The Stade Louis II club decided against signing the 31-year-old to a permanent deal with the Principality club following his time with the club.
Domoraud's agents have been meeting with officials at the Estadio Olimpico de Montjuic club this week to discuss a move for the veteran defender.
With the rossoneri carrying a number of defenders on their books, the Serie A club may be keen to let Domoraud take another loan spell away from the Giuseppe Meazza this coming season.
Espanyol are keen to strengthen their side for the new La Liga season and Domoraud may provide the Barcelona-based club some much-needed experience in their back-line.
