Banking Law and Green Finance Litigation in Spain

1. Introduction

Green finance litigation in Spain concerns legal disputes arising from financial products, investments, lending arrangements, disclosures, or commercial claims connected with environmental sustainability. It sits at the intersection of banking law, securities regulation, environmental law, consumer protection, contract law, corporate disclosure, and EU sustainable-finance rules.

Spain is particularly relevant because its companies make significant use of green loans, while financial institutions account for a large share of Spanish sustainable-bond issuance. An EU Commission staff document reports that the financial sector accounted for about 69% of sustainable-bond proceeds in Spain in the period examined.

Despite this activity, Spain still has a relatively limited body of reported judgments dealing specifically with disputes over bank-issued green loans or green bonds. Therefore, understanding green-finance litigation requires considering both directly environmental cases and broader Spanish/EU authorities on investor protection, disclosure, financial contracts, renewable-energy finance, and greenwashing.

2. Main Legal Framework

Green-finance disputes in Spain can involve several overlapping regimes.

At the EU level, important rules include the EU Taxonomy Regulation, Sustainable Finance Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD), MiFID II rules applicable to investment products, prospectus legislation, and increasingly the European Green Bond framework.

Spanish law supplements these rules through securities-market legislation, banking regulation, the Ley de Competencia Desleal (Unfair Competition Act), consumer-protection rules, contractual principles in the Civil Code, corporate legislation and environmental legislation.

Consequently, litigation may arise where a financial institution:

• describes an investment as environmentally sustainable without sufficient support;
• provides inaccurate ESG information;
• misrepresents the environmental characteristics of a fund or bond;
• fails to provide required sustainability disclosures;
• breaches contractual sustainability conditions in a loan;
• finances projects affected by environmental or regulatory restrictions;
• provides misleading environmental advertising; or
• incorrectly represents environmental risks to investors.

The importance of these questions is growing because sustainable financing is already a significant component of Spain's financial markets.

Important Case Laws

A qualification is necessary: there are not yet six major reported Spanish judgments specifically concerning disputes over bank-labelled green-finance products. The following cases therefore include directly relevant greenwashing and renewable-energy-finance litigation together with authorities establishing principles likely to govern Spanish green-finance disputes.

1. Iberdrola Energía España v Repsol — Judgment No. 12/2025

Court: Commercial Court No. 2 of Santander
Date: 21 February 2025
ECLI: ES:JMS:2025:7

This is an important Spanish judgment concerning alleged greenwashing. Iberdrola challenged environmental and sustainability-related communications made by Repsol, arguing, among other things, that they amounted to misleading commercial practices under Spanish unfair-competition rules.

The Commercial Court dismissed Iberdrola's claims. Importantly, this means the judgment should not be described as a finding that Repsol had engaged in greenwashing. The court considered the challenged statements in their commercial context when determining whether they were misleading.

Importance for banking law

Although the defendant was not a bank, the reasoning is highly relevant to financial institutions. Banks frequently advertise:

• green mortgages;
• sustainable investment funds;
• green bonds;
• sustainability-linked loans; and
• ESG investment services.

Environmental representations made in marketing these products may potentially be tested under similar rules concerning misleading advertising and unfair competition.

The case therefore illustrates that green-finance litigation may concern not only the financial structure of a product but also how its environmental characteristics are communicated to customers and investors.

2. Portigon AG v Kingdom of Spain

Forum: ICSID arbitration
Case: ARB/17/15
Decision: 2025

Portigon, a German financial institution, had participated in financing Spanish solar-energy projects. The dispute concerned changes affecting Spain's renewable-energy regulatory framework.

An important issue was whether project-finance loans and related financial arrangements could constitute protected investments.

The tribunal accepted jurisdiction on the basis that the relevant project-finance loans and hedging arrangements could qualify as protected investments, although the claimant's substantive claims were ultimately dismissed.

Importance

This case is unusually relevant to the connection between banking finance and green-energy investment.

It demonstrates that financing structures themselves—not merely equity ownership of renewable-energy companies—can become central to disputes arising from changes in environmental and energy regulation.

For banks financing renewable projects, regulatory changes can therefore create:

• credit risk;
• contractual disputes;
• investment-law questions;
• project-finance risk; and
• disputes concerning regulatory expectations.

