Child theme index:

In particular, the Provincial Court of Leon (Judicial Division 2) recently handed down a ruling on January 4, 2019 that analyzes an intriguing issue regarding the applicability of the notice provided for in Article 25 of Law 12/1992 of May 27, on the Agency Contract Law (hereinafter “LCA”) for cases of a company terminating an indefinite term agency contract.

In the court case decided by the aforementioned ruling, it was essentially discussed whether the compensation sought by the agent pursuant to Article 29 of the LCA was appropriate in the event of a unilateral termination by the employer without providing the agreed upon two-month notice.

In this sense, Article 29 of the LCA stipulates that “Without prejudice to compensation for customers, employers who unilaterally terminate an indefinite term Agency Contract, shall be obligated to compensate the damages that, in its case, the early termination has caused to the agent, provided that it does not allow the amortization of the expenses that the agent, instructed by the employer, has incurred in order to perform the contract.”

On the other hand, Article 25 of the LCA states that “The indefinite term agency contract shall be terminated by the unilateral termination by either party by giving written notice” and “The notice period shall be one month for each year of the term of the contract, with a maximum of six months”, notwithstanding that “The parties may agree on longer notice periods, but the agent’s notice period may not be less than the employer’s notice period in any case“. Finally, the aforementioned regulation adds that “To determine the notice period for fixed term contracts that have been converted into indefinite term contracts by operation of law, the term the fixed term contract would have had shall be calculated by adding the time that has elapsed since the contract was converted into an indefinite term contract.”

The parties to the dispute in these proceedings entered into an agency contract where a company appointed another agent for the province of Madrid in order to exclusively carry out business transactions and actions for the products that it distributed in its price catalog. The plaintiff alleged that the contractual relationship between the parties was unilaterally terminated by the defendant in breach of the two-month notice period stipulated in the agency contract, therefore he should pay the relevant compensation for unjustified termination of contract.

The defendant challenged, along with other recitals, alleging that, in addition to, in his opinion, having fulfilled the contractually established notice period of two months, the agency contract entered into between the parties was to be deemed to be a fixed term contract and not an indefinite term contract and therefore a notice period would not even be necessary, despite appearing in the text of the contract between the parties, since the contract would end after one year.

The following was stated in clause seven of the contract entered into by the parties: “This Contract is entered into for one (1) year and shall thus expire on May 16, 2017, but will be automatically extended for another year if not otherwise communicated in writing at least 2 months prior to expiration.”

The legal arguments then are clear: the plaintiff understands that this automatic, indefinite extension for annual periods entails an indefinite term of the contract with the subsequent application of the provisions of Articles 25 and 29 of the LCA, in particular the compensation and the defendant understands that since the initial contractual term and its subsequent extensions is a fixed, finite period, notwithstanding their tacit renewal, the aforementioned provisions of the law do not apply.

The Court ruled on the previous issue stating that “Indeed, the issue is controversial and there is no peaceful response in the rulings of the various Provincial Courts, however, we believe, as we said in the previous Ruling dated February 26, 2018, that the contract subject to a tacit extension clause, as is the case, is more in line with an indefinite term agency contract than a fixed-term contract (in this sense, the Ruling of the Provincial Court of Asturias, Judicial Division 1, dated June 19, 2002, and the Ruling of the Provincial Court of Barcelona, Judicial Division 1, dated February 2, 2004 and those mentioned therein), so that the notice period for terminating the contract would be the agreed two months in accordance with the provisions of Article 25.3 of the Agency Contract Law 12/92 of May 27”.

As a rule in our system, the parties have the power to unilaterally unbind themselves from indefinite term contracts – in this sense, Supreme Court ruling 130/2011 of March 15 -, however, the duty of loyalty, whose particular importance in business transactions is pointed out in  Article 57 of the Spanish Commercial Code, requires that the party that intends to unilaterally withdraw without cause gives notice to the other party even when it is not expressly stipulated in accordance with the provisions of Article 1258 of the Spanish Civil Code, unless there is reasonable cause to omit such communication – in fact, the duty of legal notice that Article 25 of the Agency Contract Law imposes is a specific expression of said rule. In this sense, Supreme Court ruling 130/2011 of March 15, reiterating ruling 1009/2005 of December 16, states that “it is, of course, unnecessary to give notice to terminate indefinite term contracts however it should be noted, that, although this is so, nevertheless it happens that exercising the power to terminate by surprise or without prior warning, without a certain margin for reaction in the form of reasonable advance notice, can be construed as an abuse of the right to terminate, or constituting unfair conduct incurred in bad faith when exercising rights, which while it does not prevent terminating the link, but must lead to compensation when it causes damages.”

Whether the contract from the aforementioned rulings was for an indefinite term or not can be argued. Of course, initially, it was not since a term of one year was foreseen. But it was also stipulated that, after that initial term, it could extended for an indefinite term, however always divided into spans of a year. In any case, a declaration of either party’s intent was required to terminate the contractual relationship. In that sense, if it was not an indefinite term, it did have an important similarity with contracts of this kind in that a declaration of either party’s intent was required to terminate it, just as Article 25 of the Law stipulates for indefinite term contracts.

