SPAIN Trends and Developments Contributed by: Gonzalo Ardila, Margarita Morales, Fátima Mallén and Alberto Witzl, Hogan Lovells Cadwalader
The third section examines a dual development – one ruling from the Court of Justice of the European Union, the other from the Spanish Supreme Court – that is redrawing the permissible boundaries of ancillary insurance financing within loan agreements. Both rul- ings converge on a single critical principle: when an insurance premium is financed as part of a loan’s prin- cipal, courts will scrutinise the genuine transparency of the arrangement and the availability of effective alternatives for the consumer. Read together, these decisions carry significant implications for bancas- surance distribution models and for the litigation risk associated with single-premium insurance products embedded in consumer and mortgage credit. The fourth and final section analyses two recent Supreme Court judgments that address core struc- tural questions in directors’ and officers’ (D&O) liability insurance. The rulings confront the consequences of marketing D&O policies drafted under Anglo-Saxon legal traditions – particularly the exclusion of legal- entity directors from the definition of “insured” – and establish important criteria regarding the standing of a shareholder to claim, as an injured third party, under a D&O policy taken out by the company whose director caused the loss. Together, these decisions underscore the urgent need for policies marketed in Spain to be adapted to the specificities of Spanish corporate and insurance law. Across these four areas, a common thread emerg- es: the Spanish courts are assuming an increasingly active role in defining the contours of insurable risk, and the pace of judicial and regulatory change is out- stripping the adaptation capacity of many existing policy wordings. For insurers, reinsurers, brokers and corporate policyholders operating in the Spanish mar- ket, understanding these developments is no longer optional – it is essential. Does a Product Recall Amount to a Defect? Recent Supreme Court Doctrine and Its Implications for Product Liability Insurance The recent judgment of the Spanish Supreme Court (Civil Chamber), issued in cassation appeal No 8763/2024 on 6 May 2026, represents a turning point in the interpretation of liability for defective prod- ucts, with significant implications for medical device
manufacturers and insurers. The dispute arose from a metal-on-metal hip prosthesis implanted in 2007 and explanted in 2014. The device was destroyed in accordance with standard hospital protocols, mak- ing any subsequent expert examination impossible. One year later, the manufacturer issued a safety notice contraindicating the product for female patients and withdrew from the market femoral heads with certain characteristics – including the one implanted in the claimant – due to a revision rate higher than originally anticipated. On this basis, the Supreme Court over- turned the judgment of the Provincial Court and held that the prosthesis was defective despite the impos- sibility of examining the specific implanted unit. The ruling is particularly noteworthy because it sig- nificantly relaxes the evidentiary requirements tradi- tionally associated with the defective product liability regime. Article 139 of the Consolidated Text of the General Consumer and User Protection Act (TRLGD- CU) requires the injured party to prove the defect, the damage and the causal link. The Provincial Court had held that, since the explanted prosthesis no longer existed, it was impossible to demonstrate a specific defect in the implanted unit. The Supreme Court, how- ever, accepted that defectiveness could be inferred from indirect evidence, such as information obtained through post-market surveillance, observed revision rates, or safety measures adopted in relation to the product. From the perspective of manufacturers and their insurers, the judgment raises important concerns. In particular, it ultimately concludes that the product was defective even though the specific unit could not be examined and without conclusively identifying the precise nature of the defect alleged to have caused the claimed damage. The key issue raised by the decision is not so much a formal alteration of the rules governing the burden of proof, but rather the weight attributed to information generated years after the product was placed on the market. The Court states that a product recall does not necessarily mean that the product was defective when it was first put into circulation. Nevertheless, in practice, the safety notice, the contraindication for certain patients, and the withdrawal of specific prod-
218 I NSURANCE L I T IGATI O N 2026
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