Judgment;Summary — ECLI:EU:C:2020:578
Date: 2020-07-16
Language of the case: Spanish
Court formation: Fourth Chamber
Subject matter: Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Spain

Summary C-224/19 — 1 
Case C-224/19 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
14 March 2019 
Referring court: 
Juzgado de Primera Instancia No 17 de Palma de Mallorca 
Date of the decision to refer:  
12 March 2019 
Applicant: 
CY 
Defendant: 
Caixabank, S.A. 
  
Subject matter of the main proceedings 
Action brought in ordinary proceedings seeking (a) the declaration of invalidity on 
grounds of unfairness of two clauses (a clause requiring the borrower to pay the 
costs of formalising and cancelling the mortgage, and a clause requiring the 
borrower to pay an arrangement fee) contained in a mortgage loan agreement 
concluded between a bank and a consumer, and (b) the reimbursement of the 
amounts paid by the consumer on the basis of each, together with interest thereon. 
Subject matter and legal basis of the request for a preliminary ruling 
Interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in 
consumer contracts (OJ 1993 L 95, p. 29) (‘Directive 93/13’ or ‘the directive’). 
Reference for a preliminary ruling under Article 271 TFEU. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
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Questions referred 
(1) The Court of Justice is asked whether, in the light of Article 6(1) of 
Directive 93/13, a clause declared invalid on grounds of unfairness which 
attributes to the borrower all the formalisation, novation or cancellation 
costs of a loan agreement secured by a mortgage may be varied as regards 
its restitutory effects after it has been declared invalid on grounds of 
unfairness. 
(2) The Court of Justice is asked whether, in the light of Article 6(1) of 
Directive 93/13, national case-law establishing that, after the declaration of 
invalidity of a clause attributing to the borrower all the formalisation, 
novation or cancellation costs of a loan agreement secured by a mortgage, 
notarial and management expenses must be borne equally by the lender 
and borrower may be regarded as variation by the courts of the declaration 
of invalidity of an unfair term and therefore contrary to the principle set out 
in Article 6(1) of Directive 93/13 that unfair terms are not binding. 
3) The Court of Justice is asked whether, in the light of Article 6(1) of 
Directive 93/13, national case-law establishing that, after the declaration of 
invalidity of the clause attributing to the borrower all the formalisation, 
novation or cancellation costs of a loan agreement secured by a mortgage, 
the borrower must also be required to pay the costs involved in valuing the 
property and the tax on the establishment of the mortgage deriving 
from formalisation of the loan infringes the principle that consumers are 
not bound by terms found to be unfair, and whether it is contrary to 
Article 3(2) of Directive 93/13 to place on the borrower the burden of 
proving that he was not permitted to provide his own valuation of the 
property. 
4) The Court of Justice is asked whether, in the light of Article 6(1) of 
Directive 93/13, it is contrary [to that directive] for national case-law, after 
the declaration of invalidity of a clause attributing to the borrower all the 
creation, novation or cancellation costs of a loan agreement secured by a 
mortgage, to establish that that clause can continue to have effects for the 
borrower where it makes modifying novations or cancels the mortgage, in 
that the borrower must continue to pay the costs resulting from such 
modification or cancellation of the mortgage, and whether the attribution 
of those costs to the borrower entails an infringement of the principle that 
consumers are not bound by terms found to be unfair. 
5)  The Court of Justice is asked whether, in the light of Article 6(1) in 
conjunction with Article 7(1) of Directive 93/13, national case-law which 
partially excludes the restitutory effect of the declaration of invalidity on 
grounds of unfairness of a clause attributing to the borrower all the 
formalisation, novation or cancellation costs of a loan agreement secured by 
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a mortgage is incompatible with the deterrent effect on the seller or supplier 
provided for in Article 7(1) of Directive 93/13. 
6)  The Court of Justice is asked whether, in the light of the principle 
established in the case-law of the Court of Justice that clauses declared 
invalid cannot be varied, and in the light of the principle that unfair terms 
are not binding set out in Article 6 of the directive, national case-law which 
varies the restitutory effects after the declaration of invalidity of a clause 
attributing to the borrower all the formalisation, novation or cancellation 
costs may be regarded as an infringement, based on the interests of the 
borrower. 
7)  The Court of Justice is asked whether, in the light of the Article 3(1) and (2) 
of Directive 93/13, national case-law establishing that an ‘arrangement fee’ 
clause automatically satisfies the transparency test may infringe the 
principle of the reversal of the burden of proof established in Article 3(2) of 
the directive, since the seller or supplier is not required to prove that it 
provided information in advance or that the clause was individually 
negotiated. 
8)  The Court of Justice is asked whether it is contrary to Article 3 of Directive 
93/13 and the case-law of the Court of Justice for a consumer to be regarded 
under national case-law as being automatically aware that it is normal 
practice for financial institutions to charge an arrangement fee, and, 
accordingly, for a lender not to be required to provide any evidence to 
establish that the clause was individually negotiated, or whether, on the 
contrary, and in any event, a lender must establish that that clause was 
individually negotiated. 
9) The Court of Justice is asked whether, in the light of Articles 3 and 4 of 
Directive 93/13 and the case-law of the Court of Justice, it is contrary to that 
directive for national case-law to establish that it is not possible to assess 
the unfair nature of the ‘arrangement fee’ clause under Article 4(2) 
since it relates to the definition of the main subject matter of the 
contract, or, on the contrary, whether such an arrangement fee must be 
regarded as forming not part of the contract price but an ancillary charge, 
and therefore the national court must be allowed to review its transparency 
and/or content in order to determine whether it is unfair in accordance with 
national law. 
