Dispute resolution 2012 e-report

January / February 2012 • IBERIAN LAWYER • www.iberianlawyer.com

IBERIAN LAWYER

DISPUTE RESOLUTION REPORT 2012Hanging up the gloves

An abstract from Iberian LawyerJanuary / February 2012

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We are living through a period of constant change, which is bringing unforeseen and unique cha-llenges. Who can say what will happen tomorrow, let alone during the year ahead.

In 2011 over 1,240 in-house lawyers participated in the In-House Club events across Spain and Portugal – Barcelona, Lisbon, Madrid – as well as London, Miami and New York.

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excellent format for debating legal issues.” Beatriz Martinez-Falero, General Counsel,

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Hanging up the gloves

In a downturn it is law firms’ litigators and arbitrators that become the stars, goes conventional thinking. A drop in transactional activity may be matched, or even exceeded, by a rise in disputes. There has been a huge rise in the number of cases but this is also bringing a need for new approaches to resolving them, meaning lawyers must have more weapons in their armoury. Companies must be prepared to fight, but they must also be open to talk.

“There has been a clear upturn in litigation and arbitration since the onset of the financial crisis and in many cases these disputes are much more complex than before,” says Mercedes Fernández, Managing Partner of Jones Day in Madrid.

Cases are rising further up the corporate agenda, with shareholder, contractual and finance disputes more common. The way businesses approach such claims is therefore taking more strategic importance. Three years into the downturn and lawyers question whether they are riding a still-growing wave of claims.

“The financial crisis is far from over and we believe that we are nowhere near a peak in the number or type of disputes being seen,” says Carlos de los Santos Lago, disputes Partner at Garrigues. “However, the number and relevance of judicial disputes has not been as significant as one would have expected when the crisis first broke.”

Lawyers may debate whether firms’ litigation and arbitration practice are truly anti-cyclical but nonetheless agree that

En épocas de recesión los procesalistas y

árbitros son los que se convierten en las

estrellas del mercado legal. La caída en la

actividad transaccional ha sido igualada o

incluso superada, por un aumento en el número de disputas. Los despachos

de abogados afirman, sin embargo, su deseo de que la economía se

recupere, aún a expensas de la ola creciente de

demandas y contra demandas en España y Portugal. No cabe duda

de que los abogados procesalistas están más

ocupados que nunca.

in the past few years they have become busier than ever as the economy has turned bad. “I am not sure if litigation is a real counterbalance but it has certainly grown in weight relative to the levels of corporate activity seen at our firm,” says Miguel Virgós, Partner at Uría Menéndez in Madrid.

A rising trendSince the onset of the financial crisis in 2007, and the bursting of Spain’s real estate bubble in 2008, the downturn has seen a rise in specific kinds of disputes. With a dramatic increase in claims arising out of the construction and financial sectors – including mis-selling claims – and an inevitable spike in insolvency and bankruptcy-related actions.

“In my opinion, the economic crisis has generated a new type of judicial procedure on the basis of bank or financial contracts of complex figures, financial derivatives and swaps, and in regard to which I don’t believe that we are anywhere near reaching the maximum peak,” says Jordi Calvo, litigation Partner

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rise in the number of non-performing loans, foreclosures and in insolvency proceedings.”

The downturn is therefore all-pervasive and businesses have to adapt their operations and strategies according to reduced revenues. Among the most significant trends has been an increase in credit claims for very high amounts, debt recovery and proceedings by multinational companies led by commercial restructuring and insolvencies, as well as collective dismissals, says Sandra Ferreira Dias of Franco Caiado Guerreiro

in Lisbon, among others.It is no surprise that labour disputes continue to be

on the rise. “There has been a significant increase in legal claims between employers and employees regarding the most sensible interpretation of labour rights including, for instance, even the concept of overtime,” says Ana Claudia Rangel of Raposo Bernardo in Lisbon.

Considered casesYet despite the upturn in the volume of cases lawyers emphasise that formal disputes are not being entered into lightly. Cases are taking on greater strategic importance but companies are much more careful about costs of fighting them.

“We have seen a rise in contractual disagreements and disappointments, but clients are not filing claims without careful thought. They are much more conscious of the risks, the costs and the management time involved with pursuing claims,” says José María Alonso, Head of Dispute Resolution at Baker & McKenzie in Madrid, and member of the Steering Committee of the Global Arbitration Group.

Both the merits and demerits of pursuing a case are being more carefully analysed, many emphasise. “As a consequence of the downturn there has been a clear increase in debt recovery litigation however, with respect to complex commercial litigation we do not perceive a similar trend. Many clients are now increasingly hesitant to start cases due to the fact that they may result in significant expenses with an often uncertain outcome,” says David Arias, Head of Litigation and Arbitration at Pérez-Llorca in Madrid.

An inevitable concern is the potential cost of making, and defending, a claim. With liquidity already tight, companies therefore increasingly want certainties over how much they are putting at risk.

Clients want their lawyers to be more creative in the ways in which they approach disputes, adds Arias.


02

at Roca Junyent.Likewise, lawyers report that the hangover from the

transactional boom of the last decade is also now being played out in the courts. “We have seen a large number of claims emanating out of corporate transactions entered into before the downturn, which have turned out not to have met the parties’ expectations in one way or another,” adds Fernández at Jones Day.

