Analysis: “Waiver of the right to bring an action contesting an unfair term according Article 6(1) Directive 13/1993” by Francisco Pertíñez
The Ibercaja Banco judgment (C-452/18) of the Court of Justice of the EU (CJEU) delivered on 9 July 2020 has established the bases of the validity of an agreement between a professional and a consumer under the Unfair Terms Directive 13/1993, in the context where the consumer has waived the right to rely on the unfairness of a contractual term.
This issue is of great economic significance for Spanish mortgage practices, because between 2013 and 2016 a very large amount of waivers of the right to bring an action contesting the so-called ‘floor term’ limiting the minimum interest rate in mortgage agreements were agreed by consumers as compensation for the immediate elimination or modification (novation agreements) of that clause.
When the Gutiérrez Naranjo judgment (Joined Cases C‑154/15, C‑307/15 and C‑308/15) of 21 December 2016 declared the doctrine of the Spanish Supreme Court on the limitation of the reimbursement of the sums unduly paid on the basis of the floor term (restricted to amounts unduly paid since 9 May 2013) not to be in accordance with Article 6(1) of the Unfair Terms Directive and recognised the consumer’s right to full restitution, the bases on which these waiver agreements were agreed were altered. Thousands of lawsuits were then filed contesting the validity of such waiver agreements, based on the fact that the non-binding effect of unfair terms (Article 6(1)) must also be extended to subsequent contracts concerning such terms or the lack of information provided about the consequences of such waiver agreements.
The CJEU had previously stated in Pannon (C-243/08), Banif Plus (C-472/11), Sales Sinués (C-381/14) and Dziubak (C-260/18), that the right to effective consumer protection includes the option to waive the exercise of one’s rights. Consequently, a consumer may waive the effects that would result from a term being declared to be unfair, provided that the waiver was based on free and informed consent about the non-binding nature of that term and of the consequences resulting from it. What is truly new about the Ibercaja Banco judgment is that it assesses the possible unfair nature under the Unfair Terms Directive of such a waiver agreement when it arises from a clause that was not individually negotiated.
For that purpose, Ibercaja Banco distinguishes between the waiver of rights of action in the context of an agreement aimed at resolving a dispute between a professional and a consumer concerning the validity of a term, and the prior waiver of any rights of action in disputes which may arise in the future.
In the first case, a waiver clause is capable of falling within the main subject matter of that agreement, within the meaning of Article 4(2) of the Unfair Terms Directive and, consequently, may be regarded as unfair where the consumer was not provided with the relevant information enabling him or her to understand the legal and economic consequences of this waiver.
On the contrary, the prior consumer waiver in respect of future disputes of any right of action based on the rights under the Unfair Terms Directive would run counter to the mandatory nature of Article 6(1) and would jeopardise the effectiveness of that system. The reason is that, by definition, the consumer cannot assess the consequences of agreeing to such a term as regards disputes which may arise in the future.
Perhaps the most relevant aspect of Ibercaja Banco on Spanish judicial practice is the nuances made regarding the professional’s obligation to inform the consumer, pursuant to Article 4(2) of the Directive, about the legal and economic consequences that arise from the waiver of the legal right to bring an action for annulment of an unfair term:
- The professional is not obliged to inform the consumer about the amounts the consumer might waive by agreeing to a new ‘floor’ term and which correspond to the difference between the amounts paid by the consumer under the original ‘floor’ term and those which would have been payable in the absence of a ‘floor’ term. Those amounts can easily be determined by an average consumer who is reasonably well informed and circumspect, provided that he or she has access to all the necessary information from the banking institution.
- The duty of information must be assessed by reference to the time of conclusion of the waiver agreement, taking into account all the circumstances known by the professional at that time, which must be examined by the referring court. The CJEU considers that in the main proceedings, at the time of the conclusion of the novation agreement (4 March 2014, before Gutiérrez Naranjo), it was not certain that Ibercaja Banco knew that the existence of an unfair ‘floor’ term gave rise to a right to full reimbursement of the sums unduly paid because of that term. This will probably be a problematic issue in the interpretation of Ibercaja Banco judgment on whether financial entities were obliged to inform the consumer about the existence of the preliminary ruling Gutiérrez Naranjo, and the effects that the future CJEU judgment could have on the obligation of reimbursement of the sums unduly paid on the basis of the floor term.
- The need to inform the consumer about the non-binding effect of the floor clause will depend on the level of certainty that existed at the time of the waiver, regarding the unfair nature of such clause, which should also be assessed by the referring court.
In my opinion, the multiple references in the Ibercaja Banco judgment to aspects that must be examined by the national judicial organs augur great uncertainty for the resolution of the thousands of disputes before the Spanish courts, which challenge the validity of the term waiving the right to bring an action against an unfair floor term.
Francisco Pertíñez is Professor of Private Law at the University of Granada and a lawyer.