Holtrop S.L.P. blog

This is the second article in our series on the administrative obstacles that developers of renewable energy projects in Spain face when seeking approval for their projects.

At the end of our last article, we posed two questions regarding the requirement to place a financial guarantee prior to commencing the application process. Firstly, assuming the application is successful and the guarantee is cancelled, the effective application fee is €0. How then do the authorities recover their costs? Secondly, is it fair or desirable to require an entity that voluntarily desists with an application to forfeit the entirety of the guarantee?

In this article, we explore these questions.

The obvious answer to the first is that the authorities take a cut of the revenues derived from the electrical system. Red Eléctrica de España, for example, charges an ‘operations fee’ of approximately 1.05% of the final cost of electricity provided (the final fee will depend on the precise nature of the consumer and their location in the grid). This fee is charged to every consumer of the electricity, and is designed to cover REE’s costs incurred in operating the transportation network. This means that consumers are, in part, subsidizing the costs that REE has incurred in processing connection applications – both successful and unsuccessful. Similar fees are charged by the operators of the distribution networks (which, as we discussed in our earlier article, follow broadly the same administrative rules as REE).

If we were using a ‘user pays’ model, the obligation to pay for the application costs would properly fall upon the owner of the plant whose application has been processed. The current system clearly results in certain entities – for example, households and other end users – subsidizing the costs of both authorities and producers through higher electricity prices. Similarly, one would assume that the bank guarantees forfeited by unsuccessful applicants go some way in compensating the authorities for the costs involved in the application process; also resulting in a violation of the ‘user pays’ principle (unless in the unlikely event that the amount of the bank guarantee equates exactly to the amount of costs incurred in processing the unsuccessful application). At a conceptual level, then, we need to more to the second question: why should end users and unsuccessful applicants be required to subsidize successful applications?

One possible answer is that only sufficiently-qualified entities should be making applications in the first place. If a guarantee is executed against an unsuccessful applicant, this is an indication of that applicant’s unsuitability. Whilst we can understand this argument – and indeed, in some cases it is probably fair – it fails to take into account situations in which a project starts off being viable but later, for reasons unrelated to the applicant, ceases being so. In these circumstances the project owner has to decide whether to keep going with a sub-optimal project or accept the loss of the guarantee. Given the guarantee represents a lot of money, it is logical to expect that various projects continue with the application process even though they are not optimal. This is clearly a perverse outcome caused by the current system.

Another answer is that end users are the ones actually consuming energy, so they should be responsible for bearing the costs of the application processes for successful applicants. Although we have some sympathy for this line of thought, it neglects to consider that the producers themselves make money (sometimes, lots of money) from the production of electricity. This money ultimately comes from end users. Why, then, should the end user be required to pay not only for the product, but also for the producer’s costs incurred in creating that product? A fairer solution would be to make the project owner solely responsible for paying the application costs, costs which they can then recover through the operation of their plant. Going one step further, producers will already recuperate their costs from consumers via the sale of their energy on the wholesale market; why, then, should producers not have to cover their own application fee costs?

In our next article in this series, we explore the application processes in two other jurisdictions and ask whether these models could work in Spain.


How much does it cost to apply to Red Eléctrica de España (REE) for permission to construct a greenfield renewable energy plant in Spain? The surprising answer is: €0, if your application is successful. The answer is not so simple – or cheap – if your application fails.

In Spain, as in other countries, the application process for connecting renewable energy projects to the grid is long, expensive and complicated. A key part of this process is applying for grid access to either the distribution or transportation grid. In this article, we discuss some of the peculiarities of the application process to the transportation grid[1], specifically the costs associated with applying for approval from the grid owner, REE. Recently we have noticed that one aspect in particular of renewables projects is acting as a source of uncertainty for our international clients: the Spanish law requirement to deposit a financial guarantee in order to begin the application process for greenfield developments.

Note that there are many other administrative steps – and costs – associated with a grid connection application, some of which we will consider in later articles.

