INTRODUCTION TO BUSINESS LAW

Course 2021 - 2022| 2nd Trimester

Index
Continguts de la presentació

1. INTRODUCTION TO SPANISH LEGAL

SYSTEM

2. PUBLIC LAW vs PRIVATE LAW:

COMMERCIAL LAW

INTO THE LEGAL SYSTEM

3. SOURCES OF LAW

4. HIERARCHY PRINCIPLE:

HIERARCHY OF LAWS

HIERARCHY OF JURISDICTIONAL
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1. INTRODUCTION TO SPANISH LEGAL SYSTEM

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1. INTRODUCTION TO LEGAL SYSTEMS

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1. INTRODUCTION TO SPANISH LEGAL SYSTEM

The Spanish legal system is a civil law system based on comprehensive legal codes and laws rooted in Roman
law, a continental model as opposed to common law, which is based on precedent court rulings. The basic
features of this model are:
• ??

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What are the main differences with the common law system?

1. ??
2. ??

https://www.youtube.com/watch?v=iUCepIy2UUI

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What is the origin of each system?

COMMON LAW:

CIVIL LAW:

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2. PUBLIC LAW vs PRIVATE LAW

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PUBLIC LAW vs PRIVATE LAW

Traditionally, the Law is divided into two blocks of legal rules: Public and Private Law. Within each one of these
blocks of Law, it is possible to find different branches of law, that is, sets of legal rules having the same
principles and governing specific areas.

• Public Law comprises, among other things, the rules governing the basic institutions of the country, the
territorial division, rights of people, as well as regulating the organization and functions of different parts of
the administration of a country and their relationships with citizens.

• Private Law refers to a group of legal rules governing the relationships between persons (including natural
and legal entities) and is comprised of diverse branches of Law with the emphasis on three of them: Civil,
Commercial and Labor Law.

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PUBLIC LAW vs PRIVATE LAW

Which are the main PUBLIC LAW branches?

Which are the main PRIVATE LAW branches?

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COMMERCIAL LAW IN THE LEGAL SYSTEM

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COMMERCIAL LAW IN THE LEGAL SYSTEM - HISTORY

Commercial law was created by traders to regulate all those matters arisen from their business activities.

When? In the XIX century

How? Their customs where codified into the Code of Commerce (CCom), enacted in 1885.

Why? To regulate all commercial activities (“acts of commerce”) independently of the person doing them (objective
criteria vs subject criteria)  Under the equality principle and free market, it was adopted an objective criteria in order
that all people could have equal chances for accessing to the commercial activities.

Since then, Spanish private law has been divided into two main separate codes:
- Civil Code, enacted in 1889 GENERAL RULES
- Code of Commerce, enacted before in 1885 commercial rules are SPECIAL in relation to the civil one

Commerce
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The civil code:
 The civil code:

https://www.boe.es/buscar/act.php?id=BOE-A-1889-4763

Article 612. The owner of a swarm of bees will have the right
to pursue it on another's property, compensating the owner
of it for the damage caused. If it is fenced, you will need the
consent of the owner to enter it. When the owner has not
pursued, or ceases to pursue the swarm for two consecutive
days, the owner of the property may occupy or retain it.
 The civil code:

https://www.boe.es/buscar/act.php?id=BOE-A-1889-4763

Article 613. Pigeons, rabbits and fish that pass from their
respective hatchery to another belonging to a different owner,
will be the property of the latter, as long as they have not
been attracted by means of any artifice or fraud.
 The civil code:

Let’s debate!

DO YOU THINK THESE ARTICLES ARE STILL HELPFUL

NOWADAYS?
COMMERCIAL LAW IN THE LEGAL SYSTEM - NOWADAYS

The Code of Commerce is the main/basic rule for commercial law, but
there are many different laws that conform business law.

We can define BUSINESS LAW as the assemblage of legal rules, mainly

private, applied to the entrepreneur and their activity developed by
means of enterprise.

Can you think of any of these private laws?

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3. SOURCES OF LAW

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Sources of law

Arts. 1 Civil Code (CC) Art. 2 of Code of Commerce

(CCom)

Case Law

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Statute/Law/ Act: legal texts issued by those authorities with legislative powers. Statutes shall enter into force
twenty days after their full publication in the Official State Gazette (BOE), unless otherwise provided therein.
Statutes shall not have retroactive effect, unless otherwise provided therein.

• Do you know how do we call this period of time?

Customs are uniform, repetitive and constant acts executed by the entrepreneurs in their business. Art. 1.3 CC.

• Can you find an example of a custom?

General Principles of law (art. 1.4 CC) are unwritten sources of law. In the absence of applicable legal
provisions or customary rules, general principle of law shall be applicable. The general principles of law are a
subsidiary source within the legal system.

