03 Apr Europe imposes on Spain greater forcefulness against unfair terms from banks and Entrepreneurs

The European Court of Justice has declared that Spain has not correctly adapted its laws to article 6, paragraph 1, of Directive 93/13/EEC which seeks to harmonize consumer rights across the EU and eliminate terms generally used in contracts that would benefit sellers or suppliers against the interests of consumers.

The Regulation defines the principle of “unfairness” as follows:

• If a contractual term has not been individually negotiated and
• the term causes significant imbalance in the parties’ rights and obligations, then
• the term is contrary to the requirement of good faith.

The European Court of Justice points out that the breach that has been produced in Spain’s existing laws lies in the power of our national judges to modify the contents of unfair terms contained in contracts once they are declared as existing, by re-composing the chapter/s in such contracts affected by the invalidity, in accordance with the provisions of article 1258 of the Spanish Civil Code and on the principle of good faith.

The Court considers that such power could endanger the long term goal provided for in article 7 of the Directive, since it would help eliminate the dissuasive effect exerted on entrepreneurs, such as banks, and as a matter of fact, purely and simply, such unfair terms may not apply to consumers, in so far as such entities could be tempted to use unfair terms knowing that even when arriving to declare their nullity, the contract could be re-composed by the Spanish National Court, thus ensuring the interests of entrepreneurs against the interests of consumers.

The result of all this has been the adoption by Spain of a law 3/2014, of 27 March amending the text of the current General Law for the defense of consumers and users in the sense that the new article 83 does not now oblige a Spanish Judge to perform this integration, (I would call it re-composition), of contracts having clauses declared null and abusive in order to keep them in force once these are deleted, but that such contracts only may retain their validity in so far as the Judge deems that they can survive, without integration or re-composition of its content, once unfair terms are eliminated.