Opinion of the Advocate General — ECLI:EU:C:2018:201
Date: 2018-03-21
Language of the case: Spanish
Subject matter: Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Spain

summary proceedings, such as mortgage enforcement proceedings. 45. The principle of effectiveness requires that the provisions of EU law conferring rights on individuals are implemented effectively and that national procedural law must not render the application of EU law impossible or excessively difficult. (20) 46. Directive 2005/29 limits itself to imposing penalties on traders and does not as such guarantee the right to a contractual remedy for consumers. Unlike Article 6(1) of Directive 93/13 (21) which expressly provides as a legal consequence invalidation of the term in question or, where appropriate, invalidation of the entire contract, no such provision can be found in Directive 2005/29. 47. Importantly, Directive 2005/29 on the contrary specifically provides that application of the directive is to be without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract. (22) As pointed out by the Spanish Government, the finding that an unfair commercial practice exists therefore cannot create any direct legal effects on the contractual relationship between a trader and a consumer. (23) 48. Rather, the intended effect of Directive 2005/29 is the imposition of penalties on a trader who has taken recourse to an unfair commercial practice. Therefore, in order to effectively implement that directive, Member States are only under the obligation to provide for an appropriate system of penalties for traders who take recourse to unfair commercial practices. (24) 49. Spanish law provides that the existence of unfair commercial practices may be established via declaratory proceedings. These declaratory proceedings, however, do not have a suspensory effect on mortgage enforcement proceedings; nor can the court hearing the case adopt any interim measures. 50. This leaves the question whether it is necessary, in order to ensure the effectiveness of Directive 2005/29, either to enable courts to impose penalties in mortgage enforcement proceedings on the basis of the directive or to make provision for such proceedings to be stayed in the event of declaratory proceedings to establish the existence of an unfair commercial practice. 3. Application of Directive 2005/29 in mortgage enforcement proceedings 51. The Court has consistently held, with regard to the principle of effectiveness, that every case in which the question arises as to whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, before the various national bodies. (25) 52. The subject matter of mortgage enforcement proceedings is the execution of an enforceable instrument deriving from a mortgage. Such proceedings imply that the property concerned has previously been mortgaged as security and that the creditor has at its disposal an enforceable instrument, validated by a notarial instrument and registered at the land registry, upon which that creditor may rely in the event of the debtor’s failure to fulfil his repayment obligations as ultima ratio. Enforcement proceedings are meant to provide an expeditious and effective means to enforce legal rights on the basis of a validated enforceable instrument. (26) 53. In the interest of procedural economy, the Spanish legislature has limited the grounds of objection to mortgage enforcement. Apart from objections relating to the validity of the mortgage itself, review by the court is restricted to whether the enforceable instrument contains unfair contractual clauses, a provision which was added following the judgment of the Court in Aziz. (27) 54. Indeed, in that case, brought in the context of Directive 93/13, the Court held, in line with established case-law, that to deny the possibility of reviewing the fairness of a contractual term in mortgage enforcement proceedings could unfairly prejudice the consumer as he might only be able to obtain subsequent protection of a purely compensatory nature which the Court held to be incomplete and insufficient. (28)Consequently, it held that the national legislation in question was precluded by EU law. (29) 55. The referring court implies in its request for a preliminary ruling that the same reasoning should apply with respect to unfair commercial practices, as declaratory proceedings do not have a suspensory effect. If enforcement were achieved against the property prior to delivery of the judgment in the declaratory proceedings, it might then be unfeasible to give effect to a decision handed down against the trader which would unfairly prejudice the consumer. Presumably, this is why the Commission also believes that the case-law deriving from Aziz should be extended to the case at hand. (30) 56. However, the case at hand must be distinguished from that line of case-law. 57. The rights conferred on the consumer by Directive 2005/29 differ from those conferred by Directive 93/13. The latter provides that the finding of an unfair contractual