Introduction
On 2 January 2025, Organic Law 1/2025 was enacted, introducing several reforms to improve the efficiency of the Public Service of Justice in Spain, and entered into force on 3 April 2025. The Organic Law covers a variety of measures, including the mandatory inclusion of alternative dispute resolution mechanisms (ADR) before bringing a claim before the courts. These modifications and new measures resulted in changes in the system of court costs in declaratory proceedings.
Until now, the imposition of court costs depended exclusively on the outcome of the proceedings, except in cases where there were doubts as to the facts or the law, or the court considered the proceedings to be vexatious (temeridad). The new regulations introduce a new criterion for the assessment and imposition of costs: participation in a dispute resolution mechanism, when such mechanism is mandatory or has been ordered by the judge or court clerk, will be decisive in determining whether the successful party is (also) awarded costs.
II. ADR, If the Court Fully Upholds the Claim
The new wording of article 394.1 of the Spanish Law on Civil Procedure (Ley de Enjuiciamiento Civil, LEC) maintains the old and well-known criterion of imposing court costs on the party whose claims have been rejected, with the winner of the lawsuit being the beneficiary of the costs. However, and here comes the novelty, there will be no award of costs in favour of the successful party where it has expressly or tacitly refused, without justification, to participate in a means of dispute resolution prior to the judicial proceedings, in cases where this was mandatory or ordered by the judge or court clerk. To this end, albeit the parties are required to participate in ADR, they are not required to reach a specific result.
This idea also applies to parties receiving free legal aid. If the party required to initiate negotiations prior to the judicial proceedings has refused to participate in them, the requesting party, if its claims are rejected, will be exempt from paying costs, unless there is evidence of abuse of the public service of justice (abuso del servicio público de justicia as defined in article 394.4 LEC).
III. ADR, If the Court Partially Upholds the Claim
In cases, where the claim is partially upheld or partially dismissed, it is a general rule under article 394.2 LEC that each party shall bear its own costs and half of the common or shared costs, unless costs are imposed on the vexatious party. However, when one of the parties has not participated in the ADR, when this is mandatory or has been judicially ordered, they may be ordered to pay the full costs by means of a reasoned decision, even if the ruling partially upholds their claim. This decision is at the discretion of the court clerk.
IV. ADR and Legal Aid
In addition, the new wording of article 394.3 incorporates a mandate for legal aid professionals into the LEC that is not new, as it reproduces the content of article 36.5 of the Spanish Law on Legal Aid (Ley de Asistencia Jurídica Gratuíta). By virtue of this, when the party benefiting from the decision on court costs is entitled to free legal aid, these costs must be paid to the professionals who have been appointed to represent and provide legal advice. In turn, these professionals will be obliged to return any amounts previously received from public funds for their involvement in the proceedings. To this end, the administrative office of the court (oficina judicial) will notify the relevant professional associations of this circumstance.
V. ADR and Acquiescence
As is known, article 395 LEC establishes that court costs shall not be imposed on an acquiescing party, unless bad faith is detected in their actions. The new wording of this provision includes a third paragraph, according to which it is considered an act of bad faith for the defendant to refuse to participate in ADR when this is mandatory or has been ordered by the judge or court clerk. Thus, if the defendant subsequently acquiesces the claim, they will be ordered to pay the costs, unless the court finds there to be exceptional reasons against such imposition.
VI. Withdrawal
Regarding the costs in cases of termination due to withdrawal of the plaintiff, Organic Law 1/2025 does not introduce any changes compared to the old regulation. The plaintiff who withdraws from the proceedings will be ordered to pay the court costs, unless the defendant has consented such withdrawal (article 396.1 LEC).
VII. Limitation of Costs and Indeterminate Claims
Regarding the assessment of costs, the maximum amount of court costs to be borne by the unsuccessful party is limited to one third of the amount of the claim per party benefiting from the decision. However, the amount of the claim used as basis in this context is increased from EUR 18,000 to EUR 24,000 for claims whose monetary value cannot be determined (so called indeterminate claims). This general rule applies, unless the court determines otherwise due to the complexity of the matter (article 394.3 LEC).
VIII. Conclusion
In conclusion, Organic Law 1/2025 introduces a significant change in the system of court costs, directly linking participation in alternative dispute resolution mechanisms (ADR) with the possibility of the successful party being awarded costs. This change seeks to encourage the out-of-court settlement of disputes before resorting to the courts, punishing unjustified refusal to participate in these mechanisms, even when the party has won the case. The new regulations reinforce the idea that justice should not only be resolved in the courts, but that conciliation and prior agreement should be promoted, excluding those who do not participate in ADR from something as sought after and beneficial in Spanish procedural law as being awarded court costs.
Lucas de León-Sotelo Fuentes
Abogado
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