3. Green Power K/S and Obton A/S v Kingdom of Spain

Forum: Stockholm Chamber of Commerce arbitration
Case: SCC V 2016/135
Decision: 2022

Danish renewable-energy investors brought proceedings concerning regulatory measures affecting their investments in Spain's solar-energy sector.

A particularly important issue was whether the tribunal had jurisdiction over an intra-EU dispute under the Energy Charter Treaty.

The tribunal concluded that EU law prevented the relevant arbitration provision from establishing jurisdiction between investors from one EU Member State and another Member State.

Banking significance

The decision matters to lenders and investors financing green infrastructure because it illustrates that dispute-resolution mechanisms themselves can be affected by EU law.

A bank financing cross-border renewable projects therefore needs to examine not merely environmental profitability but also:

• applicable EU law;
• governing law;
• dispute-resolution provisions;
• jurisdiction;
• regulatory-change provisions; and
• enforceability of contractual protections.

4. Banco Santander / Banco Popular II — Joined Cases C-775/22, C-779/22 and C-794/22

Court: Court of Justice of the European Union
Judgment: 5 September 2024
Reference from: Spanish Supreme Court

These proceedings were not green-finance cases, but they are important to understanding the treatment of investor claims involving financial disclosures and capital instruments in Spain.

Investors sought remedies associated with allegedly flawed or incorrect information in the prospectus for financial instruments connected with Banco Popular.

The CJEU held, in the circumstances governed by the Bank Recovery and Resolution Directive, that after the relevant write-down and resolution measures, EU resolution rules prevented certain damages and nullity actions against the resolved institution or its successor.

Green-finance relevance

Future green-bond or sustainable-security disputes could similarly involve allegations that offering documentation inaccurately described:

• environmental characteristics;
• allocation of proceeds;
• sustainability targets;
• climate risks; or
• ESG performance.

Banco Popular II demonstrates that investor remedies cannot be considered in isolation. Banking-resolution legislation and other specialised financial rules may substantially affect what remedies remain available.

5. Banco Santander / Banco Popular — Case C-410/20

Court: Court of Justice of the European Union
Spanish underlying litigation

This earlier Banco Popular litigation also examined the relationship between investor-protection claims and the EU bank-resolution framework.

The subsequent Banco Popular litigation confirms that Spanish investors brought numerous actions relating to allegedly defective information supplied when financial instruments were marketed or subscribed. The CJEU developed principles concerning when such claims could continue following resolution measures.

Importance for green finance

The case demonstrates a broader principle: financial-product disclosure disputes are governed by several interacting legal regimes.

If a Spanish bank were to issue securities marketed as environmentally sustainable and investors later alleged inaccurate sustainability information, courts might have to consider securities disclosure requirements together with banking, resolution, contract and investor-protection legislation.

6. Banco Espírito Santo / Novo Banco — Spanish Supreme Court Proceedings

Court: Spanish Supreme Court, Civil Chamber
Reference: ATS 11304/2022

This dispute arose after the resolution of Portuguese Banco Espírito Santo and the transfer of parts of its business to Novo Banco.

Spanish customers had entered financial-product contracts through the Spanish branch of Banco Espírito Santo. Litigation followed concerning the effects of the resolution and the transfer of liabilities to Novo Banco.

Green-finance relevance

Although not an environmental case, it provides an important banking-law analogy concerning financial-product liabilities and institutional restructuring.

If liabilities connected with green bonds, sustainable investments or ESG-labelled financial products are affected by restructuring or resolution, courts may need to determine:

• which institution carries the liability;
• whether obligations transferred to a successor;
• whether contractual claims survive;
• how EU resolution rules interact with domestic law.

3. Greenwashing Litigation

One of the most important emerging risks is greenwashing.

Greenwashing litigation may occur where an institution presents a product or activity as more environmentally sustainable than the available evidence supports.

For example, a bank might describe a fund as environmentally sustainable while the underlying portfolio does not satisfy the stated investment methodology.

Possible legal consequences can arise under:

Unfair competition law: Environmental advertising may be challenged if it is misleading.

Consumer law: Retail customers may argue that environmental representations materially influenced their decision.

Securities law: Investors may allege that sustainability disclosures in offering documents were inaccurate.

Contract law: Environmental commitments incorporated into financial agreements may potentially become enforceable contractual obligations.

The Iberdrola/Repsol litigation demonstrates that Spanish courts are already confronting sustainability-related commercial representations.

4. Green Bond Litigation

Green bonds generally involve raising capital for projects represented as environmentally beneficial.

