i Legal framework
Professional liability is governed in Spain by general tort regulations. In those cases in which there is a contractual relationship between the professional and the damaged party (client), the contract is the main source of the provisions on the liability arising from the former's performance. Professionals' duties of care are normally standardised by sector or profession and usually supplement contractual provisions. Standardised duties of care are either set forth in codes of conduct or protocols (such as in the case of lawyers or medical practitioners), or in case law.
Professionals' malpractice may have an impact on third parties that do not have a contractual relationship with the negligent professional (e.g., injury caused to pedestrians by the collapse of a building with construction defects).
The general legal framework of tort and contractual liability is set forth in the Spanish Civil Code (Article 1101 et seq. and Article 1902 et seq., respectively). Specific acts of professional misconduct may also be considered crimes or administrative infractions governed by the Spanish Criminal Code or specific criminal and administrative laws (for instance, the regulations applicable to lawyers can give rise to administrative sanction proceedings that are separate from their civil liability in relation to clients arising from misconduct).
Professionals' liability is subject to the regulation and principles of liability for defective service. This means that professionals are generally not obliged to guarantee a specific outcome, but their performance needs to conform to certain standards of due diligence (thus, lawyers are not obliged to guarantee a specific outcome to the cases on which they advise, in the same way that doctors are not obliged to guarantee that patients will be cured as a result of their treatment, but the legal counsel provided and the medical treatment administered must meet the applicable standards of care).
As general rule, for there to be professional liability there must be: (1) unlawful conduct (either an act or omission) of the professional; (2) wilful or negligent misconduct (except in cases of strict liability); (3) a causal link between the professional's conduct and the damages claimed by the claimant; and (4) damage (either actual losses or loss of profit).
Professional negligence is normally related to the professional's failure to comply with rules set forth in sector-specific regulations, codes or protocols or with standards of care defined in case law (developed over time and when there are no specific regulations). Thus, it will normally be sufficient for a plaintiff to prove that the professional did not honour the standard of care set out in the regulations or case law. Furthermore, in some specific cases (such as medical malpractice), professional malpractice can be presumed or indirectly proven (i.e., the res ipsa loquitur doctrine applies to medical malpractice, as discussed below).
Proving causation may be difficult for plaintiffs. In Spain, the standard of proof of factual causation is, in theory, high. The Supreme Court formally requires that the evidence of the existence of a causal link must be clear and precise, and not based on mere deduction, conjecture or probability. Therefore, in principle, it requires absolute evidential certainty.
Consequently, in Spain, doctrines such as that expressed in the 'more-probable-than-not' rule are, in theory, excluded. As such, statistics (or epidemiology, which may be relevant in medical malpractice cases) would not be sufficient by themselves to prove a causal link.
In practice, however, on many occasions judges and courts reach decisions that come close to applying the more-probable-than-not rule, in particular by recourse to a judicial presumption (praesumptio juris). This presumption allows the judge or court to apply rules of human logic to deduce a fact and deem it proven (deduced fact) on the basis of the evidence of one or more 'basic facts'.
On other occasions, judges and courts have used statistics and epidemiology – which are insufficient by themselves to establish the causal link – in combination with other basic facts provided as evidence to determine the causal relationship.
Spanish case law has developed legal causation theories similar to proximate-cause theories. For example, the courts have identified the 'objective imputation criterion', which includes theories aimed at limiting liability such as foreseeability (commonly referred to as the adequate-cause defence in Spain), ex post events (known as the German rule of regressverbot und Garantenstellung), the 'harm-within-the-risk' rule, etc.
In those cases in which the professional's negligence is particularly serious and sufficient to amount to a criminal offence, the civil liability arising therefrom is dealt with as part of the criminal prosecution proceedings.
Finally, as a general rule, professionals take out professional liability insurance. In fact, professional liability insurance is mandatory for some professionals, including lawyers, medical practitioners, auditors, insurance intermediaries, real estate agents, credit intermediaries and credit or financial consultants.
ii Limitation and prescription
The statute of limitations rules applicable to professional liability depend on whether or not there is a contract between the professional and the damaged party.
