Aziz v Caixa d'Estalvis de Catalunya
| Aziz v Caixa d´Estalvis de Catalunya | |
|---|---|
| Court | European Court of Justice |
| Full case name | Aziz v Caixa d´Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa) |
| Citation(s) | (2013) Case C-415/11, [2013] 3 CMLR 5 |
| Keywords | |
| Consumer protection, unfair contract terms | |
Aziz v Caixa d´Estalvis de Catalunya (2013) Case C-415/11 is an EU law and consumer protection case, concerning the Unfair Terms in Consumer Contracts Directive. It emphasises the foundations of consumer protection on inequality of bargaining power and imbalances in information.
Facts
Mohammed Aziz was a resident in Spain. He took out a mortgage with Caixa d´Estalvis de Catalunya (the Savings Bank of Catalonia), secured on his home at an annual default interest rate of 18.75%. The Caixa was entitled to call in the loan upon a default by Aziz. Clause 15 of the contract also purported to give the right to reclaim any debt, quantifiable immediately. Aziz did default, and the Caixa quantified the debt through a notary, adding contractual and default interest. The bank began repossession of the property and a week before eviction, Aziz applied to the Spanish court to annul clause 15 on grounds of unfairness under the Unfair Terms in Consumer Contracts Directive. No provision in Spanish law foresaw this possibility, nor was there any interim relief. Under Spanish law, final vesting of the mortgaged property was irreversible even if a term was challenged as unfair before the court. The only exception was where a consumer made preliminary registration for the application to be annulled before a marginal note regarding a security certificate.
Judgment
Spanish courts
The Spanish Court asked the European Court of Justice (1) whether national law was compatible with the Unfair Contract Terms Directive 93/13/EC, (2) what the concept of ‘unfair term’ in articles 3(1) and (3) meant, to assess the fairness of terms relating to acceleration in long terms contracts, in setting default interest rates and quantification. The Caixa said this was inadmissible, as being irrelevant to the dispute, because it related to declaratory rather than enforcement proceedings.
European Court of Justice
The Court of Justice, First Chamber, held that the terms were capable of being assessed for fairness.
| “ | 44. In replying to that question, it should be noted first that the system of protection introduced by the directive is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge (Banco Español de Crédito [2012] 3 C.M.L.R. 25 at [39]).
45. As regards that weaker position, art.6(1) of the directive provides that unfair terms are not binding on the consumer. As is apparent from the case law, that is a mandatory provision which aims to replace the formal balance which the contract establishes between the rights and obligations of the parties with an effective balance which re-establishes equality between them (see Banco Español de Crédito [2012] 3 C.M.L.R. 25 at [40] and case law cited). 46. In that context, the Court has already stated on several occasions that the national court is required to assess of its own motion whether a contractual term falling within the scope of the directive is unfair, compensating in this way for the imbalance which exists between the consumer and the seller or supplier, where it has available to it the legal and factual elements necessary for that task (Pannon GSM [2009] E.C.R. I-4713 at [31] and [32], and Banco Español de Crédito [2012] 3 C.M.L.R. 25 at [42] and [43]). [...] 65 By its second question, the referring court seeks, essentially, to obtain clarification of the constituent elements of the concept of ‘unfair term’, in the light of Article 3(1) and (3) of the directive, and of the annex thereto, in order to assess whether the terms which are the subject of the main proceedings and relate to acceleration in long-term contracts, setting of default interest rates and the agreement on quantification are or are not unfair. 66 In that regard, according to settled case-law, the relevant jurisdiction of the Court extends to the interpretation of the concept of ‘unfair term’ used in Article 3(1) of the directive and in the annex thereto, and to the criteria which the national court may or must apply when examining a contractual term in the light of the provisions of the directive, bearing in mind that it is for that court to determine, in the light of those criteria, whether a particular contractual term is actually unfair in the circumstances of the case. It is thus clear that the Court must limit itself to providing the referring court with guidance which the latter must take into account in order to assess whether the term at issue is unfair (see Case C-472/10 Invitel [2012] ECR, paragraph 22 and case-law cited). 67 That being so, it should be noted that, in referring to concepts of good faith and significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer, Article 3(1) of the directive merely defines in a general way the factors that render unfair a contractual term that has not been individually negotiated (see Case C-237/02 Freiburger Kommunalbauten [2004] ECR I-3403, paragraph 19, and Pannon GSM, paragraph 37). 68 As stated by the Advocate General in point 71 of her Opinion, in order to ascertain whether a term causes a ‘significant imbalance’ in the parties’ rights and obligations arising under the contract, to the detriment of the consumer, it must in particular be considered what rules of national law would apply in the absence of an agreement by the parties in that regard. Such a comparative analysis will enable the national court to evaluate whether and, as the case may be, to what extent, the contract places the consumer in a legal situation less favourable than that provided for by the national law in force. To that end, an assessment should also be carried out of the legal situation of that consumer having regard to the means at his disposal, under national legislation, to prevent continued use of unfair terms. 69 With regard to the question of the circumstances in which such an imbalance arises ‘contrary to the requirement of good faith’, having regard to the sixteenth recital in the preamble to the directive and as stated in essence by the Advocate General in point 74 of her Opinion, the national court must assess for those purposes whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to such a term in individual contract negotiations. 70 In that regard, it should be recalled that the annex, to which Article 3(3) of the directive refers, contains only an indicative and non-exhaustive list of terms which may be regarded as unfair (see Invitel, paragraph 25 and case-law cited). |
” |
See also
| ||||||||||||||||||||||||||||||||||||||||||||||