It should be noted that according to Art. 107 of the Spanish Civil Code, where both spouses have a common nationality then this should be the law applied to the proceedings.
So an English couple could apply for a divorce in Spain and, while being heard by a Spanish court, have English law applied. Alternatively, they could decide to simply apply Spanish law where both parties agree.
Therefore, while the English couple both live in Spain, it remains an option to choose to have English family law applied to their proceedings. It should be noted that this can result in an increase of costs due to the need to provide the court with briefs on English law fully translated etc.