Contractual liability, unless the contract provides otherwise (which is unusual in Spanish contracts), is subject to a five-year limitation period. However, this statute of limitations rule results from a recent amendment of the 1889 Civil Code (passed in October 2017). This amendment includes transitory provisions that apply to legal actions related to the infringement of obligations that existed prior to the entry into force of the amendment. These actions must be brought within 15 years of the infringement occurring, or within five years of the date the reform entered into force (i.e., by 7 October 2020), whichever date falls first.
Specific limitation periods exist for some sectors, such as construction or auditing, which we address below.
Non-contractual liability is subject to a one-year statute of limitations rule. The Spanish Supreme Court has clarified that the one-year period runs only from the moment that the aggrieved party is fully aware of the existence of the damage suffered and it is definitive (i.e., in the case of 'continuing damages', the statute of limitation period does not start until the arising of damages ceases).
A limitation period can be interrupted by the damaged party issuing an out-of-court request claiming the damages from the professional. Every time that an out-of-court request is issued, the one-year term restarts from the beginning.
iii Dispute fora and resolution
Professional liability claims are normally dealt with by the judiciary in Spain. Arbitration clauses may be used in some cases, such as construction claims, to resolve an issue connected with the contractual liability of the professional in relation to the damaged client. Obviously, arbitration clauses do not exist in non-contractual liability cases. And even in those cases in which there is an arbitration clause, certain types of damages claims may not be subject to arbitration (e.g., personal injuries arising from professional negligence).
Professional liability claims are normally dealt with by the civil courts and in particular by the courts of first instance.
There are two basic declarative procedures for seeking payment of compensation: verbal proceedings and ordinary proceedings. These are regulated in the Civil Procedure Law of 7 January 2000. Which stream a case falls under depends on the amount claimed: (1) where compensation of up to €6,000 is sought, the claim is handled in verbal proceedings; and (2) where the amount claimed is more than €6,000, the claim is handled in ordinary proceedings.
Professional negligence cases will normally be handled in ordinary proceedings.
In both cases, the civil procedure starts with the filing of the claim. The claim must include all factual allegations, set out in as much detail as possible, as well as the legal grounds on which it is based. However, under the principle of jura novit curia, (1) the plaintiff is not required to set out the legal grounds in thorough detail, and (2) the legal grounds invoked are not binding upon the judge, who may uphold the action based on alternative legal grounds.
If verbal proceedings are initiated, once the claim has been filed and given leave to proceed, the defendant is given a term to file a defence (or a counterclaim brief) of 10 working days (which includes every day of the year except Saturdays, Sundays, national holidays, non-working days in the autonomous region or city where the proceedings take place, and the month of August). This period cannot be extended except when both parties agree to stay the proceedings. Subsequently, the court will call the parties to a hearing in which they propose the evidence they are going to submit, the evidence is produced and the final conclusions are presented – all in the same hearing.
If ordinary proceedings are initiated, once notified of the lawsuit, the defendant has a 20-working day term to file a brief of response. This period cannot be extended except when both parties agree to stay the proceedings. Any allegation, documentary evidence and expert reports on the facts or events on which the defence is based must be attached to the brief of allegations. It is unlikely that any other documents will be accepted subsequently.
The court then calls the parties to a preliminary hearing in which they propose the evidence they are going to submit. The court then summons the parties to the trial where the evidence and final conclusions are presented. Although the Civil Procedure Law sets forth that the trial should be held within one month of the preliminary hearing, it is very common for the trial to be scheduled for between two and 12 months after the preliminary hearing, depending on the court's workload. If there are a lot of witnesses and experts to be heard, the court may schedule more than one day for the trial.
No discovery proceedings for plaintiffs
The Spanish legal system does not provide for a general disclosure procedure.
