Information;Order — ECLI:EU:C:2023:134
Date: 2023-02-28
Language of the case: Spanish
Court formation: Ninth Chamber
Subject matter: Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - inadmissible
Origin: Spain

Summary C-254/22 – 1 
Case C-254/22 
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:  
12 April 2022 
Referring court:  
Juzgado de Primera Instancia No 17 de Palma de Mallorca (Spain) 
Date of the decision to refer:  
4 April 2022 
Applicants:  
AW 
PN 
Defendant:  
Caixabank, S. A. 
  
Subject matter of the main proceedings 
Application for a declaration of nullity of a term in a mortgage loan agreement 
under which variable interest is calculated by reference to the Índice de Referencia 
de Préstamos Hipotecarios (Mortgage Loan Reference Index, the ‘IRPH’), on the 
grounds that it was included in a non-transparent manner and is unfair. 
Subject matter and legal basis of the request 
Consumer protection – Interpretation of Council Directive 93/13/EEC of 5 April 
1993 on unfair terms in consumer contracts – Interpretation of Directive 
2014/17/EU of the European Parliament and of the Council of 4 February 2014 on 
credit agreements for consumers relating to residential immovable property and 
amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) 
No 1093/2010 – Unfair terms in consumer contracts – Loan agreement – Variable 
interest rate – Mortgage loan reference index (IRPH) – Review of the 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
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transparency requirement by the national court – Review of the unfairness of the 
term by the national court – Consequences of a declaration that the term is unfair 
Questions referred for a preliminary ruling 
1) Do Articles 3, 4, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court declaring void for unfairness a non-transparent term which 
has caused the consumer proven financial loss, in that it resulted in 
considerably higher costs compared with the other indices available at the 
time the loans were taken out, where the term imposes a specific reference 
index and the seller or supplier has failed to give the consumer a minimum 
level of information stating that this specific index would be applied, rather 
than any of the other indices available at the time the loan was marketed, 
thus depriving the consumer of the possibility of analysing and evaluating 
the economic consequences of agreeing to the term? Would such a decision 
be contrary to the objectives pursued in Articles 7, 14 and 16 of Directive 
2014/17/EU?  
2) Do Articles 3, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court declaring the IRPH term included in a loan agreement 
between a seller or supplier and a consumer void for unfairness, on the 
ground that it referred to an inoperative regulation that had not been updated 
pursuant to which information of particular importance in enabling the 
consumer to identify the economic consequences of agreeing to the term and 
to perform a basic assessment of them was omitted? 
3) Do Articles 3, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court declaring a term which introduces the IRPH index in a non-
transparent manner void for unfairness, where the seller or supplier has not 
informed the consumer that the IRPH index is an actual rate rather than a 
nominal rate, meaning that the index would always be higher than other 
available reference indices, and/or that it may even increase when the other 
indices in the market are falling? 
4) Do Articles 3, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court declaring the IRPH term unfair on the grounds that it was 
included by the seller or supplier in the consumer loan agreement in a non-
transparent manner and, grammatically, implied that the rate was a nominal 
interest rate rather than an actual rate, and that the financial institution 
omitted the information required by the regulations setting out the need to 
apply a negative differential to the index to reflect the fact that it is an actual 
rate, and/or because it referred to an inoperative regulation pursuant to 
which the seller or supplier omitted this information, which could have 
alerted the consumer to the detrimental economic consequences of the term? 
5) Does Article 7 of Directive 93/13/EC preclude a decision of a national court 
declaring the IRPH term void for unfairness where the loan agreement can 
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continue in existence without the term, with no need for the term to be 
replaced by another reference index, since the seller or supplier continues to 
receive remuneration through the positive differential applied. 
6) Do Articles 3, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court declaring a non-transparent term void for unfairness where the 
term imposes an initial fixed-rate period in a variable-rate loan, temporarily 
converting the loan into a fixed-rate loan, where this has caused the 
consumer financial loss because he or she has paid more interest than the 
interest otherwise stipulated? 
7) Do Articles 3, 5 and 7 of Directive 93/13/EC preclude a decision of a 
national court which declares a term included in a loan agreement between a 
consumer and a seller or supplier void for unfairness where it provides for 
the interest rate applicable to the mortgage loan to be determined by 
reference to a future event which cannot be foreseen – such as a reference to 
a future decision by a Council of Ministers which arbitrarily determines the 
interest rate to be applied – meaning that the consumer cannot know in 
advance the criteria and method for calculating the interest to be applied in 
the loan agreement, which would enable the consumer to evaluate the 
economic consequences? 
