judgement in and limits the scope of the action for the annulment of the arbitration award provided for in art. 41 of the LA. Indeed, the Ruling confirms the restrictive nature of the action for annulment, which must be limited, when judging a possible violation of public policy, to a review of the legality of the arbitration agreement and the arbitrability of the subject matter and the “procedural correctness of the arbitration proceedings”:

“We also recall that […] the action for annulment is the judicial control mechanism provided for in arbitration legislation in order to ensure that the arbitration proceedings comply with its rules, […] such control has a very limited content and does not allow for a review of the merits of the case decided by the arbitrator, nor should it be considered as a second instance […].

Now, once again, we must reiterate that the assessment by the competent judicial body of a possible contradiction of the award with public policy cannot lead to a new analysis of the matter submitted to arbitration, replacing the role of the arbitrator in the resolution of the dispute. Instead, it must be limited to a decision regarding the legality of the arbitration agreement, the arbitrability of the subject matter and the procedural correctness of the arbitration proceedings.

In this regard […] and, from the procedural point of view, public order is configured as the set of necessary formalities and principles of our procedural legal system, and only arbitration that contradicts any of these principles may be declared null and void for violation of public order. Therefore, the purpose of the action for annulment, can only be the analysis of possible procedural errors in the arbitration proceedings, in compliance with fundamental principles of due process, […]“

In this line, the TC warns about the dangers of excessive judicial intervention in the field of arbitration as a result of the extension of the concept of public order. Thus, the Ruling objected the criterion that had been held by some national courts:

“Also, in this recent STC 46/2020, we warned of the risks of over-extension of the concept of public policy as a ground for annulment of arbitral awards [art. 41 f) LA] and of the need to carry out a restrictive interpretation of the concept. Otherwise, there would be a risk of violating the freedom of choice of the parties (art. 10 EC) and their specific waiver of the jurisdiction of ordinary courts (art. 24 EC). It must therefore be firmly established that the ground provided for in Article 41(1)(f) of the LA cannot allow the courts hearing the action for the annulment to replace the criterion reached by the arbitrator […].

In other words, the possible court review of the award and its conformity with public policy cannot lead to a substitution of the arbitral tribunal by the court in applying the law. Nor is it a second instance to review the facts and law of the award, or a mechanism for controlling the correct application of case law”.

On the other hand, the Ruling addresses the duty to state reasons applicable to arbitration awards, decoupling it from art. 24 of the CE and basing it exclusively on the requirement set out in art. 37.4 of the LA. On this premise, the TC states that it is not required that the arbitration award contains an exhaustive assessment of all the arguments and facts presented by the parties. Instead, it is sufficient if the award allows to know the criteria on which it is based:

“Moreover, with regard to the argumentation of the awards, it should be clarified that an exhaustive and detailed argumentation of all aspects and perspectives that the parties may have is not even required, since the right to obtain a well-informed decision, favourable or adverse, is a guarantee against arbitrariness and unreasonableness and this, in arbitration, implies that the decision must contain the elements and grounds, which must not be arbitrary, that allow the legal criteria or the equitable basis on which the decision is based to be known […]

We say that the duty to state reasons does not have the same nature in both kinds of decisions, because in the case of judicial decisions it is a requirement inherent to the right to effective judicial protection ex art. 24 CE. However, for arbitration awards, this obligation appears in Art. 37.4 LA […] it is a requirement of exclusive legal determination, and it could therefore be dispensed at the behest of the legislator.

[…] Art. 37.4 LA only provides that “the award shall always state the reasons”, but it does not expressly impose that the arbitrator must decide on all the arguments presented by the parties or that he must indicate the evidence on which he has based his decision on the facts, or give reasons for his preference of one piece of evidence over another. The only legal specifications on the content of the award […] are negative, since they refer to the limitations imposed on the arbitral decision, derived from the provisions of Art. 41.1 LA on the grounds for annulment of the award, […]. That is to say, the legal provisions only state that the award must contain a statement of the grounds on which the decision is based, but not that the argumentation must be convincing or sufficient, or that it must necessarily extend to certain points. […] this duty to state reasons for awards is exclusively determined by the law, and does not stem from art. 24.1 CE, it would be illogical to understand that this brief legal provision contains a stricter rule than the one imposed on judicial bodies, […]“.

When setting out the basis on which the duty to state reasons by judicial decisions and awards should be reviewed, the TC clarifies that the expression “jurisdictional equivalent” referring to arbitration does not imply that it must comply with the requirements of the duty to state reasons of judicial decisions, but rather that the said term refers to the effects of res judicata which can be extended to awards:

“It may be that the confusion that this Court has been observing in some rulings, such as the one that is now subject matter of the application for amparo, has been caused by the use in our first rulings (SSTC 15/1989, 26 January; 62/1991, 22 March; 288/1993, 4 October; 17411995, 23 November; and 176/1996, 11 November) – and then reiterated in later ones – of the term “jurisdictional equivalent” to refer to arbitration. If that was the cause, it is necessary to clarify that such equivalence specifically refers to the effect of res judicata that is produced in both types of proceedings, judicial and arbitral”.

