Organic Law 1/2025 and its impact on commercial litigation in Spain
Organic Law 1/2025, on measures to improve the efficiency of the Public Justice Service, has introduced a significant change in Spanish civil and commercial litigation: as a general rule, before filing a claim, the parties must have previously attempted an Adequate Means of Dispute Resolution, known in Spain as MASC.
MASC stands for Medios Adecuados de Solución de Controversias, which may be translated as Adequate Means of Dispute Resolution. The concept includes various forms of negotiation or out-of-court dispute resolution, such as mediation, conciliation, direct negotiation between the parties or their lawyers, a confidential binding offer, or the opinion of an independent expert.
The purpose of the reform is to encourage out-of-court settlements, reduce litigation and promote a more collaborative approach to dispute resolution. However, its practical application is not straightforward in all areas of law. One of the areas where the issue is particularly complex is corporate litigation and, more specifically, challenging corporate resolutions in Spain.
What does challenging corporate resolutions mean under Spanish law?
Challenging corporate resolutions is the legal mechanism that allows shareholders, directors or other entitled parties to contest the validity of certain resolutions adopted by the general shareholders’ meeting or by other corporate bodies.
The Spanish Companies Act allows the challenge of resolutions that are contrary to the law, opposed to the company’s articles of association or to the rules governing the shareholders’ meeting, or that harm the corporate interest for the benefit of one or more shareholders or third parties.
In practice, these actions often arise in the context of shareholder disputes, particularly between majority and minority shareholders. They may also arise where the legality of resolutions relating to annual accounts, capital increases, the appointment or removal of directors, amendments to the articles of association, corporate transactions or breaches of shareholders’ information rights is disputed.
For international investors and foreign companies operating in Spain, this area is especially relevant. Corporate resolutions often determine the strategic direction, governance structure or financial position of a Spanish company. Any challenge to those resolutions may therefore have significant legal, commercial and operational consequences.
Is it mandatory to attempt a MASC before challenging a corporate resolution?
The answer is not entirely settled.
On the one hand, Organic Law 1/2025 establishes MASC as a general procedural admissibility requirement in declaratory civil and commercial proceedings. From this perspective, it could be argued that, before filing a claim to challenge a corporate resolution, the claimant should first attempt a MASC, unless a legal exception applies.
On the other hand, the MASC regime excludes disputes concerning matters that are not at the parties’ disposal. This is where the difficulty arises: in proceedings to challenge corporate resolutions, it is not always clear whether the dispute concerns a matter that the parties are legally free to settle.
In some cases, the conflict may have an essentially financial, contractual or transactional nature. In other cases, however, the dispute concerns the validity of a corporate resolution, compliance with mandatory rules, protection of the corporate interest or the proper formation of the will of a corporate body.
For this reason, it cannot be stated categorically that all actions challenging corporate resolutions must necessarily be preceded by a MASC. Nor can it be stated, in the opposite direction, that all such actions are excluded from MASC because they concern non-disposable matters.
A particularly complex issue in Spanish corporate law
When challenging a corporate resolution, the dispute does not necessarily concern only the challenging shareholder’s individual interest. The regular functioning of the company, the effectiveness of a resolution adopted by majority vote, the rights of other shareholders and, in some cases, effects vis-à-vis third parties may also be at stake.
This explains why the scope for negotiation may be limited. For example, it may be difficult to envisage an effective settlement when the resolution is challenged on the grounds of a breach of mandatory legal provisions, essential defects in the notice or in the constitution of the meeting, or an infringement of shareholders’ information rights.
However, there are also situations in which prior negotiation may be useful. This may be the case, for example, in relation to management decisions, shareholder disputes that may be resolved through a transactional solution, or situations in which the company may validly revoke, replace, or correct the contested resolution.
In other words, the relevance of MASC in corporate disputes should not be assessed in abstract terms. It requires a careful analysis of the nature of the resolution, the grounds for challenge and the practical possibility of reaching a lawful out-of-court solution.
Revocation or replacement of the corporate resolution as a possible solution
The Spanish Companies Act provides that a challenge will not proceed where the corporate resolution has been revoked or validly replaced by another resolution before the claim is filed.