Therefore, it can be said that, if the contract was not an indefinite term contract, it did have a great resemblance to that kind of relationship in terms of its termination method and, on the other hand, the declaration of the employer’s intent had the same objective and purpose of the termination of any contract.

This, in turn, is the interpretation that other provincial courts have been holding, citing, in addition to the rulings referred to in the excerpt transcribed above, the rulings of the Provincial Court of Cadiz – Judicial Division 8 – June 24, 2002, Provincial Court of Pontevedra – Judicial Division 6 – July 23, 2002, Provincial Court of Barcelona – Judicial Division 14 – November 29, 2002, and Provincial Court of Barcelona – Judicial Division 12 – October 2, 2003).

In any of these cases, one cannot overlook the fact that the compensation required due to failure to give prior notice is not immediate and objective, and in this regard, the aforementioned Supreme Court ruling 130/2011, dated March 15, stipulates that “Article 1101 of the Spanish Civil Code, by imposing on the party that fails to comply with the obligation to compensate, limits said party to “the damages and losses caused”, without presuming their concurrence due to the fact of non-compliance, in such a way that the damages actually caused to the agent because the employer did not notify its intentions in advance to terminate the contractual relationship, as stated in ruling 991/2007, of September 28 “as a rule, they can be compensated according to the general rules of contracts – and, of course, after proving their reality, given that the failure to give prior notice does not necessarily cause them, in accordance with settled case-law concerning any breach of contractual obligations: rulings of December 28, 1999, July 26, 2001 and April 30, 2002, among many others – “” and concludes “We establish as case-law doctrine that the unilateral termination of agency contracts without notice does not necessarily result in damages and, where appropriate, this does not have to coincide with the average remuneration received by the agent during the period of time covered by the notice.”

Thus, it is important to consider that from the employer’s perspective it would certainly be more advisable to enter into fixed-term agency contracts since their subsequent extensions require new, express agreement by both parties, thereby avoiding the application of the provisions of Articles 25 and 29 of the LCA.

The controversy surrounding the possible nullity of certain abusive clauses in the procurement of financial services underwent another development last 23^rd January of 2019. On this date, the Civil Division of the Spanish Supreme Court handed down five rulings (44, 46, 47, 48 and 49/2019) while meeting in a plenary session for the purpose of fully declaring its position on the following issues: (i) opening commissions; (ii) notarial tariffs, (iii) tax on documented legal acts (IAJD, Impuesto de actos jurídicos documentados); (iv) registration tariffs and (v) management fees. In this overview, we focus strictly on the first of these without prejudice to future analyses.

At the core of it, we are seeing the High Tribunal’s first reflections on the validity of opening commissions, at least since the maelstrom concerning the study of abusive clauses began nearly a decade ago. The rest of the issues addressed are but the consequences of the principles established in the Supreme Court Ruling 23 December 2015 with regard to the possible nullity of the expense allocation clause.

It should be recalled that, according to the legal theory on the nullity of contractual clauses, a three-part scrutiny and monitoring process should be performed, preceded by prior compliance with two objective requirements of doctrine applicability (arising from the Spanish Law on the general conditions of contracts and its reference to special regulations on consumer and user protection). Thus,

• Pre-requisite 1: The principle requires the involvement of a consumer. This means that the loan in question cannot be associated with a business activity or professional loan provider.

• Pre-requisite 2: The contractual clause in question must be a general condition of the contract. In other words, it cannot be a clause that is negotiated by the parties. It must have been previously drafted by the financial institution for the purpose of being incorporated into a variety of contracts.

If these two prerequisites are met, the principles described by the Supreme Court in multiple phases (albeit not without some notable missteps along the way) become applicable, submitting the contractual clause to a triple inspection crucible for “purity”, you could say. These are:

• Establishment monitoring

Or, verification of the formal legality of the contractual stipulation. In the specific case of opening commissions, it seemed obvious that said inspection is passed with NO trouble. In fact, the Supreme Court does not even address this question, as if taking it for granted. Notwithstanding, it is easy to find explicit references to opening commissions in banking sector regulations (for example, in Order 12 December 1989; Circular 8/1990 of 7 September; Circular 5/1994 of 22 July; Order of 5 May 1994; Circular 5/2012 of 27 June; Law 2/2009 of 31 March, and even indirectly in Directive 2014/17/EU. The prohibition of vague or opaque clauses also fall within this domain of scrutiny.

• Content monitoring

O control de legalidad material. A través del mismo se mide la proporcionalidad de la estipulación contractual, y su posible carácter abusivo para el consumidor en el contexto de la relación negocial. Ahora bien, este análisis de proporcionalidad debe realizarse siempre desde una perspectiva jurídica, nunca económica, de tal suerte que no será de aplicación el control de contenido para juzgar la prudencia o bondad del precio del contrato. Y en relación con la comisión de apertura hete aquí el quid de la cuestión.

