SPAIN Trends and Developments Contributed by: Gonzalo Ardila, Margarita Morales, Fátima Mallén and Alberto Witzl, Hogan Lovells Cadwalader
bility of certain exclusions make these events fertile ground for increased litigation. The main source of uncertainty, however, lies not only in the magnitude of the loss event itself but also in the absence, to date, of a definitive technical determina- tion by the competent authorities and regulatory bod- ies regarding the causes of the blackout. Despite the economic and social significance of the incident, and the various analyses and reports published since then, the sector still lacks a sufficiently clear official conclu- sion capable of accurately establishing the chain of causation and, where appropriate, the corresponding liabilities. This circumstance has a direct impact on the insur- ance sector. Determining liability within the electricity industry requires a rigorous technical reconstruction of events, particularly in an environment involving mul- tiple participants engaged in generation, transmission, distribution and system operation activities. However, the lack of a conclusive official explanation has left room for differing interpretations regarding the ori- gin of the incident, making it more difficult to identify potentially liable parties and complicating insurers’ decision-making processes. The practical consequences of this uncertainty are evident. Insurers are compelled to make decisions regarding coverage, exclusions and potential subro- gation or recovery actions in a context of consider- able legal uncertainty. At the same time, policyholders face difficulties in identifying the parties against whom claims should be directed and the legal grounds upon which compensation claims should be based. In such a scenario, disagreements between the parties are almost inevitable, and disputes are likely to be resolved through litigation. Moreover, in the absence of a definitive official con- clusion, expert reports commissioned by insurers, insured parties and electricity system operators will likely play a central role in resolving these disputes. Discussions concerning the causes of the blackout and the allocation of liability will therefore be trans- ferred to the courts, where judges will be required to assess competing technical opinions and deter- mine which is supported by the evidence. This points
towards complex proceedings involving substantial evidentiary burdens and potentially lengthy litigation. In this context, and given the extraordinary scale of the event, some commentators have suggested a possible intervention by the Spanish Insurance Com- pensation Consortium ( Consorcio de Compensación de Seguros , or CCS) as a mechanism for compensat- ing losses. The closest precedent is the DANA (iso- lated high-level depression) that affected the Valencia region in October 2024, where the Consortium fully exercised its indemnification role because the event constituted an extraordinary risk expressly covered under the regulatory framework governing extraordi- nary-risk insurance compensation. However, the comparison is legally debatable. Unlike the DANA – a natural phenomenon expressly included among the extraordinary risks covered by the Consor- tium – the blackout of 28 April 2025 does not appear, based on the information currently available, to fall within any of the categories of extraordinary risks covered by the relevant legislation. Rather, it appears to involve an incident related to the operation of the electricity system and the possible conduct of specific operators, meaning that compensation issues would more appropriately be addressed within the frame- work of ordinary civil liability rather than through the CCS extraordinary-risk compensation scheme. In conclusion, the April 2025 blackout illustrates how systemic events affecting critical infrastructure can become significant sources of litigation for the insur- ance sector. The absence of a clear official conclusion regarding the causes of the incident and the potential allocation of responsibility has increased uncertainty for both insurers and insureds, shifting a substan- tial part of the dispute into the courts. It is likely that judicial decisions will ultimately play a decisive role in defining liabilities and establishing important prin- ciples for the management of future disputes arising from similar large-scale events. Limits on Financing Ancillary Insurance Within Loans 2026 is proving to be a turning point in the judicial treatment of ancillary insurance financed within the loan itself, with two developments converging from
220 I NSURANCE L I T IGATI O N 2026
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