AS anticipated, on March 3, 2020 the Superior Court of Justice of the European Union (ECJ) issued its final decision with regards to the Mortgage Loan Interest Index IRPH; used by many Spanish lenders to establish the interest rate on numerous mortgage loans.
This judgement allows us to point out some relevant aspects that must be taken into account before presenting any claim to try to recover part of the money paid to the bank by way of interest in such IRPH cases.
Firstly, the Spanish courts asked the European Court if the effects of European directive 93/13 for consumer protection are applicable in the case of IRPH, as it is an official index published in the official Spanish bulletins.
And the answer was in the affirmative, so any claim must be checked to see whether it was a transparent clause.
Secondly, the Court has indicated the importance of consumers being made fully aware of the consequences of the IRPH clauses. The Court has indicated that the Spanish courts are obliged to analyse whether the consumer obtained sufficient information to understand and evaluate with all guarantees the conditions of the loan and it is essential to establish whether the lending banks informed the client of the evolution of IRPH compared to other indices, like EURIBOR, etc.
Finally, it is worth highlighting the court’s interpretation of the effects that a possible nullification of the IRPH clause must have. In this sense, the court contends that it is the Spanish courts that must decide whether, as an essential element of the contract, the abolishment of the IRPH clause would allow the contract to continue existing or it could mean the full revocation of the contract.
In the event the Spanish courts confirms that the loan agreement can continue to exist if the IRPH clause is declared null and void, we would be in a scenario in which consumers could claim all the interest paid up to date. We understand a mortgage loan contract without interest is totally possible, so the cancellation of the IRPH clause does not imply the nullity of the whole contract and therefore we believe all the interest paid should be refunded.
Otherwise, if the courts decide that the contract could not continue to exist, the complete nullity of the contract would imply very harmful effects for the consumer and the Spanish judges have the power to set a substitute interest rate, which we understand should be the one set as a substitute in the mortgage loan deed itself, normally the EURIBOR.
In summary, the ECJ has declared that the Spanish courts must make sure that the IRPH clause was included with all the necessary information and if otherwise, urges the Spanish judges to declare it null and void; or exchange it for another interest rate, which would mean significant refunds of money.
All such cases require specialised legal study and advice, so if your mortgage is referenced to IRPH, contact us and we will inform you of the steps to be followed, claim without risk and without costs, as we offer a no win no fees policy.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
C/Diana 19, 2º D, 03700 Denia (Alicante) Spain
Tel. +34 966-426-185
Fax +34 965-784-471
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