Al contrario de lo que venía considerando la jurisprudencia menor, la comisión de apertura del préstamo no supone propiamente -como es habitual en las “comisiones”- la repercusión de un gasto, que deba ser acreditado por quién exige su abono. Estamos, más bien, ante el cobro de una partida integrante del precio que el banco pone a sus servicios y, como tal, queda eximida del control de contenido. El interés remuneratorio y la comisión de apertura constituyen las dos partidas principales del precio del préstamo

Si bien podría haberse quedado aquí el tribunal, una vez expuesto que este control de contenido no es adecuado a la naturaleza de la estipulación, prefiere salir al paso de la polémica y afrontar -a mayor abundamiento- algunos de los argumentos que en denuncia de la abusividad se venían sosteniendo. En esta línea, afirma:

• That the commission corresponds to inherent and necessary activities for the granting of the loan in its initial phases, specifically, its preparation and official granting.
• That the opening commission is not treated the same way as other commissions within sector regulation, since it is not charged with the intent of validating the effective provision of a service charged through the commission itself, but instead is part of the price.
• That, as a consequence of the foregoing, the principle of «reality of the remunerated service» does not require anything other than the grant of the loan in the case of the opening commission.
• That the proportionality of the amount of the commission compared to the services provided cannot be ruled upon because this amount constitutes the free establishment of the price of a service.
• Moreover, insofar as the opening commission is an integral portion of the APR, notification of the opening commission must be given in advance when the offer is made. This practice would be inconsistent with its subsequent establishment on the condition of services that have not yet been provided.

• Transparency monitoring

Created by the SC on the occasion of the infamous Ruling of 9 May 2013 on minimum applied interest rates, popularly know as claúsula suelo or ‘ground clauses’. Transparency is neither analysed through a test of the the clause’s formal legality, nor of its proportionality or abusive nature from a substantive perspective (prohibited to those elements that form an integral part of the price of the contact), but instead, the possible true comprehension of how the clause operates and of its economic consequences from the banking client’s perspective. This inspection is applicable to this specific case, although the Division considers that the commission has passed with flying colours. They state: “It is widely known among consumers that the banking institutions charge an opening commission in the vast majority of mortgage loans” and that “in fact, this tends to be one of the main subjects of banking publicity and marketing” and that being “a commission to be paid in its entirety at the start of the loan […] makes the average consumer pay special attention to it”. It is evident that allegations of lack of knowledge on what was paid from the beginning is not an argument that will easily win.

Superado este triple examen, la Sala le concede el “aprobado” a la controvertida estipulación.

Interesting Supreme Court decision (Contentious Administrative Division, on 12/13/2018) on the Impuesto Municipal de Construcciones, Instalaciones y Obras (ICIO, municipal tax on construction, installation and repairs)

It is well-known that the fiscal management of the tax applied to the physical execution of construction work, popularly known as the ICIO (Impuesto Municipal de Construcciones, Instalaciones y Obras, municipal tax on construction, installation and repairs), has one peculiarity with respect to other taxes, and this is that the Spanish tax agency (in this case, the town halls, since the ICIO is a municipal tax) is allowed to carry out a provisional liquidation even before the taxable act takes place, in this case, the performance of construction work. Normally, liquidation is completed with the resolution of the administrative act that authorises the construction, namely, the municipal construction permit.

Traditionally, city halls have understood the  provisionality aspect as a type of procedural act that permits them to quickly acquire revenue without incurring in future obligations. In doing so, once the practical permissions and accrediting administrative certificates for the completion of the works being taxed have been issued, many municipal institutions recalculate the real and effective cost of the construction project completed, swiping the slate clean of the first liquidation. They issue a new tax liquidation, the so-called definitive liquidation, which may double or even triple the initial amount given in the provisional liquidation by newly including appropriations, line items, equipment or facilities that were not valued the first time. The problematic nature of this situation is highlighted more significantly in situations where the items installed are more expensive than the cost of the work done to install them.

In a recent decision dated 13 December 2018 (Law 181810/2018), the Supreme Court reached a conclusion with sweeping logic. After very prudently analysing the judicial nature of the taxable acts embodied by the so-called provisional ICIO liquidations, they ruled that these provisional liquidations are definitive administrative acts that mark the end of a tax agency management procedure. As such, they are binding upon the government agency levying the tax, as per the maxim “nemo potest mutare consilium suum” (no one can protest their own actions). Therefore, the addition of any objective element in a new evaluation that could have been the subject of evaluation at the time of the provisional calculation and was not included is in violation of the law, due to the fact that this would entail a legal review of the administrative act without following the legal procedure established for this purpose.