However, provision is made for coercive measures in relation to document disclosure in two specific situations.
Preliminary proceedings are simply aimed at preparing the proceedings (and therefore take place before the lawsuit is filed) and allow the potential plaintiff to verify that its intended claim and defendant are appropriate. In other words, the preliminary proceedings are very short and specific proceedings that the plaintiff is entitled to start if it needs to verify basic aspects of the claim. An example of a situation in which a plaintiff may consider using preliminary proceedings is to request the exhibition of an insurance policy when the exact scope of the insurance coverage will be under discussion in the main proceedings.
If the court gives leave for the preliminary proceedings to proceed, it will call the parties to a hearing where the request will be made (either to disclose documents, show the object of the claim or respond to the plaintiff's questions). The decision to call the parties to this hearing can be challenged by the defendant, but if this opposition is dismissed, the law provides that, depending on the type of request, the court may consider responding affirmatively to the questions that the plaintiff poses or even entering and searching premises to obtain documents requested by the plaintiff in cases where the person or entity to which they refer or who is in possession of the documents refuses to disclose them.
During ordinary proceedings, each party may request the others to disclose documents referring to the object of the proceedings. The requesting party must provide a photocopy of the requested document or, in the absence thereof, indicate the contents of the requested document as accurately as possible.
Should the party or parties unjustifiably refuse to disclose the requested private documents, the court may either (1) rule that the copy provided by the requesting party has evidentiary value, or (2) issue an express order for the documents to be furnished, when it is advisable given the nature of the documents, the other evidence brought to the proceedings and the contents of the allegations and claims made.
Unlike in preliminary proceedings, here the law does not allow for premises to be entered and searched in the event of a refusal to disclose documents. However, the party that refuses to disclose documents requested by the court may be considered guilty of the criminal offence of disobedience, which can be sanctioned with imprisonment of up to 12 months.
The role of expert witnesses
Expert witnesses can play a vital role in professional negligence cases in establishing whether or not the professional has met the standards of care applicable to his or her performance, proving the damage suffered by the plaintiff or the causal link between the professional's negligence and the damage suffered.
Expert reports must be proposed and submitted by the parties in their respective briefs of allegations. Only in the following exceptional circumstances can they be submitted afterwards:
- for reasons of lack of time, a party may announce that the report will be attached to its pleadings brief at a later date (but in any case before the preliminary hearing);
- as a consequence of the allegations made by the defendant in its response, or as a result of the occurrence of new facts, or as a result of additional allegations made by the parties before or during the previous hearing; and
- when a request to extend the scope of the expert witness report is made during the hearing.
Moreover, a party can request the court to appoint an expert:
- when it waives its right to appoint an expert in the brief of allegations; or
- as a consequence of the allegations made by the defendant in its response, or as a result of the occurrence of new facts, or as a result of additional allegations made by the parties before or during the preliminary hearing.
Either at the time of attaching the expert witness report to the initial brief of allegations or to the additional allegations, or during the preliminary hearing, the parties (and sometimes the court, when it deems it necessary) must indicate whether they want their expert or the one proposed by the opposing party to appear during the trial for the purpose of (1) further explaining the report; (2) answering questions; (3) undergoing cross-examination by the opposing party; or (4) challenging the other parties' expert witness.
iv Remedies and loss
The Spanish civil liability system is based on compensatory grounds. Consequently, indemnifiable damages should match the impairment or loss suffered by a person (or his or her property) as a result of a given event or fact.
Indemnifiable damages include both purely economic damages and 'non-material damages' (which includes, for instance, for suffering or pain). In the Spanish legal system, whenever compensation is sought, the plaintiff must prove not only the existence of damage, but also the scope and the means of calculating the compensation being claimed.
Punitive damages are not contemplated in the Spanish legal system.
Spanish tort law does not ban in natura compensation, by virtue of which a consumer seeks to be restored to a situation as similar as possible to that in which he or she would have been had the service provided by the professional not been defective.
