Legal effectiveness in Spain of Powers of Attorney granted abroad

Published on 30th Jun 2017

Despite the high number of judgments and rulings of the General Directorate of Registries and Notaries (“Dirección General de Registros y del Notariado”) in this regard, the effects and validity of powers of attorney granted abroad for transacting legal business in Spain continue to be an ongoing conflict among notaries and registrars, resulting in a lack of confidence in Spanish legal security.

In Spain, it is currently customary for certain legal transactions to have at least one foreign party. It is for this reason that the various legal players involved in such transactions (from legal advisers to judges themselves, public notaries and property and commercial registrars) are faced with the need to know certain aspects of foreign regulations which may be applicable to the legal transaction in question. The problems arise when the interpretation of applicable Spanish regulations is not homogenous, despite the many attempts that have been made to try to unify criteria.

In particular, we refer to the effectiveness of powers of attorney granted abroad to carry out legal acts in Spain, in light of the resolutions of the General Directorate of Registries and Notaries (“DGRN”): (i) resolution dated 17 April 2017; and (ii) resolution of 14 September 2016, both relating to the necessary requirements for the powers of attorney granted abroad to be fully valid in Spain.

Specifically, with these resolutions, the Dirección General de Registros y del Notariado  has reiterated that for a power of attorney granted abroad to be valid and fully effective in Spain it must have the legal equivalence of a power of attorney granted in accordance with the Spanish legal framework. Therefore, a power of attorney granted abroad must meet with “those structural elements that give force to the Spanish public document, that is: (i) it must be authorized by someone who has competence to attest the same in their country; and (ii) that the authorizing party -certifies- the identification of the grantor as well as his capacity for the act or business contained therein. The first of these requirements is verified by means of the legalization of foreign powers of attorney or, if applicable (the most common example), by the apostille provided in the Hague Convention of 5 October 1961. The second criteria is fulfilled by means of the insertion of a notarized certificate, in which the foreign public official attests the identification of the grantor of the power of attorney and the validity of his/her powers or position by virtue of which the power of attorney was granted. In addition to these criteria, both the registrar and the notary must verify the existence and validity of the foreign regulations applicable to these powers, the proxies or the interested parties being responsible for accrediting such foreign regulations, if they are required to do so. It goes without saying that this accreditation is not an easy task for somebody from outside the legal sector.

However, the practical implications are more complex than those posed in theory. Firstly, seeking equivalence between the powers granted in certain countries and the powers granted in Spain is not a simple task, since the functioning of the notary public in Spain differs radically, among others, from the Anglo-Saxon countries, where the notarial function does not focus on attesting or accrediting certain formalities, but focuses on the accreditation of the signatories’ identity (mainly by means of the legalization of signatures). To remedy this, legal advisors use the notarial certificates referred to above. However, there are many cases in which foreign notaries are unwilling to endorse such notarial certificates, either because it is not necessary for the powers that are to be used in their jurisdictions or because, in certain cases, their own legislation does not allow them to make such assertions (for example, notaries of the State of California in the United States).

Secondly, there is also the problem of capacity judgment (of the proxy and the grantor of the power), an interminable struggle between registrars and notaries to determine which of them is competent to verify such capacity. It is precisely this dispute that leads to the greatest practical problems, since it is not unusual for one of them to consider that the power is sufficient for the act in question and that it has been validly granted in accordance with applicable legislation (and is also “equivalent” to a Spanish power) (usually the notary), while the other (usually the registrar) considers that some of the requirements have not been met.

It is clear that the fact that notaries and registrars are not in agreement in spite of the increasingly detailed decisions of the DGRN in this respect, greatly complicates the work of the other legal players as they are unable to categorically affirm if the foreign powers are going to be “functional” in Spain which, unfortunately, provides for greater legal insecurity and, therefore, the loss of confidence of foreign parties who wish to invest in Spain. They do not understand (and it is an arduous task of Spanish legal advisors to “justify” it) that a mere formality such as the recognition of a foreign power duly legalized or apostilled (and fully valid in the country of origin) is acceptable in Spain and could jeopardize an investment in Spain (whether this is for the purchase of a small apartment on the coast, or the purchase of a company for millions of euros).

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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