Spain overhauls commercial courts role in insolvency reforms

On 17 August 2022, Organic Law 7/2022 of 27 July, amending Organic Law 6/1985 of 1 July 1985 on the Judiciary ("LOPJ", for its Spanish acronym) on Commercial Courts, entered into force. Law 7/2022 was passed as an urgent complimentary reform to the Insolvency Law to achieve the speed and efficiency required by Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019, on preventive restructuring framework, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency ).

To accomplish the objective required by European regulators, some adjustments have been made to the powers conferred to the Spanish commercial courts and the commercial law specialised sections of the provincial courts, thus amending articles 74, 82, 85, and 86 of the LOPJ. Likewise, Law 7/2022 "seeks to ensure that the very positive aspirations that justified the creation of the commercial courts and the specialised sections of the provincial courts by Organic Law 8/2003 of 9 July are not thwarted".

Commercial court powers adjustment

To achieve these objectives, the commercial courts have had their powers reduced by transferring to the courts of first instance the jurisdiction over collective actions provided for in the EU consumer protection rules and in the legislation on consumer rights. 

Likewise, the commercial courts are no longer competent to hear travel-related  claims based on international conventions and EU regulations (see box below), setting out that the courts of first instance are competent to hear them. In coherence with that, the specialised sections of the provincial courts are released from hearing the appeals of these matters as said powers have been transferred to the  civil sections of the provincial courts.

The reduction of commercial courts powers is counterbalanced by the attribution of jurisdiction  over insolvency proceedings of non-business natural persons.

Additionally, Law 7/2022, in order to achieve homogeneity in this field, establishes that in all provinces where there is more than one commercial court, the insolvency proceedings of natural person debtors must be distributed to a single court; and, if there are more than five commercial courts, to two or more equally specified courts.

In insolvency matters, and to coordinate the LOPJ with the Insolvency Law, the powers of the insolvency judge have been extended to social actions involving substantial modification of working conditions, transfer, dismissal, suspension of contracts, and reduction of working hours for economic, technical, organisational or production reasons of a collective nature, as well as those relating to the suspension or termination of senior management contracts. 

Additionally, the insolvency judge now has exclusive jurisdiction to hear restructuring plans, special procedures for micro-enterprises, and civil, administrative, and social preliminary questions related to or necessary for the conduct of the insolvency proceeding.

Progress in the specialisation of commercial courts

To move forward with the objective and continue with the specialisation route mentioned above, Law 7/2022 provides that, in addition to commercial courts specialising in bankruptcy of natural persons proceedings, there will also be commercial courts specialising solely and exclusively in intellectual and industrial property, unfair competition and advertising, all depending on the number of commercial courts existing in each province.

Along the same lines, the specialised sections of the provincial courts have been given jurisdiction to hear appeals brought against Spanish Patent and Trademark Office ("OEMP", for its Spanish acronm) decisions that exhaust administrative remedies, entering into force said attribution of jurisdiction on 14 January 2023. In this regard, the General Council of the Judiciary has the authority to decide that a specific section of the provincial court that is competent to hear appeals in this matter shall assume exclusive jurisdiction. 

Amendments to Civil Procedure Law

Law 7/2022 also amends Law 1/2000, of 7 January, on Civil Procedure ("LEC", for its Spanish acronym) in coherence with the transferred powers. By amending articles 45, 52.1.13, 249.1.4, and 468 LEC, changes are introduced concerning the processing of appeals against OEMP decisions which will be heard, under certain specifications, by means of oral proceedings. Moreover, new articles have been introduced to the LEC regarding the accumulation of actions, the accumulation of proceedings, and counterclaims– articles 73.1.1.1, 77.2, 250.3, 406.2, 477.4 and 477 bis – in order to "introduce a forum conexitatis in favour of the commercial courts to hear certain disputes outside their jurisdiction," and avoid contradictory decisions.