A court in northern Spain recently ordered that Sabadell Bank to pay a company compensation for a renewed loan contract. The sentence opens the door to companies as well as individuals to benefit from case law on renewed agreements. Compensation in this particular case is expected to be around half a million euros.
Background to the Case
The company in question ran a marina and wind farm construction company in Asturias, northern Spain. In 2011, the company signed a loan contract with Sabadell Bank to finance the building of a new marina. The agreement included several interest rate ‘swaps’.
The company took the bank to court over malpractice to seek the nullity of the ‘swap’ contracts. However, the bank imposed an out-of-court agreement leading the company to a difficult choice – accept the agreement or face the execution of all guarantees.
The company chose the first option to ensure the viability of its project. However, the bank then failed to rescue the company, which entered bankruptcy proceedings. As well as financial difficulties, there was also a great personal toll as the company owner died of a heart attack through stress caused by the situation.
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Financial Harassment
The company owner’s grandson then took the bank to court on the charge of financial harassment. The defence alleged that the bank had contrived beneficial new contracts and also taken advantage of the no-claim agreement.
The defence argued that the attitude of the bank did nothing to help save the company from bankruptcy and its owners faced the additional obstacle of a draconian contract.
The Case
The court case involved compelling evidence from the company against the bank. This included recordings of conversations between the company owner and the bank. It also encompassed documentary evidence proving that the bank imposed the no-claim agreement. As a result, the company had no choice but to accept it.
The company’s legal representative claimed that the agreement was no transparent or voluntarily negotiated. He also said that its clauses were abusive for the client. The judge accepted both these arguments.
Did you know? Mortgage contracts are among the most common documents to include non-transparent and/or abusive clauses. Find out more.
The Sentence
As a result, the judge has ruled that the contract signed between the Sabadell Bank and company to be null and void. In the sentence, it passes the blame for breach of contractual liability to the bank and condemns it to pay compensation for damage caused by the contracts.
Under the ruling, the bank must return to the company the money lost as well as compensation. The exact amount is not yet known – the final sentence will specify it – but analysts believe it will be in the region of €500,000 (the €475,000 originally claimed plus interest since 2011).
The bank will also be liable for costs.
Did you know? Costaluz Lawyers offers comprehensive services to companies in Spain, including help with bankruptcy proceedings and second chances.
Relief for companies
The sentence will come as a huge relief to companies who now have a way forward to receiving compensation for non-transparent contracts and abusive clauses in them. The latest ruling opens the door for companies to benefit from case law from the European Court of Justice on new agreements.
At Costaluz Lawyers, we applaud this sentence as we believe it further extends consumer rights. All too often, individuals and companies find themselves in challenging financial straits because of draconian contracts from their banks. And this latest ruling proves that compensation is a legitimate right.
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Maria Luisa Castro