 Under Spanish legislation, all new renewable energy generation projects must deposit a bank guarantee of €10/kW using the plant’s peak, installed capacity for purposes of calculation (note that for smaller installations this amount may be modified or waived; see for example the final first disposition of RD 1966/2011). For example, for a 100MW project, the amount of the guarantee will be €1.000.000 euros (see Articles 59bis and 66bis of RD 1955/2000). This guarantee will remain in place until the plant receives its final administrative authorization to commence injecting energy into the grid. If the applicant desists in the application process, the guarantee will be executed and, in most cases, the applicant will forfeit the entire sum. If the application becomes impossible to complete for reasons that are outside of the applicant’s control then, prima facie, the guarantee is returned to the applicant.

The rationale behind requiring applicants to place this guarantee is simple: the Spanish authorities don’t want to waste their time with applications for plants that are never likely to be constructed. By requiring applicants to put down considerable sums of money prior to commencing the applications – with the very real prospect that this money will not be returned if the project goes badly – only serious players enter the market.

This situation raises at least two interesting questions. Firstly, assuming the application is successful and the guarantee is cancelled, the effective application fee is €0. How then do the authorities recover their costs? Secondly, is it fair or reasonable to require an entity that voluntarily desists with the application to forfeit the entirety of the guarantee?

We explore the answers to these questions – and more – in our upcoming series of articles relating to the grid connection process.


[1] Note that, barring a few exceptions, the costs associated with applications to the distribution and transportation grids are normally very similar.


Commercial distribution is a key sector of the Spanish economy and after seeing the big display and interest generated by the two recent food fairs held in Barcelona, it is not difficult to believe. First, it was “La Fira Alimentaria”, and at the beginning of the month the Catalan capital welcomed “Biocultura”, centered on ecological products and responsible consumption.

Despite their importance, distribution contracts have no specific regulation in Spain. They only require consent from both parties in order to be formalized. Although this allows great freedom of choice, the lack of regulation prompts a high volume of disputes.

Total deregulation has led to a situation in which the parties are not equal when negotiating and executing these agreements. Generally, suppliers, being more powerful, force distributors to accept unfair terms (namely, exclusivity; limitation of the independence of distributors; remuneration systems or imposition of minimum sales) with the threat of cancelling the contract if they do not agree.

Regarding the contract duration, in the absence of any specific written or verbal agreement, the duration of the distribution contract will be considered to be permanent. Nevertheless, as the case law suggests, both parties can terminate the contract at any time, without the need to prove a specific cause. There is however, a duty of notice judicially recognized. The notice period is of 1 month for every year of contract, up to a maximum of 6 months. Although, this is not a legal requirement for the termination to be valid, the courts have understood it to be proof of good faith in dealings. The way this duty is enforced is by granting compensation for breach of the duty of notice. The maximum amount of this compensation would be the medium average remuneration perceived during the last five years, as established in the Law of the Agency Contract (applied by the courts by analogy). The Spanish Supreme Court has recognised a duty to compensate for the harm caused by the breach of the notice time even when the contract was permanent and no specific duty of notice had been agreed on by the parties.

What characterises this type of contracts is their collaboration aspect, as they go further than an ordinary bilateral agreement. This is so because the supplier not only benefits directly from the sales to the distributor, but also benefits from the distribution network offered by the latter. This creates a double set of ties between both parties. In fact, once the contract is terminated, the distributor may be entitled to compensation for the clientele generated.

This compensation is not automatic, the distributor must prove a) the existence of a clientele created by his personal effort, and b) that said clientele can continue to produce substantial advantages to the supplier. The calculation of the compensation is guided by art. 28 of the Law of Agency Contracts, taking into account the net benefit of the distributor, not the commercial margin.  


Foreign receivers of a debtor who has assets in Spain may be liable here for any financial loss to the assets of the receivership, unless they can prove they have acted with due diligence. Without a doubt, one of the first duties, if not the first, that will need to be complied with is publication of the foreign judgement. According to article 221.3.2º of the Spanish Insolvency Law, once a foreign insolvency proceeding is opened, the receivers will be under the obligation to request the corresponding annotations in the public registers where the debtor has assets or rights listed.

