ECJ: National court cannot revise an unfair term
By Sophie Petitjean | Thursday 14 June 2012
A national court that establishes the existence of an unfair term in a consumer contract cannot revise it but is obliged under EU law to set the term aside, ruled the EU Court of Justice, on 14 June, in its response to a request for a preliminary ruling by the Auciencia Provincial de Barcelona (Spain) in Case C-618/10.
In May 2007, Calderón Camino entered into a loan agreement in the amount of €30,000 with the Spanish bank Banesto for the purchase of a car. The nominal interest rate was set at 7.950%, the annual percentage rate of charge at 8.890% and the rate of interest on late payments at 29%. On 8 January 2009, Banesto submitted an application for an order for payment to the Juzgado de Primera Instancia No 2 de Sabadell for the reimbursement of seven repayments not yet made. The national court, after establishing the existence of an unfair term related to interest for late payment, declared the term null and void, lowered the rate from 29% to 19% and ordered Banesto to recalculate the amount of interest. However, under Spanish law, a national court before which an order for payment has been made is not entitled of its own motion to declare null and void the terms contained in a contract between a business and a consumer: it must wait for the consumer to object to payment (within 20 days). Spanish law allows the court to modify the contract by revising the content of the unfair term in such a way as to remove its unfair aspects.
The Court of Justice held first that the national court is required to assess of its own motion whether the term is unfair “where it has available to it the legal and factual elements necessary for that task,” pursuant to Directive 93/13/EEC on unfair clauses in consumer contracts. In other words, it does not have to wait for the consumer to object to payment.
The EU court then held that when the national court has established the existence of an unfair term it is obliged only to set aside the term to keep it from producing binding effects on the consumer. It adds, however, that the court may not be allowed to revise the content of the term since this power could eliminate the deterrent effect on sellers or suppliers of the straightforward non-application of the unfair term vis-à-vis consumers.
The court concluded that the Spanish procedural legislation is not compatible with the directive on unfair terms in consumer contracts.
This power could eliminate the deterrent effect on sellers or suppliers of the straightforward non-application of the unfair term vis-à-vis consumers