term must result in the invalidation of the term in question or, where appropriate, the entire contract. (31) Directive 93/13 thus provides for a legal remedy that has direct consequences for the contractual relationship between a trader and a consumer. That is why the Court of Justice was inclined to give effect to this possibility in mortgage enforcement proceedings, especially since the case concerned the consumer’s home. (32) 58. Directive 2005/29, on the other hand, makes no provision for individual contractual remedies for the consumer and, as explained above, finding the existence of an unfair commercial practice can, on the basis of the directive, only lead to the imposition of penalties on the trader in question. (33)Such a finding therefore cannot prevent the enforcement of the mortgage and the outcome of the declaratory proceedings will have no contractual consequences. Even if the judgment in the declaratory proceedings were to be handed down subsequent to the enforcement of the debt, the consumer would not be unfairly prejudiced thereby. As a matter of fact, the decision in the declaratory proceedings does not affect the legal position of the consumer in the mortgage enforcement proceedings at all. 59. What is more, in the case at hand the alleged unfair prejudice vis-à-vis the consumer does not lie in the enforcement of the mortgage as such, but rather in the new valuation of the property used to calculate the starting price at auction. The debtors fear that their property will not achieve as high a bid at auction as it would have with a higher starting price. As was pointed out by the Spanish Government at the hearing, the damage claimed by the debtors is merely hypothetical until the auction is completed. The mortgage or the amount of the debt is not in dispute: rather, the issue is the amount of debt that will still be outstanding after the auction has been completed and its proceeds have been off-set against the existing debt. Should the court hearing the declaratory proceedings determine that there has been an unfair commercial practice, damages can be awarded following the enforcement of the mortgage. The result for the debtors would be the same even were the enforcement proceedings to be stayed pending the outcome of the declaratory proceedings. 60. To the extent that Directive 2005/29 stipulates that Member States must make provision for an accelerated procedure in combating unfair commercial practices, such a procedure is only foreseen for circumstances where the courts are called upon to order the cessation of an ongoing unfair commercial practice, not where an unfair commercial practice is being assessed ex post. (34) 61. Therefore, in my view, the fact that declaratory proceedings do not have a suspensory effect does not render the application of Directive 2005/29 impossible or excessively difficult, even in circumstances where it is not possible to review unfair commercial practices in mortgage enforcement proceedings. 62. However, a certain caveat exists where the question of reviewing a contractual term as to its unfairness in accordance with Directive 93/13 is raised, either by the court of its own motion or by one of the parties, as is the case in the main proceedings. (35) 63. In assessing the fairness of a contractual term, all the circumstances attending the conclusion of the contract in question must be taken into consideration. A finding that a commercial practice is unfair is one element among others on which the competent court may base its assessment. (36) Therefore, in so far as it is necessary in order to properly assess the unfairness of a contractual term in the light of Directive 93/13, review of unfair commercial practices must also be possible in mortgage enforcement proceedings. (37) However, it is not necessary in that context for the court hearing the mortgage enforcement proceedings to be able to declare a commercial practice unfair within the meaning of Directive 2005/29 and to impose the corresponding penalties. Neither the declaration nor the imposition of penalties can have any bearing on the enforcement proceedings. 64. Furthermore, as was emphasised by the Court in Pereničová and Perenič, the finding that an unfair commercial practice exists is not such as to establish ‘automatically and on its own’ that the contested contractual term is unfair, and therefore has no direct and immediate consequence on whether the contract is valid within the meaning of Article 6(1) of Directive 93/13. (38) In accordance with Directive 93/13, a range of additional criteria must be fulfilled. For instance, the term in question must not be the result of individual negotiations between the trader and the consumer. (39) In the main proceedings however, it seems to me that the contract term in question may have been the result of negotiations. The debtors asked for an extension of the loan repayment term and the bank agreed to that extension, on condition that the mortgaged property be re-evaluated. Therefore