This possibility may be particularly relevant in the context of MASC. In certain cases, prior negotiation may allow the company to adopt a new resolution, correct defects or remove the grounds for challenge.
However, this route will not be useful in every case. Its effectiveness will depend on the type of resolution, the grounds for challenge, the stage of the dispute and the real possibility of remedying or replacing the contested resolution.
Accordingly, rather than applying an absolute rule, the most prudent approach is to analyse, on a case-by-case basis, whether attempting a MASC before challenging a corporate resolution is legally required, strategically advisable or practically useful.
Procedural risks of not attempting a MASC
Until there is consolidated case law on this issue, the decision to attempt a MASC before challenging a corporate resolution should be taken with caution.
If the court considers that a MASC was required and no attempt was made, the claim may face admissibility issues due to failure to prove compliance with the procedural admissibility requirement.
Conversely, if a MASC is initiated regarding a matter ultimately considered non-disposable, its usefulness or appropriateness may be questioned. Nevertheless, from a practical perspective, it may help demonstrate that the challenging shareholder acted diligently and showed a genuine willingness to explore an out-of-court solution, to the extent legally possible.
For this reason, in many cases it may be advisable to send at least a carefully drafted prior communication. Such communication should identify the contested resolution, the essential grounds for objection and the willingness to explore an out-of-court solution, insofar as the subject matter is legally disposable.
Conclusion: case-by-case analysis and procedural strategy
The application of MASC to the challenge of corporate resolutions in Spain remains a debated issue and is still awaiting practical consolidation by the courts.
The reform introduces a general requirement for prior negotiation in civil and commercial proceedings. At the same time, it excludes matters that are not legally disposable by the parties. This tension is particularly relevant in corporate law, where many disputes go beyond purely financial or individual interests.
Therefore, absolute conclusions should be avoided. Until clearer judicial criteria are established, the safest strategy is to assess each case individually, determine the degree of disposability of the matter, document any attempt at negotiation and preserve the applicable deadlines for challenging the resolution.
For companies, shareholders and foreign investors in Spain, early legal advice is essential. The decision whether to attempt a MASC, how to document it and when to file the claim may directly impact the admissibility and effectiveness of the legal action.
Frequently Asqued Questions
There is not yet a fully settled answer. Organic Law 1/2025 establishes MASC as a general pre-court requirement in civil and commercial proceedings, but excludes matters that are not at the parties’ disposal. In corporate resolution challenges, the key issue is whether the specific dispute concerns a disposable or non-disposable matter.
Because corporate disputes do not always involve purely individual or financial interests. In many cases, the challenge concerns the validity of resolutions adopted by corporate bodies, compliance with mandatory rules, the corporate interest or the rights of other shareholders.
A MASC may be useful where there is room for an out-of-court solution. For example, the company may be able to revoke the resolution, validly replace it with a new one, correct formal defects or adopt measures that remove the cause of the dispute.
It may be more questionable where the challenge is based on serious legal infringements, essential defects in the calling or constitution of the meeting, breach of shareholders’ information rights, abuse of majority or resolutions affecting non-disposable matters.
If the court considers that a MASC was required, the claim may face admissibility problems due to a lack of proof of compliance with the procedural admissibility requirement. Until case law becomes clearer, the strategy should be assessed carefully before filing the claim.
Not necessarily. The decision should be made on a case-by-case basis, taking into account the nature of the resolution, the grounds for challenge, the degree to which the matter is legally disposable, the applicable deadlines and the safest procedural strategy.
It should clearly identify the company concerned, the contested resolution, the date on which it was adopted, the essential grounds for objection and the willingness to explore an out-of-court solution to the extent legally possible. It is also important to keep sufficient documentary evidence of the communication and its content.
A commercial lawyer can assess whether a MASC is legally required or strategically advisable, draft the prior communication, preserve the deadlines for challenging the corporate resolution and design the appropriate procedural strategy to protect the rights of the shareholder or the company.
Do you need legal advice before challenging a corporate resolution in Spain?
Before taking any action, it is essential to assess the nature of the resolution, the grounds for challenge, the applicable deadlines and whether an out-of-court route should be attempted.
