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Procedural Keys to Litigating Against Foreign Companies in Spain: Can a Parent Company Be Served Through Its Subsidiary?

Posted on by ALBA CRESPO
23
Apr

1. Litigating Against a Foreign Parent Company: The Dilemma of Service via Subsidiary

In an era of increasing cross-border litigation, particularly concerning competition law, numerous multinational corporations face lawsuits filed in jurisdictions where they operate through subsidiaries, including Spain.

In this context, a crucial question frequently arises: Is it valid to serve a lawsuit on a foreign parent company through its subsidiary established in Spain?

This issue is not merely theoretical. The answer determines the validity of service, compliance with procedural safeguards, and ultimately, the effectiveness of the judicial process. Jurisprudence from the Court of Justice of the European Union (CJEU) regarding the trucks cartel, along with recent rulings from our Supreme Court aligning with the pioneering stance of the Constitutional Court, shed light on this essential matter to ensure the viability of the intended claim.

2. Brussels I bis Regulation: The Legal Framework for Serving Lawsuits in the EU

The service of lawsuits to foreign companies within Europe is governed by Regulation (EU) No 1215/2012 (Brussels I bis Regulation)[1]. This instrument regulates both judicial jurisdiction and the recognition and enforcement of civil and commercial judgments within the European Union.

The Regulation stipulates that the defendant must be served at their domicile, which generally refers to the registered office of the legal entity being sued. However, Article 7(5) of the Regulation[2] introduces the possibility of suing in the place where a company has an “establishment” or “branch,” raising questions about whether a subsidiary can be considered as such for procedural purposes.

3. Parent Company and Subsidiary: Economic Unity Versus Procedural Independence

From an economic standpoint, many companies operate as a single integrated entity. In competition law, this reality translates into the concept of an economic unit, allowing liability to be attributed to the parent company for the actions of its subsidiaries. However, procedurally, the legal independence between parent and subsidiary remains the general rule.

The subsidiary, although operational and part of the same group, possesses its own legal personality. Therefore, as we will see in the analysed jurisprudence, a foreign company cannot be validly served merely because its subsidiary has received the lawsuit. A careful distinction must be made between the material sphere (economic unity) and the formal or procedural sphere (legal personality and procedural capacity).

4. The Pioneering Jurisprudence of the Constitutional Court Prior to the CJEU Ruling

The Constitutional Court was a pioneer in addressing the validity of serving a foreign company through the registered office in Spain of its subsidiary, in Judgment STC 91/2022[3]. In this case, the lawsuit filed by Casa Severón, S.L., indicated that the defendant’s domicile, IVECO S.P.A., was in Turin, but “for the purposes of notification and service,” the address in Madrid of another company considered by the claimant as its subsidiary was provided. After two unsuccessful attempts to serve at the Madrid address, the court proceeded with service by public notice and continued the proceedings, declaring the defendant in default.

The court of first instance deemed the service valid under Article 155.3 of the Civil Procedure Act (LEC)[4], as it considered proven that the defendant conducted its habitual activity at the same address as the company identified by the claimant as its subsidiary.

However, the Constitutional Court held that the relationship between the two entities (the defendant and the subsidiary) was insufficient to presume the transfer of notifications between them, jeopardising the defendant’s awareness of the proceedings and resulting in clear defencelessness: “a notification made at the premises of a subsidiary company, but addressed to the parent entity, will be valid insofar as, based on the existence of that relationship between them, it can be deduced that the latter had or could have had knowledge of the notification, which must be verified by the competent judicial body, depending on the concurrent circumstances.”

Based on this premise, the judgment determined that “it is not reasonably foreseeable that a notification made at the premises of one entity would necessarily be known by the other, even if there is a certain relationship between them.”

With firm resolve, the Constitutional Court’s judgment concluded the importance of the judicial system as a guarantor of the parties’ rights, understanding that ensuring the effectiveness of communication acts reflects this role, and that a mere presumption of joint activity of such magnitude to determine with certainty the transfer of notifications between both entities is not valid: “it requires the judicial body to adopt a true guarantor position of the parties’ rights, ensuring the effectiveness of communication acts. However, in this case, the judicial body presumed the exercise of joint activity that was not proven and, as a result, accepted a notification without verifying its reality or effectiveness. It did not carry out those communication acts that were reasonably within its reach (serving at the defendant’s domicile in Turin). Consequently, a situation of material defencelessness not attributable to the now-appellant entity was caused.”

5. The End of the Debate: The CJEU Judgment of 11 July 2024 in the Case of AB Volvo v. Transsaqui S.L. and the Jurisprudential Line Followed by the Supreme Court in Recent Judgments of March 2025

In the same context of damages litigation within the framework of the trucks cartel, the Supreme Court recently declared the revocation of three default judgments[5]. In all three proceedings, the lawsuit had been unsuccessfully served to the Spanish subsidiary of the Swedish parent company, AB Volvo, without the claimant, Transsaqui S.L., having initiated service at the registered office of the foreign parent company.