the caveat described above does not seem to apply to the case before the referring court. In any case, even where a national court finds that an unfair commercial practice exists, it must give due consideration to all the requirements laid down by Directive 93/13 in relation to the unfairness of a contractual term. 65. In order to conduct such a review it is sufficient that provision is made for a review of contractual terms on the basis of Directive 93/13, as in Article 695 of the Law on Civil Procedure. It is not necessary to provide a separate grounds for objecting to the enforcement of the mortgage on the basis of Directive 2005/29. Where an unfair commercial practice translates into an unfair contractual term, the possibility to review such a practice is provided within the context of assessing a contractual term on the basis of Directive 93/13 and the rights conferred on consumers by the latter directive are given due effect. 66. Consequently, Article 11 of Directive 2005/29 does not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the review by the courts, of their own motion or at the request of one of the parties, of unfair commercial practices in mortgage enforcement proceedings. B. The second and third questions referred 67. By the second and third questions referred, the national court seeks clarification regarding the legal remedies available to the consumer on the basis of Directive 2005/29 in circumstances where a trader does not comply with a code of conduct. 68. All the parties which have submitted written observations contend that codes of conduct cannot be enforced on the basis of Directive 2005/29. 69. Traditionally, codes of conduct are used in some Member States to define norms and standards of behaviour for traders on a voluntary basis within a specific sector. The purpose of such self-regulatory codes is either to explain details of legislative requirements to consumers in a way they can understand or to establish certain sectoral standards where this is not provided for in legislation. (40) Accordingly, codes of conduct are also intended to combat improper business-to-consumer conduct and their objective somewhat overlaps with that of Directive 2005/29. Crucially, however, codes of conduct are self-regulatory instruments. Control of conduct is exercised only among the members of a given sector who have signed up to be bound by a particular code. Directive 2005/29, on the other hand, requires Member States to enforce its provisions by force of law and in a universal manner. 70. Against this background, what is the role of codes of conduct in relation to Directive 2005/29 and can compliance with a code of conduct be enforced on the basis of the directive? 71. Directive 2005/29 defines a ‘code of conduct’ as ‘an agreement or set of rules not imposed by law, regulation or administrative provision which defines the behaviour of traders’. (41) As pointed out by Ireland, codes of conduct are thus defined as non-binding and not having the status or force of law. From the outset, it thus seems contrary to such a definition to enforce compliance with a code of conduct through the courts. 72. Directive 2005/29 envisages a role for codes of conduct in assessing the existence of unfair commercial practices. On the one hand, the blacklist, set out in Annex I to Directive 2005/29, of commercial practices that are to be considered unfair in all circumstances contains two commercial practices which relate to codes of conduct. First, a claim by a trader to be a signatory to a code of conduct when he is in fact not and, second, claiming that a code of conduct has an endorsement from a public or other body which it does not have, automatically leads to the finding that an unfair commercial practice exists. (42) 73. On the other hand, in assessing whether or not an unfair commercial practice exists on the basis of Articles 5 to 9 of Directive 2005/29, the norms and standards of behaviour provided in codes of conduct are one of the elements to be taken into consideration. Notably, codes of conduct can provide evidence as to the requirements of professional diligence in a given sector. (43) 74. However, Directive 2005/29 imposes further requirements for the existence of an unfair commercial practice. The mere fact that a trader has not complied with a code of conduct cannot on its own and automatically lead to the finding that an unfair commercial practice exists. The directive requires an assessment, having regard to the facts of each particular case, of whether the commercial transaction at issue is unfair in the light of the criteria set out in Articles 5 to 9 thereof. (44) 75. Beyond the role of codes of conduct in assessing the existence of unfair commercial practices, Article 10 of Directive 2005/29, which was specifically mentioned by the referring court, provides that control of unfair commercial practices may also be exercised by code owners, in addition to legal action or a complaint mechanism before an administrative authority. Codes of conduct are thus intended to contribute to combating unfair commercial practices by creating additional means of control. The norms or standards of behaviour enshrined in codes of conduct are meant to help traders to apply the principles set out in that directive effectively in the course of their day-to-day business in their specific sector. (45) As is expressly stated in Article 10, recourse to such control by code owners ‘shall never be deemed the equivalent’ to judicial and administrative recourse and does not make the content of codes of conduct legally enforceable. 