Monday, 5 May 2014

What unfair terms control cannot do: CJEU in Barclays (C-280/13)

While last week we endeavoured to give our readers a timely and informative account of Kásler, which might become a very relevant case in the subject of unfair terms control, on the same day the CJEU also delivered another decision in the field, Barclays Bank SA v Sara Sánchez García, C-280/13.

This case, rather than producing knowledge on the working of unfair terms control under Directive 93/13, reminds us of the limits beyond which the Directive cannot reach. It also shows how, after cases such as Aziz, Spanish courts have tried to use the Directive as a means to address social issues to which national legislation doesn't seem to give an (equitable) answer.

In Barclays, Ms Sánchez and her husband concluded a secured loan- using as security the house they lived in. When they stopped paying the due installments, they ended up with their house being acquired by the bank and a remaining outstanding debt of over 100 000 euros (out of the 153 000 they had borrowed).  

This was made possible by a combination of Spanish legal provisions (allowing inter alia, the vesting of property by the creditor for half of its value were the property auctioned in vain) and a contractual term in favour of the bank, which again was explicitly authorised by Spanish law.

Of such provisions, under which it was impossible to consider Barclay's behaviour as an abuse of rights, the Juzgado de primera instancia of Palma de Mallorca asked the Court of Justice whether they, or their effects, were contrary to the Directive and "the principles of EU law concerning consumer protection".

But "statutory and regulatory provisions" of national law are explicitly excluded from the Directive's scope (see art 1(2) thereof). The Court (para 41) recalls that, as concerns such provisions, "it may legitimately be supposed that the national legislature struck a balance between all the rights and obligations of the parties to certain contracts".

The fact that the Directive, by excluding them from its scope, regulates the "position" of national contractual rules also puts them beyond the reach of general principles (of EU consumer law? para 44), following the prevalence of lex specialis.

In other words, EU law and the CJEU can be of no help to ms Sánchez and other Spanish consumers in a position similar to hers and her husband's.    

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