The Supreme Court referred a preliminary question to the CJEU, leading to Case C-632/22 (AB Volvo v. Transsaqui S.L.)[6]. This case was decisive in establishing doctrine across the Union: the CJEU unequivocally ruled that serving a company at the domicile of a subsidiary that is not a party to the proceedings is invalid, even if both are part of the same corporate group.

The CJEU emphasised that defective service, as in the case of AB Volvo, can lead to the nullity of the proceedings if it deprives the defendant of their most fundamental right of defence.

Based on this criterion, it ruled that serving the defendant through its subsidiary, even if both entities formed a single economic unit, directly contravened Union law. The Supreme Court concurred with this interpretation, which, as detailed, had already been analysed years earlier by the Constitutional Court in a pioneering manner.

In light of the CJEU’s criterion, the Supreme Court concluded that there was fraudulent manoeuvring by the claimant, under Article 510.1.4º of the LEC[7], in the sense of manifesting a wilful and intentional desire to conceal the defendant’s foreign domicile. Indeed, the claimant chose to request the continuation of the proceedings after the subsidiary’s rejection instead of exercising due diligence and promoting the ascertainment of the correct domicile of the defendant.

Thus, the Supreme Court concluded in all three cases that the defencelessness caused to the defendant, materialised in the lack of service and declaration of default, was directly attributable to the claimant.

6. Strategic Shortcut or Procedural Trap?

The strategy of serving a lawsuit on a foreign parent company through its subsidiary in Spain may initially appear as a shortcut facilitating the proceedings and increases the chances of the claim being upheld. In reality, however, it constitutes a clear procedural error with serious consequences. European case law is unequivocal: the legal autonomy of corporate entities and the guarantee of the defendant’s right to a defence must be upheld when serving a lawsuit.

Claimants can no longer rely on service to a subsidiary as a quick and effective means of summoning a defendant, unless the subsidiary has a representative role in legal proceedings or acts as a real and permanent centre of activity for the parent company. For litigating parties, it will be essential to:

  • If considering the possibility of serving the lawsuit to the subsidiary domiciled in Spain, verify whether the subsidiary holds powers of representation or acts independently.

  • If direct service to the foreign parent company is required, utilise mechanisms of international judicial cooperation, such as the 2020 Service Regulation (EU) 2020/1784[1].

  • Anticipate potential delaying or even invalidating effects of defective service.

In short, while globalisation has blurred many economic borders, even in cross-border litigation, procedural rules continue to demand a guarantee based on formalist principles. Legal certainty and the effectiveness of the judicial process are at stake: courts must ensure these guarantees at every stage of the proceedings, including seemingly formal matters such as the method of serving the lawsuit.

[1] Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Available at: https://www.boe.es/doue/2012/351/L00001-00032.pdf

[2] Article 7(5) of the Brussels I bis Regulation: “as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or establishment is situated.”

[3] Judgment of the Second Chamber of the Constitutional Court No. 91/2022 of 11 July 2022, resolving Constitutional Appeal 1431/2021, available at: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2022-13787

[4] Article 155.3 of the Spanish Civil Procedure Act (LEC): “The domicile of the claimant shall be that stated in the claim or in the application or petition initiating the proceedings. (…) The place where the claimant carries out professional or non-occasional work activity may also be designated as the domicile for this purpose (…)”.

[5] Judgment of the Supreme Court, Civil Chamber, No. 238/2025 of 12 February 2025. Available at: https://www.poderjudicial.es/search/AN/openDocument/d2598e41158b31b6a0a8778d75e36f0d/20250221

Judgment of the Supreme Court, Civil Chamber, No. 239/2025 of 12 February 2025. Available at: https://www.poderjudicial.es/search/AN/openDocument/0d74253c340349dea0a8778d75e36f0d/20250221

Judgment of the Supreme Court, Civil Chamber, No. 240/2025 of 12 February 2025. Available at: https://www.poderjudicial.es/search/AN/openDocument/7a29fe51bc99e36ea0a8778d75e36f0d/20250220

[6] Judgment of the CJEU, Fifth Chamber, of 11 July 2024 in Case C-632/22, AB Volvo v. Transsaqui S.L. Available at: https://eur-lex.europa.eu/legal-content/ES/TXT/?uri=CELEX:62022CJ0632

[7] Article 510.1.4º of the LEC: “A final judgment may be reviewed: (…) If it was obtained unjustly as a result of bribery, violence, or fraudulent scheming.”

[8] Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (recast version). Available at: https://www.boe.es/buscar/doc.php?id=DOUE-L-2020-81762

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