The judgment of the European Court of Justice ( ECJ) of 21 December 2016 (EDJ 2016/226005), could cost the Spanish banks about € 3,000 to € 5,000 millions, depending on the number of affected consumers who finally claim for their rights, and for the nullity of their mortgage floor – suelo or limitation to the variability of the interest clause.
As the readers know, the floor clauses or thresholds were inserted by many Spanish banks in mortgage loans, establishing that the interest payable would never be lower than a fixed figure, for example 3.5%,, the floor, despite apparently having agreed a variable interest rate, for example Euribor + 1%, in the loan deeds,
This limitation on the variability of mortgage interest implies now, when the interest rates are very low, a major loss for consumers, who were not usually sufficiently informed by the banks, of the consequences that in the long run this type of clauses could mean for them.
The Supreme Court of Spain, (TS) declared the nullity of these clauses when the information given to consumers was not sufficient, but stated that the banks must only pay the overcharged interest back from the 9th of May 2013, when the Supreme Court issued its judgment.
Now, the ECJ has declared that this temporary limitation of the consequences of a clause declared null and void, is contrary to European Union Law, and more specifically to Article 6 of Directive 93/13, and a clause declared unfair or null must be understood as if it had never existed, and therefore, it must be possible to claim the repayment of overpaid interest, etc., from the beginning of the contract, and not only from the date indicated by the Spanish Supreme Court.
In addition, the ECJ points out that the temporal limitation set by the TS was an insufficient and incomplete protection to consumers, and therefore was not in line with the European law, noting that only the ECJ is allowed to this kind of interpretation, and no the national courts.
We are in agreement with the ECJ, as we have defended for long time, a contractual clause declared abusive could have no effects. It should be remembered by readers that this ECJ judgment is binding for Spanish courts and tribunals.
Thus, those affected by a floor clause will be entitled to ask for the refund of the overpaid interest, as well as the recalculation of their mortgage repayment table, and the revision of the pending capital of their mortgages, from the beginning of their mortgage loan and not only from May 2013.
If you have any questions about the floor clause, contact us, we are experts, and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
White & Baos
Tel:+34 966 426 185