According to some sources, insolvencies in Spain have increased by nearly 20 percent over the last year alone, further overwhelming the Commercial Courts.

“Construction companies and real estate developers continue to lead the number of insolvency requests. Unfortunately, in 2012 we will continue to see intense activity by the Commercial Courts in relation to such proceedings,” says Guillermina Ester, litigation and arbitration Partner at Pérez-Llorca. “Additionally, banks are continuing their recovery proceedings, mainly related to the enforcement of mortgage loans.”

Regulated sectorsIn Portugal, the same trends are clearly evident, say lawyers. Financial pressures are bearing down on companies and more are wrestling with their contractual obligations. In addition, the downturn has been characterised by an upturn in claims between regulated businesses.

“There is a rise in issues across all areas of the economy, but we have seen peaks in specific sectors, notably banking, telecoms and in industrial sectors, where companies are short of liquidity but the competition is most fierce,” says Frederico Goncalves Pereira, Head of Disputes at Vieira de Almeida (VdA) in Lisbon.

Here too there is a perception that we have not yet reached the crest of the wave in the number nor value of claims, especially in areas such as commercial litigation and debt recovery.

“Companies have experienced a large increase in the number of cases involving real estate guarantees such as liens and mortgages, while the number of insolvency cases has grown exponentially,” says Nuno Líbano Monteiro, Head of Insolvency & Restructuring and Litigation at PLMJ. “But 2012 will be economically and financially far more complicated and this means that litigation will increase; we will see a significant further

We have seen a large number of claims emanating out of corporate transactions entered into before the downturn, which have turned out not to have met the parties’ expectations in one way or another. Mercedes Fernández, Jones Day

“”



03

“There is also a clear move away from invoicing on an hourly rate basis and indeed for us, the application of fixed fees or other alternative fee arrangements is not a problem. There are always additional issues that come up in any case, but we are confident that we have the experience to foresee what may happen.”

The use of hourly rates in litigation is now therefore a thing of the past. “Clients want to manage their costs and part of this is driven by the fact that there is an increased number of disputes arising from cash shortage problems, which themselves are leading to very complex litigation cases,” says José Luis Huerta, Managing Partner of Hogan Lovells in Madrid.

The same drive towards certainty over costs and fixed fee arrangements is also evident in Portugal.

“When there is money in the system conducting litigation is not perceived as

a luxury, within a crisis environment it may be,” says Miguel Pinto Cardoso, Head of Disputes at Linklaters in Lisbon.

Companies are therefore being most forthright when they believe they have the strongest of claims, suggest others. “It is not true that businesses are being flippant. Each claim comes with a cost, and in this environment everybody is more careful. Clients want to be cost effective and to ensure that they recover the money spent, and are looking more towards a combination of hourly rates with success fees,” agrees Fernando Aguilar de Carvalho, Disputes Partner at Uría Menéndez - Proença de Carvalho in Lisbon.

Aggressive strategies For businesses that have the funds

for litigation there is the question of the strategy to be employed. For some it may be a straight fight, but for a growing number of companies the launch of court proceedings is often a first step towards negotiating a settlement.

“It is difficult to make a statement that is valid in general terms, but we do now see people go to trial for things that some years ago would have probably stayed out of court, simply because there has been a change of mentality. Companies and individuals have become both more nervous and aggressive,” says Francisco de Malaga, Head of Disputes at Linklaters in Madrid.

Some clients are though looking to find faster and

more cost-effective solutions even if that implies having to waive some claims, say others. “It is an approach that presents a challenge for lawyers as it compels us to constantly offer the proper advice to facilitate their negotiation objectives without undermining their legal position,” says de los Santos Lago at Garrigues.

Others nonetheless believe that companies’ evident willingness to resort to litigation is no different to that seen in previous times, it is just that there are significantly more claims. This has however two major effects, says Fernando Gonzalez of Squire Sanders in Madrid: “First, an increased frequency of out of court settlements, as many companies still prefer ultimately to avoid lengthy and costly litigation, and second, increased litigation concerning breaches of contract.”

A more forthright position also works both ways. “Clients are more constructive in their use of litigation. However, the reverse is also true, given the downturn, the serious threat of litigation is also taken a bit more seriously by defendants,” says Calvin Hamilton, Principal of Madrid boutique Hamilton Abogados.

More room for litigation means also that businesses are placing greater focus on avoiding disputes in the first place, note others.

“This is an important part of companies’ overall negotiating strategy, as in the current economic scenario disputes are likely to arise sooner than expected. External counsel are increasingly being used as preventive instruments during negotiations, where their participation is perceived as an investment rather than a cost,” says Gonzalo Stampa of Stampa Abogados in Madrid.

Despite the evident pressures facing businesses, lawyers can still help clients to better focus their frustrations. “Parties become naturally less patient and flexible, although not necessarily more effective,” says Antonio Teles, Partner at Sérvulo in Lisbon.

Others in the market suggest that a rush to file a claim can anyway bring about unintended results. “In some cases, companies have used procedural means to force debtors to pay debts even if those procedures are manifestly inadequate: for instance, creditors have requested the insolvency declaration of their debtors merely to force them to pay,” explains Miguel Esperança Pina Litigation Partner at Cuatrecasas Gonçalves Pereira in Lisbon.

