SPAIN Law and Practice Contributed by: Pablo Silván and Fernando Manzanedo, Ramón y Cajal Abogados, S.L.P.
hearings and disclosure of tribunal composition and funding. Spain’s evolving treaty practice increasingly reflects these norms, especially in light of EU-wide reforms to ISDS.
tional principles, such as proportionality or due pro- cess. 8.2 Methodologies for Quantum Assessment In Spanish law – especially in arbitration – valuation methodologies for quantifying damages are not rigidly prescribed, but tribunals and courts tend to rely on internationally accepted financial approaches, tailored to the nature of the claim and the available evidence. The most common valuation methodologies in Span- ish legal practice are the following. • Discounted cash flow (DCF) – most used in cases involving business interruption, expropriation, or loss of future profits. Spanish courts and arbitral tribunals accept DCF if projections are reliable, but they scrutinise assumptions rigorously. It is often challenged if the business lacks a track record or if future cash flows are speculative. • Market value/comparable transactions – used in shareholder disputes, M&A litigation, or investment treaty arbitration. Spanish tribunals may prefer this method when objective market data is available, and the asset is actively traded. • Cost-based/replacement cost – applied in con- struction disputes, property damage, or asset valuation. It is often used when income-based valuation is not feasible, such as for infrastructure or machinery. • Book value/net asset value – sometimes used in corporate disputes or insolvency-related claims. • Liquidation value – relevant in bankruptcy pro- ceedings or when a business is no longer a going concern. Spanish courts and arbitral tribunals require causation between the wrongful act and the loss, foreseeability and certainty of damages and expert evidence, often from forensic accountants or valuation specialists. 8.3 Recovering Interest and Legal Costs In investor–state arbitration involving Spain, parties are generally entitled to seek interest, legal and expert fees, and arbitral institution costs – but the awarding of these items depends on several factors, including the arbitration rules, the investment treaty, and the tribunal’s decision.
8. Damages and Valuation 8.1 Remedies
Spanish law imposes limits on the types of remedies that an arbitral tribunal may award – especially in investor–state arbitration or international arbitration seated in Spain. These limits are shaped by the Span- ish Arbitration Act (Law 60/2003), Spain’s civil law tra- dition, and public policy considerations. • Punitive damages are not permitted. Spain follows a civil law system, which does not recognise puni- tive damages. Enforcement of awards that include punitive damages may be refused in Spain on pub- lic policy grounds, especially under the New York Convention or Spanish enforcement rules. Spanish courts apply a triple test of legitimacy to assess whether a foreign award with punitive elements violates Spanish public order. • Rectification and specific performance are permit- ted. Tribunals may order contractual rectification, restitution, or specific performance, provided the remedy is legally available under the applicable law and it does not infringe sovereign powers or administrative prerogatives of the Spanish state. • Injunctions and interim measures are permitted with limits. Arbitral tribunals seated in Spain may grant interim relief, including injunctions, under Article 23 of the Arbitration Act. However, enforce- ment of such measures often requires judicial assistance, especially if they affect third parties or public entities. • Declaratory relief is permitted. Tribunals may issue declarations of rights or obligations, which are common in investor–state disputes (eg, breach of treaty, or unlawful expropriation). Spanish courts may refuse to enforce arbitral awards if the remedy violates Spanish public order, conflicts with mandatory legal norms or infringes on constitu-
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