From the preceding follow two conclusions: (I) First, from here forward, town halls should take great pains to correctly handle the ICIO. The taxed entity knows that the city administration is not free to determine a new taxable base as it pleases. The city is bound to the budget for the physical execution of works that served as a basis for the ICIO provisional calculation. (II) If the foregoing is important in and of itself, another implication derived from this judicial decision should by kept in mind by he who agrees with the former: the decision’s recognition of the nullity of those definitive liquidations resulting from an illegal review of the provisional liquidation in fact opens the door to their review, encouraging the corresponding legal review procedure regulated by Royal Decree 520/2005 of 13 May.

View the complete ruling

The BOIB from last November 15 published the resolution of the Plenary Session of the Mallorca Island Council definitely approving an amendment to the General Regulations of Law 2/2014 of March 25, on planning and land use for the island of Mallorca.

Of the different modifications to the aforementioned regulatory standard, it is worth pointing out, due to its importance, the amendment to Additional Provision Three with regard to the procedure for issuing occupancy certificates contained in Autonomous Regional Decree 145/1997 of November 21, which regulates the conditions of size, hygiene, and facilities for the design and habitability of homes.

The original wording of Autonomous Regional Decree 2 of the Regulation implementing the Law on Planning and Land Use (LOUS) (BOIB of April 30, 2015) eliminated the requirement of getting a municipal certificate of completion of construction (CFO) in order to obtain first occupancy licenses for businesses and residential buildings.

Now, the reform implemented by the resolution of the Plenary Session of the Mallorca Island Council once again requires First Municipal Occupancy Licenses (colloquially known as end of municipal construction or LPO) to be obtained as a prerequisite before obtaining an Occupancy Certificate.

With things put this way, we cannot avoid critically analyzing this regulatory reform. The conclusion we reach must be negative.

We do not know the reason behind modifying the legal framework of the Regulation of April 16, 2015, since the Council’s Resolution does not offer any explanatory statement about why a positive measure such as the waiver of the first occupancy license (LPO) in order to obtain the Occupancy Certificate was repealed, which in turn allows utilities like electricity, gas, and water to be turned on with the utility companies and may be significantly relevant in the understanding that various obligations of a private contractual nature have been complied with, including tax obligations that are linked to the handover of a home with an Occupancy Certificate.

What we can argue is that eliminating the requirement of the municipal LPO as a procedure prior to the Occupancy Certificate was a huge success because it dispensed with bureaucratic red tape that slowed down obtaining a document of such importance to the real estate trade as is the Occupancy Certificate.

It is striking that the pre-existing regulation didn’t last three years and it is discouraging to see that the new framework will slow down obtaining the countless administrative permits that are required for selling real estate developments even more.

As we can see, the cancer of bureaucratic red tape is far from being healed and continues to spread.

On June 28, 2018, the Supreme Court handed down a ruling sentencing the former administrator of a company to 4 years in prison for a recurring offense of misappropriation and improper management for taking cash from the cash box without his partner’s consent, making transfers to his personal account, and other irregularities in the management he was entrusted with as administrator.

The ruling written by judge Magro Servet analyzes two essential issues: (i) The differentiation between the criminal offenses of improper management and misappropriation and (ii) the need to establish compliance mechanisms at companies to avoid cases such as the one being prosecuted.

A.- Differentiation between the criminal offenses of improper management and misappropriation before LO 1/2015 [Organic Law 1/2015]

The Supreme Court begins by specifying that “although both conducts are disloyal from the point of view of betraying trust, with misappropriation disloyalty entails an action outside of what the title of receipt allows, while in the other case, improper management, the disloyalty consists of the administrator exercising powers that, with the conditions of Article 295, are harmful to the company but have not exceeded the proper limits of the position of administrator.”

In Article 295 of the Spanish Penal Code, the behaviors described reflect dispositive acts of an abusive nature of the company’s assets but that do not entail appropriation, that is, executed without definitive non-compliance with the obligation to deliver or return.

On the other hand, in Article 252 of the Spanish Penal Code, the dispositive act entails an action that goes beyond the legal limits of the title of ownership that is granted, in the corporate offense of Article 295 that binds the company or disposes of its assets, does so while exercising of a genuine legal power, a decision-making ability that is legally recognized.

The legal right is also different in both cases: Whereas with misappropriation in Article 252 of the Spanish Penal Code, the legally protected right by the rule would be property, assets understood as stationary, however in improper management under Article 252, more than the property itself, it would be attacking the economic interest derived from exploiting the resources the company owns.

The substantial criterion that the majority of case law in appeals follows to delineate the criminal offense of misappropriation in the form of improper management by embezzling money (Article 252 of the Spanish Penal Code) and the corporate offense of improper management (Article 295 of the Spanish Penal Code) is that of the definitive disposal of the victim’s assets, in this case, the money. Thus, if the accused definitively incorporates the money he administers to his own assets or gives it definitively to a third party, it is clear that, since this is a definitive disposal of non-compliance, the most serious criminal offense must be applied: misappropriation. On the other hand, if the administrator commits a fraudulent abuse of his obligations by allocating the money for something other than what it is meant for, but without the intention of definitively disposing of it to the company’s detriment, so that it intends to return it but that does not subsequently occur, this would be the lesser criminal offense of improper management pursuant to Article 295 of the Spanish Penal Code.