There is a rise in issues across all areas of the economy, but we have seen peaks in

specific sectors, notably banking, telecoms and in industrial sectors, where companies are short of liquidity but the competition is most fierce. .

Frederico Goncalves Pereira, Vieira de Almeida

“”



relation to the impartiality and ‘corporatism’ of professional arbitrators,” says Borja de Obeso, Partner with Gómez-Acebo & Pombo.

This perception is changing but very slowly, says Calvin Hamilton. It is a situation that is in direct contrast to the willingness of many international companies to choose arbitration almost by default. The most sophisticated clients are even now adopting a hybrid method to pursuing claims, he adds. “This involves tiered clauses where

the parties require that an attempt is made to reach an amicable solution, including a cooling-off period, prior to commencing litigation. Indeed, some Arbitration Tribunals are often being asked to decide whether or not the applicable cooling-off criteria has been met.”

Lawyers in Portugal also agree that there is still an element of misunderstanding around the use of arbitration for domestic disputes, but concrete steps are being taken to reinforce parties’ comfort in the system.

“We are seeing a rise in domestic cases as the Courts become increasingly overwhelmed and parties increasingly want to have someone who understands their business sector and the specific issues in dispute to decide their cases,” says Cardoso at Linklaters in Lisbon. In Portugal, the construction sector is among the most advanced in the use of arbitration but more has to be done to ensure wider acceptance.

Resistance still exists as corporate and in-house lawyers are not familiar with ADR solutions and therefore contracts still do not usually contain specific clauses for it. “But the new UNCITRAL-inspired Portuguese Arbitration Law will hopefully help to speed the evolution,” says José Miguel Júdice, Head of Arbitration at PLMJ.

The process is already obligatory in many IP disputes, while last December saw the approval of a new Voluntary Arbitration law, changing Portugal’s Civil Code Procedure Act – recognising the enforcement of foreign arbitral awards, and the granting of interim injunctions.

“Clients seem to be willing to explore ADR methods, particularly arbitration. This has always been the case with international clients but there is a clear domestic trend as well, which has been further bolstered by the successful practice of commercial arbitration centres and the publication of a new and modern legal framework,” says Tito Arantes, Head of Disputes at Uría Menéndez - Proença de Carvalho.

Reforming the systemThe changes being seen by lawyers in the type and volume of case emerging out of the economic downturn therefore present new and different challenges, they say. Both in terms of their substance and the means by which they are increasingly being resolved.

In Portugal, the volume of cases and inefficiencies of the court system has finally moved the Government

Likewise adopting an aggressive litigation strategy can backfire. “I am not entirely convinced that choosing litigation is the best means of putting pressure on another party, unless each side has deep pockets and the best legal team,” says Goncalves Pereira at VdA. “The only major instances in which we see companies using litigation strategically is for private enforcement where no other alternative exists. But even here, in the telecoms or competition fields, it is only really the beginning of a trend.”

In very complex cases, parties usually only ever resort to the courts when there is no other option on the table, say others. “Portuguese clients, relative perhaps to multinational businesses, are certainly less ready to enter into litigation,” says Aguilar de Carvalho at Uría Menéndez - Proença de Carvalho.

Alternative methodsOne tangible outcome of the upturn in cases has clearly been the overwhelming of many Commercial Courts, largely the result of a deluge of insolvency cases, say lawyers. Frustrations with the judicial process and delays in proceedings are however helping to push clients (some reluctantly) to consider other forms of dispute resolution methods. The primary alternative being arbitration, as both Spain and Portugal see the ongoing modernisation of rules.

Spanish companies still prefer to go to Court every time they consider that they are right, and often regard settlement as a sign of weakness, say lawyers, but the Arbitration Court of Madrid is reportedly now hearing its first billion euro claim.

“There has certainly been growth. But, as far as domestic arbitration is concerned, there still appears to be a degree of reluctance on the part of some Spanish companies. Some in-house lawyers do not want to go to their CEO and say that they have chosen domestic arbitration over litigation, they need to get more personally involved. After all, the client usually chooses the arbitrator but it never chooses the judge” says Arias at Pérez-Llorca.

The recurring issue is a lack of confidence in arbitration institutions and arbitrators, and unfamiliarity with the system, say others. “In general, companies accept that arbitration can provide a final solution to their disputes more quickly than the ordinary courts. Nevertheless, there are suspicions, particularly in

In the old days the Spanish firms had much to learn from the global players in terms of conducting international cases, but nowadays we have done our homework, gained experience and provide the same level of services. David Arias, Pérez-Llorca

“”


to propose significant reform to both the make-up and location of the Commercial Courts, including the creation of dedicated, IP, competition, regulatory and supervisory Courts. Moves are also underway to update the country’s arbitration rules.

Such developments are broadly welcomed but some nonetheless suggest that the judicial system has seen prior change without success.

“There are procedural issues but mainly structural, like the effectiveness of court management to look after and schedule cases. Arguably we do not need major reform we just need more and better organisation,” adds Miguel de Almada, Disputes Partner at Morais Leitão Galvão Teles Soares da Silva.