While the aforementioned duty could seem quite straightforward, practice has proven differently. From Holtrop we have come across a Property Register which at first instance denied inscription of the foreign court decision declaring insolvency, under the mistaken belief that an exequatur procedure was required. Indeed, the exequatur procedure for foreign judgements is mentioned in article 220.1.2º of the Insolvency Law, and in this sense, the mistake is understandable. However, a very important distinction between judgements from member states and judgements of non-member states has to be drawn. While the exequatur procedure will be applicable to the latter, the former shall be recognized and produce the same effects in all other member states without any further formalities. This conclusion stems from article 16 of Regulation 1346/2000 on insolvency proceedings and was confirmed by our appeal before the property register in the Easylife file.

Parallel to the duty to register in the required public registers, we find the duty to publicise the judgement in the Official Gazette. Publicity is not always mandatory, only in the case where the debtor possesses an establishment in Spain, according to article 221.3.1º of the Insolvency Law. In the Interedil Srl case, the ECJ clarified that ‘"establishment" shall mean any place of operations where the debtor carries out a non-transitory economic activity with human means and goods.' To obtain the said publication, the receivers will first need a sworn transition of the judgement with a Spanish apostille. Then, the process can mostly be completed online through the National Agency of the Official Gazette, under section four, named Administration of Justice. Even though publicity is not always required, foreign receivers might nevertheless choose to do so for practical purposes, such as speeding up other actions, or the exact opposite, to deter certain actions. Sure enough, this is what we have seen in a current file we are dealing with (Groenewoud).   


As the proceedings of our files progress, keep your eyes open for further posts on dealing with foreign insolvency cases in Spain!


Shopping on Black Friday?

We still have a whole month to go till the closing of the fiscal year, but as today is Black Friday, and everybody is already doing their Christmas shopping, we decided instead to start preparing our yearly summary  on M&A activities.

For the time being, the most technically complex operation we have done this yearhas been the purchase of the winery Propiedad de Arínzano last summer. Our client SPI Group bought this winery from the historical company Chivite, from Navarre, in the frame of a restructuration started by the “Fondo Fénix”, the “bad firm bank”, created by the banks Santander, BBVA, Caixabank, Bankia, Popular and Sabadell, which was also used to restructure the winery Condesa.

BBVA has been the leadbank in the operation made by Grupo Chivite, and has been assessed by the attorneys of Gómez Acebo & Pombo together with the financial assessors of Ernst & Young. Grupo Chivite has been assessed by the attorneys of Uría Menéndez and the financial assessors of Eurohold. SPI-Group was assessed by the attorneys of HOLTROP S.L.P. Transaction & Business Law and the financial assessors of PWC.

SPI-Group, with headquarters in Luxembourg, is a company with a strong international presence andorigins in the vodka sector, owner of the brands Stolichnaya, Elit and Moskovskaya. SPI-Group already owned the renowned wineries Achaval Ferrer from Argentina, and the Italian wineries Tenuta dell’Ornellaia, Castelgiocondo y Luce della Vita, the later by means of a joint venture with Marchesi de Frescobaldi and the Californian Michael Mondavi. SPI-Group has created High End Wines Holding B.V. in order to direct its current and future growing in the wine sector. Manuel Louzada, coming from Numanthia, has been designated General Director of Propiedad de Arínzano.

The cause of the bigger complexity of this operation has been to align the interests of the sellers, as well as the banks and the purchasers. In some press publications emphasis was put on the requirements imposed by the international regulation against money laundering, with 6 involved banks, each one with its approval committees, which dit not make it easier to speed up the operation. The problem here is not the material compliance of these requirements, which no one with a reasonable judgement would doubt about, but knowing in advance both the procedure as well as the formal requirements of each entity separately. This is a topic which makes people nervous, as it is apparently difficult to create clear, predictable, rational and transparent rules and procedures.

An additional complication has been the difficulty by the purchaser in accepting modifications in the purchase agreement which were proposed subsequently to the firm of the contract, but before its closing. For our client, being used to Anglo-Saxon transactional culture, this has been a cultural matter of  very difficult acceptance. If it wouldn’t have been a winery of great interest because of its strategic relevance for our client, he wouldn’t have accepted it.