Supreme Court ruling 574/2017 dated July 19, 2017, points out that “as it is stated in the Supreme Court’s Ruling 656/2013 of July 22, and invoked in the summary ruling 206/2014, the most correct delimiting theory between the criminal offenses of diverting money and consumables (Article 252 of the Spanish Penal Code) and the crime of improper management is focused on the degree of intensity of the illegality of the perpetrator’s behavior against the legal right protected by criminal law. So it must be understood that the behaviors stipulated in Article 295 of the Spanish Penal Code include acts of an abusive nature of the corporate assets, but without the purpose of appropriating or definitively breaching the obligation to deliver or return, hence these would be acts of improper management. On the other hand, the behavior of diverting money stipulated in Article 252 of the Spanish Penal Code, either to the perpetrator of the crime or to a third party, amounts to appropriation or a definitive breach which entails a greater undermining of the legal right.”

B.- The need to establish compliancemechanisms at companies to avoid cases like the one being prosecuted.

The ruling also points out that “a good corporate practice at companies is to implement these regulatory compliance programs that ensure that this type of incident does not happen, or hinder the continued actions of diverting money, or abuse of office that a good regulatory compliance program would have immediately detected.

The Court recalled that it was an essential part in restructuring good corporate governance of companies that good management protocols be established and implemented for the administrators of companies.

It added that the introduction of compliance programs in companies that would avoid cases like the one being prosecuted was essential for good governance of their administration since internal control at companies avoids crimes being committed by managers. It said: “If there had been an adequate regulatory compliance program, cases such as the one that occurred here would be more difficult, since in most cases the knowledge of activities, such as those of appropriation of funds and abuse of management declared to be proven here, would not have occurred and we would not have had to wait until the tax administration had intervened in order to detect the tax fraud that existed with the imported coal, and the appropriations made by the appellant would have eventually been discovered.”

Hence, the judges affirm the importance of these regulatory compliance programs at companies and the innovation that they must be, (i) not only to avoid the derivation of criminal liability for the company in cases of crimes committed by managers and employees, (ii) but also to avoid the commission of the crimes of misappropriation and improper management.

One of the most recurring questions asked by parents who are obligated to pay child support is: How long do I have to pay?

The first answer, which answers 70% of the parents who ask that question is: child support does NOT end when a child becomes a legal adult. This would be an objective fact which would help parents determine exactly when their obligation ends, however, the reality for an 18 year old in this day and age is that they are usually far from being financially independent, unless they are a sports or TV star.

The second answer is: when your child becomes financially independent. This is the general criterion, in addition to the death of the person obligated to provide support or the death of the one who is entitled to receive it, however Article 152 of the Spanish Civil Code establishes two cases that occur more and more often in our society: (i) the obligee may practice a trade or profession in such a way that a maintenance allowance (child support) is not necessary, or (ii) when the need for the child support comes from the obligee’s misconduct or lack of effort to work.

The application of these last two cases is becoming more and more frequent where children over 23 years of age do not have an occupation or income which creates uncertainty for the parent who is forced to pay support but does not know the extent of their obligation. As we already mentioned, parents’ obligation does not end at the age of majority but continues on while the professional or academic training of their children continues. If this training reaches university levels, it can be extended up to age 23 and subsequently two or three years more if a postgraduate or master’s degree is pursued. Payment of child support does not usually continue after age 25-26, except in cases where the child has some type of disability that hinders or prevents them from accessing employment.

Recently, the Provincial Court of Albacete terminated the support payments a father paid to his 24 year old daughter due to a “lack of academic achievement” in her studies since, at her age, she spent the last three school years in the second year of Bachillerato [Spanish equivalent to senior year in high school] and did not pass a single subject. The ruling argues that “it is not acceptable for the father to be obligated to make the financial sacrifice of paying support payments and his daughter not spend her time properly learning in order to obtain a standard of living that enables her to become independent”.

In short, there is no single answer to the question asked but it depends on each case, although as main ideas we can conclude the following:

Finally, it is important to know the parent that is obligated to pay child support cannot unilaterally decide to terminate it, but an agreement between the parties must be reached, put in writing, and signed by the adult child and parent that was receiving the support or, in case of a dispute, legal proceedings must be initiated and support cannot be terminated until a ruling is handed down.

On 4 May 2016, Regulation (EU) 2016/679 of the European Parliament and of the Council, of 26 April 2016, on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, was published, usually referred to as the General Data Protection Regulation (GDPR). This regulation aims to bring together the provisions relating to rights in terms of privacy and data protection, as well as guarantee common security standards in the digital environment in the countries of the European Union.