In the specific case of medical practitioners' liability, restitutio in natura might be a possibility in certain specific cases. For example, in the case of a negligent late diagnosis of a disease, the patient may be awarded the right to receive medical monitoring as compensation for the anxiety that the late diagnosis caused.
Compensation includes direct damages, indirect damages (although remoteness theories are applied to some extent by Spanish courts, with the purpose of limiting the damages that are awarded) and loss of profits (lucrum cesans).
ii SPECIFIC PROFESSIONS
Lawyers in Spain are subject to the regulations set out in the 2001 Spanish Lawyers General Regulation and the 2002 Spanish Lawyers Deontological Code. The General Regulation sets out lawyers' obligations and duties of care in their dealings with peers and in providing legal services to clients. Lawyers' obligations towards their clients include the obligation to (1) keep clients appropriately informed of developments in the case and to provide them with a minimum and fair assessment of the probabilities that the clients' position will prevail; (2) store appropriately the documents provided by clients; (3) return the documents to clients at the end of the case; (4) comply with confidentiality rules; and (5) know the law and the case law.
The infringement of the Deontological Code gives rise to administrative sanctions imposed by the Spanish bar associations and may also give rise to professional liability claims.
However, beyond the eventual infringement of the Deontological Code, lawyers' negligence in their rendering of legal services may additionally involve civil liability for the damage caused to clients.
The Spanish Supreme Court has issued several decisions on lawyers' civil liability. In this case law, the Court has held that to establish the amount of the damages arising from the lawyers' negligence, the cost of the loss of opportunity must be assessed. Thus, the court that has to decide on a lawyer's liability has to assess what the result of the case would have been had the lawyer not acted negligently. Thus, if the lawyer negligently failed to file a brief of defence or an appeal in due time, or negligently addressed a legal issue, the court needs to assess whether the defence or the appeal would have prevailed or whether the legal action would have been successful if the lawyer had approached it properly. This is not an easy assessment, as the Spanish Supreme Court has confirmed in most of its case law. For that reason and unless the assessment of the probability of a different result is very clear, the Spanish Supreme Court limits clients' compensation to something equivalent to moral damages for the loss of opportunity.
Lawyers must have civil liability insurance. As a matter of fact, all Spanish lawyers obtain insurance coverage through their compulsory membership of a Spanish bar association. Additionally, law firms are obliged to take out an insurance policy to cover their civil liability, in addition to the individual policies that each of their lawyers are also obliged to take out.
ii Medical practitioners
Medical practitioners are subject to the general Spanish law of tort. However, the Spanish Supreme Court has developed a set of specific rules and principles that apply to their activity.
- Medical practice is the provision of a service. This means that medical practitioners are not obliged to deliver (to guarantee) a given result (i.e., medical practitioners cannot be found liable if a patient is not cured, provided that they have diligently performed their duties). However, cosmetic surgery and odontology are an exception to this general rule; practitioners are subject to strict liability if they are not able to deliver the cosmetic result or the dental treatment solution requested by the patient.
- There is a set of standards of care that derive from past clinical experience and generally accepted protocols for clinical diagnosis and treatment, which is known as lex artis.
- The disproportionate-result or res ipsa loquitur theory (which is applicable when the damaging effect suffered by the patient as a result of clinical treatment is not proportionate to the one normally expected) results in a presumption that the medical practitioner did not comply with lex artis. Thus, the burden of proof passes to the medical practitioner to show that he or she acted correctly.
- Proving causation in cases of treatment malpractice is not a simple issue when the underlying disease or condition is at an advanced stage. Expert witness testimony is particularly relevant in these civil liability cases.
Insurance coverage is also mandatory for medical practitioners.
In the case of medical practitioners who have an employment or contractual relationship with private or public hospitals, medical malpractice legal actions are normally directed against both the hospital and the medical practitioner on the basis of their joint and several liability.
iii Banking and finance professionals
Banking and finance professionals are not subject to any specific civil liability regime but to the general Spanish law of tort.