With a body of domestic expertise built up over decades and in challenging judicial and commercial environments, firms are also increasingly looking to export their disputes capabilities. It is an area of practice in which many Spanish and Portuguese lawyers believe they can complete with the largest international law firms.

“For disputes involving Portuguese or Spanish-speaking parties, I consider that there is no need whatsoever to look for expertise out of the Iberian arena,” says Jose Alves Pereira, Partner with Alves Pereira & Teixiera de Sousa in Lisbon.

As Iberian businesses continue to grow

internationally new opportunities are therefore opening up to lawyers. “In the old days the Spanish firms had much to learn from the global players in terms of conducting international cases, but nowadays we have done our homework, gained experience and provide the same level of services,” says Arias at Pérez-Llorca.

Antonio Hierro at Cuatrecasas agrees. “For decades we have followed Spanish and Portuguese clients to Latin America and have built up a track record and experience of managing cases, alone and with local co-Counsel. It is hard to see how other international firms can be better placed to assist businesses across the region.”

Despite the wave of claims now overwhelming the Courts and Tribunals lawyers acknowledge however, that situation is not one that is good for the economy or even their law firms.

Litigation and arbitration practices may be booming and teams working non-stop but clients’ demand for more certainty over costs, a move towards fixed fee arrangements and a growing willingness to hang up their gloves and settle more often, means that revenues may still not match the corporate groups in the boom years. Disputes lawyers may be riding to the rescue of their clients but they may not save the day for their law firms.

05


Mediating changeWhen it comes to the use of mediation in resolving disputes there remain considerable hurdles to overcome across both Spain and Portugal. Not least a lack of understanding among businesses and lawyers alike of the process, say some.

“Due to the financial difficulties of many companies, creditors see litigation as the stage prior to reaching a new refinancing agreement. We should therefore be reasonably optimistic about Spain’s proposed Mediation Law, which is intended to promote the quick settlement of disputes and to help relieve the pressure on the domestic courts,” says Raul da Veiga, Disputes Partner at GOLD Abogados in Madrid.

The economic situation is already forcing companies to consider settlement proceedings that are often very close to what a mediation process is, suggests Santos at Garrigues. “The rate of success of such negotiations is very high and I believe that recourse to them will continue even after the end of the economic turndown.”

Lawyers recognise that mediation is effective but also that it is a distinct discipline that requires specific expertise. Nonetheless, despite the potential there remains a very shallow pool of qualified mediators.

“Mediation can be effective and much quicker than litigation through the Courts but part of the challenge facing it are the differences in approach parties encounter; there is no common standard,” says Álvaro Lobato, Disputes Partner at DLA Piper in Madrid.

In Spain there is also no “without prejudice” concept, note lawyers. Confidential terms may be agreed in mediation but should the negotiations fail a party may still rely on the information to support their case in court. If mediation is to become a credible alternative route, issues like privilege, judicial recognition and enforcement all have to be addressed, they say.

There is also no tradition of the use of mediation in Portugal where lawyers also raise concerns over the perception of the neutrality of mediators. A lack of understanding of the system means that clients may even expect their own lawyers to mediate for them.

“Often the challenge is simply to convince the client that mediation is a real option, and finding examples – of which there are admittedly few in public – that it does work,” says Miguel de Almada, Disputes Partner at Morais Leitão Galvão Teles Soares da Silva.

The ability to resolve a dispute in a matter of weeks rather than months or years nonetheless brings the potential for tremendous financial and time savings, and firms have therefore to play a role in promoting the process, insists Miguel Castro Pereira, Managing Partner of Abreu Advogados.

His firm has notably launched a Mediation Service aimed at non-clients of the firm, the first in Portugal. “We have taken the initiative because of what we see as rising demand. Mediation may be currently more common in personal disputes but we think it is also perfectly suited to resolving commercial disagreements,” adds fellow Disputes Partner Natália Garcia Alves.

Iberian Lawyer In-House Club is hosting a training for General Cousels on mediation. Please contact: [email protected]



Litigation as a strategy in a more challenging commercial environmentThe use of litigation to assert a commercial position is increasing as is the demand for more certainty in costs

It is no surprise that the challenging commercial environment in Spain has led to a rise in corporate disputes. The squeeze on finances and the economic slump have left many companies fighting for survival and businesses are increasingly turning to the courts for relief, but businesses are being more selective about what battles they fight.

Alejandro Fernández de Araoz, Partner at Madrid-based Araoz & Rueda, says that Spain’s financial turmoil continues to keep his firm active with the litigation team second only to the M&A department in terms of volume of work during 2011.

“We have seen an increase in the profile and number of specific types of litigation related to the economic situation,” he comments.

He gives the example of companies increasingly now using litigation as a tactic to attempt to either renegotiate or exit an existing agreement. This has resulted in deeper contractual scrutiny with every single clause in an agreement being inspected to see if there is an escape route.

“We have seen plaintiffs challenge contracts stating that they were signed on the basis of reasonable market conditions, which since the onset of the recession is no longer the case,” says de Araoz.

“As such, they claim that no-one could have anticipated the current economic turmoil so the agreement should be cancelled or that they are entitled to reduced payments.”

