At a glance: class action formation in Spain

Class formation

What are the standing requirements for a class action?

Standing to file class actions depends on the type of interests that are allegedly harmed. However, they can always be filed by public prosecutors and entities authorised under EU law.

Apart from that general standing, in case of collective interest actions (ie, those where all members of the harmed group are previously determined or identified, can be determined or may be easily determined), the following have legal standing:

• ad hoc groups of affected consumers (known as ‘platforms’ in Spain). To be able to bring a collective action, consumer platforms must prove that they are the majority of victims affected by the alleged harmful event;
• national or regional consumer institutes; and
• consumer and user associations, as well as legally incorporated entities that defend or protect the consumers and users.

In case of diffuse interest actions (ie, actions where the members of the harmed group are undetermined or difficult to determine), the representative consumer associations have exclusive legal standing. The Consumer Protection Act deems ‘representative’ those associations that are part of the Council of Consumers and Users. Some of the most active in class-action litigation are the Association of Users of Banks, Savings Banks and Insurance (ADICAE), Consumers in Action (FACUA) and the Organisation of Consumers and Users (OCU).

Other Spanish laws complement the regulations foreseen in the Spanish Code of Civil Procedure, such as the Consumer Protection Act, the Act on General Terms and Contractual Conditions, and the Spanish Unfair Competition Act.

Individuals do not have legal standing to bring claims defending group interests (ie, those that go beyond their private sphere). In fact, Directive (EU) 2020/1828 deliberately excludes individual consumers when addressing the entities qualified to file class actions. However, with the regime currently in force in Spain, they may join the class action following notification of their filing by the claimant (collective interest actions) or the court clerk (diffuse interests actions). Aside from that, the draft bill transposing Directive (EU) 2020/1828, as it currently stands, does not differentiate class actions based on the type of interest being protected (ie, collective or diffuse), and confers standing to the:

• Public Prosecutor’s Office; and
• qualified entities (national and those designated in other member states, which may bring cross-border actions, except for ad hoc groups, which shall no longer hold legal standing to file these types of claims).

The draft bill also sets forth new criteria for consumer associations to be considered as qualified entities. Among others, these associations must demonstrate effective and public engagement in activities that align with their purpose of protecting consumer interests for a minimum of 12 months prior to their application for designation, and they must act as a non-profit entity.

Do members of a class have to opt in or opt out of the action? Are class members notified that an action has been commenced on their behalf and, if so, how?

Collective actions in Spain currently do not proceed on an opt-in or opt-out basis. Conversely, there is an announcement and intervention system aimed at calling the affected consumers to appear in the proceedings and to assert their individual rights or interests. In any case, the Spanish system is often described as an opt-in system, in line with the applicable rules and Spanish legal tradition, where opt-out systems are uncommon.

Notice requirements vary depending on the type of action:

• in collective interest actions (ie, those where all members of the harmed group are previously determined or identified, can be determined, or may be easily determined), claimants must inform each consumer potentially affected by the alleged harmful event about their intention to bring the action before filing it (this publicity system is intended to allow the individual consumers to exercise its rights); and
• in diffuse interest actions (ie, actions where the members of the harmed group are undetermined or difficult to determine), claimants do not have to inform each consumer potentially affected by the alleged harmful event of their intention to bring the action. Potentially affected consumers are notified by the court clerk after the filing, typically, through publications in widely distributed newspapers.

Upon receiving the notification either from the claimant or the court clerk, consumers can decide whether to become involved in the proceedings or defend their interests individually.

In the case of diffuse interest actions, consumers can only join the proceedings following the summoning of the court clerk, but not later. However, these consumers may rely on the class-action judgment, even if they were not involved in the proceedings, to seek the direct enforcement of their rights if the class action is successful. In fact, Directive (EU) 2020/1828 expressly compels member states to ensure consumers can benefit from redress measures granted through class actions without having to file follow-on individual claims.