The success of the closing of the operation is certainly to a considerable extent thanks  to the leadership of the “lead bank” BBVA in guiding the other entities in the structuration of the operation as it was finally done. In general terms, the negotiation with the attorneys of the bank and the seller has been fruitful, and despite the final changes, the key has been the interest in easing the closing of the operation.

In this list you can read more press mentions on this operation:


EXPANSIÓN: Los bancos crean el fondo Fénix S.L. para rescatar empresas

PROENSA: El grupo SPI remata la compra de Arínzano 

CINCO DÍAS: El proyecto Fénix salva a GAM, Condesa, Chivite y en puertas queda Ros Casares

EL DIARIO DE NAVARRA: El grupo ruso SPI se queda con Señorío de Arínzano (Chivite) por unos 15 millones de euros This article confuses the origin country of the SPI Group founder with the company headquarters, which are in Luxembourg.


INVERSIÓN & FINANZAS.COM: La banca renuncia a rescatar en bloque empresas sobreendeudadas


Currently we have one interesting assignment which we would consider part of our M&A practice, we are advising in the setup of an ESCO in Chile, to deliver industrial heat to a largecap stakeholder, our client is a Catalan company in the biomass sector. We hope to be able to provide more information shortly.

Another project which we have been following for something over a year has reached us today, it's a classic M&A operation in the food and beverages, involving a vineyard for a leading company in the sector. We will confirm this operation if and when confirmed and disclose parties when allowed on closure of the operation. We have done some operations in this niche before and it would be great if we could do some more.

We are very happy to do a few M&A projects every year in the mids of all the litigation we are handling against the Spanish State for the Renewable Energy sector in Spain.


In the summermonths we have two American students over as interns. Dana is one of them and wrote this on intercultural negotiation issues:

   Dana Cary, HOLTROP S.L.P. Transaction & Business Law  

Business negotiations are supposed to be clear, concise, and straightforward. They are a way to establish guidelines, create networks, and finish deals in an efficient, timely manner.  Right? Maybe to an American. To a Pole, an international business negotiation may be the perfect opportunity to educate others about their romantic culture and improve their understanding of other cultures; to a Hungarian it may present the opportune time to socialize and gossip about recent news.

The differences amongst international business cultures can lead to serious mishaps if not understood.   From the perspective of an American, a light-hearted wisecrack in the beginning of a business meeting is often used as an attempt to lighten the mood, however to other cultures it may be considered offensive and lead to the termination of an entire business deal.  Therefore, it is important to familiarize yourself with these cultural differences before conducting international business negotiations in order to prevent miscommunication.  And while miscommunication could occur in any type of interaction, two cultures that are especially prone to miscommunication due to their drastic cultural differences are that of Spain and the United States. 

What would it be like for an American to conduct a business negotiation with a Spaniard? As Julie stated in her blog post, Americans are monochromic individuals. We are linear-thinking, fast moving people that prize being on time, setting clear and realistic standards, and getting to the point in almost every interaction we have.   

Spanish culture varies dramatically from this.  The Spanish are multi-active, polychromic people that don’t live agenda-like lifestyles. To a Spaniard, punctuality isn’t crucial—arriving for a 9am business meeting at 9.30 isn’t considered rude or unprofessional, it is often times expected. Contrary to Americans who adamantly sift through information in attempts to discover the bottom line, the Spanish try to be affable and enthusiastic in their communication styles, thinking of ways they can establish bonds with the person they are doing business with.And the best way to influence a Spaniard is not through presenting a list of deadlines and regulations, but rather through personal appeal. Show them honor, respect, a big heart and a sense of humor and you’re on the right path to a successful, harmonious business negotiation.  

If unaware of these cultural differences, conducting a negotiation with a Spanish corporation (or any other foreign company) could be a very frustrating experience for an American. While we tend to rely on our lawyers when outlining the terms of a negotiation and leave no room for on-the-fly improvisation, the Spanish are quick to accept any terms of a negotiation (in attempts to be polite) and then retrospectively decide to change  these terms.    Just being aware of this single difference is an example of turning what could be a very frustrating miscommunication into a respected understanding of culture. This example, out of many, illustrates how crucial it is to understand a foreign company’s culture before engaging in a business negotiation. To learn more about how business cultures vary, check out Richard Lewis’s “When Culture’s Collide: Leading Across Cultures.”



