Case C-450/22 Caixa Bank and Others v Adicae and Others ECLI:EU:C:2024:577
The European Court of Justice (ECJ) has recently clarified that a collective action against the entire banking industry of a country regarding the transparency of a contractual term in millions of mortgage contracts is,in fact,allowed despite the complexity inherent in the judicial review. On 4 July 2024, the ECJ ruled that the large number of sellers and supplies sued in a collective action and the heterogeneity of the individual applicants do not preclude the judicial review of the transparency of contractual terms based on the concept of the average consumer. In assessing the average consumer, the court can take account of changes in consumers’ perception regarding that term. The judgment strengthens the protection of (financial) consumers by ensuring the effectiveness of their right to bring collective action despite the large number of defendants or complexities involved.
The matter was referred to the ECJ for a preliminary ruling by the Tribunal Supremo (Supreme Court, Spain). 820 consumers brought a collective action (through Adicae, a Spanish association of users of banks, savings banks and insurance) against 101 banks seeking the annulment of a ‘floor clause’ in mortgage loan agreements spanning from December 1989 to June 2019. Placed in the general conditions of the mortgage loan agreements, this clause provided for a minimum threshold below which the variable interest rate could not fall.The referring court asked the ECJwhether, under the Unfair Terms in Consumer Contracts Directive (Directive 93/13),[1] a collective action is the appropriate judicial mechanism to review the transparency of the floor clausewhenthe collective action is brought against a large number ofbanks and concerning a very large number of contracts.The question is raised due to the difficultyof making a concrete assessment of all the circumstances attending the conclusion of a contract and the pre-contractual information provided to the consumer concerned, a necessary exercise in evaluating the transparency of the contractual term at hand.
The ECJ answered in the affirmative.The concept of transparency of a contractual term does not depend on the type of action (collective or individual). The number of banks is not relevantbecause a case’s complexity should not undermine the effectiveness of the individual rights conferred by Directive 93/13. The only relevant criteria are two: (i) the sellers and suppliers being from the same economic sector (in this case, that of banks) and (ii) the sellers or suppliers must use or recommend the use of the same general contractual terms or similar terms. Regarding the second condition, the contractual terms need not be identical, but the operating mechanism should, in principle, always be the same. Both criteria are fulfilled in the present case according to the European court. Given that the protection of the consumer should remain the same regardless of the type of action, the case-law arising from individual actions relating to the transparency requirement is transposable to collective actions. In this case, by the very nature of collective actions, the national court must consider the standardised practices of banks rather than the circumstances specific to individual situations.
The referring court also asked whether the large amounts of plaintiffs could be grouped together despite the many differences and subsequently have the ‘average consumer’ concept be applied to them. The case at hand involved hundreds of plaintiffs from various categories (social housing finance, special schemes on account of one’s profession and so on). Again,the ECJ did not see the diversity of plaintiffs as precluding the judicial review. In fact, it is precisely this heterogeneity of the public concerned that necessitates the legal fiction of the ‘average consumer’.The national court should review the transparency of the contractual term based on the perception of the average consumer.According to jurisprudence, the latter is defined (here and here) as being reasonably well informed and reasonably observant and circumspect. In the present case it was difficult to delineate the perception as the contracts spanned from 1989 to 2019. However, the ECJ noted that the passage of time alone is not sufficient to infer the change in consumers’ perception. On the other hand, occurrence of an objective event or a matter of common knowledge can impact a consumer’s perception at the time when the mortgage agreement was concluded. Examples include a Supreme Court’s decision finding the floor clauses not transparent or the collapse in interest rates of the 2000s. It is up to the national court to carry out the review of the average consumer’ perception while taking account of these changes.
Despite the assessment left for the national court, the floor clauses being null and void means not only that they will not be used anymore but also that the banks will have to reimburse their consumers the sums paidon the basis of that clause.
Eugerta Muçi[2]
[1]Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.
[2]Faculty of Law, Erasmus University Rotterdam, the Netherlands.