The deadline for moving from the Directive replaced by the aforementioned Regulation is 6 May 2018 and its provisions will be fully applicable on 25 May 2018, therefore it is worth knowing what changes or adaptations must be made by companies to ensure compliance with the new data protection regulation. This is not a trivial matter. The fines imposed by the Spanish Data Protection Agency (AEPD) are significant. Specifically, non-compliance by companies with the data protection regulation may accrue sanctions of up to 20,000,000 euros or 4% of the company’s annual turnover, whichever amount is larger.

Spanish legislation on data protection is certainly one of the most advanced and thorough in the region, to the extent that even the European Regulation was inspired by several of the provisions of the current Organic Law 15/1999, of 13 December, on the Protection of Personal Data (LOPD). For this reason, adapting to the new European regulation should not be a big problem for Spanish companies that already comply with current legislation. However, it is worth bearing in mind some of the changes or additions that implementation will involve for those responsible for processing data by certain methods, in order to adapt to these changes.

Below are some of the most relevant developments:

• Registration of files: The obligation to register files containing data with the national data protection authorities is removed. Each person in charge of data must keep an internal record of the data processing that takes place.
• Impact evaluations: Prior to the implementation of data protection measures, the system that already exists in the company must be evaluated, along with the impact of data processing on the person, the methods that are available and the procedures to ensure compliance with their obligations. The data protection system must be constructed in accordance with this prior evaluation. This is named “privacy by design”.
• Data protection by design and by default: The former involves the person responsible for data processing adopting suitable measures based on their specific circumstances. The latter, data protection by default, means that due to the methods used, only the data necessary for each specific purpose will be processed.
• Security breaches: The obligation to communicate any security breach in data processing to the supervisory authority is extended, meaning the destruction or loss of personal data stored or sent or unauthorised access or communication of these data. Any security violation must be communicated to the supervisory authority in a maximum deadline of 72 hours from when it is recorded.
• ARCO rights: Refers to the classic rights of access, rectification, cancellation and opposition. The interested party continues to be freely able to exercise these rights, however, what is new is that if the request is obviously excessive, the person responsible for the data may refuse to respond or impose a reasonable fee based on the administrative costs faced to provide the information. As a new feature, the inclusion of the right to removal is highlighted, which is commonly referred to as the right to be forgotten, which up until now only had jurisprudential recognition. In addition, it introduces the possibility that heirs may exercise the ARCO rights that belonged to the deceased.
• Compliance check: The person responsible is required to be able to prove at any time that each and every instance of data processing that has taken place complied with the established legal requirements. This involves, therefore, a strengthening of the checking of this compliance.
• Data Protection Officer: The Regulation creates this officer who will inform the person responsible for data processing of the obligations that apply to them by virtue of the Regulation and will supervise the due compliance of these obligations. Public entities that process data must expect this person, as well as private companies that process data on a large scale.
• Codes of conduct: Its presence is strengthened for general confidence among the interested parties. The companies that comply with the necessary requirements in relation to data protection may adhere to their sector’s code of conduct.

Although there are more changes brought by the European Data Protection Regulation, and the explanations of each of them are extensive, this article aims to provide just a few hints so that companies do not disregard the importance of the regulation that is about to fully come into force.

Due to the aforementioned regulation, there is already a proposal for the new LOPD, which will replace that of 1999 and will fully adapt to the provisions of the new Regulation.

The recently approved Urban Planning Law of the Balearic Islands (LUIB) aims to strengthen the scope of Urban Planning Controls by implementing new measures, such as the direct authority of the Consell Insular (Island council) (or indirectly through the Urban Planning Control Agency) on protected rural land, greater clarity when subrogating powers in relation to municipal inaction, a more dynamic system for granting authorisations to fulfil orders restoring legality and to facilitate and clarify the inspection works, among others.

Notwithstanding the measures and means developed by the law, it also provides for a different system of discounts on sanctions imposed due to the urban planning breaches that will be listed shortly. They aim to:

• Reduce proceedings by voluntary acceptance of the facts.
• Encourage voluntary legalisation acts.
• Encourage voluntary acts for restoring legality.

In the first case there is a voluntary acknowledgement of responsibility and express waiver of any action or appeal against the sanction resulting in a discount of 20% on the total amount of the fine. If, in the above case, the acknowledgement is accompanied by a payment, the discount will be 40% so that only 60% of the relevant sanction is paid.

Regarding legalisation, the sanction will be reduced by 95% if the legalisation is applied for and obtained within the deadline granted by the Administration (2 months). The discount will be 80% if the legalisation is applied for once the aforementioned 2-month deadline has passed. If the altered physical reality is restored before the decision ordering it is adopted, the sanction will be reduced by 90%. If this restoration of reality takes place after the decision, but within the voluntary period, the reduction will be 80%.

The aim is for interested parties to voluntarily take action in order to adapt to the law, by benefiting from significant reductions to the relevant sanction.