In the summermonths we have two American students over as interns. Julie is one of them and wrote this on intercultural negotiation issues:

   Julie Claar, HOLTROP S.L.P. Transaction & Business Law  

Negotiating with Americans

As the world gets smaller and smaller with technology, business persons need to become more aware of the cultures of other countries.  

With the slightest miscommunication or interaction, a whole business deal or relationship can be terminated. You may misinterpret a friendly gesture, an agreement, or a gift and consequently not get what you expected. The best thing to do before a negotiation is be aware of the differences and be prepared to accept and respect them.

Americans have a reputation of being hardheaded and stubborn, this may honestly be the case however it is just the culture. The US is a monochromic culture, meaning that they would prefer scheduled breaks, detailed communication, timeliness, and planned meetings and agendas, they just don´t like surprises. They take business very seriously, so they expect you to be serious in return. It´s about the deal, not quite the relationship you develop. They are direct people (and appreciate openness and frankness), do not like silence, discourage touching in the workplace, stress the importance of eye contact, enjoy certainty, and sometimes are more informal than most. They will come into the negotiation having the full authority to make decisions having planned and prepared a target goal and a walk away point.  

Finally to Americans “a deal is a deal.” When they sign a contract, they do not want to return to change it.

I am studying business in a school in the United States therefore I have taken several classes based on negotiation and organizational behavior in the workplace. From what I´ve learned and experience, a lot of this is true. Americans are straightforward and like certainty.  

Personally, a monochromic culture describes my life and expectations perfectly. Lateness is a sign of disrespect in the states and often leads to annoyance. Business is serious for Americans because in the US we seem to live to work, not work to live. People do value relationships more than they used to but partly for business reasons.  

Having a good relationship with the company will lead to potentially cheaper resources, less work to replenish supplies, and almost as good as a guarantee as you can get. Americans are also always striving for the next best thing; new is good in the States; the grass is always greener.

Another thing I have learned is the international marketplace and how all the citizens of every country need to respect and develop personal skills to be able to mold to different cultures, especially in business situations.  So not only should you expect to be prepared to accept and respect the American culture, but they should be prepared to respect yours as well. Last advice; do not get offended by a US business person. They aren´t meaning to, and like anyone else, if they are, you don´t want to do business with them anyways.



Different cultures bring different negotiation habits. Richard D. Lewis wrote a very thorough analysis on this in his book "When cultures collide". I have that book on the shelve in my office and was struck by its practical accuracy when reading it, I recommend all people involved in international business to buy and read it. Yesterday I found a PDF presentation on it, which I make available for you here:

  When cultures collide

When I find some time the coming summermonths I would like to contrast some deal experiences I made over the past years with Lewis' models, and give you some practical insights into doing business in Spain.

Marysol Claver



We intend with this section to share some of the issues that may arise in the wine industry here in Spain with a global focus. Lets start with a positive note: This industry despite the global crisis, which has hit Spain with particular ferocity, has grown in the past year and it may be expected to be continueing doing so.

The food and drink industry is the largest manufacturing industry in Spain and we are among one of the largest producers in the EU. It is non-cyclical sector and has been one of the steadiest industries in the past 20 years. Despite the crises it has kept growing, in terms of turnover , R&D, and employment

This industry is the second largest sector on exports, as well accounting for over 40% of all exports in our country. Particularly wine & spirits are the leading export product of the food and drink industry. They represent half of the exports in our country and are increasing; Spain is the second largest wine exporter in the world with 17% of the market share, behind Italy with 22%. We are the country where exports have increased most. Trades increased over 15% in 2010, (exceeded those number in 2011 ).

2/3rds of our trade volume is to EU countries. The highest turnover comes from Germany, UK, US and France. By volume, France, Germany, Portugal and Russia are our main destinations. China, Mexico and Canada have also increased our exports significantly.

Stability and growth especially in foreign markets, are the reasons that this sector is receiving so much attention lately. 

In my upcoming posts I will discuss internationalization options for local Spanish players, and we will share some of our experience obtained in M&A operations in the wine industry over the last years.