Disputes: The legal risks of Artificial Intelligence: practical risk scenarios

Energy: Force Majeure, the dormant clause that awakens in times of crisis

Employment: The legal debate on the effective enjoyment of public holidays falling on weekly rest Saturdays

DISPUTES

The legal risks of Artificial Intelligence: practical risk scenarios

JAVIER RODRIGUEZ LOSADA
Associate

For many businesses, the true extent of legal risk only becomes apparent when it translates into real-world disputes. Artificial intelligence is no longer an emerging technology; it is now embedded across customer service, marketing, document management, recruitment and even corporate decision-making.

The question is no longer whether AI should be adopted, but how it can be deployed without exposing organizations to unforeseen legal liabilities, particularly in light of the growing body of legislation imposing compliance obligations and significant sanctions.

The following examples illustrate how technologies designed to improve efficiency may ultimately give rise to employment, commercial and civil liability disputes where appropriate governance and oversight mechanisms are absent.

E-commerce: An online retail platform deploys AI systems to analyse browsing behaviour, dwell time and other behavioral indicators with the legitimate objective of personalising the customer experience and increasing sales. However, where such systems are insufficiently constrained, they may identify situations of heightened emotional vulnerability, such as anxiety, stress or fatigue, and adjust prices, promotions or marketing messages accordingly. Such practices may amount to prohibited manipulation under Regulation (EU) 2024/1689 [the EU Artificial Intelligence Act], where AI exploits vulnerabilities in order to materially distort consumers' economic behavior.

Medical diagnostics: A company installs an automated AI diagnostic system in a private clinic that generates reports based on patient tests and medical history. Due to a flaw in the model's training, a patient receives inappropriate treatment and suffers harm as a result.

The patient may bring a claim in contract or tort against the clinic in respect of the losses suffered.

The clinic, in turn, may have a right of recourse against the technology provider on the basis that it supplied a defective product. Such recourse may extend beyond any compensation paid to the patient and include recovery of reputational losses arising from public disclosure of the incident.

Given their potential impact on individuals' health and safety, these systems are classified as high-risk AI systems under Regulation (EU) 2024/1689 [the AI Act]. As such, they are subject to enhanced regulatory requirements, including robust risk management procedures, effective human oversight and comprehensive governance obligations.

Industrial sector: An industrial facility relies on an AI system to optimise production processes. Because of errors in configuration, training or supervision, the system overrides operational parameters and disables safety alerts designed to prevent machinery from operating under unsafe conditions. A workplace accident follows.

In addition to administrative sanctions for regulatory breaches, the company may face occupational health and safety claims, civil liability actions and, in the most serious cases, criminal liability.

From the perspective of the AI Act, the scenario may also demonstrate non-compliance with the obligations relating to human oversight and risk management applicable to high-risk AI systems.

Human Resources: A large employer introduces an algorithmic system to assess performance, improve productivity and support workforce reduction decisions. Inadequate human oversight combined with biased training data results in the system disadvantaging employees working reduced hours to care for children or individuals belonging to particular age groups, genders or nationalities.

Such circumstances may give rise to claims based on indirect discrimination, challenges to dismissals and allegations of infringement of fundamental rights where the employer cannot adequately explain the criteria applied by the system or demonstrate meaningful human oversight. Under the AI Act, organizations cannot rely blindly on algorithmic recommendations. They must undertake risk assessments, ensure the quality and appropriateness of the underlying data, maintain comprehensive technical documentation and guarantee effective human oversight and sufficient transparency for those responsible for operating the system.

These examples demonstrate that technologies introduced to reduce costs, streamline operations and improve performance may also create legal exposures that are not immediately apparent. Robust governance, effective human oversight and regulatory compliance enable organizations to harness the benefits of AI while minimising the risk of costly disputes and regulatory intervention.

Identifying legal risks at an early stage allows businesses to respond proactively before those risks crystallise into litigation or enforcement action.

