Abogados y Economistas

21·02·2017

The discrepances between the Spanish High Court and the European Court of Justice

Grupo Gispert - Maria López-Amo Musoles

The relationship between the Supreme Court and the European Court of Justice over abuse of clauses in consumer contracts is a chronicle of a misunderstanding, among other reasons, because the protection of our highest court in opinion of the latter, and in application of the European legislation, to the consumers in the matter of contract has been quite insufficient, and the correction of this deficient protection has been carried out in our country in a dosed and partial way and at the same time by contradictory judgments caused by the incorrect definition established by the Supreme Court in its judgments.  

The discrepancies between one and another court have led to an inevitable confusion for legal operators: judges, magistrates, lawyers, etc. and all of this at the expense of the legal security of the citizen. Thus, for example, on the early expiration clause (the clause that allows entities to give up the contract after the default of a single mortgage quota), the ECJ had already ruled in the judgment of the Aziz case, indicating to the national judge the criteria which it should take into account for assessing the abuse of that clause (in the case of an essential breach, sufficiently serious, if it is in accordance with the relevant legislation in the absence of a covenant, and if there are effective means that allow the consumer to remedy the effect of said clause). Likewise, once a clause has been declared null and void, the European Court has the most absolute prohibition on the integration of the contract, that is to say, once the clause is declared abusive, the only thing that can be done by the national court is to expel the clause from the contract, without being able to adapt it or modify it, except if such expulsion would cause irreparable harm to the consumer that advise to seek for a way less harmful to it.

However, even existing such European ruling, the Spanish Supreme Court in its judgment of December 23rd, 2017, with the aim of avoiding the filing and disappearance of mortgage procedures, made legal juggling to establish that, in order to analyze the abusiveness of the clause, "what is really relevant are not the terms in which the clause in question was drafted, but the use made of it by the creditor lender, so that if it awaited at least three defaults (which is the minimum legal currently established in article 693.2 LEC), the decision was considered correct", and, not only that, but once declared the nullity of the early expiration clause in the course of a Foreclosure Proceeding, the Supreme Court has established that the consequence of such a declaration should not be the close of the file (effect that should automatically result in the nullity of the validity), since, according to our highest court, foreclosure appears to have more guarantees and offers a higher protection for consumers than an ordinary declarative procedure.

So, is the protection offered by the Supreme Court to the consumer actually real? If the mortgage procedure was indeed more beneficial than the ordinary procedure, the consumer would only have to express its will by renouncing the abusiveness of the early expiration clause and, nevertheless, it seems logical to think that, when the accused opposes the execution alleging the abusiveness of such clause, its desire and will is that the clause is expelled from the contract and the procedure is dismissed. And, in any case, who should have the legitimacy to decide what is right for the consumer, but the consumer? At the very least, we understand that the consequences of the declaration of nullity requested by the person before the court should be taken into account before the courts fail to do what is best for them without even establishing a minimum of contradictory procedure in which their opinion is heard.

Thereby, our courts and audiences are contradicting each other, failing ones in favor of being literal to the clause, as stated by the ECJ; others stating that what is relevant is the use made of the clause by the lender, as established by the Supreme Court; and others take the middle route and even being literal to the clause and declaring the abusiveness of it, they decide not to file the proceedings arguing that dismissal of the mortgage proceeding cannot be considered more favorable to the consumer given the alleged advantages of that procedure.

Given the multiple doubts that the jurisprudence of the Supreme Court was respectful of the EU doctrine,  the judge of Santander's Court of Instance number 2 asked the European Court again, if, firstly, in order to agree on the abusiveness of the early expiration clause  he should analyze the use that the entity has made of it or it should be literal to its wording; and secondly, whether the consequence of the eventual declaration of nullity of the clause should entail its complete elimination of the contract, without the possibility of modifying or adapting it to the current legislation.

As it could not be otherwise, the answer of the European Court of Justice has overturned the doctrine of the Spanish Supreme Court. The ECJ judgment of 26 January 2017, prohibits the national court from taking into account the circumstances in which the entity has applied the early expiration clause, and states that must be in line with it and, once declared the invalidity, repeats (and takes advantage to expressly remind the Supreme Court) that no case-law can establish the modification of a clause declared null, to keep it in the contract and prevent its expulsion.

Given the above, what happens to all those procedures in which the annulment of the anticipated expiration has been declared, and the execution has been maintained based on the doctrine of the Supreme Court? Regardless whether it is possible or not to initiate proceedings, it is undeniable that the consumer, who has been subject to foreclosure proceedings, has suffered an obvious injury, as a result of the misapplication of the European protection against consumption, a particularly important damage since it involves the loss of their home. For this reason, the possibility of claiming the State's liability for judicial error and non-application of Community law could be raised.

However, in order to avoid chaos and the judicial collapse that would reopen thousands of proceedings and bring judicial proceedings back, the Supreme Court, convinced of maintaining its special interpretation of EU law, has now decided to raise a new Prejudicial question to the ECJ by formulating, through order of 8 February 2017, a double question:

  • Firstly, asks whether it can "divide" the clause into sections, in order to be able to refer about expiration for breach of obligations, or for legal reasons, and not only for non-payment of quotas.
  • Secondly, it raises the possibility of being able to assess that the supplementary application of a rule of national law such as Article 693.2 of the LEC, despite it determines the initiation or continuation of the enforcement process against the consumer, it can be more favorable for the consumer rather than closing that special foreclosure process and allowing the creditor to request the resolution of the loan or credit agreement, or claiming the amounts owed, and the subsequent execution of the conviction, without the advantages that the special foreclosure recognizes to the consumer.

The Supreme Court's questions, tired of being amended from Brussels, and especially the way they are raised, are not gratuitous but, in our view, obey a clever strategy: what the Supreme Court seems to want with its approach is that the ECJ responds that these two issues fall within the scope of national law, an area on which the European Court cannot pronounce and thus, the Supreme Court will be legitimized by the ECJ itself to maintain its position and may force the courts not to file the mortgage proceedings for being more convenient than the ordinary ones.

At the moment, it may be a coincidence, perhaps not, but the President of the European Court of Justice, Mr. Koen Lenaerts, met last Friday, February 17th, in Madrid with the President of the Spanish Supreme Court, Mr. Carlos Lesmes, and the vice-president and presidents of each Chamber, where it also attended the President of the Constitutional Court, without having transcended the slightest information about the meeting.

Although we would prefer to have more information, this meeting gives the impression that this chronicle of misunderstanding will have to happen, necessarily, by the solutions that in those private meetings, both courts will be able to agree in order to end the absolute legal insecurity to which consumers and legal operators have been subjected to.

However, we are afraid that, once again, we will have to wait for the resolution of the ECJ to see if Spanish foreclosures continue or are definitely a vestige of the past.