• Do you know the main general principles of law?

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What about the judicial decisions? Are they a source of law?

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Sources of Business Law

The sources of Business Law are recognised in art. 2 Ccom  in the absence of
an applicable commercial law, custom has the force of law, provided that it is
substantiated and is not contrary to moral standards or public order. Please note
that in this case, commercial customs are considered as rules.

Civil Law is subsidiary to the provisions recognised in the Ccom  ONLY when
there is no commercial law or customs applicable to a case, we will apply Civil
Law rules = Mercantile customs prevails over civil law.

!!!! Exception: business contracts (art. 50 CCom): matters related to requisites,

amendments, exceptions, interpretation and extinction and capacity of the
parties to the contract, shall be governed by the general rules of ordinary civil
Law.

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4. HIERARCHY PRINCIPLE

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HIERARCHY OF LAW

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Legal system – Hierarchy principle

• The Spanish system is hierarchical so that laws of a lower jurisdiction in conflict with laws of a
higher jurisdiction are invalid.
• The Constitution of 1978 occupies the highest position in this hierarchy. It establishes the basic
principles and rules of Spain’s political and legal framework.
• Spain is organized as a parliamentary monarchy with the King as the Head of State, although he
has no decision-making powers since the sovereignty belongs to the Spanish people,
represented by the Parliament consisting of two chambers, the Congress and the Senate, the
latter intended to be the chamber of territorial representation.
• Taking into account the administrative distribution of the Spain territory, Spain has three different
levels of government:
o municipalities,
o autonomous communities, and
o the central government.

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Hierarchy of Laws in Spanish legal system

In general terms and from a geographical point of view, our legal system is formed by those legal acts issued by
the authorities with legislative powers located at:

European Union

State

Regional Authorities

Local
Authorities

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European Law

• European law takes precedence over national law in order to guarantee uniformity and protect the principles
throughout all Member States (i.e. free market, free competence, freedoms of movement –people, goods, etc. - ).
• European law has autonomy with respect to the domestic law of member states.

• European law provides rights and duties to the EU authorities, member states and citizens.

Primary law Secondary law

Regulations
Foundational Treaties.
Directives
Example: Treaty of Rome + Case-law
Decision
(1958), establishing the
Recommendations
European Community.
Dictations

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European Law
• At the same time, secondary law can be classified in:
Hard law Soft law

Hard law refers to actual EU soft law measures

binding legal include quasi-legal
instruments and laws. In instruments such as opinions,
contrast with soft recommendations,
law, hard law gives communications, non-
States and international legislative resolutions, notices,
actors actual binding guidance documents or
responsibilities as well statements of administrative
as rights.  priorities.

• Treaties (Treaty on the European Union and Treaty on the Functioning of European
Union)
• European Charter of Fundamental Rights
• Regulations (Reglamentos)
• Directives (Directivas)

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 EU Legal Acts Definitions
Includes the rules of EU institutions, objectives of EU, etc. These acts are the basis of EU law
EU Treaties and give primacy to EU law.

Legal acts. Automatically and uniformly applicable to EU members since they enter into
Regulations force. Transposition not required and can be argued directly before Spanish Courts.

Legal Act that requires to EU members to achieve a certain result.

Directives Transposition required => States Members must adapt its domestic law according to
Directives, in order to achieve the goals.

Binding act. Applicable to one or more addressees (EU country, individual or company). Transposition not
Decisions required. Decision is notified to the addressee and it comes into effect.

Recommendations EU institutions suggest a line of action without imposing legal obligations to addressees. Not binding.

EU institutions make a statement without imposing any legal obligation on the subject of the opinion. Not
Opinions binding.

Delegated Acts European Commission can supplement or amend non-essential parts EU legislative acts. Binding acts.

Implementing Acts European Commission can set conditions to ensure that EU laws are applied uniformly.

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Spanish Law

 Spanish Constitution (CE): approved in 1978. This rule prevails over all rules of the Spanish legal system.

 International Treaties signed by Spain: these treaties cannot contravene CE. Art. 96.1 CE:

“Validly concluded international treaties, once officially published in Spain, shall form part of the internal
legal order. Their provisions may only be repealed, amended or suspended in the manner provided in the
treaties themselves or in accordance with the general rules of international law.”

 Laws / Acts (Ley): when talk about a general rule issued by the legislative authority of the State. There are
different types of ‘Laws’:

1. Ordinary Law (Ley Ordinaria)

2. Organic Law (Ley Orgánica)
3. Decree Law (Decreto Ley)
4. Royal Legislative Decree (Real Decreto Legislativo)
5. Regulation

LET’S FIND THEIR DIFFERENCES!

