# C_2020297EN.01001501.xml

| 7.9.2020 | EN | Official Journal of the European Union | C 297/15 |
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7.9.2020

EN

Official Journal of the European Union

C 297/15

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Judgment of the Court (Fourth Chamber) of 16 July 2020 (requests for a preliminary ruling from the Juzgado de Primera Instancia No 17 de Palma de Mallorca, Juzgado de Primera Instancia e Instrucción de Ceuta — Spain) — CY v Caixabank SA (C-224/19), LG, PK v Banco Bilbao Vizcaya Argentaria SA (C-259/19)

(Joined Cases C-224/19 and C-259/19) (1)

(Reference for a preliminary ruling - Consumer protection - Directive 93/13/EEC - Articles 6 and 7 - Consumer contracts - Mortgage loans - Unfair terms - Term charging all of the costs of creating and cancelling a mortgage to the borrower - Effects of a declaration that those terms are void - Powers of the national court when dealing with a term considered to be ‘unfair’ - Award of costs - Application of national supplementary provisions - Article 3(1) - Assessment of the unfairness of contractual terms - Article 4(2) - Exclusion of terms relating to the main subject matter of the contract or the adequacy of the price and the remuneration - Condition - Article 5 - Obligation to draft contractual terms in plain, intelligible language - Costs - Limitation - Principle of effectiveness)

(2020/C 297/19)

Language of the case: Spanish

Referring court

Juzgado de Primera Instancia No 17 de Palma de Mallorca, Juzgado de Primera Instancia e Instrucción de Ceuta

Parties to the main proceedings

Applicants: CY (C-224/19), LG, PK (C-259/19)

Defendants: Caixabank SA (C-224/19), Banco Bilbao Vizcaya Argentaria SA (C-259/19)

Operative part of the judgment

| 1. | Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts are to be interpreted as meaning that, in the case where an unfair contractual term requiring the consumer to pay the full costs of creating and cancelling a mortgage is void, they preclude the national court from refusing to refund to the consumer the amounts paid pursuant to that term, unless any provisions of national law that may be applicable in the absence of that term require the consumer to pay all or part of those costs; |
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1.

Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts are to be interpreted as meaning that, in the case where an unfair contractual term requiring the consumer to pay the full costs of creating and cancelling a mortgage is void, they preclude the national court from refusing to refund to the consumer the amounts paid pursuant to that term, unless any provisions of national law that may be applicable in the absence of that term require the consumer to pay all or part of those costs;

| 2. | Articles 3, 4(2) and 5 of Directive 93/13 are to be interpreted as meaning that contractual terms falling within the concept of ‘main subject matter of the contract’ must be understood as being those that lay down the essential obligations of that contract and which, as such, characterise it. By contrast, terms ancillary to those which define the very essence of the contractual relationship cannot fall within that concept. The fact that an arrangement fee is included in the total cost of a mortgage loan does not mean that it is an essential obligation of that loan. In any event, a court of a Member State is required to review the clarity and intelligibility of a contractual term relating to the main subject matter of the contract whether or not Article 4(2) of that directive has been transposed into the legal order of that Member State; |
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2.

Articles 3, 4(2) and 5 of Directive 93/13 are to be interpreted as meaning that contractual terms falling within the concept of ‘main subject matter of the contract’ must be understood as being those that lay down the essential obligations of that contract and which, as such, characterise it. By contrast, terms ancillary to those which define the very essence of the contractual relationship cannot fall within that concept. The fact that an arrangement fee is included in the total cost of a mortgage loan does not mean that it is an essential obligation of that loan. In any event, a court of a Member State is required to review the clarity and intelligibility of a contractual term relating to the main subject matter of the contract whether or not Article 4(2) of that directive has been transposed into the legal order of that Member State;

| 3. | Article 3(1) of Directive 93/13 must be interpreted as meaning that a term in a loan agreement concluded between a consumer and a financial institution which requires the consumer to pay an arrangement fee may create, to the detriment of the consumer, a significant imbalance in the rights and obligations of the parties as arising from that agreement, contrary to the requirement of good faith, where the financial institution does not demonstrate that that fee corresponds to services actually provided and to costs it has incurred, which is a matter for the referring court to verify; |
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3.

Article 3(1) of Directive 93/13 must be interpreted as meaning that a term in a loan agreement concluded between a consumer and a financial institution which requires the consumer to pay an arrangement fee may create, to the detriment of the consumer, a significant imbalance in the rights and obligations of the parties as arising from that agreement, contrary to the requirement of good faith, where the financial institution does not demonstrate that that fee corresponds to services actually provided and to costs it has incurred, which is a matter for the referring court to verify;

| 4. | Articles 6(1) and 7(1) of Directive 93/13 must be interpreted as meaning that it is not contrary to those provisions for the bringing of an action to enforce the restitutory effects of a finding that an unfair contractual term is void to be subject to a limitation period, provided that the starting point and duration of that period do not make it practically impossible or excessively difficult for the consumer to exercise his right to seek such a refund; |
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4.

Articles 6(1) and 7(1) of Directive 93/13 must be interpreted as meaning that it is not contrary to those provisions for the bringing of an action to enforce the restitutory effects of a finding that an unfair contractual term is void to be subject to a limitation period, provided that the starting point and duration of that period do not make it practically impossible or excessively difficult for the consumer to exercise his right to seek such a refund;

| 5. | Articles 6(1) and 7(1) of Directive 93/13 and the principle of effectiveness must be interpreted as meaning that they preclude a system whereby the consumer may be made to bear part of the costs of proceedings depending on the level of the unduly paid sums which are refunded to him following a finding that a contractual term is void for being unfair, given that such a system creates a substantial obstacle that is likely to discourage consumers from exercising the right to an effective judicial review of the potential unfairness of contractual terms such as that conferred by Directive 93/13. |
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5.

Articles 6(1) and 7(1) of Directive 93/13 and the principle of effectiveness must be interpreted as meaning that they preclude a system whereby the consumer may be made to bear part of the costs of proceedings depending on the level of the unduly paid sums which are refunded to him following a finding that a contractual term is void for being unfair, given that such a system creates a substantial obstacle that is likely to discourage consumers from exercising the right to an effective judicial review of the potential unfairness of contractual terms such as that conferred by Directive 93/13.

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(1)  OJ C 246, 22.7.2019.

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