A court recognizes the floor clauses’ total retroactivity
A Basque court recognizes the floor clauses’ total retroactivity a few days before the CJEU’s final sentence. The costs for the banks could be up to E5.2bn.
The Barakaldo’s First Instance Court (Basque Country, Spain) has admitted the floor clauses’ total retroactivity and it obliges a bank to give 14.250 euros back to a Basque couple from their mortgage. At Del Canto Chambers we have been informing on this issue and in our platform www.spanishbank.co.uk information on the topic can be found.
This ruling contradicts the prevailing doctrine that, following a ruling by the Supreme Court (TS) in 2013, banks were required to pay back the overpayment for land clauses only since May of that year and not since the signing of the contract.
Sufferers had been overpaying bank up to 350 euros monthly with a 3.60%’s rate. Floor clauses had been declared as abusive by the TS. This Basque Court confirms this assestment now and it considers them as not complying with the “bona fide’s requirements”.
If the date of the TS decision had been considered as a limit to the return of the ground clauses and not the total retroactivity, as the Barakaldo court has now recognized, those affected would only have returned 6,750 euros. That is why, with this ruling, banks are faced with having to double the amounts returned.
Despite the judgment not being final it can still be appealed to the Provincial Court of Vizcaya, it is estimated that if total retroactivity became the dominant doctrine, banks should disburse a total of E5.2 bn to all those who had signed a mortgage with floor clauses.
The European Court of Justice (ECJ) should decide, finally, if floor clauses’ repayments are limited or if total retroactivity is considered for them. The decision is expected to be ruled next 21st of December.
Last June, the CJEU’s General Advocate, Paolo Mengozzi, in a non-binding opinion had decided to limit floor clauses since the Spanish high court’s judgment’s date (May 13th 2013); a decision that caused strong controversy due to his arguments’ nature.
For judicial law, if a bank’s clients have overpaid for their mortgage due to abusive-considered clauses, it is fair to be given those amounts back. According to the Law, if a clause is determined as abusive, the contract is void. A lot of citizens have been affected, thus, recognizing this basic legal premise turns into a social justice’s exercise.