June 2026

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ENERGY

Force Majeure, the dormant clause that awakens in times of crisis

JUAN GUILLERMO RIANCHO
Partner

The conflict involving the United States, Israel, and Iran, together with the blockade of the Strait of Hormuz in the Persian Gulf, once again places us before a contractual clause that generally receives little attention during contract negotiations. It is a clause that remains quietly embedded in agreements, rarely read or invoked until the world erupts into an armed conflict or a pandemic spread across the planet: the force majeure clause.

In recent years, the increase in armed conflicts across different regions, from Ukraine to the Middle East, has demonstrated that these scenarios can no longer be always considered exceptional within the context of international business.

In most international contracts, especially in sectors such as energy and infrastructure, force majeure clauses commonly include war, armed conflicts, or geopolitical instability among the events that may justify the non-performance of contractual obligations. They also generally include natural events contractually referred to as “Acts of God”, such as earthquakes, hurricanes, volcanic eruptions, floods, and other natural phenomena. Forces of nature that cannot be prevented or controlled by human beings.

The last time force majeure took center stage in legal and contractual discourse at this scale was in 2020, when COVID-19 emerged on the global stage in the most dramatic way possible.

Was COVID-19 foreseeable? It probably was not in January 2020, but was it foreseeable in March? In June? What about when contracts were already being signed during the pandemic? What was the actual event triggering force majeure? Was it the lockdowns imposed by governments? Or was it the existence of the virus itself? This distinction is contractually significant because a governmental order (a change in law) may trigger contractual consequences different from those arising from a natural disaster.

Generally speaking, force majeure requires the presence of three essential elements, which are usually described as three fundamental pillars:

1. The Degree of Externality

The event must be external to the parties. It must lie beyond the reasonable control of the parties and must not be caused by any act or omission attributable to them.

2. The Degree of Foreseeability

The concept of foreseeability is generally assessed and defined at the moment the contract is formed. Events that are foreseeable can, to some extent, be anticipated, and the contracting parties may agree on several mitigating measures to address them. However, foreseeability may evolve throughout the life of the contract and may vary depending on the circumstances in which the parties operate and the geographical location where the contractual activity takes place.

3. The Degree of Impossibility (or Substantial Impediment) of Performance

Force majeure is not a doctrine of inconvenience. It does not apply simply because performance has become more expensive, more difficult, or less profitable. It requires that performance has become impossible or, under some formulations, that the impediment is such that the affected party could not reasonably have overcome or avoided it.

Total physical impossibility, such as a factory destroyed by bombardments, a port blocked by naval forces, or a border closed by governmental or military order, lies at one extreme of the spectrum. There must be a direct impact preventing or significantly hindering the performance of contractual obligations.

Causal Connection

The concept of force majeure requires a clear causal relationship between the event, such as an armed conflict, and the three pillars described above.

In the context of energy and infrastructure projects, certain situations that may be deemed to constitute force majeure can become particularly complex:

• Supply chains may be disrupted.
• Access to critical equipment or facilities may be restricted.
• Financing conditions may deteriorate.
• Operational continuity may be compromised.

In the current Middle East conflict and the Strait of Hormuz situation, establishing this causal nexus link may encounter certain difficulties for the affected party seeking to invoke force majeure, and the legal analysis may genuinely become highly complex in certain cases.

Force majeure is disruptive for both parties to a contract. It affects not only the party directly suffering from the event but also the counterparty receiving the force majeure notice. Both parties may suffer economic, logistical, financial, and even reputational damage under such circumstances. Consequently, there may be situations in which a declaration of force majeure is rejected by the other party even where the surrounding circumstances initially may appear consistent with a force majeure event.

It is precisely in such contexts that effective legal advisory skills prove essential, and contractual drafting assumes particular significance.

A force majeure declaration may be challenged by disputing the pillars supporting it. In the context of foreseeability and the current Gulf conflict, force majeure may be rejected on the basis that “the conflict has already been ongoing for several months, if we take into account the major military escalation between Israel and Iran during June 2025 and the subsequent months, during which both countries engaged in unprecedented levels of military attacks and violence not seen in the last 40 years.”

Can unforeseeability still reasonably be invoked in relation to the Gulf conflict in 2026?