Most frequent flyers are familiar with the feeling of powerlessness and time lost during long waits in airports when the flight they were due to catch is delayed by several hours.

While we are all aware that we have certain rights as passengers, the truth is that on most occasions we merely express our dissatisfaction to the airline personnel and, once we have reached our destination, several hours late, we are left with a rage that is quickly forgotten. Unless our holiday plans have been seriously disrupted, we tend not to claim compensation from the airline company for the lost time, usually because either we don’t know the procedure to follow, we can’t be bothered, or we are convinced that a simple out-of-court complaint will be a pointless exercise.

That said, the truth is that the procedure is more straightforward than it seems, with airline companies increasingly willing to assume liability without a prolonged argument and pay compensation as laid down in the applicable legislation, precisely because consumers are better informed and more aware of their rights. This has led to a recent flurry of sentences in favour of the passenger being handed down by Spanish courts of law.

[roto lado=”left” texto=”The time of arrival at your destination will be used to determine the length of the delay”]

It is important to be clear about what to do and who to contact in the event your flight is delayed or cancelled. We should firstly define the basic regulations regarding compensation and assistance offered to airline passengers. Regulation 261/2004 of the European Parliament and of the Council, of 11 February 2004, the provisions of which must be adopted and implemented according to the interpretation of same issued by the Court of Justice of the European Union. This regulation put into practice a legal framework for compensation, the main points of which are as follows:

– A delayed flight is considered equivalent to a cancelled flight where the delay is greater than three hours.

– The time your plane arrives at your destination will be used to determine the length of the delay. Arrival time is deemed to be the moment at least one of the plane’s doors is opened, allowing passengers to leave the aircraft.

– The rates of compensation for cancellation or delay are stipulated as follows:

• €250 for flights of up to 1500 km

• €400 for all intra-Community flights of more than 1500 km, and other flights of between 1500 and 3500 km

• €600 for flights of more than 3500 km

– The stipulated compensation rates will be reduced if the airline offers an alternative means of transport.

– There will be no entitlement to compensation when the airline can demonstrate that the delay or cancellation was due to extraordinary circumstances which were unavoidable, despite all reasonable precautions having been taken. Generally speaking, aircraft technical problems are not deemed extraordinary.

This entitlement to compensation is automatic under circumstances as described. The passenger is merely obliged to demonstrate that there was a delay (or cancellation). It is therefore important to gather as much of the documentary evidence at your disposal as possible: boarding card, photographs of the flight boards showing the time and the delay, information on the flight’s arrival time, etc.

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In addition to the amounts stipulated, passengers can make a further claim for damages suffered because of the delay, including moral damages. This additional compensation would require the passenger to demonstrate, not only the existence of the delay, but a direct cause-effect relationship between the delay experienced and the actual damage suffered as a result.

Once you are familiar with your rights as a passenger, the circumstances under which you can demand them and the amounts you can expect to receive, you need to know who to contact to make your claim. In the first place, you can make a claim to the airline company itself, either at the airport desk or via their website. Most airlines have an online complaints section on their website. If the first reply you receive refuses your entitlement to any compensation, you must emphasize that compliance with Regulation 261/2004 is obligatory in order to obtain payment of the stipulated amount.

Passengers also have the option to appeal to consumer protection centres and, in the last resort, lodge a formal complaint with the appropriate courts of law. This final option would be most common where a passenger is claiming an additional amount for damages as well as the standard compensation.

Article written by Marina Villalonga Cladera, lawyer at Bufete Buades.

After the rollercoaster ride of the British referendum, Bregret – a major trending topic on social media – our own elections in Spain and the arduous formation of a government, it’s time to get back to normal and look at the political, legal and fiscal aftermath of the United Kingdom’s now inevitable, tentative exit from the European Union.

1. United Kingdom exit procedure

Speculation aside, we must bear in mind the result of the referendum. From a procedural standpoint, the UK must invoke Article 50 of the Treaty on European Union to begin the exit process.

Contrary to popular belief, the Member State wishing to leave must serve notice of its intention to the European Council, not the other way around. Once the United Kingdom has formally submitted its notification, it will be the job of the European Council to authorise the commencement of negotiations and oversee the negotiation and agreement process.

The United Kingdom may not officially take part in the meetings or the decision-making of either the European Council or the Council of the European Union.

For the secession agreement to be valid, it must be approved by the European Parliament before the Council can make it definitive. The agreement would therefore need to be renegotiated if the European Parliament opposed it.

Finally, once passed by Parliament, the Council of the European Union votes to accept or reject the agreement with a qualified majority vote. A qualified majority requires the support of 72% of the Council’s members, representing 65% of the population of the participating Member States.

The exit procedure must be completed within two years of the United Kingdom’s formal exit notification. However, the procedure is expected to require the express authorisation of the Parliaments of some Member States and is therefore likely to take around four years, the necessary deadline extension being agreed cooperatively.

