Mandatory Legal Representation in Dispute Resolution
The binding offer as a dispute resolution mechanism was created to reduce the workload of the courts and thus speed up the court proceedings, while safeguarding the rights of the parties. Accordingly, while the parties may, in principle, make use of any or several of the mechanisms for dispute resolution, choosing the binding offer comes with an important condition: legal representation is mandatory. There are some exceptions, for example this requirement for legal representation does not apply to disputes for small claims (amount in dispute < EUR 2,000) or if sectoral regulations permit intervention without a lawyer.
Nevertheless, as a whole, the new regulation of the binding offer underscores the view that the involvement of a lawyer in (out-of-court) settlement proceedings with a binding offer is essential to ensure that both parties fully understand the legal implications of their decisions.
For the other dispute resolution mechanisms, legal representation is optional, as regulated by article 6 of Law 1/2025.
The Binding Offer: Requirements and Deadlines
Article 17 of Law 1/2025 regulates the binding offer and emphasises its importance as a formal procedural step. Both the offer and its acceptance must be made or communicated in a form that allows for the identity of the person making the offer and its effective notification (including the date of notification) to be documented. This requirement is intended to ensure the transparency of the procedure and to avoid disputes about the validity of the communications.
Article 17 also sets a clear deadline for the acceptance or rejection of the binding offer. If the recipient does not accept the offer within a period of no more than one month or a longer period specified by the offeror, the offer automatically becomes invalid. This rule allows the offeror to refer the matter to the competent court for resolution in the event of rejection or failure to respond to the offer. In order for such claim for resolution before the courts to be feasible, the remission and notification of the offer must be proven; proof of its content, however, is not required.
Confidentiality in the Negotiations
Another key aspect of the reform is the confidentiality of the negotiations. Article 9 of Law 1/2025 classifies the negotiations as a whole and all documents used in this context as confidential. The mandatory confidentiality extends to the parties involved, their legal representatives (lawyers) and any neutral persons who may be involved in the negotiation process. The norm not only intends to maintain the negotiations confidential, but also to ensure that no party to the negotiations can use the information obtained during the process to the detriment of the other party in future court or arbitration proceedings.
However, there are exceptions to this rule, e.g. if all parties expressly agree to disclosure or if this information is necessary in certain court proceedings, such as the challenge of procedural costs. In addition, judges in criminal cases may also request confidential information in certain cases, and the disclosure of confidential information may be necessary for reasons of public order or to protect the best interest of a minor or the physical or mental integrity of a person.
A violation of this obligation to confidentiality through unlawful disclosure or provision of documents, without prejudice to any liability arising from such violation, will result in the inadmissibility of the relevant evidence in the proceedings and, where appropriate, in a court order that these documents not be included in the case file, thus not forming part of the proceedings.
Conclusion: Steps Towards a More Efficient Justice System in Spain
The Spanish procedural law reform, introduced by Organic Law 1/2025, is a significant step towards a more efficient and accessible justice system. The introduction of the binding offer is intended not only to speed up court proceedings, but also to offer the parties a mechanism for dispute resolution that promotes negotiation and mediation before resorting to the courts.
At the same time, not only is the plaintiff obliged to submit a (binding) offer for out-of-court settlement of the dispute, but the defendant is also expected to show a clear willingness to make an out-of-court payment and find a solution in order to avoid litigation in court. In this context, the law refers to the concept of abuse of the public service of justice (abuso del servicio público de justicia). This concept allows for modifications in the final decision, depending on the behaviour of the parties. If, for example, the unsuccessful defendant had refused to settle the debt during the out-of-court negotiations, higher procedural costs could be imposed on him or her. The final decision is, however, at the discretion of the court clerk. This reform is undoubtedly a step towards greater efficiency and transparency in the Spanish justice system, although its effective implementation will depend on the appropriate training and adaptation of all those involved in it.