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Spanish Law

1. Ordinary Law (Ley Ordinaria): art. 87.1 CE, legislative initiative:

(i) Parliament (Congreso de los Diputados y Senado)

(ii) Government

(iii) Popular initiative

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2. Organic Law (Ley Orgánica): Their approval requires an absolute majority of the members of the Congress.
It is defined in the art. 81 CE: “Organic laws are those relating to the development of fundamental rights
and public liberties, those which establish Statutes of Autonomy and the general electoral system, and
other laws provided in the Constitution”. The main difference with the ordinary Law is the specific matters
that should be regulated by Organic Law:
o Fundamental rights and public freedoms (articles 15-29 SC)  the laws have to develop/regulate them
directly. It is not enough if the laws affect these rights indirectly.

3. Decree Law (Decreto Ley): art.86 CE. This law is issued by the Government due to an extraordinary and
urgent need. After the issuance by the Governance, the Decree Law must be submitted to the Congress for
its approval or repeal as is the case. In case it is repealed, the Decree Law effectiveness period will run from
the approval by the Government until the repeal by the Congress.

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4. Royal Legislative Decree (Real Decreto Legislativo): art. 82 CE: the issuance of this rules are not subject to
an extraordinary and urgent need. The Government is authorized by the Congress to issue these kind of
rules in order to regulate a specific matter, according to the criteria and conditions provided in the law of
delegation (issued by the Congreso):

(i) Base Laws (Leyes de Base): these laws provides the criteria to regulate some specific matters which
will be developed by the Government through a Decreto Legislativo.

(ii) Law for recasting legal texts (Ley para refundir textos legales): the Government can issue a legal text
in order to compile all regulation about a matter which is included in different legal texts and
consolidate all rules connected in unique Law.

5. Regulation: this is a rule issued by Administrative bodies (without legislative powers conferred by CE)
regulating something previously stated in Law. It is the Law the one that gives power to the regulation to
develop the topic in further detail.

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 VISUAL SUMMARY – STATE LAWS

Laws

Rules with status of

Laws issued by the
law issued by
Parliament
Government

Legislative
Organic Law Ordinary Law Law Decree
Decree

!! The ‘Regulations’ in Spanish Law have a lower

status tan Laws.
Note that the ‘Regulations’ issued by European Base Law
Consolidated
institutions have status of European Laws. texts

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Spanish legal system: autonomous region and local entities

“Estatuto Autonomía”: this includes regulation concerning the basic organization of the ‘Comunidad
Autónoma’ and the essential rules of its bodies. This rule is subordinated to the CE.

Law enacted by the CCAA: they have the same rank/status that the laws issued by the State. They can only
regulate matters that fall within their attributed competences (art. 149 SC). I.e.: in education matters Catalonia
has competence so the Catalan Parliament can pass the Ley Catalana de Educación.

Local entities rules: these rules are considered as regulation and subject to hierarchy principle. I.e.: municipal
ordinance (ordenanzas municipales) for controlling the security and order in the municipality/district.

!!
Please take note that the only organisms that have competence in exclusive for
regulating mercantile matters are the State institutions (Parliament and
Government). The reason of this is one of the main principles in the mercantile law:
market unity; in order to protect (i) free movement of goods and people in
Spanish territory, (ii) the exercise of economical activities on equal terms and
conditions by all Spanish citizens and (iii) the position of consumers with a legal
certainty (this exclusive competence is collected in art. 148 and 149 CE).

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SUMMARY OF HIERARCHY LAWS

The Spanish legal texts are organized with regards to the principle of hierarchy, considering the origin of each
one.

Art. 9.3 Spanish Constitution => guarantees the hierarchy principle of legal provisions following these
rules:

(a) A lower rank rule cannot contravene a higher rank rule. Ex: A “Reglamento” cannot contravene a
Law/Statute.

(b) A subsequent rule derogates a previous rule of the same rank. Ex: LOPD 1999 vs LOPD 2018.

(c) A special rule prevails over a general rule => Example: Corporate Enterprises Act vs Code of Commerce.

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VISUAL SUMMARY of the Hierarchy between Spanish rules

International treaties

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HIERARCHY OF JURISDICTION

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Types of courts – brief description

Article 117 of the SC: states that the principle of the unity of the judicial power is the basis for the organization
and operation of the courts.

The workload and cases of each court are distributed according to different criteria: subject matter, amount,
person, function or region.