76. Importantly, even if it is established that an unfair commercial practice exists where a trader has not complied with a code of conduct, the only possible legal consequence of this under Directive 2005/29 is that a penalty will be imposed on the trader in question. As explained in points 47 to 49 above, and as has also been pointed out by the Commission and the Spanish Government regarding the enforcement of codes of conduct, no individual contractual remedy for the consumer is provided by the directive. 77. Since Directive 2005/29 does not create any individual contractual remedy whereby the consumer may enforce compliance with a code of conduct, it is for each Member State to determine the consequences of non-compliance with such a code as long as ‘adequate and effective means’ exist to combat unfair commercial practices. 78. Specifically with regard to the Code of Good Banking Practice, Spanish law makes provision for a complaint mechanism before the Banco de España (Bank of Spain). Complaints based on a credit institution’s alleged failure to comply with the code can be lodged with the Bank of Spain which can then impose financial penalties and order the bank in question to adhere to the code. This is in line with the requirements imposed by Directive 2005/29 with respect to codes of conduct, as described above. (46) 79. Consequently, the answer to the second and third questions referred must be that Directive 2005/29 does not preclude national legislation, such as that at issue in the main proceedings, which does not provide for any individual contractual remedy for the consumer in circumstances where a trader has not complied with a code of conduct. IV. Conclusion 80. In the light of the considerations presented above, I propose that the Court answer the questions referred by the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance No 5, Cartagena, Spain) as follows: (1) Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) does not preclude national legislation, such as that currently regulating Spanish mortgage enforcement proceedings, namely Article 695 et seq. of the Ley de Enjuiciamiento Civil (Law on Civil Procedure), read in conjunction with Article 552(1) thereof, which does not provide for the review by the courts, of their own motion or at the request of one of the parties, of unfair commercial practices. (2) Directive 2005/29 does not preclude national legislation, such as the Spanish law at issue in the main proceedings, which does not provide for any individual contractual remedy for the consumer in circumstances where a trader has not complied with a code of conduct. 1 Original language: English. 2 Directive of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) (OJ 2005 L 149, p. 22). 3 Council Directive of 5 April 1993 (OJ 1993 L 95, p. 29). See, notably, judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164. 4 Amending procedural legislation in view of the establishment of a new Office of the Judiciary. 5 On measures to protect mortgagees, debt restructuring and social rents. 6 See Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for a consumer protection and information policy (OJ 1975 C 92, p. 1). See also Article 38 of the Charter of Fundamental Rights of the European Union, codifying previous case-law. 7 See Article 12 of the TFEU. 8 There are currently around 90 pieces of EU legislation that deal with consumer protection issues. 9 See Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM(2003) 356 final. 10 See Article 3(9) of Directive 2005/29. 11 See recital 11 of Directive 2005/29. 12 See recital 11 and Article 5(1) of Directive 2005/29. 13 See Articles 11 and 13 of Directive 2005/29 and, to that effect, judgment of 16 April 2015, UPC MagyarországUPC Magyarország, C‑388/13, EU:C:2015:225, paragraphs 57 and 58. 14 See judgment of 16 April 2015, UPC Magyarország, C‑388/13, EU:C:2015:225, paragraph 34 and the case-law cited. 15 See Article 3(1) of Directive 2005/29, read in conjunction with Article 2(c) thereof. See also judgment of 16 April 2015, UPC Magyarország, C‑388/13, EU:C:2015:225, paragraph 36. 16 See Article 5(2) of Directive 2005/29. 17 See Article 5(4) and Articles 6 to 9 of Directive 2005/29. 18 See Article 5(5) of Directive 2005/29, read in conjunction with Annex I thereto. 19 See judgment of 16 April 2015, UPC MagyarországUPC Magyarország, C‑388/13, EU:C:2015:225, paragraph 57 and the case-law cited. 