Litigation & ADR report 2015 | Page 2

Litigation & ADR annual report Cooling things down There are signs that attitudes to ADR are changing with more clients adopting such methods to avoid heated courtroom battles While law firms report some growth litigation, the increase in arbitration has been much more dramatic. Traditionally, Iberian clients have taken a litigious approach to commercial disputes, but there is a feeling that a “cultural shift” is taking place as clients awareness of the benefits of various types of alternative dispute resolution (ADR) grows. However, improving client awareness of ADR remains one of the biggest challenges facing law firms. Alfonso Iglesia, partner at Cuatrecasas, Gonçalves Pereira, says that, while there has been moderate growth in litigation and domestic arbitration, there has been an increase of international commercial arbitration cases and an “explosion” in investment arbitration, much of it relating to renewable energy. Meanwhile, Uría Menéndez partner Álvaro López de Argumedo says there has been an increase in financial litigation as investors become “more aware of their rights”. According to Squire Patton Boggs partner Fernando González, there has been a tremendous increase in criminal litigation with “corruption affecting more corporations” as well as a lot of insolvency-related litigation. Iglesia adds that there is a tendency to criminalise shareholder conflicts. Araoz & Rueda partner Cliff Hendel says he has seen, as both counsel and arbitrator, a significant number of disputes as a result of the “fall-out from the financial crisis”. He adds: “There are a lot of shareholder and joint venture-related disputes and M&A disputes of all types, especially involving price adjustments and claims for breach of representation and warranty. In the boom years, 38 • IBERIAN LAWYER • January / February 2015 when deals went sour, things were sometimes not bad at all for either party. When deals go sour in today´s environment, things are really bad, sometimes even for both parties.” Cultural change not seen a Spanish client ask for mediation yet, but mediation is something to be considered in the future. He adds that banking litigation will continue and that litigation lawyers will become even more involved in refinancing matters. Iglesia says that methods of alternative dispute resolution have been created “bottom up” by clients in the “common law countries”. He adds: “It´s a less expensive way of resolving disputes, it has clear advantages and companies need to understand that this can be useful. If Spanish companies are exposed to these methods, it is likely that they will be keener to use them.” Rodríguez says that clients are concerned about confidentiality in that they are worried the opposing party may use information they have acquired if the matter is not resolved at the mediation. According to López de Argumedo, large international corporations tend to welcome mediation. He adds that while mediation is more efficient and cheaper, Spanish culture is “very adversarial”. Linklaters partner Francisco Málaga says the issue with some clients is that, when their lawyer suggests going to mediation, they interpret it as the lawyer thinking they would lose the case in court. “I believe parties should be compelled to go to one session of mediation,” he adds. On the issue of the use of arbitration, Freshfields Bruckhaus Deringer partner Vicente Sierra says a process of “cultural change” is taking place as arbitration is more widely accepted by clients in Spain. He adds that progress is being made and there are now more arbitration clauses in contracts. Meanwhile, Sierra says litigation is also on the increase: “We are seeing more and more since the economic downturn – there is a lot of insolvency litigation and shareholder disputes.” Pérez-Lorca partner Guillermina Ester says insolvency-related cases are starting to decrease although there are still many insolvency proceedings ongoing as well as many cases relating to restructuring and refinancing. Meanwhile, López de Argumedo says there are more instances of clients in the hospitality sector seeking a reduction of rents in lease agreements, and highlights the recent judgment of When deals go sour in the Supreme Court today´s environment, things of 15 October, 2014 in relation to this. are really bad, sometimes One partner says even for both parties. it will be difficult Cliff Hendel for businesses in Araoz & Rueda the hotel sector to review rents because the crisis has passed, but he says that insolvency and Hendel argues that the most restructuring-related matters effective changes [in attitudes to create a lot of litigious work. mediation] come from society. González says that there needs to “Legislation is not the answer, be amendments to the legal cost of the most effective changes are mediation, so that it will be more bottom up, not top-down. In the “broadly used” in Spain. US, institutions like CPR [the Gómez-Acebo & Pombo partner International Institute for Conflict Javier Izquierdo says that he has Prevention and Resolution] have “ ”