Litigation centred on such economic considerations is rising across Spain. Parties unable to pay bills are using the courts to stall enforcement processes and hoping that the other side will settle for a lower payment, he says. In addition, companies are attempting to avoid insolvency by launching court action as a way to stave off administrators and buy more time to resolve financial difficulties.

“Litigation is being used by companies as a means to prolong their existence because cases can drag on for years, which gives them more room to manoeuvre,” he adds.

The troubled banking sector, which has undergone major restructuring after

the collapse of many local saving banks (cajas), has also found itself under the spotlight. Many investors who were sold complex derivatives-based structured financial products in the boom times – and often benefitted from them – are now suing banks after the deals turned bad.

“Plaintiffs are claiming that they were mis-sold products or that they were not given a proper explanation of how the products worked and thus did not understand the risks involved,” says fellow Partner Íñigo Rodríguez-Sastre.

De Araoz is quick to point out however, that plaintiffs are not filing claims without careful thought. The loser often ends up with a heavy costs order, which “dissuades pointless cases”. Even so, while the recession has seen a surge in litigation in a bid for financial compensation, both plaintiffs and defendants are looking to reduce the costs associated with litigation.

Cients increasingly want to manage litigation in the most cost-effective manner, agrees Rodríguez-Sastre. First, they are settling sooner rather than later – it makes more economic sense to make a reduced payment to a plaintiff than take a case through a lengthy court process – and second, the mechanisms used to pay lawyers are also changing.

“Spanish clients increasingly struggle with the concept of litigation fees but are clearly now less willing to pay lawyers by the hour. More often we receive requests for fixed rates or a closed quote in order to better balance their costs.”

Rodríguez-Sastre and de Araoz acknowledge that the cost of litigation is a hot topic throughout Europe, and that in jurisdictions such as the UK reforms are underway which will ban the “loser pays” concept as well as “no win, no fee” contingency payment plans.

“Contingency fees were prohibited for a long time in Spain and were only allowed following a Supreme Court decision a few years ago. We may see a rise in requests for the use of contingency payments, including through success fees, but regardless why a client chooses litigation, most now want more certainty on costs,” concludes Rodríguez-Sastre.

El contexto actual en España, ha conllevado un crecimiento en el número de conflictos y litigios entre las empresas. Las dificultades financieras y la crisis económica ha dejado a muchas empresas luchando por sobrevivir y cada vez son más los que recurren a los tribunales como válvula de escape. Se están utilizando los procesos litigiosos como herramienta estratégica para retrasar acontecimientos, afirma Alejandro Fernández de Araoz e Íñigo Rodríguez-Sastre, de Araoz & Rueda.

Íñigo Rodríguez-Sastre

January / February 2012 • IBERIAN LAWYER • www.iberianlawyer.com 07


Energising the alternatives in dispute resolutionThe use of mediation may not be common in Spain but there is a steady trend among parties to explore new methods of resolving disputes

Los conflictos contractuales entre las partes están creciendo

en España, pero la tradicional preferencia por

los procesos judiciales está cediendo ante los

métodos alternativos de resolución de conflictos,

especialmente el arbitraje y la mediación, afirma

Gonzalo Stampa, de Stampa Abogados.

Gonzalo Stampa

Proposals to reorganise Portugal’s Commercial Courts will have an impact not only on where cases are decided but how, says Nuno Líbano Monteiro, Head of Disputes at PLMJ.

“A major challenge remains the length of time it takes for a cases, namely in the Commercial Courts. We have more judges per capita than any other European country yet the courts in Lisbon and Oporto continue to face a tremendous backlog, which is very difficult to explain especially to foreign clients.”

Portugal’s Minister of Justice has announced plans to close down a number of regional Courts and to concentrate resources in the main urban centres. This is intended to help refine the judicial process and create more specialised courts, but will require the relocation or redundancy of up to 80 Judges.

The plans are controversial, says Líbano Monteiro, but necessary. Targets to speed up the judicial process were

among the terms of the Memorandum agreed in Portugal’s €78bn financial assistance package. But what is proposed is different to the approach taken by the previous Government, which sought to extend the reach of the judiciary beyond the main urban centres.

“Access to justice is important but it cannot be right that you have to wait months for a simple interim measure in Lisbon while some regional courts seemingly have more staff than cases. A better balance has to be found.”

The draft proposals will now be sent before Portugal’s Parliament but are expected to come into effect in September, says Líbano Monteiro.

“The creation of the Commercial Courts was a positive first step but we need to go further and create dedicated IP, competition, insolvency and family courts and to better train Judges and others legal players. Resources are scarce so they have to be focused where most required.”

Reorganising Portugal’s Commercial Courts

La propuesta de reorganización de los

tribunales portugueses, cerrando algunos

tribunales y expandiendo otros en los principales centros financieros, no solo cambiará el lugar sino también el modo

en que se resuelven los casos, según Nuno Líbano

Monteiro de PLMJ.

Nuno Líbano Monteiro

Contractual disputes are on the rise among Spanish parties but a traditional preference for litigation is starting to give way to a rise in alternative dispute resolution, says Gonzalo Stampa, of Stampa Abogados in Madrid.

“We are seeing an increase in disputes particularly involving energy companies, for example, which are unable to connect to the national grid because of the failure of a contractor to finish project construction work on time.”