A distinction must be made between three fundamental aspects:

1. Jurisdictional order

2. Territorial order

3. Single judge or a bench of judges (tribunal)

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Jurisdiction – Different Orders

The Spanish courts are also organized hierarchically through a system of appeals
(generally before the Provincial Courts or the High Court of Justice of each Autonomous
Community) up to the Supreme Court in Madrid, which is the highest judicial body in all
jurisdictions.
The judiciary is organized into five main jurisdictional orders:
1. Civil jurisdiction (remember that commercial/mercantile matter are a special part of
civil law)
2. Criminal jurisdiction
3. Administrative jurisdiction
4. Labour or social jurisdiction
5. Military jurisdiction

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The territorial aspect (HIERARCHY IN MERCANTILE MATTERS)

In accordance with the explanatory memorandum to Organic Law 6/1985 of 1 July 1985 on the Judiciary (LOPJ), the
State is divided territorially, for judicial purposes, into:
1. Municipalities: Peace Courts (Juzgados de Paz), who solve minor matters of the citizens and their relations
(when the quantity is lower than 90 euros).

2. Districts or Provinces = Judicial district (Partidos Judiciales): it is the basic unit of the judiciary, covers one or
several municipalities and is served by at least one first instance and one inquiry court.

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The territorial aspect (HIERARCHY IN MERCANTILE MATTERS)

In the mercantile order the courts are:

 COMMERCIAL COURTS, which will hear:

(i) all questions that arise in relation to bankruptcy,
(ii) competition law, industrial and intellectual property, publicity;
(iii) claims regard to shipping;
(iv) claims regards enforcement of Maritime Law
(v) General conditions of adhesion contracts and the protection of consumers and users

 CIVIL COURTS (COURTS OF FIRST INSTANCE): will hear about the rest of civil issues, including commercial
matters or disputes between entrepreneurs or their activities, i.e., contracts (banking, distribution, etc.)

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The territorial aspect (HIERARCHY IN MERCANTILE MATTERS)

 Single province: Provincial Court (Audiencia Provincial; i.e. In Barcelona: APB): is a bench of judges and is
responsible for two jurisdictional orders: civil and criminal. The Civil chambers: are responsible for appeals
against judgements issued by First Instance Courts or Commercial Courts.
 Autonomous communities: High Courts of Justice (Tribunales Superiores de Justicia) are the highest
jurisdictional bodies of the autonomous communities (i.e. In Catalonia: TSJCat). They are a bench of judges and
are divided into three Chambers covering four jurisdictional orders.
 The First Chambers will hear about civil/commercial matters, specifically: it is responsible for civil cases
involving acts by the president of the autonomous community, members of the government council or of the
legislature and, regard the rulings issued by inferior courts, they hear about appeals
 National: The Supreme Court (Tribunal Supremo): is the highest judicial body in Spain. It’s a bench of judges and
it is composed of five chambers, it has cognizance of all jurisdictional orders and its rulings cannot be appealed,
except to the Constitutional Court.
 National: Constitutional Court (Tribunal Constitucional): Please note that this Court is not considered part of the
judiciary, but as an independent branch of the state responsible for interpretation of the constitution. Despite
this, its functionality and activities are usually similar to those of the rest of the judiciary but only hear about
constitutional issues. I.e., in for our interests we know it that hear the appeals writ against the Judgments issued
by Supreme Court when one of the parties considered that their constitutional rights have been infringed.

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 VISUAL SUMMARY

ECJ (European Court of Justicie) [TSJUE]

TC (Constitutional Court) 1.When we talk about the

Judgments (Sentencias) issued by
Spanish Courts we introduce
TS (Supreme Court)
before these abbreviations a ‘S’;

TSJ (High Courts of Justice) !! i.e.: STC

2.When we talk about provincial
or community courts we
introduce the abbreviations of
AP (Provincial Court) the territorial; i.e.: APBcn or
TSJCat
JPI (First Instance Court)
JM (Commercial Court)

Peace Courts

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 DISCLAIMER:

!! We have studied the hierarchy in commercial law issues but, please note, that for each
jurisdictional order there is a special Court in the first instance, i.e.: Courts of inquiry (investigating
all criminal cases -Juzgados de Instrucción-) or Social Courts (Labour matters), and, other special
Courts that was created for hearing special and specific matters, i.e.: courts dealing with violence
against women or Juvenile Courts (Criminal cases committed by minors).

Spain has a National Court (Audiencia Nacional) that is a bench of judges with jurisdiction over the
entire territory of the nation. This Court hears about three jurisdictional orders: criminal,
administrative and social/labour matter, in connection with the appeals against resolutions issued
by lower courts.

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ALTERNATIVE DISPUTE RESOLUTION MECHANISMS:
Do you know which alternative resolution mechanisms do we have? Explain them!

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THANK YOU!