The judgment of the First Chamber of the Supreme Court 772/2022, of November 10th (hereinafter, the “Judgment”) dealt with a case in which a limited liability company filed, against a banking entity, a first claim for declaratory action for breach of contract (for failure to inform and advise on the risks of certain swap contracts) and subsequently a second claim for damages arising from the aforementioned breach.
Following the favourable ruling in the first and second instance in the second proceedings, the bank filed an extraordinary appeal for breach of procedure against the latter judgment, for infringement of articles 222 and 400.2 of the Civil Procedure Act, relating to res judicata and preclusion, in accordance with the interpretation of these articles by Supreme Court judgments no. 629/2013, of 28th October, 552/2002, of 10th June and 164/2011, of 21st March, and the Court Order of 4th July 2018.
In Legal Ground Three, the Court examined the aforementioned legal concepts and made the following considerations:
A.- With regard to material res judicata:
According to article 222 of the Civil Procedure Act (hereinafter “CPA”) res judicata with regard to final judgments excludes further proceedings the object of which is identical to that of the proceedings in which the judgment was rendered and extends to the objectives of the claim, the counterclaim, as well as claims of compensable credit and nullity of the legal business.
B.- With regard to preclusion (of allegations of legal facts and grounds).
According to article 400 of the CPA, where the claim may be based on different facts, legal grounds or pleas in law, all those which are known or can be relied on at the time the claim is brought must be raised in the claim, without it being possible to reserve their allegation for a later proceeding. For the purposes of lis pendens and res judicata, the facts and legal arguments relied on in a dispute shall be deemed to be the same as those relied on in a previous lawsuit, if they could have been relied on in that lawsuit.
In the Legal Ground Four, the Court concluded that the appeal should be upheld as material res judicata, on the basis of the following reasoning:
- In our procedural system, it is expressly forbidden to bring a second procedure for claiming an amount after having already brought a first procedure of a merely declaratory nature, pursuant to the provisions of article 219.1 of the CPA.
- In the case at hand, there is no justification for circumventing this prohibition because: (i) the linking of swap contracts was nothing extraordinary or alien to the contractual reality and, at the date on which the first action was brought, there was already consolidated case law on swap contracts that provided the parties and the courts with sufficient instruments that did not make it necessary to bring two actions, one for the declaration of the breach and the other for compensation; (ii) the declaration of contractual liability is the logical and necessary presupposition for a claim for damages, so that the two must go hand in hand in order not to divide the outcome of the claim.
- The statement by the plaintiff, in the first proceeding, that they reserve actions for a future claim for a monetary award is irrelevant because compliance with the legal requirements does not depend on the will of the parties. In our case, these requirements prevent the initiation of two successive proceedings in order to obtain a pecuniary award.
Upon finding the case to be res judicata, the Court upheld the actions brought by the bank for breach of procedure and the appeal and dismissed the claim, ordering the plaintiff to pay the costs incurred in first instance.
Mireia Bosch
Vilá Abogados
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5th January 2023