The draft bill transposing Directive (EU) 2020/1828, which is currently under discussion in the Spanish parliament, is expected to be approved in the coming months. This bill significantly modifies the existing legislation and introduces, as a general rule, an opt-out mechanism for class actions. This change has not been without criticism from practitioners, as it diverges considerably from traditional Spanish procedural principles. The court shall, however, retain the discretion to order that the action be processed under an opt-in system if the value of redress for each consumer exceeds €3,000 (the amount was €5,000 in a previous draft bill discussed in the Spanish parliament) and if the court deems this approach more conducive to the proper administration of justice. Affected consumers will have the opportunity to join or exclude themselves from the class action through an electronic platform within a court-determined period, which will range between two and six months. Filing an individual action or a complaint before an administrative authority within this period on the same subject matter as the class action will be interpreted as an expression of the consumer‘s intent not to be bound by the class action.

What are the requirements for a case to be filed as a class action?

The Spanish Code of Civil Procedure currently does not specify any requirements for a case to be filed as a class action (other than that it must be a consumer-related matter). Similarly, the Spanish legal system does not provide for a certification process to establish a class or group. However, Spain is a fact-pleading jurisdiction, meaning that the claimant is required to provide the court with detailed and comprehensive facts in the complaint to ground the causes of action it alleges.

In fact, Spanish case law has established that not all collective claims can be promoted by way of a class action (in particular, Judgment of the Spanish Supreme Court 408/2020 of 7 July indicated that, where the resolution of the case required analysing the individual and specific circumstances in each contractual relationship, such claim could not be pursued through a class action). This limitation is aligned with Directive (EU) 2020/1828, since both seek early identification of whether an action filed is suitable to be processed as a class action.

Aside from the above, the Spanish Code of Civil Procedure outlines notification requirements attached to the filing of collective interest actions (i.e., those where all members of the harmed group are previously determined or identified, can be determined or may be easily determined). If those requirements are not met, the claim may not be admitted or material and procedural grounds may arise against the continuation of the procedure.

The draft bill transposing Directive (EU) 2020/1828 indicates that, in relation to injunctive measures, claims will only be admitted if the claimant has requested the defendant to cease the conduct at least one month prior to filing the claim.

Regarding redress measures, the draft bill introduces a new procedure with strict timelines for each stage. To be admitted, the claim must include:

• information about the conduct;
• identification of the consumers affected or, if not feasible, the characteristics and requirements that must be met to be considered beneficiaries of a favourable judgement;
• explanation of the causal link between the conduct and the harm suffered;
• demonstration of the homogeneity between the claims of consumers and users;
• clear specification of the redress being sought; and
• a summary of the financial sources, including identification of any third-party financing.

Also, the draft bill does establish a certification phase, so the class must be certified for redress measures claims to proceed.

How does a court determine whether the case qualifies for a class action?

Ex officio analysis by Spanish courts of whether a case qualifies for a class action is very limited. Courts may verify whether the class action filed complies with all legal requirements (in particular, in case of collective interest action, its pre-filing notification requirements), but it usually falls to the defendant to raise any objections. Since the Spanish is a fact-based pleading system, the burden of proof of fulfilment of all requirements for the claim to be processed as a class action falls on the claimant, while the defendant bears the burden of raising any objections to the class action that may lead to the claim being dismissed on procedural grounds.

In any event, if the court does not identify procedural problems with the class-action claim, it will issue a resolution admitting it. If the court finds remediable defects in the complaint filed, it will grant the claimant the opportunity to remedy such defects. Otherwise, it will reject the claim as inadmissible.

However, the procedure to seek redress measures established in the draft bill transposing Directive (EU) 2020/1828 includes a relevant class certification regulation that differs importantly from the current regulation on the matter. This includes holding a certification hearing after the claim seeking redress measures is admitted, which serves to verify a series of procedural aspects concerning the claim, after which the competent court, through a certification court order (auto de certificación), will address whether it is appropriate to exercise such a claim as a representative claim and, if it is, what its subjective and objective scope should be. The court will also decide whether to apply an opt-out (general rule) or opt-in (exceptional) scheme for consumers to be affected by the outcome of the process and will assess the appropriateness of the third-party funding of the class action (if existing).