Furthermore, the TC criticises the criterion adopted by the TSJM, considering that the said court annulled the award exclusively due to a discrepancy of opinion between what was decided by the arbitrator and what the TSJM would have ruled, had the dispute been resolved by the latter. Therefore, the Ruling establishes that the court deciding the action for annulment is not allowed to decide on the merits of the case:

“As the applicants for amparo and the public prosecutor make clear, the judicial body, on analysing the award, concludes that the arguments offered by the arbitrator […] are insufficient because all the evidence was not assessed, most of all because the pre-existing legal proceedings between the parties were not taken into account. […] Similarly, the Civil and Criminal Division of the High Court of Justice of Madrid does not share the assessment of the evidence made by the arbitrator, […] Now, the fact that the same conclusions are not drawn from the evidence only implies the existence of a division of opinions among the arbitrator and the judicial body, but in no way can we speak of a breach of the duty to state reasons in the award or of an unreasonable decision by the person who was in charge of settling the dispute. […] In short, from the reading of the contested arbitral award it can be concluded that it contains sufficient and logical argumentation, without it being possible to appreciate any kind of breach, incoherence or contradiction.

[…] the decision of the judicial body to annul the award for insufficient argumentation (art. 37 LA), was contrary to the constitutional canon of reasonableness of judicial decisions (art. 24.1 CE), a conclusion that is further reinforced by the conduct of the TSJM, which reviewed the merits of the case exceeding the constitutional limits of the duty to state reasons and the principle of congruence. […]

As it can be seen, the argumentation of the contested decision only shows its discrepancy in the legal assessment made by the arbitrator and, therefore, once again, it should be recalled that the action for annulment can only refer to errors in procedendo, and cannot lead to a review of the application of substantive law by the arbitrators, that is, that arbitral decisions can only be annulled on the basis of the failure to comply with the requirements of the due process in the arbitral instance […]”.

Finally, and in this sense, the TC concludes by warning that the criterion applied by the TSJM represents a sort of transformation of the action for annulment, which should only be an exceptional remedy to be applied for specific and exceptional reasons: “[i]n view of this, it is manifestly unreasonable and clearly arbitrary to try to include in the notion of public policy ex art. 41 f) LA what simply consists of a mere review of the assessment of the evidence carried out by the arbitrator, because through this evidentiary review what is being done is a real transformation of the action for annulment, which is an extreme and exceptional remedy that cannot be based on purely formal infringements, but which should only serve to address situations of real and effective defencelessness or violations of fundamental rights or to safeguard Spanish public order […]” .

3. Implications of the Ruling

With the Ruling, the TC has guaranteed the legal certainty provided by arbitration as a method of dispute resolution in line with what it had already decided in its previous Ruling nº 46/2020, of 15 June.

Thus, the TC connects arbitration with the execution of the principle of freedom of choice by the parties stated on Art. 10 of the CE, consolidating constitutional endorsement. In addition, and in this sense, the TC reinforces its protection by (i) restricting the action of the jurisdictional courts in charge of deciding the action for annulment of the award, as well as (ii) clarifying the criteria of the duty to state reasons required for arbitration awards.

The Ruling constitutes a milestone of great importance for the consolidation of arbitration in Spain by definitively consolidating the legal certainty provided by Spain as a seat of international arbitration.

This endorsing decision of the TC constitutes the ultimate boost for international investors to opt for Spain as a benchmark seat for arbitration, in view of the legal certainty provided by the new established criteria of the TC, as well as considering the competitiveness and efficiency in the administration of international arbitrations provided by the recently created Madrid International Arbitration Centre (CIAM).

La entrada Arbitration and public order in the action for annulment of arbitral awards in Spain: Review of the Constitutional Court ruling of 15 february 2021 se publicó primero en Gamero & Bravo Abogados.

“International arbitration has been the principal vehicle for the development of international trade during decades. In a world whose economic growth has been based on the increase in commercial transactions, the existence of mechanisms that provide security to companies and that guarantee the integrity of their transactions has become a real necessity.”

[…]

“Far from dampening its growth, arbitration in Spain has taken a giant step forward in 2020 and 2021 thanks to the creation of the Madrid International Arbitration Centre (CIAM), as well as to the Spanish Constitutional Court’s rulings protecting arbitration in Spain. These accomplishments have been highly praised by the Spanish arbitration community. Additionally, these developments have been complemented by the recognition recently given by the Global Arbitration Review (GAR), which has recognised Spain as the country in the world that has made the greatest progress in this field.”

[…]

“At the same time, the Spanish Constitutional Court has delivered a few judgements, between June 2020 and the first half of 2021, in which it has definitively endorsed arbitration as a dispute resolution mechanism. Thus, the support provided by the Constitutional Court’s clarification of the very restricted criteria to be followed by Spanish judicial bodies when reviewing the validity of arbitration awards issued in our country consolidates Spain’s position as one of the most solvent and secure international arbitration seats.”

[…]

“For all these reasons, there is no doubt that Spain has now the opportunity to position itself as a world reference arbitration seat, especially given its close relationship with Latin America, its enormous Spanish-speaking market and the leading position of Spanish infrastructure and energy companies in international markets.”

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