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CJEU Joined Cases C-96/16 and C-94/16 / Opinion

Banco Santander SA v Mahamadou Demba and Mercedes Godoy Bonet and Rafael Ramón Escobedo Cortés v Banco de Sabadell SA

Policy area:
Consumers
Deciding Body type:
Court of Justice of the European Union
Deciding Body:
Advocate General
Type:
Opinion
Decision date:
22/03/2018

Key facts of the case:

Reference for a preliminary ruling — Directive 93/13/EEC — Unfair terms — Scope — Assignment of debts — Loan agreement concluded with a consumer — Criteria for assessing the unfairness of a contractual term setting the default interest rate — Consequences of that unfairness.

Outcome of the case:

In view of the foregoing considerations, I propose that the Court give the following answers to the questions referred for a preliminary ruling:

I. In Case C‑96/16, referred by the Juzgado de Primera Instancia No 38 de Barcelona (Court of First Instance No 38, Barcelona, Spain):

(1) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts does not preclude a business practice of assigning or purchasing debts, as described in the present case, without offering the consumer the opportunity to extinguish the debt by paying the price of the assignment, as well as interest, expenses and costs, to the assignee.

(2) Article 6(1) and Article 7(1) of Directive 93/13 do not preclude national case-law which establishes as an unequivocal criterion the fact that, in loan agreements concluded with consumers, a non-negotiated term which sets a rate of default interest that exceeds by more than two percentage points the agreed rate of ordinary interest is unfair in so far as:

  • it does not restrict the discretion of a national court with regard to a finding of unfairness in respect of terms of a loan agreement concluded between a consumer and a seller or supplier that do not meet that criterion, and
  • it does not prevent that court from setting aside such a term should it find the term to be ‘unfair’, within the meaning of Article 3(1) of that directive.

(3) Article 6(1) and Article 7(1) of Directive 93/13 do not preclude –– following a finding, in accordance with the case-law mentioned above, of unfairness of a term in a loan agreement setting a rate of default interest that exceeds by more than two percentage points the agreed rate of ordinary interest –– the term setting the rate of ordinary interest from continuing to apply until the debt is repaid in full.

II. In Case C‑94/17, referred by the Tribunal Supremo (Supreme Court, Spain):

(1) Article 6(1) and Article 7(1) of Directive 93/13 do not preclude national case-law which establishes as an unequivocal criterion the fact that, in loan agreements concluded with consumers, a non-negotiated term which sets a rate of default interest that exceeds by more than two percentage points the agreed rate of ordinary interest is unfair in so far as:

  • it does not restrict the discretion of a national court with regard to a finding of unfairness in respect of terms of a loan agreement concluded between a consumer and a seller or supplier that do not meet that criterion, and
  • it does not prevent that court from setting aside such a term should it find the term to be ‘unfair’, within the meaning of Article 3(1) of that directive.

(2) Article 6(1) and Article 7(1) of Directive 93/13 do not preclude –– following a finding, in accordance with the case-law mentioned above, of unfairness of a term in a loan agreement setting a rate of default interest that exceeds by more than two percentage points the agreed rate of ordinary interest –– the term setting the rate of ordinary interest from continuing to apply until the debt repaid in full.

(3) There is no need to answer the third question.