This is an issue of increasing importance in the renewable energy market because the Government is reducing the large subsidies, meaning there are significant financial risks if new projects are not finished before the relevant cut-off date.

“The ability of parties to obtain a quick resolution to their dispute and for it to be determined by experts with specific sector expertise, which arbitration offers, is therefore of significant importance,” says Stampa.

Spain experienced a boom in renewable

energy during the mid-2000s on the back of very generous feed-in tariffs – the price paid to producers to supply power to the grid. This encouraged the launch of hundreds of new projects although, following the decision to cut tariffs, the market has been thrown into uncertainty.

Stampa predicts that in the face of continuing issues in the sector, the number of disputes involving turnkey and Engineering, Procurement and Construction (EPC) contracts looks likely to increase. But he points out that some parties are looking beyond both litigation and arbitration, towards mediation.

“Mediation offers a means by which disputes may be resolved in a matter of weeks rather than months. But it can also be used to refine the issues in contention between parties. The process may still be new in Spain but it is an option that companies should increasingly consider, and the use of which will likely grow with the transposition of the EU Mediation Directive in the coming months.”

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The right tools for tracking company fraudThe nature of corporate fraud may have changed since the onset of the financial crisis but the need to remain vigilant has not, with “digital evidence” now a key tool in uncovering offenders

Prior to the financial crisis, the most serious frauds usually involved Senior Management using accounting manipulation, fictitious services or related companies, says Fernando Lacasa Cristina, of KPMG Forensic Fraud in Madrid.

“It is now however less easy to hide frauds in a context of corporate losses. The most common offences we now see are by less senior Directors, in support areas, with a big budget or involving at inflated prices,” he says.

Most misappropriations are often still only uncovered as a result of “tip-offs”, or by those companies with a good fraud prevention system when conducting internal reviews. “Where such checks do not exist, the discovery usually only comes when the offender makes some form of mistake or simply by chance.”

The Forensic Fraud team works with companies and law firms depending on how the offence is discovered, explains Lacasa Cristina. When irregularities are suspected but there is a lack of evidence

it is most often a company´s legal department that approaches them.

“When a fraud is detected and legal action taken, the issue then becomes one of helping a law firm calculate the value, to demonstrate how it has been carried out, and to produce documentary and expert witness testimony showing how it was covered up.”

Companies need therefore to remain vigilant in order to identify potential or actual frauds, they emphasise, with digital evidence now a vital tool on the detection trail.

“The information contained in companies’ IT systems can be vital so preserving this is crucial,” says Javier García Chappell, Forensic Technologies Manager at KPMG. “Businesses need to have in place the means to uncover any ‘smoking guns’ and part of this is ensuring that employees are aware of the privacy expectations surrounding communications, and the limits of their access to company IT systems.”

La naturaleza del fraude corporativo, ha cambiado desde los inicios de la crisis financiera mundial, introduciéndose nuevas herramientas como la “prueba digital”, sin embargo es clave para las empresas mantenerse vigilante en todo momento, comenta Fernando Lacasa Cristina.

Javier García Chappell

In difficult economic times, mediation offers many advantages to parties facing a dispute, says Thomas Gaultier, Of Counsel at Abreu Advogados and Co-Founder of the firm’s innovative Mediation Centre.

“Parties are able to resolve their dispute without incurring major costs, or the loss of time as would be suffered through the Court system, and without the risk of an often unpredictable judicial decision.”

Businesses are increasingly more protective of their assets but have fewer financial resources to protect themselves and this is where mediation stands out, he says. “It allows them to have control over a tailored solution that they themselves help reach, ultimately encouraging greater respect of the final settlement agreed.”

Despite such advantages, Gaultier accepts that many in the Portuguese legal community remain uncomfortable with the process in part due to a lack of understanding or a fear that the rule of law will no longer prevail. He believes

however that lawyers must adapt and embrace solutions that benefit both companies and lawyers – satisfied clients will generate more business.

In order to promote the process, he has helped launch a private mediation service with Abreu Advogados’ lawyers acting as mediators for parties who are not already clients of the firm.

“We strongly feel that this gives a breath of fresh air to the legal market. But it requires certain precautions, including ensuring mediators’ qualifications and conflict of interest verification,” he says.

The firm’s mediators will be trained and certified by an independent entity and adhere to the highest international ethical standards. “Mediation is an essential component of a modern legal market and our hope is that other firms help us change the current Portuguese reality in the best interests of all potential users.”

Private commercial mediation: an innovative solution

En épocas difíciles, la mediación ofrece muchas ventajas a la partes de un conflicto. El proceso es generalmente más corto, económico y flexible que los medios tradicionales de resolución de conflictos, afirma Thomas Gaultier, de Abreu Advogados.

Thomas Gaultier


D DDDDDDDD DDDDDDDDDDD DDDDDGUIDE TO LEADING LAWYERS

Sponsored section: A selection of law firms recommended within the internationally recognised directories and / or by clients.