10)  The Court of Justice is asked whether, in the light of Article 4(2) of 
Directive 93/13, which was not transposed by [Ley 7/1998, de 13 de abril, 
sobre condiciones generales de la contratación (Law 7/1998 of 13 April on 
general contractual conditions)] into the Spanish legal system, it is contrary 
to Article 8 of Directive 93/13 for a Spanish court to rely upon and apply 
Article 4(2) of that directive when that provision has not been transposed 
into Spanish law in accordance with the wishes of the legislature — which 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
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sought a comprehensive level of protection in relation to all the terms that a 
seller or supplier may insert into a consumer contract, including those which 
relate to the main subject matter of the contract, even if those terms were 
drafted in plain, intelligible language — if the view is taken that an 
‘arrangement fee’ clause constitutes the main subject matter of the loan 
agreement. 
11)  The Court of Justice is asked whether, in the light of Article 3(1) of 
Directive 93/13, the ‘arrangement fee’ clause, when it has not been 
individually negotiated and the financial entity has not established that 
it corresponds to services actually provided and to costs incurred, gives 
rise to a significant imbalance between the rights and obligations of the 
parties to the contract and must be declared invalid by the national court. 
12)  The Court of Justice is asked whether, in the light of Article 6(1) in 
conjunction with Article 7(1) of Directive 93/13, a costs order against the 
seller or supplier — resulting from proceedings in which a consumer has 
brought actions for a declaration of invalidity on grounds of unfairness of 
terms in a contract concluded with him and in which the Courts have 
declared the term invalid on the ground that it is unfair — is a necessary 
consequence of the principle that unfair terms are not binding and the 
principle of deterring the seller or supplier, where those actions for a 
declaration of invalidity are upheld by the national court, regardless of 
whether the repayments ordered by the judgment have actually been made, it 
being understood, moreover, that the main claim is for a declaration of 
invalidity of the terms and that the repayment of amounts paid is merely an 
ancillary claim inherent in the former. 
13)  The Court of Justice is asked whether, in the light of the principle that unfair 
terms are not binding and the principle of the deterrent effect of Directive 
93/13 (Articles 6(1) and 7(1)), the restitutory effects deriving from a 
declaration of invalidity on grounds of unfairness of a term in a contract 
concluded between a consumer and a seller or supplier may be limited in 
time, by the upholding of an objection that the action for repayment of 
the amount paid is time-barred, even though an action for a declaration 
that a term is invalid ab initio on the ground that it is unfair is not 
subject to any limitation period under national legislation. 
Provisions of EU Law relied upon 
Directive 93/13, twelfth, thirteenth, nineteenth, twentieth and twenty-fourth 
recitals, and Articles 1(1), 3(1), 4(1) and (2), 5, 6(1), 7(1) and (2) and 8. 
The following case-law of the Court of Justice is also relied upon: 
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Judgment of 6 October 2009, Asturcom Telecomunicaciones, C-40/08, 
EU:C:2009:615. Unfairness of financial terms and principle that unfair terms are 
not binding. 
Judgment of 3 June 2010, Caja de Ahorros y Monte de Piedad de Madrid, 
C-484/08, EU:C:2010:309. States may legislate to provide protection to 
consumers going beyond that established in the directive. The Spanish regulations 
provide for a level of protection that is actually higher and includes price 
monitoring. 
Order of 16 November 2010, Pohotovosť, C-76/10, EU:C:2010:685. Review by a 
court of its own motion. 
Judgment of 15 March 2012, Pereničová and Perenič, C-453/10, EU:C:2012:144. 
Continued existence of a contract containing unfair terms following a declaration 
of invalidity. 
Judgment of 26 April 2012, Invitel, C-472/10, EU:C:2012:242. Principle that 
unfair terms are not binding. Future effects of passing on costs to a consumer 
following a declaration that a term is invalid on the ground that it is unfair. 
Judgment of 14 June 2012, Banco Español de Crédito, C-618/10, EU:C:2012:349. 
Principle that unfair terms are not binding. 
Judgment of 21 February 2013, Banif Plus Bank, C-472/11, EU:C:2013:88. 
Review by a court of its own motion of all the terms of the contract, not only the 
ones at issue. Adversarial principle. 
Judgment of 14 March 2013, Aziz, C-415/11, EU:C:2013:164. Stay of enforcement 
by the court hearing a case relating the invalidity of the term. The list in the 
directive is indicative and non-exhaustive. 
Judgment of 21 March 2013, RWE Vertrieb, C-92/11, EU:C:2013:180. Principle 
that unfair terms are not binding. Deterrent effect. 
Judgment of 30 May 2013, Asbeek Brusse and de Man Garabito, C-488/11, 
EU:C:2013:341. Prohibition on varying a term declared invalid. 
Judgment of 16 January 2014, Constructora Principado, C-226/12, 
EU:C:2014:10. Imbalance between the rights and obligations of the parties. 
Judgment of 30 April 2014, Kásler and Káslerné Rábai, C-26/13, 
EU:C:2014:282. Multi-currency loan secured by a mortgage. Main subject matter 
of the contract. Definition of charge. Interpretation of the consequences of a term. 
Judgment of 17 July 2014, Sánchez Morcillo and Abril García, C-169/14, 
EU:C:2014:2099. Stay of enforcement due to the existence of unfair terms. 
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Judgment of 21 January 2015, Unicaja Banco and Caixabank, C-482/13, 
C-484/13, C-485/13 and C-487/13, EU:C:2015:21. Mortgage enforcement. Effect 
of invalidity of unfair term and principle that unfair terms are not binding. 
Judgment of 26 February 2015, Matei, C-143/13, EU:C:2015:127. Risk fee 
equivalent to the arrangement fee. Allows for finding of unfairness. Not an 
essential element of the contract, but an ancillary charge. Possibility of review of 
transparency and content in accordance with national law. 
Judgment of 3 September 2015, Costea, C-110/14, EU:C:2015:538. Consumer 
protection. Extension of the concept of consumer. 
Judgment of 29 October 2015, BBVA, C-8/14, EU:C:2015:731. Mortgage 
enforcement. Unfair terms and effects. 
