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Equal rights to all those affected by floor clauses

As readers of past articles posted on Lexland´s website will know, the protection that Spanish legislation grants us in our dealings with Spanish banks is constantly changing and evolving. Over the last few months, we have seen changes in many areas of Banking Law, invariably referring to the so called Floor Clauses that have generated so much controversy in recent years.

Having said this, on the 3rd of September 2015, a very interesting Judgment was issued by the Court of Justice of the European Union, which has granted yet another layer of protection to those natural persons implicated in a bank loan or mortgage.

Up until the present moment, the Courts have adopted a protective attitude towards all those persons that receive bank loans/mortgages without receiving the proper preliminary information or without a sufficient level of explanation of the terms and conditions of such loans. However, traditionally, persons working in the legal sector, particularly qualified lawyers, accountants and real estate agents have been excluded from this judicial protection, as it was assumed that such persons have a sufficient knowledge of banking law to be able to understand the agreement to be signed, without the need for exhaustive explanation from the banks´ legal department.

Invalid & abusive floor clauses

The European Union Judgment of the 3rd of September represents a turning point in this perspective, as the Court of Justice now considers such legal professionals to also be in need of consumer protection in these contracts, as long as such professionals are acting outside of the area of their legal expertise.

This judgment was reached in a prejudicial consultation posed by the Court of First Instance de Oradea, in Romania, in a case in which a Romanian lawyer had claimed that the bank had misled him using an abusive contractual clause.

Legal professionals will now have the consideration of “consumers”, described as those persons that carry out an activity different from their profession, reason for which they will benefit from a special level of protection, due to their situation of inferiority in relation to the banking entity. This inferiority is understood to be due to both the consumers´ lack of understanding of banking law and due to their lack of negotiating power. The consequence of this consideration is that the abusive clause will be held to be null and void.

It is yet to be seen to what degree Spanish courts will apply the criterion indicated by the European Court of Justice. However, if you are a professional person affected by an abusive clause, Lexland Lawyers can advise you on the proper course of action. From the 3rd of September, you may now be entitled to make a claim.