Debt Collection In Spain

• Published date: 10 March 2022
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Debt Capital Markets, Financial Services, Arbitration & Dispute Resolution
• Law Firm: Giambrone & Partners
• Author: Mr Gonzalo Butori

Despite Britain's exit from the EU the latest statistics published by the Government regarding current trading with Spain show that the value of goods and services traded between Britain and Spain in the past four quarters amounted to '34.2 billion. Spain is Britain's 9^th largest trading partner with British companies exporting '13.1 billion of goods and services to Spain to the end of quarter three of 2020.

Cross-border trade must be supported with robust contracts incorporating a range of clauses to protect the business, including jurisdiction clauses and alternative dispute resolution clauses (ADR) in the event of a contentious issue arising, allowing you to pre-select the jurisdiction and require the obligation to use a form of ADR to resolve an issue. This provides you with a degree of control over a dispute, by setting out the way it is to be managed and also removes any element of surprise, such as your trading partner litigating in an unusual jurisdiction

The contract should also ensure that settlement terms related to payment of invoices are fair but strict. Cash flow is the life-blood of all companies, outstanding debt can cause even the most successful companies to falter.

In the event of an unpaid invoice due from a Spanish customer and you find yourself facing collecting a debt from Spain, you should always attempt to implement ADR, either mediation or arbitration if you have incorporated ADR clauses in your contract.

Gonzalo Butori, a partner based between the London and Barcelona offices commented "even if you have not included ADR clauses in your contract you should approach your debtor with an offer to mediate or arbitrate to resolve the issue. Being seen to attempt to find resolution before taking court action will show that you making every reasonable attempt to resolve the dispute without recourse to costly and time-consuming litigation" Gonzalo further remarked "Also, resolving the dispute through a negotiated settlement has a better chance of preserving the business relationship. Should ADR prove to be unsuccessful or not be possible, there are a range of options open through the courts to bring about settlement"

If there appears to be no other choice but to embark on litigation, your debtor should receive a letter before action (LBA) setting out the debt and requesting payment within a set number of days - seven or ten are typical - and stating that on expiry of that...