Judgment [of 18 February 2016, Finanmadrid EFC, C-49/14, EU:C:2016:98]. 
Unfairness of terms and effects. 
Judgment of 14 April 2016, Sales Sinués and Drame Ba, C-381/14 and C-385/14, 
EU:C:2016:252. Collective action for an injunction relating to a floor clause. 
Invalidity and effects. 
Judgment of 21 April 2016, Radlinger and Radlingerová, C-377/14, 
EU:C:2016:283. Review by a court of its own motion of unfair terms in the course 
of proceedings. Principle that unfair terms are not binding. 
Judgment of 28 July 2016, Tomášová, C-168/15, EU:C:2016:602. State liability 
for the damage caused by an infringement of EU law. Termination of a contract 
and subsequent claim before a court. 
Judgment of 21 December 2016, Gutiérrez Naranjo and Others, C-154/15, 
C-307/15 and C-308/15, EU:C:2016:980. Principle that unfair terms cannot be 
varied. Principle that unfair terms are not binding. Deterrent effect. 
Judgment of 26 January 2017, Banco Primus, C-421/14, EU:C:2017:60. 
Accelerated repayment. Res judicata. Non-modification of the accelerated 
repayment clause. 
Judgment of 20 September 2017, Andriciuc and Others, C-186/16, 
EU:C:2017:703. Multi-currency mortgage. Essential element of contract. 
Assessment of unfairness, non-application of Article 4(2) of the directive. 
Judgment of 7 December 2017, Banco Santander, C-598/15, EU:C:2017:945. 
Invalidity of terms in extrajudicial mortgage enforcement proceedings. 
Judgment of 31 May 2018, Sziber, C-483/16, EU:C:2018:367. Multi-currency 
mortgage. Essential element of contract. Assessment of unfairness, non-
application of Article 4(2) of the directive. 
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Judgment of 7 August 2018, Banco Santander and Escobedo Cortés, C-96/16 and 
C-94/17, EU:C:2018:643. Non-assignment of debts save where this is provided for 
in the contract and where there is knowledge of the assignment. Disproportionate 
default interest. Default interest not binding, application of ordinary interest. 
Judgment of 20 September 2018, OTP Bank and OTP Faktoring, C-51/17, 
EU:C:2018:750. Impossibility of concluding an agreement to remedy invalidity. 
Provisions of national law relied upon 
Texto refundido de la Ley General para la Defensa de los Consumidores y 
Usuarios (Consolidated text of the General Law for the protection of 
consumers and users), approved by Royal Legislative Decree 1/2007 of 16 
November (‘the TRLGDCU’). 
Article 8. Basic rights of consumers and users. 
The following are basic rights of consumers and users: 
... 
(b) Protection of their legitimate economic and social interests, in particular 
from unfair commercial practices and the inclusion of unfair terms in contracts. 
(c) Compensation for damages and redress for harm suffered.  
(d) Provision of correct information regarding different goods or services and 
education and transmission of knowledge as to their proper use, consumption or 
enjoyment. 
... 
(f) Protection of their rights through effective procedures, especially in 
situations where they are in weak or subordinate positions or are unable to defend 
themselves properly. 
Article 60. Pre-contractual information. 
1. Before the consumer or user is bound by a contract or any corresponding 
offer, the seller or supplier shall provide to him in plain intelligible language, 
unless it is clear from the context, relevant, correct and sufficient information 
concerning the main features of the contract, in particular its legal and financial 
terms. 
2. The obligations to provide information regarding the goods or services, as 
established in this and other applicable laws, shall be relevant, as will: 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
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(a) The main characteristics of the goods or services, to the extent appropriate 
to the medium used and to the goods or services. 
... 
(c) The total price inclusive of all taxes and charges. Where the nature of the 
goods or services is such that the price cannot reasonably be calculated in 
advance or is subject to the drawing up of a budget, the manner in which the price 
is to be calculated, as well as all additional freight, delivery or postal charges or, 
where those charges cannot reasonably be calculated in advance, the fact that 
such additional charges may be payable.  
All information provided to the consumer and user concerning the price of goods 
or services, including advertising, shall state the total price, with a breakdown, 
where appropriate, of the amount of any increases or discounts that may be 
applicable, expenses that may be passed on to the consumer or user and 
additional expenses for additional services, financing, use of different payment 
methods or other similar payment terms. 
(d) The arrangements for payment, delivery and performance, the date by which 
the seller or supplier undertakes to deliver the goods or to perform the service. 
... 
4. Pre-contractual information shall be provided to the consumer and user free 
of charge and at least in Spanish. 
Article 80. Requirements of terms not individually negotiated. 
1. In consumer contracts which use terms not individually negotiated, 
including those drafted by public authorities and the entities and undertakings 
which depend on them, such terms must comply with the following requirements: 
(a) Precise, clear and simple wording, enabling immediate understanding 
without reference to texts or documents which are not provided before or at the 
time of conclusion of the contract and which, in any event, must be expressly 
referred to in the contract document. 
(b) Accessibility and legibility, so that the consumer or user may know of their 
existence and content before the contract is concluded. Under no circumstances 
shall this requirement be deemed to be fulfilled if the size of the font used in the 
contract is smaller than one and a half millimetres or a lack contrast with the 
background makes it difficult to read. 
(c) Good faith and fair balance between the rights and obligations of the 
parties, which, under all circumstances, excludes the use of unfair terms. 
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2. If individual actions are brought, in the event of uncertainty as to the 
meaning of a term, the interpretation most favourable to the consumer shall 
prevail. 
Article 82. Concept of unfair terms. 
1. All clauses not negotiated individually and all practices not expressly 
agreed which, contravening the requirements of good faith, give rise, in a manner 
detrimental to the consumer or user, to a significant imbalance in the rights and 
obligations of the parties arising under the contract, shall be regarded as unfair 
terms. 
2. The fact that certain aspects of a term or one specific term have been 
individually negotiated shall not exclude the application of the rules on unfair 
terms to the rest of the contract. 
