Power of Attorney in Andorra: Importance in Cross-Border Transactions

International tax

A power of attorney in Andorra is a document through which a person (the principal) grants a legal representative in Andorra the authority to act on their behalf and represent them in certain legal matters. While seemingly straightforward, its scope, formalities, and effects differ significantly between continental (civil law) and common law systems. Andorra, governed by civil law, imposes strict formalities, particularly for disposal acts, underscoring the importance of properly granting a power of attorney in Andorra. This distinction is vital in international transactions to avoid legal risks such as accepting powers without required formalities, enabling unauthorized disposal acts that can seriously harm parties involved.

What is a power of attorney?

A power of attorney in Andorra is a legal instrument allowing a person to delegate authority to perform legal acts such as signing contracts, managing assets, representing in court, or carrying out disposal acts (buying, selling, or mortgaging real estate, transferring copyrights, etc.). Its scope depends on the type of power and applicable legal system. In Andorra, powers of attorney must be granted before a notary, ensuring authenticity and legal certainty.

Types of powers of attorney in civil law

In civil law systems (like Andorra’s), powers are classified by purpose and scope:

Type of power of attorney	Scope	Use	Advantages/Risks
General power of attorney	Authorizes the legal representative in Andorra to carry out a wide range of actions, such as managing assets, signing contracts, representing in legal proceedings, etc.	Commonly used for the comprehensive management of affairs, such as in cases of prolonged absence or to carry out procedures in Andorra or abroad across multiple areas.	Risks: Broad scope may be risky if not precisely defined or if the agent abuses trust.
Special power of attorney	Limits authority to specific acts—such as selling a property, signing a particular contract, incorporating an Andorran company, representing in a specific proceeding, among others.	Ideal for singular transactions or specific procedures in Andorra.	Advantage: Reduces risks by restricting the agent’s powers.
Power for administrative acts	Allows the agent to perform routine management—paying bills, collecting rents, maintaining properties.	Used in business and asset management, and frequently for administrative purposes in Andorra.	Limitation: Does not include disposal acts.

Differences between civil law and common law

Civil law systems (such as the one applicable in Andorra) and common law systems take fundamentally different approaches regarding the form and effects of powers of attorney. In civil law, powers of attorney — particularly those related to acts of disposition — are subject to strict formal requirements: they must be granted before a notary, drafted with precision, and in some cases, registered in public registries such as the Companies Register (general power of administration). These requirements aim to ensure legal certainty, authenticate the agent’s authority, and prevent abuse.

By contrast, in common law countries such as the United Kingdom or the United States, a power of attorney can be granted through a private document without notarial intervention. The document’s authenticity is then based on the principal’s signature or the presence of witnesses. While this flexibility simplifies procedures, it also carries greater risks, especially regarding the control over the validity and scope of the powers granted.

Consequences of differences?

These divergences can have serious legal consequences in the context of cross-border transactions. For example, a foreign company accepted a contract signed by a representative acting in Andorra, even though the representative did not hold a notarized power of attorney — in public deed — granting them authority to dispose of assets, as required under Andorran law. As a result, the representative was able to carry out acts of disposition (such as asset transfers) to the detriment of their client (the principal).

Under civil law, such a contract could be declared null or unenforceable due to a substantive defect, whereas under common law, those powers might be interpreted as valid when granted in a private document, potentially causing confusion. This type of situation creates legal uncertainty and can lead to costly litigation, highlighting the importance of properly understanding the differences between the two legal systems.

Importance of understanding legal systems

Familiarity with the specificities of each legal system is essential to avoid legal risks, especially in international transactions involving powers of disposition through a notarized power of attorney in Andorra. Key reasons include:

Fraud prevention: The formalities of civil law systems, such as those required to grant a power of attorney in Andorra, ensure that the legal representative acts within established limits, reducing the risk of abuse.
Validity of legal acts: In Andorra, acts of disposition (such as the sale of real estate) without a valid notarized power of attorney may be challenged, undermining the legal security of transactions.
Regulatory compliance: In international contexts, parties must ensure that powers of attorney meet Andorran legal requirements, especially when used for legal acts of disposition in Andorra or abroad.
Protection of interests: Verifying the existence and scope of a notarized power of attorney prevents unauthorized acts by third parties, such as in the case of a harmed client.

Practical recommendations

Verification of powers: Always request the original notarized power of attorney in Andorra and verify its authenticity with an Andorran notary.
Specialized legal advice: Hire lawyers familiar with Andorran and international law to review contracts and powers of attorney in cross-border transactions.
Specificity of powers: When granting a power of attorney in Andorra, request a specific type of power to limit the scope of the representative’s authority, especially regarding powers of disposition.
Knowledge of the local context: Before entering into a contract in Andorra, research the formal requirements set by Andorran law.

Conclusion

The notarized power of attorney in Andorra is an essential tool for delegating authority, but its use and legal effects vary between continental law—such as that which governs Andorra—and common law systems. In Andorra, strict formalities are crucial for acts of disposition, whereas common law offers greater flexibility, which can pose risks if the authority of the legal representative in Andorra is not properly verified. Understanding these differences and taking precautionary measures when granting a power of attorney in Andorra, or using one that includes powers of disposition, is vital to protect the parties’ interests and avoid legal contingencies, such as those suffered by the client in the case described.

The information contained in this article is provided for informational purposes only and does not constitute legal advice. Notarised powers of attorney, particularly in international contexts, involve complex legal considerations that require personalised analysis. Before granting or accepting a power of attorney, it is essential to consult with a qualified professional.

At Carlota Pastora Business Law Firm, we will be pleased to assist you in the drafting, validation, and use of powers of attorney in accordance with Andorran and international legal requirements.

Contact us to receive legal guidance tailored to your case and to effectively protect your interests in national and international operations.