Potential litigation could concern whether proceeds were actually used for the stated purposes.

For example, disputes might involve:

Misallocation of proceeds: Funds represented as financing renewable infrastructure are diverted to ordinary corporate expenditure.

Misleading disclosure: Offering documents contain materially inaccurate environmental information.

Failure to satisfy eligibility criteria: Projects cease to meet stated green-project requirements.

Investor claims: Investors argue that environmental characteristics were material to their investment decision.

Spain's substantial sustainable-bond market makes these issues commercially significant. Sustainable bonds represented around 10% of Spanish corporate bond issuance over 2013–2023 in the Commission data cited above.

5. Sustainability-Linked Loan Disputes

A sustainability-linked loan differs from a conventional green loan because financial terms can be connected to predetermined sustainability targets.

For example, the interest margin could be connected to agreed environmental performance indicators.

Litigation could arise over:

• calculation of sustainability KPIs;
• inaccurate emissions data;
• failure to achieve contractual targets;
• verification procedures;
• interpretation of sustainability clauses;
• incorrect interest adjustments; or
• representations supplied by borrowers.

Spanish contract law would therefore operate alongside banking and sustainability regulation.

6. Renewable-Energy Project Finance

Renewable-energy finance has particular importance in Spain because of the country's substantial solar and wind sectors.

Banks can provide:

• construction loans;
• project-finance facilities;
• refinancing;
• guarantees;
• hedging arrangements; and
• bond financing.

The Portigon proceedings demonstrate that project-finance loans and hedging arrangements themselves can become important legal objects when renewable-energy regulation changes.

This means lenders should consider regulatory-change risk when structuring long-term green infrastructure financing.

7. Climate-Risk Disclosure

Climate risks can affect the creditworthiness of borrowers and the value of financial assets.

They commonly fall into two categories:

Physical risk concerns losses caused by environmental events or longer-term climatic changes.

Transition risk concerns financial losses associated with regulatory, technological and economic movement toward lower-carbon activities.

For banks, inaccurate assessment or disclosure of these risks can potentially create supervisory, contractual or investor-protection issues.

8. Consumer Protection

Retail consumers increasingly encounter products marketed with terms such as:

• green;
• sustainable;
• ESG;
• climate-friendly;
• environmentally responsible.

Those descriptions can influence investment decisions.

Consequently, banks and investment firms need sufficiently clear information concerning what the environmental label actually means. The emerging Spanish greenwashing jurisprudence illustrates the importance of examining environmental representations in their full commercial context rather than treating sustainability terminology as legally meaningless marketing language.

9. Remedies in Green Finance Litigation

Depending on the legal basis and facts, litigation could involve requests for:

Damages for financial losses resulting from actionable misrepresentation or contractual breach.

Contractual remedies where sustainability obligations form part of the agreement.

Unfair-competition remedies concerning misleading environmental advertising.

Regulatory sanctions where financial institutions breach applicable disclosure or conduct requirements.

Investor remedies concerning inaccurate offering documentation.

However, Banco Popular litigation shows that otherwise available private-law remedies can sometimes be limited by specialised EU banking legislation, particularly in a resolution scenario.

10. Future Direction in Spain

Green-finance litigation in Spain is likely to develop around the increasing integration of sustainability information into mainstream financial regulation.

Particularly significant areas include greenwashing, ESG investment advertising, green-bond disclosures, sustainability-linked lending, renewable-project finance, climate-risk disclosure and the accuracy of sustainability data.

The Spanish market makes these issues especially important because green loans have been used extensively by Spanish corporations and financial institutions dominate the country's sustainable-bond issuance.

Conclusion

Banking Law and Green Finance Litigation in Spain is an emerging field rather than a completely separate branch of banking law. Its distinctive feature is the interaction between traditional financial-law obligations and increasingly detailed environmental representations and sustainability requirements.

The six authorities discussed above demonstrate different pieces of that framework: Iberdrola v Repsol addresses greenwashing; Portigon v Spain directly concerns renewable-project financing; Green Power v Spain concerns renewable investment and EU jurisdiction; the Banco Popular cases establish important principles governing financial disclosures and investor remedies; and the Banco Espírito Santo/Novo Banco proceedings illustrate liability questions following banking restructuring.

As green financial products become more common, the central legal issue will increasingly be whether environmental claims, contractual targets, disclosures and use-of-proceeds commitments accurately correspond to the actual characteristics of the financed activity.