A seller or supplier who claims that a particular term has been individually 
negotiated shall bear the burden of proof in this respect. 
3. The unfairness of a contractual term shall be assessed taking into account 
the nature of the goods or services for which the contract was concluded and by 
referring to all the circumstances attending the conclusion of the contract and to 
all the other terms of the contract or of another contract on which it is dependent. 
4. Notwithstanding the foregoing paragraphs, terms shall always be regarded 
as unfair if, in accordance with the provisions of Articles 85 to 90, both inclusive, 
they: 
(a) make the contract dependent on the wishes of the supplier or seller, 
(b) limit the rights of the consumer or user, 
(c) determine that there shall be no contractual reciprocity, 
(d) impose disproportionate guarantees on the consumer or user or wrongly 
impose the burden of proof upon him, are disproportionate in relation to the 
formation or performance of the contract, or 
… 
 (f)  contravene the rules on jurisdiction and applicable law. 
Article 83. Invalidity of unfair terms and continued existence of the contract. 
Unfair terms shall automatically be void and deemed not to have formed part of 
the contract. To that end, the court, after consulting the parties, shall declare the 
invalidity of unfair terms included in the contract, which shall nevertheless 
continue to bind the parties on the same terms if it is capable of continuing in 
existence without the unfair terms. 
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Article 87. Terms that are unfair by reason of lack of reciprocity. 
Terms that result in a lack of reciprocity in the contract, contrary to good faith 
and to the detriment of the consumer and user are unfair, in particular: 
... 
5. Clauses providing for the rounding up of time consumed or of the price of 
goods or services, or any other clause that envisages payment for goods or 
services which have not actually been used or consumed. 
In those sectors in which the commencement of the service entails a cost to 
undertakings or sellers or suppliers which is inextricably linked but is not passed 
on in the price, the separate billing for such costs shall not be considered unfair, 
where they are appropriate to the service actually provided. 
6. Clauses which impose onerous or disproportionate conditions on the 
exercise of rights granted to the consumer and user under the contract, 
particularly in the case of contracts for the supply of goods or services on an 
ongoing or continuous basis, or impose excessively long durations, waive or 
restrict the right of the consumer and user to terminate such contracts by 
excluding such right or interfering with it or making it difficult to exercise such 
right using the agreed procedures, as is the case where terms introduce 
formalities that are different from those required for entering into a contract or 
stipulate that amounts paid in advance are to be forfeited or that services not 
actually provided are to be paid for, or which confer on the undertaking the 
unilateral right to apply any contractual penalties or specify compensation that 
does not correspond to the losses actually suffered. 
Article 89. Unfair terms affecting the conclusion and performance of the contract. 
The following shall, in any event, be regarded as unfair terms: 
... 
3. The imposition on the consumer of documentation and handling charges, 
when these are legally the responsibility of the seller or supplier. In particular, in 
property sales contracts: 
(a) A clause which requires a consumer to bear the costs deriving from the 
preparation of titles which by their nature are the responsibility of the seller or 
supplier (new construction, property held in co-ownership, mortgages to finance 
construction or the division and cancellation thereof). 
... 
(c) A clause which requires a consumer to pay taxes for which the seller or 
supplier is the person liable. 
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... 
4. The imposition of unsolicited supplementary or additional goods or services 
on the consumer or user. 
5. Price increases in respect of additional services, financing, time extensions, 
surcharges, compensation or penalties that do not correspond to additional 
services that can be accepted or rejected in each instance and that are separately 
and clearly expressed. 
6. The express refusal to comply with the obligations or duties incumbent on 
the seller or supplier, with automatic referral to administrative or judicial claims 
proceedings. 
... 
8. The provision for agreements waiving or making settlements in respect of 
the right of a consumer or user to choose a competent notary according to the 
law, for the purpose of drawing up the public instrument in which the contract 
must initially or subsequently be formalised. 
Código Civil (Spanish Civil Code) (‘the CC’) 
Under Article 1258 of the CC, ‘Contracts are concluded by simple consent and 
from that point are binding, not only as to the performance of the matters 
expressly agreed, but also as to all consequences which, by their nature, are in 
accordance with good faith, custom and the law’. 
Under Article 1303 of the CC: ‘When an obligation has been declared void, the 
contracting parties must restore to one another those things that formed the 
subject matter of the contract, together with the profits derived therefrom, and the 
price together with interest, subject to the provisions of the following articles’. 
Ley 7/1998, de 13 de abril, sobre condiciones generales de la contratación 
(Law 7/1998 of 13 April on General contractual conditions) (‘the LCGC’)  
Article 7 of the LCGC states that: 
‘The following general terms shall be deemed not to be included in the contract: 
(a) those of which the consumer has not had genuine opportunity to take full 
cognisance before the conclusion of the contract or that have not been signed, 
where appropriate, as provided in Article 5; 
(b) terms that are illegible, ambiguous, obscure or incomprehensible, except in 
the case of the latter, if the contracting party has expressly accepted them in 
writing and they comply with the specific rules concerning transparency of 
contractual clauses in that sector.’  
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Pursuant to Article 8 of the LCGC: 
‘1. General conditions that infringe the provisions of this Law or any other rule 
ordering or prohibiting certain conduct, to the detriment of a party to the 
contract, shall automatically be void, save in so far as they make separate 
provision for cases of breach. 
2. In particular, where a contract has been concluded with a consumer, general 
conditions that are unfair shall be void ...’. 
Orden de 12 de diciembre de 1989, sobre tipos de interés y comisiones, 
normas de actuación, información a clientes y publicidad de las Entidades de 
crédito (Order of 12 December 1989 on interest rates and fees, performance 
standards, information for customers and advertising of credit institutions). 
Chapter I thereof, relating to interest rates, fees and obligations to provide 
information, governs fees as follows: Credit institutions shall be free to determine 
the fees for the operations or services which they provide. 
