Measures for the efficiency of the Public Justice Service.

Summary note of Organic Law 1/2025 of January 2, on measures for the efficiency of the Public Justice Service.

Introduction
Organic Law 1/2025, of January 2, introduces essential reforms to modernize and streamline the functioning of the Public Justice Service in Spain. One of its main objectives is to improve procedural efficiency, establishing, among other measures, the obligation to resort to appropriate dispute resolution methods (ADR) before initiating judicial proceedings in civil and commercial matters. This reform is complemented by the transformation of single-judge courts into instance tribunals, which strengthens the organizational structure of the judicial system. Additionally, the law contemplates a set of procedural modifications aimed at accelerating judicial proceedings, with special emphasis on verbal trials and auctions, and establishes compensation for late payment in consumer litigation.
The publication of this Organic Law in the Official State Gazette, on January 3, 2025, marks the culmination of a series of legislative reforms within the framework of the Justice 2030 plan. This law is the third and final of the digital, organizational, and procedural reform projects that make up this plan, following the entry into force of Royal Decree-Law 5/2023 on the reform of the appeal in cassation and Royal Decree-Law 6/2023, which implemented measures for procedural streamlining and efficiency.
Although the regulation regarding collective actions, which was originally part of the proposal, was withdrawn during its parliamentary processing, the law maintains its focus on efficiency and optimizing access to and management of the judicial system. These changes aim not only to reduce litigation but also to improve the experience of users of the judicial system, contributing to faster and more accessible justice. The main innovations of this Organic Law in the civil process are detailed below.

1. Appropriate Dispute Resolution Methods (ADR)

1. Definition and Scope of Application:

  • ADRs are legally recognized negotiation activities used to resolve conflicts extrajudicially, either directly between parties or with the help of a neutral third party.
  • They apply to civil and commercial conflicts, including cross-border cases.
  • Exclusions:
    • Matters outside the parties’ disposition (fundamental rights, filiation, paternity, minors, disability; in another order, bill of exchange proceedings, and others).
    • Labor, criminal, and insolvency areas.
    • Cases where one of the parties belongs to the public sector.

2. Types of ADR:

  • Private conciliation: A conciliator (any person managing a negotiating activity to which the parties submit) proposes solutions to the conflict and guides the parties towards an agreement.
  • Confidential binding offer: One party makes a written proposal that, when accepted, becomes binding.
  • Independent expert opinion: Non-binding technical opinion issued by a qualified and neutral person. The expert must accredit their qualification.
  • Collaborative law: A process in which lawyers from both parties negotiate; if no agreement is reached, they renounce representing their clients in a subsequent trial.
  • Other methods such as mediation and direct negotiation are also recognized.

3. Procedural Requirement:

  • It will be mandatory to attempt an ADR before filing civil lawsuits, except in exceptional cases such as protection of fundamental rights, filiation, or bill of exchange proceedings, etc.
  • Failure to do so will be grounds for inadmissibility. (403.2 LEC)
  • In consumer litigation, the requirement is met with a prior extrajudicial claim to the company.

4. Confidentiality and Deadlines:

  • Everything discussed in the ADR will be confidential and cannot be used as evidence, except for exceptions provided in LO 1/2025.
  • The request to initiate an ADR interrupts the prescription or suspends the expiration of the action. If no agreement is reached, the lawsuit must be filed within one year.

5. Costs and Efficiency:

  • Costs are not awarded to the winning party that refuses to participate in an ADR without justification.
  • In cases of acceptance or partial estimation, costs may be imposed on the party that unjustifiably failed to attend an ADR.
  • In the challenge of cost assessment, the condemned party may request exemption or reduction of payment if they previously proposed an agreement through an ADR, and this substantially coincides with the court ruling.

2. Modifications in the Civil Process

1. Oral Proceedings:

  • Introduction of oral judgments in hearings, although they will be subsequently written. Parties will have a five-day period to express their interest in appealing.
  • The proposal of evidence must be submitted in writing within the common period of five days, counting from the notification of the resolution that transfers the response to the claim (or, if applicable, from the delivery of the announced expert report). The same period is granted for the plaintiff to present allegations on the procedural exceptions raised. (438 LEC).
  • Challenges to documents and expert reports must be made within three days from the submission of the evidence proposal document.
  • After this period, the court will resolve by order on the procedural exceptions, the challenge to the amount, the admission of the proposed evidence, and on the relevance of holding the hearing. The order will be subject to appeal for reconsideration and will have a suspensive effect.

2. Consumers and Unfair Clauses:

  • Claims against unfair clauses will require a prior claim to the financial institution, which will have one month to respond.
  • In case of non-compliance with an agreement, legal interest rates will be imposed, increased by up to 8% and 20% annually after two years without compliance.

3. Execution and Auctions:

  • The execution procedure may be suspended, at any time, to attempt an ADR if both parties request it.
  • New auction rules: increase in the amount to participate (10% for movable property and 20% for real estate).
  • In judicial auctions, the executing party must participate as another bidder, being able to make bids, but without the right to improve the price after the auction ends or to request the award if it is deserted.
  • After an auction without bidders:
    • The seizure can be lifted at the request of the executed party, unless they designate someone to award the asset or a new auction or other method is agreed upon.
    • If the executing party does not cover the difference between their credit and their offer, they will be penalized with a discount equivalent to the deposit required from other bidders.

4. Other Changes:

  • The concept of abuse of the public Justice service is introduced, comparable to bad faith.
  • The reference value for inestimable claims is increased to 24,000 euros.
  • Cost allocation is eliminated in the challenge of excessive cost assessment, except in cases of abuse of the public Justice service.

3. Reorganization of the Judicial System

1. Courts of Instance:

  • Grouping of all courts in a judicial district into collegiate courts (Courts of Instance), which will be headquartered in the capital of the district.
  • These courts will have specialized sections (civil, commercial, family) and will be supported by a single organization, the Judicial Office.

2. Justice Offices in Municipalities:

  • Justice of the Peace Courts are transformed into Justice Offices, responsible for administrative tasks and support in smaller localities.

4. Entry into Force

1. Application Date and Transition:

  • The reform of ADR and procedural efficiency measures will come into force on April 3, 2025, applying only to proceedings initiated after that date.
  • Ongoing processes may adopt ADR if both parties agree, and oral judgments in oral proceedings will only apply if the hearing has not yet been held.
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