On 16 July 2020, a new judgment of the Court of Justice of the European Union was published on unfair terms in consumer contracts.
Issues analysed by the CJEU
The judgment addresses several issues that have been debated to date:
1) Mortgage expenses
The Judgment states: "a contractual term declared unfair must, in principle, be regarded as never having existed", which "justifies the application of the provisions of national law that may govern the allocation of the costs".
Therefore, according to our legal system, the bank must pay all the registry costs, as well as half of the notary and agency costs. Stamp Duty must be paid by the borrower.
2) Arrangement fee
The judgment deals with the arrangement fee, finding that it will be for the judge to assess whether or not it is unfair, taking into account the amount of information available to the consumer, whether the consumer understood what the arrangement fee entails and how it works within the contract, and in any case ensuring that its wording is not obscure or liable to cause confusion.
In this way, if it is determined that there has been bad faith or an imbalance to the detriment of the consumer, the fee clause may be declared null and void, and the financial institution must refund what the consumer paid unduly.
3) Limitation period for bringing claims
Another issue addressed by the judgment is the period available to the consumer to claim the refund of mortgage expenses. In this regard, the judgment considers that the limitation period for claiming the nullity of unfair terms will be 5 years.
The question is from when this 5-year period begins to run, an issue which, due to its complexity, we will address in a new article.
4) Legal costs
Finally, the Judgment rules on the payment of legal costs and considers that the costs of a claim for unfair terms that has been fully upheld should not be borne by the client, but by the bank, as otherwise consumers would be discouraged from bringing proceedings for moderate amounts.