However, credit institutions shall establish and make public, following 
registration with the Bank of Spain, the rates of chargeable fees and expenses, 
together with an indication of the situations in which and, where appropriate, the 
frequency with which they will be applicable, and cannot impose rates or amounts 
higher than those set out therein or for purposes not referred to therein. 
Under no circumstances is it possible to impose fees or costs for services not 
agreed or requested by the customer. The fees or costs charged must correspond 
to services actually provided or to costs incurred. 
Likewise, Circular 8/1990, de 7 de septiembre, sobre transparencia de las 
operaciones y protección de la clientela (Circular 8/1990 of 7 September on 
transparency of transactions and customer protection); Orden 
EHA/2899/2011, de 28 de octubre, de transparencia y protección del cliente 
de servicios bancarios (Order EHA/2899/2011 of 28 October on transparency 
and protection of banking services customers), and Ley 2/2009, de 31 de 
marzo, por la que se regula la contratación con los consumidores de 
préstamos o créditos hipotecarios y de servicios de intermediación para la 
celebración de contratos de préstamo o crédito (Law 2/2009 of 31 March on 
mortgage loan or credit agreements with consumers and intermediary 
services for the conclusion of loan or credit agreements) contain provisions 
similar to those previously referred to in the Order of 12 December 1989. 
Real Decreto 1426/1989, de 17 de noviembre, por el que se aprueba el arancel 
de los notarios (Royal Decree 1426/1989 of 17 November approving the table 
of notarial charges). 
This provision establishes that the obligation to pay the charges falls to the 
persons who required the notarial duties or services and, where appropriate, to the 
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persons concerned according to the substantive and fiscal provisions and, if there 
are several such persons, to all of them jointly. 
Real Decreto 1427/1989, de 17 de noviembre, por el que se aprueba el arancel 
de los registradores de la propiedad (Royal Decree 1427/1989 of 17 November 
approving the table of property registrars’ charges) 
This provision imposes the payment obligation on the person or persons for whom 
the right is directly registered or entered, it being payable also by the person who 
presented the document to the person seeking the service in question or for whom 
the right is registered or the certification is sought. In the event that registration is 
sought by the person who transfers the right or who has an interest in securing the 
right to be registered, the fee must be paid by the transferor or the interested party. 
Brief summary of the facts and the main proceedings 
1 Before a notary, on 16 May 2000 the parties entered into a loan agreement for an 
amount of EUR 81 136.63 secured by a mortgage on the purchased property, 
which would become the habitual residence of the borrower. 
2 That agreement included a clause relating to costs, according to which the 
borrower assumed: 
– the costs involved in valuing the mortgaged property; 
– the costs and taxes resulting from the public instrument in which the agreement 
was formalised; 
– the costs of the measures and contracts formalised in the instrument, the costs 
of registering it in the Property Registry, and the costs arising from completion 
of all the formalities required to lodge that instrument and the instrument 
cancelling it at the Property Registry; 
– the lawyers’ fees in the event of a claim in the courts, even if their intervention 
is not mandatory. 
3 Likewise, the agreement included another clause which required the borrower to 
pay an arrangement fee of 1% of the loan capital, amounting to EUR 811.37. 
4 On 22 March 2018, the borrower brought proceedings before the referring court 
seeking (a) the declaration of invalidity on grounds of unfairness of those clauses 
and (b) an order that the bank reimburse to the borrower the amounts paid under 
the aforementioned clauses, together with interest at the statutory rate accrued 
thereon, for each of the following: 
– notarial fees; 
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– costs arising from registration of the mortgage as a right over immovable 
property in the Property Registry; 
– management costs; 
– costs involved in valuing the property; 
– payment of the Impuesto de Actos Jurídicos Documentados (Stamp Duty), ‘the 
IAJD’; 
– the arrangement fee. 
Principal submissions of the parties to the main proceedings 
5 The bank claims that the terms at issue are fully valid. It maintains (a) that they 
were individually negotiated with the borrower and not imposed by the financial 
institution; (b) that they are simple and easily understood; (c) that the public 
instrument was granted in the presence of a notary public who certifies to its 
content as well as to the fact that the borrower was informed of the content of the 
instrument and; (d) that the terms satisfy the transparency tests laid down by EU 
legislation on the protection of consumers and users. 
6 In particular, in relation to the clause concerning costs, it asserts that the tax 
legislation requires the borrower to pay the IAJD, with the result that under no 
circumstances may the bank be required to reimburse that amount. 
7 In relation to the arrangement fee, the bank argues that that fee, together with 
ordinary interest, forms part of the price of the loan and is excluded from the 
review of unfairness carried out by the courts and that the fees are set out in a 
clear and transparent way, since the reasons for charging those fees may be 
ascertained simply by reading them. 
8 The borrower takes the view that that those terms are unfair under the national 
and EU provisions on consumer protection and requests reimbursement of the 
amounts paid under them, since he is of the view that he should not be bound by 
those terms. 
9 More specifically, he puts forward the following arguments: 
– in relation to the payment of the costs arising from the intervention of the 
notary, the borrower takes the view that they should not be borne by him, since 
formalisation of the loan agreement through a public instrument is a means 
imposed by the bank as a prerequisite for registering the mortgage right in the 
Property Registry; he also argues that the loan agreement could have been 
formalised by any other means accepted by law, such as a private contract; 
– as regards the costs arising from registration of the mortgage as a right over 
immovable property in the Property Registry, he takes the view that those costs 
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should have been borne by the bank as the party interested in establishing a 
mortgage as enforceable security in the event of non-payment of the loan; 
– as regards the valuation costs, he takes the view that they should have been 
borne by the bank, since the legislation requires the determination of an 
estimated value to serve as a reference value in any mortgage enforcement 
proceedings; 
– as regards the IAJD, he takes the view that it must be borne by the bank 
because it is a statutory requirement for registration of the mortgage in the 
Property Registry and because the mortgage is a right over immovable property 
which is registered in favour of the bank; 
– as regards the costs arising from the intervention of an agency, he takes the 
view that they should have been borne by the bank, since all the formalities 
were directed towards registering the mortgage in the Property Registry; he 
also emphasises that the agency was imposed and directly selected by the bank 
and that the consumer did not expressly engage it; 
– as regards the arrangement fee, he takes the view that it should not be paid for 
two main reasons: because the bank did not provide any service in 
consideration for his payment and because he was not informed of its existence 
before the loan was concluded. 
