Case summary

Deciding Body
Commercial Court No 1, Granada
Juzgado de lo Mercantil No 1 de Granada
National case details
Date of decision: 21.12.16
Area of law
Consumer protection
Unfair terms
Consumer credit

Preliminary ruling
Judgement of the CJEU (Grand Chamber), 21 December 2016, Case C-154/15 F. G. N. v Cajasur Banco SAU, A. M. P. M. v Banco Bilbao Vizcaya Argentaria SA, Case C-307/15 E. I. L. and T. T. A. vs Banco Popular Español SA

Life-cycle diagram

  1. 9 May 2013

    Supreme Court decision n. 241/2013

  2. 25 March 2015

    Supreme Court decision n.139/2015

  3. 25 March 2015

    Preliminary ruling by Commercial court n. 1 of Granada C-154/15

  4. 21 December 2016

    Decision of CJ

  5. 20 January 2017

    Real Decreto-Ley 1/2017

Identification of the case

National law sources
  • Article 82(1) and 83 of the texto refundido de la Ley General para la Defensa de los Consumidores y Usuarios y otras leyes complementarias (recast text of the General Law for the protection of consumers and users and other supplementary laws).
  • Article 5(5), 7 and 8 of Ley 7/1998 sobre Condiciones Generales de la Contratación (Law 7/1998 on General Contractual Conditions.
EU law sources
  • Directives directives 93/13/EEC

Summary of the case

Facts of the case

Mr F. G. N. concluded with Cajasur Banco SAU a mortgage loan containing a ‘floor clause’. After the decision of the Tribunal Supreme n. 241/2013 regarding the invalidity of the floor clauses, Mr F. G. N. brought proceedings before the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada, Spain) for a declaration of nullity and for an order for the recovery of amounts overpaid on the basis of that clause since the conclusion of the contract.

Type of enforcement
  • Civil judicial enforcement
Measures, actions, remedies claimed/applied

Restitution (of amounts paid on the basis of contractual clauses that have been held by a court to be unfair).

Reasoning (legal principles applied)

The CJEU affirms that, based on its previous jurisprudence, that a contractual term held to be unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer. As a result of the determination by a court that a term is unfair, the consumer should receive the payment of the amounts that prove not to be due.

Where the restitutory effect lacks, the remedy provided by national may not be dissuasive and may hinder the effectiveness of consumer protection as provided by art. 6 and 7 of the Directive.

In the specific case, the absence of remedy is due to a temporary limitation of the legal effects stemming from the declaration of nullity in respect of ‘floor clauses’ made by the Tribunal Supremo (Supreme Court). This decision then

“ensures only limited protection for consumers who have concluded a mortgage loan contract containing a ‘floor clause’ before the date of the judgment in which the finding of unfairness was made. Such protection is, therefore, incomplete and insufficient and does not constitute either an adequate or effective means of preventing the continued use of that type of term, contrary to Article 7(1) of Directive 93/13 (see, to that effect, judgment of 14 March 2013, Aziz, C 415/11, EU:C:2013:164, paragraph 60).”

Due to this fact, the CJEU affords the national courts to overrule the Supreme Court decision, affirming that

“the referring courts, being bound for the purposes of the decisions to be given in the main proceedings by the interpretation of EU law given by the Court, must disapply, of their own motion, the temporal limitation which the Tribunal Supremo (Supreme Court) applied in its judgment of 9 May 2013, because that limitation does not appear to be compatible with that law”. 

Role of the Charter and role of the general principles on enforcement

Principle of effectiveness

The CJEU mentions that as soon as a clause imposing the payment of amounts is defined by the court as unfair, it generates a corresponding obligation restore the amount not due. If the restitutory effect is missing in the national legislation providing for the effects of the exclusion of a unfair contract term, this may hinder the dissuasive effect required by art. 6.1 and 7.1 of Directive 93/13.

Elements of judicial dialogue

Purposes of using judicial dialogue

Preliminary ruling, conforming interpretation.

Expected effects of judicial dialogue

Enhancing the protection of consumers and extending the application of the decision of the Supreme court with retroactive effects (i.e. overruling the decision of the Supreme court of the limitation of retroactive effects).

Additional notes on the decision

Impact on legislation/policy

After the decision, the Spanish legislator issued the Real Decreto-ley 1/2017 where it aimed at facilitating the settlement of the disputes between consumers and credit institutions as well as limiting the effects of the cost for the administration of justice.

Article 3 imposes the creation of a mediation system to be implemented by credit institutions. Although the system is voluntary for the consumer, when the procedure is initiated and eventually concluded with no agreement among the parties, this decision may affect the allocation of costs of the subsequent judicial proceedings (only if the court decides a higher amount than the one proposed by the credit institution, the costs will be allocated on the latter).