In a previous blog we made clear that we were waiting for the resolution of the European Court of Justice in relation to the retroactivity of the floor clauses. This blog was partially closed in May 2016 pending of the judgment whose publication took place on December 21, 2016 and echoed by all the media. This column summarized the background to what the floor clause is. I even recommend reading the article by Manuel Llamas in Libre Mercado: "In Favour of the Floor Clauses, Against the Judicial Populism", thus we can contrast the different opinions against and favour of the mentioned clause.
THE SUPREME COURT JUDGMENT OF 9TH MAY 2013
There are several rulings that have declared the nullity of floor clauses, including the one of the Supreme Court of May 9, 2013. However, in February 2015, in a new judgment, the aforementioned court ruled that the convicted banks should only return what was collected retroactively from the date of its first resolution, that is to say, from May 9, 2013. In short, the limit of retroactivity was that date, and could not be extended further. Other sentences of the Provincial High Courts, ignoring the Supreme Court ruling, decided that the nullity should be applied from the beginning (that is, going back beyond May 9, 2013).
LEGALITY OF FLOOR CLAUSES
In principle, this type of clause is not contrary to the law, although it is in the case where such clause is abusive and when the bank does not report on the existence of such clause in the mortgage loan.
We must recall that the lenders are enforced to explain the conditions of the mortgage contract in a way that can be understood by the client. For example, such entities must provide an information booklet that clearly explains the terms of the loan. This is expressed by various Orders of the Bank of Spain, such as Order EHA / 2899/2011. In addition, after the promulgation of Law 1/2013, the notary will collect from the borrower his handwritten expression of having been warned of this risk derived from the contract.
The main issue would not be the nullity of the clause floor itself but its retroactivity. This question of limiting the non-retroactivity of the nullity of the floor clause has been questioned before the European Court, in order to determine as a preliminary question whether it is possible to limit the nullity to a date subsequent to the conclusion of the mortgage loan (this means Contracts which were signed earlier than 9 May 2015), which could be incompatible with Directive 93/13 / EEC of 5 April 1993. The ECJ in its judgment of 21 December 2016 took into account the European Commission's arguments, (leaving aside the Advocate General's report favorable to the admission of retroactivity limitation), which stated: "it is not possible for national judges to moderate the repayment of amounts paid by the client as a result of the application of a clause that has been declared null and void from the source due to lack of information and transparency."
This way, the nullity of the floor clause can be applied from its origin. However, if we take into account that the clause is in principle valid, it must be up to each particular case to determine whether it is valid or not. Although it is true that in the vast majority of cases this clause was not negotiated individually but adhered by the borrower, the opposite could be the case.
The dissenting voices in relation to the ECJ judgment are not so much against the judgment of the European Court but against the previous judgments of the Supreme Court. Manuel Lamas says: <<(...) the key to the matter is not the resolution of the ECJ in logical and legitimate terms, but in the legal botched jog, not to say outrage, that the High Court judges once committed to annul clauses that have been legally, clearly and perfectly accepted for decades. Not in vain, if such clauses do not match the law, it is as if they never existed, so that their retroactivity can not be arbitrarily and capriciously limited, as did the Supreme, suppressing its validity only from May 9 (...) In short, under the guise of an alleged sentence, the Supreme Court approved a new general rule of financial transparency and applied it retroactively to existing operations. The judges, "probably moved by the desire to satisfy the popular clamour against the floor clauses, decided to leave them without effect"(...) "the Supreme Court decides that ALL clauses of certain entities are void for lack of transparency. Thus, what the High Court does is to prosecute a clause of form abstract and general, "regardless of what has happened in reality (what the notary has read, what the client knows, and the diligence used)” (…).>>.
It is recommendable to take into account the opinions against and in favor. As far as this blog is concerned, we understand that once the floor clauses have been declared null and void, that nullity must be applied retroactively from the beginning. That is, if the ground clause is declared valid and effective there would be nothing to object. If, on the other hand, it is void because it is abusive, it is not possible to speak of partial retroactivity because it is contrary to law. The ECJ only applied Spanish legislation and legal logic in relation to retroactivity. Nullity is a different matter that has already been tried and which, we understand, must be judged in each specific case. If there is a nullification it must be understood, logically, that the clause never existed and therefore is null and void from the day of signing the mortgage and all amounts illegally charged should be reimbursed.
Another question is the imputation of such quantities. In fact, the Revenue Office has already stated that the collection of such amounts should be taxed (if they are destined for savings). But this question would be the subject of another debate. In the same way, the Government has announced that it will approve a Code of Good Practices for the refunding of excess amounts originated in the floor clauses by those banking entities wishing to join it. However, it is not discarded that there could be many legal claims in this regard.