A pivotal change in Spanish case law: The impact of EU court rulings on local financial litigations

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In a significant shift within the Spanish legal landscape, the ruling of the Court of Justice of the European Union (CJEU) dated July 16, 2020 (joined cases C-224/19 and C-259/19), has been integrated into the jurisprudence of the Civil Chamber of the Spanish Supreme Court through judgment 301/2022 of April 19.

This integration has started to have widespread effects.

This development marks the application of the principle of effectiveness from the Luxembourg court’s doctrine, encapsulated in the idea: “Even in cases of partial adjudication, the defendant must bear the costs.”

Prior to this ruling, banks often employed a strategy of systematically and massively opposing consumer lawsuits. However, the CJEU’s judgment penalized this approach by establishing that a first-instance judge should order the financial institution being sued to pay the legal costs whenever this circumstance occurs.

One of the earliest applications of this principle occurred on March 12 in the Court of First Instance number 2 bis of Cádiz, in judgment 5/2024. Furthering this trend, a new ruling, 19/2024, from the Third Section of the Provincial Court of Cádiz on appeal, has again applied the CJEU doctrine and the Supreme Court jurisprudence as one.

In this case, the plaintiff achieved a partial judgment in the first instance. The court declared the nullity of clauses related to expenses, late interest rates, and early maturity of the mortgage loan contracted with Banco Santander in 2003 while denying other claims.

Initially, the first instance ruling stated that “each party must bear the costs of the proceedings caused at their request and the common ones by half in accordance with article 394 of the Civil Procedure Law.”

However, this was precisely what the collegiate tribunal, consisting of judges Carlos Ercilla Labarta, Angel Sanabria Parejo, and Ramón Romero Navarro, corrected in their judgment 19/2024 of January 9. The appeal ruling stated: “The costs should be imposed on the defendant party, despite the partial adjudication of the claim, as reflected in the Supreme Court’s ruling of May 29, 2023, applying the doctrine contained in the CJEU’s judgment of July 16, 2020.”

Consequently, the Provincial Court of Cádiz concluded that the legal costs of the first instance should be borne by the defendant bank, as requested by the appellant.

This series of rulings highlights a humane and logical approach to litigation, emphasizing fairness and the principle of effectiveness. It underscores the evolving nature of Spanish Case Law, especially in cases involving consumer rights against financial institutions.

For those navigating these legal waters, it’s essential to stay informed and seek professional advice tailored to the specifics of your case. At Costaluz Lawyers, we are dedicated to providing expert legal guidance and representation in financial litigations and consumer rights cases. If you need assistance or have any questions regarding these legal developments, feel free to contact us.

If you require expert legal advice or representation in matters related to financial litigations or consumer rights, please don’t hesitate to reach out to us. Our team of experienced legal professionals is here to guide you through every step of the process and ensure that your rights are protected.

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