This is not a merely academic consideration; it is a practical issue currently being addressed by project managers, contractors, employers, contract managers, and their legal advisers across the Middle East and in other regions.

Naturally, there are arguments both in favor of and against invoking force majeure. If a contract was signed in 2021 and the escalation occurs in 2025, there may be a reasonable argument that the event was unforeseeable. However, if the contract was signed later, in 2024 or 2025 after successive military escalations, the arguments in support of force majeure may encounter significant resistance in judicial or arbitral proceedings.

A judge or arbitrator could say to the invoking party: "You entered into this contract with your eyes wide open, aware that the conflict was escalating. This was not an unforeseen event that came out of the blue. or was totally unexpected"

This does not mean that a force majeure declaration cannot ultimately be accepted or substantiated. There may still be arguments such as: “This time the escalation is much more severe because ports are blocked, major sanctions have been imposed that were not previously in force, and even the Strait of Hormuz itself is now blocked.” In any event, it is evident that the burden of proof will shift significantly to the party invoking force majeure, requiring such party to demonstrate that, beyond the existence of the conflict itself, there are in fact several aggravating circumstances that rendered the event genuinely unforeseeable.

The impossibility requirement is generally the element that causes most force majeure claims to collapse. This is where the doctrine demands the highest degree of intellectual honesty.

Have oil prices or refined petroleum products increased by 30% or 40%? That may make the contract far less profitable for one of the parties, but it does not render the contract impossible to fulfil. Has part of the workforce been lost? Can alternative labor be obtained? If a specific shipping route is blocked, is there an alternative route available, even if it is more expensive?

As mentioned earlier, force majeure is not a doctrine of inconvenience. It can only be invoked where contractual performance has become impossible, where the impossibility is insurmountable, and where it cannot reasonably be avoided by the affected party. This refers to total physical impossibility.

Arguments relating to product shortages, increased transportation costs, or other expenses making the contract more burdensome are generally no longer matters of force majeure but rather issues of hardship or excessive onerousness. Such situations may require renegotiation of existing contracts between the parties, but not a force majeure declaration.

Force majeure, or “superior force”, represents a legal acknowledgment that even today human beings do not control everything in the world. Despite our best efforts to identify and allocate risks and draft comprehensive contracts with strong and clear force majeure clauses, there remain natural, political, biological, and military forces that exceed our ability to predict, prevent, or overcome obstacles.

Force majeure isn't a safety net for negligent business calls or sloppy risk management. It's about acknowledging life's curveballs. With pandemics, wars, and climate chaos on the rise, perhaps it's time we gave this dormant contract clause the attention it deserves. The pandemic, followed by the Gulf conflict, has clearly shown and given a crucial lesson for industry and international trade: it is essential to review and understand force majeure clauses before invoking them, not while the crisis is unfolding.

June 2026

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EMPLOYMENT

The legal debate on the effective enjoyment of public holidays falling on weekly rest Saturdays

FRANCISCO JAVIER VIDAL
Associate

The recent Judgment No. 88/2026 of the Spanish National Court (Audiencia Nacional), dated 19 May 2026, has once again brought to the forefront the debate surrounding the organisation of working time where a statutory public holiday coincides with a Saturday designated as an employee's weekly rest day. This time, however, the Court's reasoning may have far-reaching implications capable of reshaping the traditional approach to such overlaps.

Should this judgment ultimately be upheld by the Spanish Supreme Court (Tribunal Supremo), its impact on workforce planning could prove significant. Throughout any given working year, it is common for several public holidays to fall on Saturdays and, in practice, to be effectively absorbed by the employee's weekly rest period.

From a statutory perspective, Article 37 of the Spanish Workers' Statute (Estatuto de los Trabajadores) provides that employees are entitled to a maximum of fourteen paid, non-recoverable public holidays each calendar year. Certain holidays—including Christmas Day, New Year's Day, 1 May (Labour Day) and 12 October (Spain's National Day)—must be observed in all cases. The legislation further provides that, where a public holiday falls on a Sunday, it may be transferred to the following Monday. No equivalent rule exists, however, for public holidays falling on Saturdays.