Brief summary of the reasons for the reference for a preliminary ruling 
The costs of formalising and cancelling the mortgage 
10 The referring court states that the courts have already declared invalid on the 
ground that it is unfair a clause imposing on the borrower the costs of formalising 
and cancelling a mortgage. Thus, the Civil Chamber of the Supreme Court ruled 
in its judgment of 23 December 2015 that, with regard to the tables of notarial and 
property registrars’ charges, the bank has the primary interest in the 
documentation and registration in the Property Registry of the instrument 
establishing the loan agreement secured by a mortgage, since the security is 
provided for the benefit of the lender and because registration of the mortgage 
establishes the right to obtain an enforcement order and to be able to have 
recourse to a special enforcement procedure. The Supreme Court considers that 
such a clause gives rise to a significant imbalance on the part of the consumer, 
which it would not have been reasonable for the consumer to accept in individual 
negotiations and which is also among the terms classified by law as unfair. 
Spanish case-law has also unanimously held that such clauses are characterised by 
their open wording and all-encompassing objective, thus demonstrating their lack 
of proportionality and reciprocity as regards the rights and obligations of the 
parties, which is sufficient in itself for those terms to be regarded as unfair. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
16  
11 However, there is no uniform case-law regarding the effects of that declaration of 
invalidity. Accordingly, it is worth noting the following judicial decisions: 
– Judgment of the Sala de lo Civil del Tribunal Supremo (Civil Chamber of the 
Supreme Court) of 15 March 2018: formalisation costs must be reimbursed to 
the borrower, apart from the IAJD paid by the borrower. 
– Judgment of the Sala de lo Contencioso-Administrativo del Tribunal Supremo 
(Chamber for Contentious Administrative Proceedings of the Supreme Court) 
of 16 October 2018: the restitutory effects must also include repayment to the 
borrower of the IAJD which he has paid. 
– Judgment of the Sala de lo Contencioso-Administrativo del Tribunal Supremo 
(Chamber for Contentious Administrative Proceedings of the Supreme Court) 
of 27 November 2018: corrects the earlier case-law and rules that the IAJD 
should not be repaid to the borrower. 
– Judgment of the Sala de lo Civil del Tribunal Supremo (Civil Chamber of the 
Supreme Court) of 23 January 2019: the valuation costs and the IAJD are the 
responsibility of the borrower; the notary and agency costs must be borne 
equally by the parties and the costs of registration in the Property Registry must 
be borne by the lender. 
12 The referring court raises a number of objections in relation to that case-law. 
Accordingly, it expresses uncertainties as to whether the Spanish courts are 
varying or modifying unfair terms by rejecting a claim for repayment of amounts 
paid in respect of certain costs, by carrying out an ex post allocation of costs 
between the bank and the consumer or by making an action for repayment of 
amounts paid subject to a limitation period, even though an action for invalidity is 
not subject to any time-bar and cannot be remedied. The referring court considers 
that that variation by the courts of the effects of the declaration of invalidity may 
be contrary to the principle that consumers are not bound by unfair terms 
(Article 6(1) of Directive 93/13) and may undermine the deterrent effect enshrined 
in Article 7(1) of that directive. In that regard, it relies on the case-law of the 
Court of Justice, more specifically on the judgments Asbeek Brusse and de Man 
Garabito, paragraph 44 of which states that Article 6(1) of Directive 93/13 must 
be regarded as a provision of equal standing to national rules which rank, within 
the domestic legal system, as rules of public policy, a finding that extends to all 
the provisions of the directive which are essential for the purpose of attaining the 
objective pursued by the provision, and of 26 January 2017, Banco Primus, 
C-421/14, EU:C:2017:60, in which it is stated in relation to that same provision 
that ‘it is a mandatory provision which aims to replace the formal balance which 
the contract establishes between the rights and obligations of the parties with an 
effective balance which re-establishes equality between them’. 
13 The solution proposed by the referring court in relation to the effects of the 
declaration of invalidity of such terms is set out below. The referring court takes 
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the view that once the term has been declared invalid and removed from the 
contract, it is necessary to proceed as if the term had never been included in the 
contract, and each of the costs under consideration must be borne by the party 
upon whom Spanish law imposes payment. The referring court is of the view that 
Article 6(1) of Directive 93/13 requires the restoration of the factual and legal 
situation which the consumer would have been in had that term not existed and 
that the bank must reimburse to the consumer the amounts which the bank would 
have been required to pay to the bank had there been no unfair term. It cites, in 
that regard, paragraph 34 of the judgment of the Court of Justice of 31 May 2018, 
Sziber, C-483/16, EU:C:2018:367, in which it is stated that a finding that a 
contractual clause is unfair must allow the restoration of the legal and factual 
situation that the consumer would have been in if that unfair term had not existed, 
by, inter alia, creating a right to restitution of advantages wrongly obtained, to the 
consumer’s detriment, by the seller or supplier on the basis of that unfair term.  