However, banking and finance professionals are subject to some sector regulations that set out duties of care in the provision of financial services, and in particular in the offering of investment products to clients.
Law 10/2014 of 26 June 2014 on the Regulation, Supervision and Solvency of Credit Institutions (which regulates, among other matters, the suitability of senior officers, corporate governance and remuneration policies in banks and other financial entities), Law 24/1988 of 28 July 1988 on the Securities Market (which regulates the obligations of bankers and finance professionals to inform investors, and prospectus requirements), and Law 35/2008 of 4 November on Collective Investment Institutions together form the basic legal framework setting out the obligations and duties of care applicable to banking and finance professionals.
It should be noted, though, that if a banking or finance professional fails to meet the standard of care required in the sector regulations, civil liability claims will normally be addressed to the bank or financial entity and not the professional.
iv Computer and information technology professionals
There is no specific legal regime applicable to computer and IT professionals in Spain. Computer and IT professionals may be civilly liable for damage caused to their clients – or to third parties – because of the defective design of computer applications and programs or defective maintenance of the same. Disruptions to the functioning of computers (or computer programs) is the most frequent source of conflicts.
Civil liability of computer professionals will normally be based on contractual liability (for the failure of the computer program to fulfil the provisions of the contract), but may also give rise to non-contractual liability in cases in which third parties alien to the contractual relationship have been damaged by the computer professional's negligence (e.g., in those cases in which the lack of sufficient firewalls in a computer program facilitated hackers' access to personal data or corporate financial information). While the existence of a cyberattack may allow the computer professional to argue proximate-cause defences (such as superseding-cause theories), the courts may still find him or her partially liable for the damaging result.
Computer and IT professionals are under no obligation to contract a civil liability insurance policy. However, as a general rule they tend to do so and this is a growing insurance market.
v Real property surveyors
When acting as construction developers, property surveyors are jointly and severally liable under the civil liability regime applicable to construction professionals (see Section II.vi).
Property surveyors acting as real estate agents are subject to the specific regulation set out in Royal Decree 1294/2007 on the General Bylaws of the Associations of Real Estate Agents. This Decree establishes obligations that real estate agents must comply with in their role as intermediaries between real estate sellers and buyers. The infringement of these obligations can result in administrative sanction proceedings, but also in civil liability actions initiated by any person or company that suffers financial damage as a consequence of the infringement. This regulation obliges real estate agent associations to take out insurance that covers the civil liability of their members.
vi Construction professionals
Construction professionals are governed by the 1999 Construction Law (Law 38/2005 of 5 November 1999). It establishes that the plot developer and construction professionals (including the constructor, architect and – when applicable – engineers) are jointly and severally liable.
As such, the owner of a building who has suffered damage as a result of defective design or construction of the building can start a legal action against any of the construction professionals and the developer, or against all of them when it is not possible to determine who is liable for the damages ex ante.
vii Accountants and auditors
Article 26.1 of Law 22/2015 of 20 July on Account Auditing states that 'auditors of accounts and audit firms shall be liable for damages resulting from non-compliance with their obligations under the general rules of the Civil Code, with the particularities established in the aforementioned article'.
As regards the specific provisions applicable to accountants and auditors, Law 22/2015 sets forth the following:
- The civil liability of auditors and audit firms is proportional and directly corresponds to the economic damage caused to both the audited entity and third parties by their professional performance. For these purposes, a third party means any physical or legal person, public or private, that proves that they acted or failed to act on the basis of the audit report and this was an essential and appropriate factor for them to take into account in giving their consent, to motivate their actions or take their decisions.
- A civil liability action should be brought against each individual separately and as a distinct issue from the damage or injury caused by the audited entity itself or by third parties.
- When the audit is carried out by an auditor on behalf of an audit firm, the auditor who has signed the audit report and the audit firm are jointly and severally liable, subject to the limits indicated in the preceding section.