Furthermore, the Workers' Statute does not designate Saturday as a weekly rest day per se. Article 37.1 merely establishes that employees are entitled to one and a half days of weekly rest, which, as a general rule, consists of Saturday afternoon (or alternatively Monday morning) together with the whole of Sunday.

It has therefore been the courts that have progressively developed the principle that employees may, in certain circumstances, be entitled to compensatory rest. Until now, this line of case law has largely been confined to situations involving shift work, rotating weekly rest schedules, seven-day operational models or other flexible working-time arrangements.

The novelty of the National Court's judgment lies in extending that discussion to employees working under more traditional schedules, namely Monday-to-Friday or Monday-to-Saturday working patterns.

In reaching its decision, the National Court reviews the historical development of both Spanish and European case law on the subject. It traces the evolution from the Spanish Supreme Court's judgment of 23 September 1993 (the Ensidesa case), which denied Monday-to-Friday employees any entitlement to compensation where public holidays fell on Saturdays, through to more recent decisions, including Supreme Court Judgment No. 372/2025 of 30 April (the Zara case). On the basis of that jurisprudence, the Court arrives at the following conclusions:

• Statutory public holidays pursue a distinct legal purpose and cannot be equated with weekly rest periods.

• Where the organisation of the working calendar results in both coinciding on the same day, employers should avoid allowing the public holiday to be absorbed by a weekly rest day to which the employee was already entitled, since this would deprive the employee of the effective enjoyment of that public holiday.

• In such circumstances, the appropriate solution is to grant an equivalent compensatory day of rest.

It should be noted that the National Court's ruling is confined to the Contact Centre sector. Nevertheless, the widespread attention the judgment has attracted, coupled with trade unions' arguments that its reasoning could extend to other industries, and the perception that the Court is seeking to fill a legislative gap where collective bargaining agreements do not expressly regulate these situations, has created a degree of legal uncertainty for employers with respect to workforce planning and working-time management. Among the principal issues likely to arise are the following:

1. Compensation within 14 days: The judgment suggests that employers may be required to grant a compensatory day of rest within a period not exceeding 14 days, notwithstanding the Court's own acknowledgment that no statutory provision expressly imposes such a deadline.

2. Retroactive claims: Employees may seek to claim compensatory rest retrospectively, potentially within the general one-year limitation period applicable to employment-related claims.

3. Limited flexibility in the form of compensation: The judgment appears to favour the granting of an additional day of rest as the appropriate remedy, without addressing whether collective bargaining agreements could validly provide financial compensation as an alternative.

4. Limited scope for relying on internal flexibility mechanisms: The existence of flexible working-time arrangements, irregular distribution of working hours, compliance with annual working-time limits or operational requirements does not relieve employers of the obligation to grant the compensatory rest day.

5. Monitoring the effective enjoyment of public holidays: Employers may need to implement robust systems for recording and monitoring the public holidays effectively taken or compensated, both at organisational and individual level, in order to minimise the risk of duplicate entitlements or subsequent claims.

Should the matter ultimately reach the Spanish Supreme Court, its decision will be pivotal in defining, with greater precision than the National Court has done, the limits of an employer's managerial prerogative to organise working time and employees' entitlement to the effective enjoyment of statutory public holidays.

Pending such clarification, it is reasonable to anticipate an increase in claims by employees seeking compensatory rest where public holidays coincide with their Saturday weekly rest day. Collective disputes are also likely to become more frequent, while employee representatives can be expected to press for express regulation of this issue during collective bargaining negotiations. In parallel, employers may find themselves compelled to review working calendars and shift allocation systems in order to mitigate the growing risk of employment litigation.

Against this backdrop, both HR professionals and employment lawyers should be prepared for a working-time framework in which long-established assumptions can no longer be taken for granted. Proactively auditing existing working calendars and designing appropriate compliance strategies will be essential to minimise organisational risk while awaiting a definitive ruling from the Spanish Supreme Court capable of bringing greater legal certainty and harmonising the applicable case law.

June 2026

*These articles do not constitute legal advice.