Álvaro Lobato, DLA PiperAddress: Paseo de la Castellana 35, 2º, 28046 MadridTel: + 34 91 788 73 00 Fax: + 34 91 319 19 40Email: [email protected] Web: www.dlapiper.com Main practice areas: Litigation, Bankruptcy and Insolvency

Ana Cláudia Rangel, Raposo BernardoAddress: Avenida Fontes Pereira de Melo, Edificio Aviz 35, 18º, 1050-118 LisbonTel: + 351 21 312 1330 Fax: + 351 21 356 2908Email: [email protected] Web: www.raposobernardo.com Main practice areas: Litigation and Arbitration

António Teles, Sérvulo & AssociadosAddress: Rua Garrett 64, 1200- 204 LisbonTel: + 351 21 093 30 00 Fax: + 351 21 093 30 01Email: [email protected] Web: www.servulo.com Main practice areas: Corporate & Commercial and Litigation

Calvin A. Hamilton, Hamilton AbogadosAddress: Espalter 15, 1º Izq, 28014 MadridTel: + 34 91 429 77 40 Fax: + 34 91 420 39 06Email: [email protected] Web: www.hamiltonabogados.com Main practice areas: Litigation & Arbitration, Cross-Border Transactions (with jurisdictions including USA, The Caribbean, Latin America and Africa)

Alejandro Fernández de Araoz, Araoz & RuedaAddress: Paseo de la Castellana 164, 28046 MadridTel: + 34 91 319 02 33 Fax: + 34 91 319 13 50Email: [email protected] Web: www.araozyrueda.com Main practice areas: Litigation, National Arbitration and Corporate & Commercial

Enrique Bacigalupo, DLA PiperAddress: Paseo de la Castellana 35, 2º, 28046 MadridTel: + 34 91 319 73 83 Fax: + 34 91 788 73 99Email: [email protected] Web: www.dlapiper.com Main practice areas: Litigation and White Collar Crime

Borja de Obeso Pérez-Victoria, Gómez Acebo & PomboAddress: Paseo de la Castellana 216, 28046 MadridTel: + 34 91 582 91 00 Fax: + 34 91 582 91 14Email: [email protected] Web: www.gomezacebo-pombo.comMain practice areas: Civil, Criminal and Contentious-Administrative Litigation

Bernardo Cremades, Cremades & AsociadosAddress: Goya 18, 2º, 28001 MadridTel: + 34 91 423 72 00 Fax: + 34 91 576 97 94Email: [email protected] Web: www.bcremades.com Main practice areas: Litigation and Arbitration




Francisco Málaga, LinklatersAddress: Zurbarán 28, 28010 MadridTel: + 34 91 399 60 00 Fax: + 34 91 399 60 01Email: [email protected] Web: www.linklaters.com Main practice areas: Litigation & Arbitration, Bankruptcy & Insolvency and Mediation

Frederico Gonçalves Pereira, Vieira de Almeida & AssociadosAddress: Avenida Duarte Pacheco 26, 1070-110 LisbonTel: + 351 21 311 34 00 Fax: + 351 21 311 34 06Email: [email protected] Web: www.vda.pt Main practice areas: Litigation & Arbitration and Corporate Crime

Íñigo Rodríguez-Sastre, Araoz & RuedaAddress: Paseo de la Castellana 164, 28046 MadridTel: + 34 91 319 02 33 Fax: + 34 91 319 13 50Email: [email protected] Web: www.araozyrueda.com Main practice areas: Litigation, Insolvency and National & International Arbitration

Javier Juste Mencía, Gómez Acebo & PomboAddress: Paseo de la Castellana 216, 28046 MadridTel: + 34 91 582 91 00 Fax: + 34 91 582 91 14Email: [email protected] Web: www.gomezacebo-pombo.comMain practice areas: Corporate Law and Business Contracts

Jesús Carrasco, Squire SandersAddress: Plaza Marqués de Salamanca 3-4, 28006 MadridTel: + 34 91 4264840 Fax: + 34 91 4359815Email: [email protected] Web: www.squiresanders.com Main practice areas: Litigation & Arbitration, Intellectual Property and Insolvency

Guillermina Ester, Pérez-LlorcaAddress: Alcalá 61, 28014 MadridTel: + 34 91 436 04 16 Fax: + 34 91 436 04 30Email: [email protected] Web: www.perezllorca.com Main practice areas: Litigation & Arbitration, Mediation and Restructuring & Insolvency

Gonzalo Stampa, Stampa AbogadosAddress: Pedro de Valdivia 8, 28006 MadridTel: + 34 91 561 84 77 Fax: + 34 91 563 67 10Email: [email protected] Web: www.gstampa.com Main practice areas: Litigation & Arbitration, Corporate & Commercial, Energy & Utilities, Mediation and Construction & Engineering

Fernando González, Squire SandersAddress: Plaza Marqués de Salamanca 3-4, 28006 MadridTel: + 34 91 426 48 40 Fax: + 34 91 435 98 15Email: [email protected] Web: www.squiresanders.com Main practice areas: Litigation & Arbitration, Intellectual Property and Insolvency




Jesús Remón, Uría MenéndezAddress: Plaza de Rodrigo Uría, Príncipe de Vergara 187, 28002 MadridTel: + 34 91 586 03 71 Fax: + 34 91 586 07 42Email: [email protected] Web: www.uria.com Main practice areas: Litigation & Arbitration, Administrative Law, Constitutional and Commercial Law