14 The referring court states that the restitutory effect deriving from Article 6(1) of 
Directive 93/13 does not correspond to the effect produced by Article 1303 of the 
Civil Code, since that national provision is applicable to benefits mutually 
provided between the parties to the contract and in this case the payments were 
made by the consumer to third parties (notary, property registrar, agent, valuer, 
etc.). However, the referring court takes the view that the situation in question is 
similar to that of unjust enrichment, because the bank has wrongly profited by 
avoiding costs which it was legally obliged to bear and which, by means of the 
unfair term, it passed on to the consumer. Where unjust enrichment is established, 
the person who has obtained an advantage is required to pay a sum of money to 
the person at whose expense the advantage was obtained. It states that the 
situation forming the subject matter of the main proceedings bears similarities 
with the concept of the making of undue payments, in accordance with 
Articles 1895 and 1896 of the Civil Code, in that the consumer has made an undue 
payment and the bank, even though it has not directly received that payment, has 
benefited therefrom, since the borrower, having wrongly made the payment, 
allowed the bank to avoid paying all or part of the amounts payable by it. 
15 Next, the referring court explains the specific solution it proposes in relation to 
each of the costs at issue. 
16 With regard to notarial and administrative costs, the referring court argues that it 
would have been reasonable, when concluding the contract, to make initial 
provision for the borrower and the bank to share the costs equally in order for that 
clause not to be declared invalid. It doubts that it is reasonable, once the term 
imposing all those costs on the borrower has been declared invalid, to establish a 
posteriori that the costs be equally distributed in that manner, as occurs in the 
most recent judgments of the Supreme Court, since the matter at issue at that stage 
is to determine the restitutory effects of the declaration that an unfair term is 
invalid. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
18  
17 With regard to valuation costs, the referring court states that the appeal courts 
reject reimbursement of those costs when the clause is declared invalid, since the 
consumer is the recipient of the loan and the offer of mortgage security is an 
essential legal requirement for obtaining that type of loan. It cites, in that regard, 
Article 5 of Ley 2/1981, de 25 de marzo, de Regulación del Mercado Hipotecario 
(Law 2/1981 of 25 March on the mortgage market), in the version resulting from 
the reform introduced in 2007, which provides that the loan or credit secured by 
mortgage may not exceed 60% of the estimated value of the mortgaged property. 
Those appeal courts maintain that it is the borrower who chooses to obtain the 
necessary financing through a loan agreement secured by a mortgage and that, 
consequently, he must prove the adequacy of the security offered to the financial 
institution, for which reason it is necessary to value the property. Accordingly, he 
must pay the valuation costs. 
18 The appeal courts also consider that the clause which imposes valuation costs on 
the borrower does not require the valuation to be carried out by the bank itself, 
since Article 3 of Law 2/1981 requires the banks to accept any property valuation 
supplied by the customer, provided that it is certified by an approved valuer; 
moreover, although the bank may carry out any checks it regards as appropriate 
concerning the valuation submitted by the customer, it cannot charge to him any 
costs or expenses for those checks. Reference is also made in those decisions on 
appeal to the fact that no evidence was taken, in the course of the judicial 
proceedings, to establish that the consumer was prevented from choosing his own 
valuer in order to reject repayment of that cost. 
19 In the light of the above case-law, the referring court asks whether or not such 
arguments constitute an unjustified reversal of the burden of proof to the detriment 
of the consumer, contrary to Article 3(2) of Directive 93/13, especially when in 
practically all cases the valuation has been carried out by entities which provide 
their services to or cooperate with the financial institutions, bearing in mind also 
that the valuation is a legal requirement for the admissibility of mortgage 
enforcement proceedings. 
20 As regards the mortgage cancellation costs, the most recent rule derived from the 
case-law of the Supreme Court, contained in the judgment of 23 January 2019, 
indicates that, since the mortgage security is registered in favour of the lender 
bank, it is for the bank to pay the costs occasioned by registration of the mortgage 
loan agreement, while registration of the instrument of cancellation releases the 
charge and is accordingly registered in favour of the borrower, and is thus a cost 
to be borne by him. 
21 The referring court considers, however, that when analysing the consequences of 
the declaration of invalidity of the unfair term in the light of the principle that 
consumers are not bound by unfair terms, and bearing in mind that the declaration 
that the term is unfair covers all the costs both of establishing and of cancelling 
the mortgage, it is not reasonable to make that distinction between the costs of 
registering and cancelling the mortgage, when a mortgage is, under Spanish 
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property law, a right over immovable property created by registration, which is 
brought into existence or extinguished in the Property Registry. It also doubts that 
it is reasonable for the borrower to assume the costs of cancelling a charge which 
he has not requested and the creation of which exclusively benefited the 
mortgagee, in view of the implications, for subsequent transfers of ownership of 
the property, arising from the fact that unless registration of the mortgage is 
cancelled, the property remains registered as a mortgaged property. 
The arrangement fee 
22 The referring court states that almost all the appeal courts found that the clause 
imposing on a borrower the payment of an arrangement fee was unfair because 
such a fee (a) did not correspond to any actual and genuine consideration provided 
by the bank, (b) was arbitrary and not proportional, and (c) failed the review of 
content and transparency. More specifically, it is pointed out that, although 
Article 87(5) of the TRLGDCU allows the seller or supplier to charge the 
consumer for costs not passed on in the price, that cost must be proportional to the 
expenditure actually incurred or service actually provided, since the balance 
between benefits referred to in Article 80 of the TRLGDCU would otherwise be 
disrupted. It is also stated that such proportionality does not exist where 
arrangement fees are concerned, since the bank’s remuneration consists 
exclusively in the interest accruing on the loan capital and there is no justification 
for the lender to be paid the arrangement fee in addition to that interest. It is also 
stated that the existence of banking legislation governing the arrangement fee does 
not prevent application of the LCGC or the TRLGDCU. 