20 See judgment of 30 May 2013, Jőrös, C‑397/11, EU:C:2013:340, paragraph 29. 21 Article 6(1) of Directive 93/13 reads as follows: ‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’ 22 See Article 3(2) of Directive 2005/29. 23 See also, to that effect, judgment of 15 March 2012, Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2012:144, paragraph 45, and order of 8 November 2012, SKP, C‑433/11, EU:C:2012:702, paragraph 30. For a detailed discussion of the issue see Opinion of Advocate General Trstenjak in Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2011:788, points 82 to 85. 24 See, to that effect, judgment of 16 April 2015, UPC Magyarország, C‑388/13, EU:C:2015:225, paragraph 58. 25 See judgment of 30 May 2013, Jőrös, C‑397/11, EU:C:2013:340, paragraph 32 and the case-law cited. 26 See, for a more detailed discussion, my View in Sánchez Morcillo and Abril GarcíaSánchez Morcillo and Abril GarcíaSánchez Morcillo and Abril GarcíaSánchez Morcillo and Abril García, C‑169/14, EU:C:2014:2110, points 60 to 64. See also Opinion of Advocate General Kokott in Aziz, C‑415/11, EU:C:2012:700, point 55. 27 Judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164. 28 See judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164, paragraph 60. 29 See judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164, paragraphs 63 and 64. 30 Even though this seems to contradict the Commission Staff Working Document ‘Guidance on the implementation/application of Directive 2005/29/EC on unfair commercial practices’ (SWD(2016) 163 final), in which the Commission states that Directive 2005/29, unlike Directive 93/13, does not have any contractual consequences (point 1.4.5). 31 Article 6(1) of Directive 93/13. 32 See, to that effect, judgment of 10 September 2014, Kušionová, C‑34/13, EU:C:2014:2189, paragraph 62 et seq. 33 See judgment of 15 March 2012, Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2012:144, paragraph 45, and order of 8 November 2012, SKP, C‑433/11, EU:C:2012:702, paragraph 30. For a detailed discussion of this issue, see Opinion of Advocate General Trstenjak in Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2011:788, points 112 to 125. 34 See the third subparagraph of Article 11(2) of Directive 2005/29. 35 In the main proceedings, the debtors have also argued that the contractual term providing for a new valuation of the mortgaged property is unfair. 36 See judgment of 15 March 2012, Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2012:144, paragraphs 42 to 44 and the case-law cited. 37 See, to that effect, judgment of 15 March 2012, Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2012:144, paragraph 43; see also, for a detailed discussion, Opinions of Advocate General Trstenjak in Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2011:788, points 115 to 125, and of Advocate General Kokott in Margarit PanicelloMargarit PanicelloMargarit Panicello, C‑503/15, EU:C:2016:696, point 128. 38 See judgment of 15 March 2012, Pereničová and PereničPereničová and PereničPereničová and Perenič, C‑453/10, EU:C:2012:144, paragraphs 44 to 46. 39 See Article 3(1) of Directive 93/13. 40 See Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM(2003) 356 final, point 72. 41 See Article 2(f) of Directive 2005/29. 42 See points 1 and 3 of Annex I to Directive 2005/29. 43 See recital 20 of Directive 2005/29, which provides that ‘… In sectors where there are specific mandatory requirements regulating the behaviour of traders, it is appropriate that these will also provide evidence as to the requirements of professional diligence in that sector. …’. See also, to that effect, Article 6(2)(b) of that directive. 44 See, to that effect, recital 17 of Directive 2005/29 as well as judgments of 7 September 2016, Deroo-Blanquart, C‑310/15, EU:C:2016:633, paragraph 29 and the case-law cited; of 17 January 2013, Köck, C‑206/11, EU:C:2013:14, paragraph 35 and the case-law cited; of 19 September 2013, CHS Tour Services, C‑435/11, EU:C:2013:574, paragraph 38 and the case-law cited; and of 19 October 2017, Europamur AlimentaciónEuropamur AlimentaciónEuropamur Alimentación, C‑295/16, EU:C:2017:782, paragraph 34 and the case-law cited. 45 See Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM(2003) 356 final, points 72 and 73. 46 In the case under consideration, Bankia and the Spanish Government are of the view that the Code of Good Banking Practice is not in fact a ‘code of conduct’ within the meaning of Directive 2005/29. Indeed, in accordance with Articles 5(4) and 15 of Royal Decree-Law 6/2012, the Code of Good Banking Practice is based on a legal instrument and, once a credit institution has agreed to adhere to it, it is legally binding. Therefore it seems that the Code of Good Banking Practice is not in fact a code of conduct within the meaning of the directive. However, this is a question of fact which is for the national court to determine, bearing in mind the definition of ‘code of conduct’ as provided in Article 2f of Directive 2005/29.