João Medeiros, PLMJ - Sociedade de AbogadosAddress: Avenida Da Liberdade 224, 1250-148 LisbonTel: + 351 21 319 75 30 Fax: + 351 21 319 74 00Email: [email protected] Web: www.plmj.pt Main practice areas: Litigation and Criminal Law

Jordi Calvo Costa, Roca JunyentAddress: Aribau 198, 08036 BarcelonaTel: + 34 93 241 92 00 Fax: + 34 93 414 50 30Email: [email protected] Web: www.rocajunyent.com Main practice areas: Arbitration, Civil & Commercial Litigation, Distribution Agreements and Insurance

José Miguel Júdice, PLMJ - Sociedade de AbogadosAddress: Avenida Da Liberdade 224, 1250-148 LisbonTel: + 351 21 319 73 51 Fax: + 351 21 319 74 00Email: [email protected] Web: www.plmj.pt Main practice areas: Litigation and Arbitration

Manuel P. Barrocas, Barrocas AdvogadosAddress: Amoreiras, Torre 2,15th floor, 1070-274 LisbonTel: + 351 21 384 33 00 Fax: + 351 21 387 02 65Email: [email protected] Web: www.barrocas.pt Main practice areas: Litigation and Arbitration

José Luis Huerta, Hogan Lovells InternationalAddress: Paseo de la Castellana 51, 6ª, 28046 MadridTel: + 34 91 349 82 66 Fax: + 34 91 349 82 01Email: [email protected] Web: www.hoganlovells.com Main practice areas: Litigation & Arbitration and Mediation

José Alves Pereira, Alves Pereira & Teixeira de SousaAddress: Avenida da Liberdade 38, 3º, 1250-145 LisbonTel: + 351 21 370 01 90 Fax: + 351 21 382 90 03Email: [email protected] Web: www.alvespereira.com Main practice areas: Litigation & Arbitration, Corporate & Commercial and Mediation

Miguel Castro Pereira, Abreu AdvogadosAddress: Avenida das Forças Armadas 125, 12º, 1600-079 LisbonTel: + 351 21 723 18 00 Fax: + 351 21 723 18 99Email: [email protected] Web: www.abreuadvogados.com Main practice areas: Litigation (Criminal, Civil, Commercial), Arbitration & Mediation, Corporate & Commercial (M&A, Private Equity, Insolvency & Restructuring), Sports, Banking & Finance, Tax and Real Estate




Miguel Virgós, Uría MenéndezAddress: Plaza de Rodrigo Uría, Príncipe de Vergara 187, 28002 MadridTel: + 34 91 587 08 31 Fax: + 34 91 586 06 17Email: [email protected] Web: www.uria.com Main practice areas: International Litigation and Arbitration

Pedro Ramón y Cajal, Ramón y Cajal AbogadosAddress: Almagro 16-18, 28010 MadridTel: + 34 91 576 19 00 Fax: + 34 91 575 86 78Email: [email protected] Web: www.ramonycajalabogados.com Main practice areas: Litigation and Arbitration

Raúl da Veiga, GOLD AbogadosAddress: Almagro 31, 3º Izda, 28010 MadridTel: + 34 91 391 10 72 Fax: + 34 91 391 53 21Email: [email protected] Web: www.goldabogados.com Main practice areas: Litigation & Arbitration and Bankruptcy

Sandra Ferreira Dias, Franco Caiado Guerreiro & AssociadosAddress: Rua Castilho 39, 15º, 1250-068 LisbonTel: + 351 21 371 70 00 Fax: + 351 21 371 70 01Email: [email protected] Web: www.fcguerreiro.com Main practice areas: Dispute Resolution and Bankruptcy & Insolvency (Civil, Commercial and Corporate Crime)

Tito Arantes Fontes, Uría Menéndez - Proença de CarvalhoAddress: Edifício Rodrigo Uría, Rua Duque de Palmela 23, 1250-097 LisbonTel: + 351 210 308 684 Fax: + 351 210 308 601Email: [email protected] Web: www.uria.com Main practice areas: Litigation (Civil, Commercial and Corporate Crime), Arbitration and Restructuring & Insolvency

Pedro Metello de Nápoles, PLMJ - Sociedade de AbogadosAddress: Avenida Da Liberdade 224, 1250-148 LisbonTel: + 351 21 319 73 14 Fax: + 351 21 319 74 00Email: [email protected] Web: www.plmj.pt Main practice areas: Litigation and Arbitration

Nuno Líbano Monteiro, PLMJ - Sociedade de AbogadosAddress: Avenida Da Liberdade 224, 1250-148 LisbonTel: + 351 21 319 75 21 Fax: + 351 21 319 74 00Email: [email protected] Web: www.plmj.pt Main practice areas: Litigation & Arbitration and Restructuring & Insolvency

Miguel Esperança Pina, Cuatrecasas, Gonçalves PereiraAddress: Praça Marquês de Pombal 2, 1250-160 LisbonTel: + 351 21 355 38 00 Fax: + 351 21 353 23 62Email: [email protected] Web: www.cuatrecasas.com Main practice areas: Litigation & Arbitration and Restructuring & Insolvency

12


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IBERIAN LAWYER

An abstract from Iberian LawyerJanuary / February 2012

For further information please [email protected]

www.iberianlawyer.com

Documents

Dispute resolution 2012 e-report