23 Contrary to that rule of case-law, the Civil Chamber of the Supreme Court stated 
in its judgment of 23 January 2019 that the arrangement fee forms part of the price 
freely determined by the bank for the services it provides and does not constitute 
the passing-on of an expense. The rule applied in that judgment is based on the 
following considerations: (a) requiring a bank to provide evidence in each case 
that the amount of the arrangement fee is ‘proportionate’ to the cost incurred by it 
in granting the loan would involve serious practical problems, mainly due to the 
existence of fixed costs which it is difficult to pass on in each transaction; (b) 
providing such evidence would prevent the amount being determined in advance, 
with the result that a customer would be unable to ascertain that amount before 
requesting a loan; (c) fixing the amount of the arrangement fee in advance is an 
unavoidable requirement of the rules governing transparency in that type of 
banking operation; (d) as a substantial element of the price of the loan, the clause 
establishing the arrangement fee is excluded from the review of the substantive 
content of the agreement under Article 4(2) of Directive 93/13 — an article which 
the Supreme Court regards as having been transposed into Spanish law by the 
replacement of the expression ‘fair balance of considerations’ with ‘significant 
imbalance in the rights and obligations’ in the General Law for the protection of 
consumers and users; (e) the arrangement fee constitutes, together with ordinary 
interest, one of the two main payments which the borrower must make for the 
grant and enjoyment of the loan; (f) the fact that some banks choose not to charge 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-224/19 
 
20  
an arrangement fee only means that, in the exercise of the freedom to conduct a 
business, they have limited the price of their service to the collection of ordinary 
interest, but it does not mean that it is unfair to choose to divide that price into an 
arrangement fee, charged once when the loan is granted, and ordinary interest, 
charged for the duration of the loan, and; (g) the transparency of that clause is 
established because it is general knowledge among consumers that, in a large 
majority of mortgage loans, banks charge an arrangement fee in addition to 
ordinary interest, banks are also obliged to inform potential borrowers of that fee 
and, in fact, it is usually one of the points referred to in banks’ advertising; the 
transparency of the clause is also demonstrated by the fact that it is a fee which 
must be paid in full at the commencement of the loan, which means that the 
average consumer pays particular attention to it as a substantial part of the 
economic sacrifice involved in obtaining the loan, and by the fact that the drafting, 
position and structure of the clause reveal that it constitutes an essential element 
of the contract. 
24 Finally, the referring court expresses doubts concerning the Supreme Court’s 
declaration that the arrangement fee forms part of the ‘definition of the main 
subject matter of the contract’ for the loan. Accordingly, on the one hand, the 
Supreme Court itself declared in its judgment of 14 December 2017, referring to 
the validity of a reference index used to calculate the variable interest rate, that the 
ordinary interest is the price of the loan agreement and that, consequently, terms 
referring to the method of setting ordinary interest affect the essential elements of 
the contract establishing its main subject matter. The referring court considers, 
however, that the arrangement fee is not used to calculate ordinary interest and 
that it is an additional element for determining the price of the service which has 
to be regarded as ancillary to the main subject matter of the contract. 
25 In any event, the referring court disputes that the LCGC transposed Article 4(2) of 
Directive 93/13 into Spanish law. For that reason, a Spanish court could, in any 
event, find that a term not individually negotiated and relating to the main subject 
matter of a contract is unfair, even in cases in which that term was drafted in 
advance by the seller or supplier in plain intelligible language. To substantiate that 
view, the referring court refers to the written observations submitted by the 
European Commission in the case referred for a preliminary ruling from the 
Juzgado de Primera Instancia No 38 de Barcelona (Court of First Instance No 38 
of Barcelona) (on the invalidity of the IRPH — Índice de Referencia de Préstamos 
Hipotecarios (Mortgage Loan Reference Index), used to calculate variable interest 
rates); in those written observations, the Commission states that the choice of the 
Kingdom of Spain not to transpose into Spanish Law Article 4(2) of Directive 
93/13 is consistent with Article 8 thereof, which authorises the Member States to 
adopt or retain more stringent provisions that ensure a maximum degree of 
protection for the consumer. Also according to the Commission, the Court of 
Justice has pointed out that the requirement for transparency of contractual terms, 
as set out in Article 4(2) of Directive 93/13, is consistent with the requirement for 
transparency laid down in Article 5 of that directive and that, as a consequence, 
the unfair nature of a contractual term may arise from wording which does not 
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comply with the requirement for drafting in plain intelligible language set out in 
Article 5 of Directive 93/13; accordingly, the review of transparency of a term 
forms part of the examination of unfairness under Article 3(1) of that directive. 
The limitation in time of the effects of the declaration of invalidity 
26 In this respect, the bank has put forward an objection that a debt recovery action is 
time-barred as regards repayment of amounts wrongly paid by a consumer under 
terms which the consumer is seeking to have declared invalid. 
27 Some decisions of the appeal courts hold that the nature of an action as one not 
subject to a limitation period should apply as regards the declaration of invalidity, 
but not as regards restitution of any items given, delivered or obtained under the 
void contract, since the restitutory effects must be subject to the usual limitation 
period for personal actions (Article 1964 of the Civil Code). If that rule is adopted 
in the main proceedings, in which the mortgage loan agreement is dated 16 May 
2000, the debt recovery action should be held to be time-barred and the claim for 
repayment of amounts wrongly paid should be dismissed. 
28 However, the referring court considers that an action for absolute nullity, as an 
action merely seeking a declaratory judgement, is not subject to any limitation 
period and must be regarded as an action which is not time-barred, since the 
passage of time cannot validate a contract which was void ab initio (quod ab initio 
vitiosum est non potest tractu temporis convalescere - that which is void in the 
beginning cannot gain strength by lapse of time). For that reason, the referring 
court considers that it is necessary for the Court of Justice to clarify whether the 
appeal courts’ interpretation of the objection that the action is time-barred is 
contrary to the principle that unfair terms are not binding contained in Article 6(1) 
of Directive 93/13 and to the deterrent effect provided for in Article 7(1) thereof.  
The relevance of the costs order against the bank 
29 The referring court considers that it is necessary to clarify whether a costs order 
against the seller or supplier should in any event be envisaged in court 
proceedings seeking a declaration that such terms are unfair, in the light of the 
principle that unfair terms are not binding and the principle of deterrence set out in 
Directive 93/13.