2. Future scenarios for EU-UK relations

An appreciation of the likely legal consequences requires a knowledge of the different scenarios that govern EU-UK relations. Current relations with third countries usefully illustrate the possible outcomes:

Firstly, we have the so-called Norwegian option, by which the UK could join the European Free Trade Association (EFTA), whose members are currently Norway, Iceland, Liechtenstein and Switzerland. As a Member State of the EFTA, integration in the European Economic Area (EEA) would become a possibility. In that scenario, the UK would NOT be part of the EU, but it could take advantage of the Common Market.

However, the main problem lies in the considerable degree of transposition of EU law, which means that, in practice, the UK would be in a worse position in terms of national sovereignty, being obliged to incorporate regulations it has neither negotiated nor approved.

The second scenario is the so-called Swiss option, which involves multiple bilateral agreements focused on specific areas. Unlike the Norwegian option, EU law would not be applicable in the UK, only the provisions of the bilateral association agreements. It would mean, in fact, a different commercial relationship for each trading area, in which there may or may not exist a partnership agreement.

However, immigration was a key issue in the Leave campaign. Given the potentially destabilising effect of a Brexit, it is doubtful that the UK will be permitted to maintain an open bilateral relationship without agreeing to the free movement of persons.

The third and final option is the third-country option, by which the EU would not grant the UK a preferential relationship over other EU trading partners. One-off trade agreements could be negotiated via multilateral trade agreements, such as those adopted within the framework of the World Trade Organization.

This option would give the UK the most autonomy, but fewer privileges in terms of relations with the EU and its constituent countries.

3. Legal and fiscal consequences of Brexit

It is clear, then, that the implications of a Brexit will be determined by the framework of relations the UK is able to negotiate with the EU under Article 50 TEU, about which nothing is currently certain.

For the purposes of a brief analysis of the consequences we are likely to face, we have to start from a situation in which no agreement exists.

When it comes to determining which legal regime is applicable in cross-border relations, it is common practice that EU regulations are applied even when one party is not a Member State. This means that any number of European legal instruments are applicable by the courts of law of the Member States, in relations with third countries as well as with other Member States. We see this in the context of contracts and extracontractual obligations referred to, respectively, in the Rome I and Rome II Regulations.

On the other hand, the Brussels I Regulation rules on jurisdiction, recognition and execution of judgements and lis pendens (parallel proceedings) are applicable, with some exceptions, only when the respondent is domiciled in a Member State. Judgements handed down by the British courts will not therefore benefit from automatic cross-border execution of judgements, and will require a Spanish court to issue an exequatur (ruling on the enforcement of a foreign judgement). There is no guarantee that a judge in a Member State will suspend (or refrain from ruling on) proceedings because of the existence of parallel proceedings in the UK whose judgement could be recognised.

Seceding from the EU would allow the UK to exercise full jurisdiction in the area of taxation, particularly with respect to VAT; special taxes on tobacco products, alcoholic drinks and fuels; and customs duties.

By not being subject to the regulations of free circulation of capital, the taxation of corporate groups could be seriously affected, given that these groups will no longer be able to take advantage of freedom of establishment and freedom to provide services to companies belonging to the same group, etc.

In terms of the Non-Resident Income Tax, physical and legal persons with no permanent residence in Spain will be taxed at a higher rate than residents of a Member State. Similarly, the European Court of Justice ruling of 13 September 2014, which overturned the discriminatory treatment between residents and non-residents resident in a Member State, will not apply.

In other areas, such as insurance and reinsurance, banking, competition law, data protection, electronic commerce, energy and telecommunications, the consequences are numerous and will depend on the framework within which EU-UK relations continue to be regulated.

4. Political Consequences:

While a majority of Britons voted for the Leave option in the 23 June referendum, the political consequences remain to be seen, when the British people appreciate what it means to lose European citizenship: in other words, the loss of the rights contained within Article 24 of the Treaty on the Functioning of the European Union.

Much has also been made of the issue of Scotland, where the majority is pro-Europe and Scottish independence is an ever-present issue. It is very likely that Scotland will attempt to influence negotiations to remain in the Union when the UK leaves. But to do that, Scotland would need the international community to recognise it as a nation state, as well as the majority vote of the United Nations General Assembly. A vote of the General Assembly can only take place if the Security Council proposes it, and the United Kingdom, along with the U.S., France, Russian and China, holds power of veto.

Speculations abound, but little is certain. The controversial figure Boris Johnson – renowned for comparing the EU with Nazi Germany and other contentious remarks during the Leave campaign – and his appointment as head of the Foreign Office appears not to bode well for a speedy, orderly and mutually satisfactory exit, though many commentators see the move as a means of bringing about the failure of negotiations and paving the way for a second round, this time less Europhobic and more open to concessions. We live in hope!

We need to carefully monitor the negotiations as they develop and so be aware of the consequences of this irreversible (?) decision.