The Supreme Court in Spain has recently confirmed that banks must pay court costs in cases against abusive clauses in Spanish mortgages. Previous sentences did not clearly state which party was liable for legal costs.
Abusive clauses in foreign currency mortgage
The Supreme Court ruling came about on the back of an appeal from holders of a foreign currency mortgage in Spain. The homeowners took their bank to court in 2016 on the grounds that their mortgage contract contained abusive clauses.
They specifically alleged that the contract involved a complex financial product. They also claimed that it went against consumer rights and demanded the removal of the abusive clauses from the contract.
Final win in legal battle
Although the case was admitted in court, it was turned down in the first instance. On appeal it went to the provincial courts. Judges here applied new case law set out by the Spanish Supreme Court (608/2017).
Under this ruling, mortgage loans come under the umbrella of consumer protection rules. On the basis of these, the Provincial Court declared that the abusive clauses were null and void because they did not meet the transparency law.
However, despite ruling a victory for the holders of the multi-currency mortgage, the court did not apply costs to the homeowners or the bank. It argued that the doubts over whether the 608/2017 law applied to foreign currency mortgages meant that the bank was not liable for charges.
New Supreme Court ruling
The mortgage holders appealed against this decision, supported by the Supreme Court that has ruled that the bank should pay legal costs. It bases its decision on the recent doctrine laid out by the European Court of Justice.
According to this doctrine, it is unfair for the consumer to pay legal costs in case of victory because if the abusive clause had not existed, the consumer would not have gone to court. If the consumer has to pay costs despite winning the case, it does nothing to help consumer rights.
Placing the burden of costs on the consumer would have the opposite effect of a deterrent. Safe in the knowledge that they are not liable for costs, banks would not dissuaded from including abusive clauses in mortgage contracts. However, consumers would not be keen to take a bank to court for small amounts because of the legal costs involved.
Free consultation on your mortgage
Costaluz Lawyers welcomes this latest decision from the Supreme Court as an excellent addition to consumer protection laws in Spain. As experts in defending mortgage holders against Spanish banks, we have years of experience in successfully contesting abusive clauses in contracts.
If you have a mortgage contract and believe it contains such clauses, get in touch for a free consultation. Our legal experts will be only too happy to give their opinion on whether you have a case to take the bank to court.
Maria Luisa Castro
