The ECJ ruled on May 17, 2022 (Case C-869/19) that Spanish procedural rules must not undermine the protection of consumer rights. National judges must take unfair terms into account ex officio.
The case in question concerns minimum interest rate clauses (clausula suelo) in a financing contract between a consumer and a banking institution. It has already been ruled by the Spanish Supreme Court in 2013 and by the ECJ in 2016 that these clauses are unfair.
In the case at hand, the consumer filed a lawsuit against the bank, demanding the invalidity of these minimum interest clauses and the full reimbursement of the amounts. The court of first instance upheld the action, but limited the amounts to be refunded in accordance with the national case law of the Spanish Supreme Court. The appellate judge also did not order the full reimbursement of the amounts received, as it was the bank, not the consumer, that had appealed in the first instance. Under Spanish law, the court of appeal cannot set aside or amend a judgment if it is not challenged by the party concerned.
The Spanish Supreme Court initiated a preliminary ruling procedure before the ECJ with the question to what extent the Spanish procedural principles are compatible with Art. 6(1) of Directive 93/13.
According to Art. 6(1) of Directive 93/13, Member States must provide that unfair terms in contracts concluded by a trader with a consumer are not binding on the consumer. The Court of Appeal did not comply with this provision in the present case.
In these circumstances, the ECJ has ruled that Article 6(1) of Directive 93/13 must be interpreted as precluding national jurisdiction. National courts dealing with a case of unfair terms must examine of their own motion whether there has been an infringement and order the full reimbursement of the amounts wrongly paid on a mortgage on the basis of such terms. This procedure is also
if the disadvantaged consumer has not taken action against the clause itself. Accordingly, national courts, such as the present Court of Appeal, must examine of their own motion whether there has been an infringement of Art. 6(1) of Directive 93/13 and order a full refund of those amounts.
The ECJ decision builds on the previous 2016 decision requiring banks to repay in full, without time limit, amounts charged under abusive minimum interest rate clauses.
In May 2013, the Spanish Supreme Court ruled in favor of consumers and emphasized the illegality of minimum interest clauses under consumer law. As a result, the refund of overpaid interest was ordered. However, the refund only applied from the date the court decision was issued, i.e. from 2013. Retroactive refund claims were not possible. On December 21, 2016, the ECJ ruled (Case C-154/15, C-307/15 and C-308/15) that the Spanish Supreme Court could not impose a time limit on the reimbursement of amounts. Thus, the reimbursement of excessive interest amounts did not only apply from the date of the court decision of May 2013, but already from the date of the conclusion of the contract. This ex nunc effect must place the consumer in the position as if these minimum interest clauses had not existed from the outset.
This affects financing contracts with variable interest rates. At the same time, these often contain hidden minimum interest rates, the so-called "clausuluas suelos". These clauses ultimately lead to a financing contract with a fixed interest rate. Consumers were disadvantaged here, paying higher interest rates in the event of an increase in the key interest rate and no less than the interest rates provided for in the floor clauses in the event of a drop in interest rates.
The clauses violate EU law and do not comply with directives. These are typically not directly recognizable in the contracts and are not highlighted clearly enough. Often, banks do not comply with their information obligations when using such clauses. The required transparency of the contractual clauses is not observed.
What does this mean in concrete terms for the affected consumer?
Affected consumers can reclaim overpaid interest from their bank. Banks must refund the excessive interest income as a result of these clauses. The year 2009 may be particularly relevant here, as an increasing drop in interest rates was observed due to the financial crisis at the time. Due to the invalidity of minimum interest clauses, all excess interest paid since the start of the loan agreement can be reclaimed. In addition, there is a right to a recalculation of the repayment schedules and the capital of the mortgage loans. The ECJ's recent decision shows that appeal courts must examine the unfairness of these clauses of their own motion and order a full and unlimited refund of the amounts. The ECJ is of the opinion that the national judicial procedural principles can make it more difficult to enforce consumer protection rights and that the principle of effectiveness is therefore impaired.
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