- Tribunal Supremo
SHARE PURCHASE AGREEMENT - BETWEEN TWO SPANISH COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET OR SUPPLEMENT APPLICABLE DOMESTIC LAW (SPANISH LAW)
INTERPRETATION OF AGREEMENT - LITERAL INTERPRETATION GENERALLY PREVAILING IN SPANISH LAW - COMMON INTENTION OF PARTIES AS INTERPRETATIVE TOOL TO BE PREFERRED - REFERENCE TO ARTICLE 4.1 UNIDROIT PRINCIPLES
"A buyer purchased a certain amount of shares of a company by means of a loan. The shares and interest of the loan were not paid on time, and hidden liabilities were found in the company, causing two parallel proceedings to arise: the seller and lender claimed the part of shares due and the interest of the loan, whereas the buyer and guarantor of the loan claimed a compensation for the hidden liabilities in the company, and intended to compensate these amounts with the pending debt.
The first court ruling declared a smaller hidden liability than the ones that were claimed, and said buyer and guarantor knew the ‘real situation of company’ (referencing the liabilities), condemning them to pay the debt.
The second ruling declared that the buyer and guarantor did not know the ‘real situation of company’, as they only had access to information provided by the seller, and condemned the seller.
In view of the second ruling, the seller appealed in cassation, alleging an incorrect interpretation of the contracts entered into by the parties, as well as a violation of estoppel doctrine by the courts.
The Supreme Court used Article 4.1 of the UNIDROIT Principles in order to avoid the general principle of literal interpretation which generally prevails in Spanish law, and referred to the importance of the common intention of the parties as an interpretative tool.
The court finally dismissed the appeal for considering that the grounds on which it was based were insufficient and improper for cassation."
(cf. A. Llevat in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 205-206)