Spain's Supreme Court rules on third-party notice in construction disputes

Background

In 2010, a legal proceeding was brought against a construction company and the project's leading architect due to construction defects, both of which were covered by their respective insurance companies. The architect requested the intervention of the technical architect, which was judicially agreed upon through an order. However, the plaintiff did not extend his claim and, during the proceedings, the architect withdrew his request to call in the quantity surveyor. 

However, the court of first instance convicted the architect and the quantity surveyor jointly and severally. The conviction was overturned by the Provincial Court, which acquitted the quantity surveyor on the grounds that it was not possible to convict the third party against whom the claim had not been extended — and therefore addressed. The architect's insurer fulfilled the condemnation on behalf of its insured.

In 2016, the insurer brought an action for reimbursement against the construction company and the quantity surveyor under the Building Regulations Act and the Insurance Contracts Act. Following opposition by the defendants, the first instance judgment upheld the claim, condemning the builder and the quantity surveyor jointly and severally. 

The defendants appealed against this judgement, and the Provincial Court upheld the surveyor's appeal, finding the lack of conviction of the surveyor in the previous proceedings and that the insured architect had withdrawn from the third-party notice in the previous proceedings.

The insurance company appealed to the Supreme Court.

Scope of the third-party notice

The Building Regulations Act provides a procedural mechanism – a third-party notice – in its seventh additional provision, which allows the building agent who has been sued to bring into the process those other agents involved in the construction of the building who, not having been sued by the plaintiff, he considers to be responsible.
Supreme Court Judgment number 4105/2024, of 9 July 2024 resolved the cassation appeal mentioned, collecting and confirming the settled doctrine on the operability of this third-party notice. 

Two questions ratified

In particular, the judgment ratified the question of the intervening third party acquiring the procedural status of a defendant only and exclusively in cases where the claim is directed against him. In other words, if the plaintiff does not bring any action or claim against the intervening third party, the summons to the latter is not equivalent to the compulsory extension of the claimAs a result, while the third party may have the same rights to plead and defend themselves as a defendant from a formal standpoint, they will not be considered a party in the matter. Consequently, any judgement rendered cannot either condemn or acquit them.

It also ratified that, even if they do not become a defendant in the proceedings, there is no impediment for the judgment to analyse the specific circumstances of the liability of the third parties involved. Moreover, those called to the lawsuit are bound by the statements made in the judgement regarding their actions in the construction process and will not be able to allege that they are not involved in these matters in a subsequent lawsuit.

Osborne Clarke comment

In the examined resolution, the High Court upheld the cassation appeal and returned the proceedings to the Provincial Court. The judgement determines that there is no obstacle to examining the agent's liability in the construction process, especially when he was neither convicted nor acquitted in the first lawsuit—in which, it should be remembered, the claim had not been extended.