The civil liability of auditors can, in turn, be of two types: contractual and non-contractual.
A legal action for the contractual liability of an auditor or audit firm is subject to a four-year limitation period beginning on the date of the audit report. Non-contractual liability claimed by third parties who relied on the auditor's report is subject to the general one-year limitation period applicable to non-contractual liability.
viii Insurance professionals
Insurance professionals who advise insured parties and represent them before the insurer (insurance mediators) are civilly liable to their clients (the insured party) if they fail to fulfil the obligations and standards of care set out in the sector regulations, in particular, in Law 26/2006 of 17 July on Private Insurance and Reinsurance Mediation.
Insurance mediators must (1) provide independent, impartial and informed advice to clients on risk coverage; (2) appropriately manage the funds provided by the client to contract insurance coverage and pay premiums; and (3) assist clients in the event of a loss or incident, providing them with the necessary information as to the scope of the coverage and the steps to be taken in relation to the insurer and taking them directly on behalf of their clients.
Insurance mediators must have an insurance policy to cover their potential civil liability for professional negligence.
iii YEAR IN REVIEW
Banking and financial professionals' civil liability was the origin of most of the many cases brought by consumers before the civil courts in Spain during 2019. Although the defendant is normally the financial entity or bank and not the professionals who work for them, the legal basis for the compensation sought by clients is, as a general rule, the negligent performance of those professionals.
The Spanish Supreme Court issued a decision in June 2019 through which a compensation claim by a company against their in-house lawyer was dismissed. The lawyer had received a administrative sanctioning resolution against the company and he had internally reported its receipt and the deadline to challenge it. The director who received the internal communication from the lawyer failed to read it before the time to challenge the decision had elapsed. The Supreme Court concluded that the in-house lawyer did not have any additional duty other than reporting on the administrative sanctioning resolution internally. Specifically, the Supreme Court found he did not have any duty to monitor the reading and taking into consideration of the need or opportunity to challenge the decision, something for which the directors were primarily responsible.
Additionally, the Court of Appeal of Madrid issued an important decision in February 2019 (which was made public in November 2019) awarding €3,658,980 in compensation to be paid by a lawyer who failed to notify his clients of the issuing of a decision that dismissed their petition to get a compensation for an expropriation administrative proceeding. The Court of Appeal of Madrid found that if an appeal had been filed against the decision (something which the plaintiffs could not do in time since they were unaware of the existence of the decision to be challenged) the plaintiffs would have most probably been awarded the compensation by the expropriating administrative body. Thus, their lawyer's negligence ultimately resulted in damages amounting to the compensation which they would have otherwise likely have received.
In June 2019, the Court of Appeal of Barcelona confirmed a court of first instance decision awarding compensation to a company for the negligent performance of their auditing company. The auditing company was declared jointly and severally liable with the company's directors for neglecting to provide a true and fair picture of the income and financial situation of the company in the annual accounts. The basis for the auditors' liability was their negligence in reviewing and auditing the annual accounts.
IV OUTLOOK AND FUTURE DEVELOPMENTS
Professional liability has developed considerably in Spain in recent years. Construction professionals are facing an increasing numbers of claims as a result of the construction boom in Spain in the past decade.
Litigation against banking and finance professionals will continue to grow in the coming years as a result of the financial loss suffered by many financial services clients as a result of the 2008–2014 financial crisis and the additional severe financial effects of covid-19 pandemic. However, as mentioned above, this litigation will be directed against the financial entity itself and not its employees or individual professionals.
Finally, an increase in medical malpractice litigation in connection with the covid-19 pandemic can be anticipated. In fact, claims against the medical services provided to geriatrics and against hospitals' criteria when setting out protocols on the order of preference in the use of ventilators and other medical material, which is scarce and therefore not available to all patients, have already been announced.
1 Alejandro Ferreres Comella is a partner at Uría Menéndez.