8) Does Article 5 of Directive 93/13/EC preclude case-law which establishes 
that the inclusion of the IRPH index in a consumer loan agreement is not 
transparent but nor is it unfair where the term by which the index is included 
is not plain and intelligible to an average consumer because it omits key 
elements that would enable the consumer to evaluate the economic 
consequences of the term, such as the fact that the index is an actual rate to 
which a negative differential must be added to enable it be used as a nominal 
interest rate, when the contract stipulates that it will be deemed a nominal 
rate? 
9) Does Article 3 of Directive 91/13/EC preclude case-law which does not 
deem a term included in a loan agreement in a non-transparent manner void 
for unfairness where the term has caused the consumer financial loss, 
inasmuch as the consumer has had to pay considerably more in interest as 
compared with the other indices available at the time the contract was 
entered into?  
10) Does Article 3 of Directive 93/13/EC preclude national case-law which finds 
that, before concluding a consumer contract, a seller or supplier is not 
required to provide the consumer with information on the conditions 
governing the loan agreement, such as the term concerning the IRPH, which 
was one of the indices available at the time the contract was entered into, but 
use of which was not mandatory? 
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11) Do Article[s] 3 and 7 of the directive preclude national case-law which 
establishes that no imbalance to the detriment of the consumer has been 
caused by the fact that the seller or supplier has included the term imposing 
the IRPH reference index in a non-transparent manner without providing the 
necessary prior minimum information on the conditions on which the loan is 
granted to the consumer, where the consequence has been that the consumer 
has paid considerably more interest as compared with any other index 
available at the time the contract was entered into? Do Articles 3, 5 and 7 of 
Directive 93/13/EC and Articles 7, 14 and 16 of Directive 2014/17/EU 
preclude case-law which does not declare a non-transparent term void, 
because it considers that the seller or supplier is not required to advise and 
inform the customer on the inclusion of the IRPH term in the loan he or she 
is taking out when, based on the available information, the seller or supplier 
knows that it would be financially disadvantageous to the consumer in 
comparison with standard loans available at the time the contract was 
entered into? 
12) Do Article[s] 3, 5 and 7 of Directive 13/93/EC preclude case-law which 
establishes that a term which includes the IRPH reference index in a loan 
agreement is not transparent but neither is it unfair in a contract between a 
seller or supplier and a consumer, even though the term was coupled with a 
positive differential when the national legislation establishes that a negative 
differential should be applied in order for a nominal interest rate to prevail, 
to offset the additional costs entailed by the fact that it was an actual rate? 
13) Do Articles 3, 5 and 7 of the directive preclude national case-law which 
establishes that a non-transparent term should not be declared void, on the 
grounds that no significant imbalance in the parties’ rights and obligations to 
the detriment of the consumer has been caused by the fact that the term was 
included by the seller or supplier in a non-transparent manner, and the 
consumer was not even told the name of the index that was to be applied, 
and the term imposing the IRPH reference index deprived the consumer of 
the right to be able to compare, analyse and evaluate before entering into the 
contract? 
14) Do Article[s] 3 and 7 of Directive 93/31/EC preclude case-law which does 
not declare an IRPH term included in a non-transparent manner void for 
unfairness, on the grounds that there is no imbalance because it is not 
possible to predict fluctuations in the IRPH when, in actual fact, given the 
calculation method and the fact that it is an actual rate, the IRPH could never 
be lower than the Euribor or other index and would always be more costly 
for the consumer? 
15) Do Articles 3, 4, 5, 7 and 8 of Directive 93/31/EC preclude a decision of a 
national court which rules that the present wording of the second paragraph 
of Article 83 of Royal Legislative Decree 1/2007 approving the consolidated 
text of the Spanish Ley General de Defensa de los Consumidores y Usuarios 
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(General Law for the Protection of Consumers and Users), which stipulates 
that non-transparent terms in contracts between a seller or supplier and a 
consumer are always automatically void, applies to cases such as the present 
one, on the grounds that the national legislature wanted to provide an even 
higher level of protection than that established by the directive, as provided 
for in Article 8 of the directive, and that, when applying consumer protection 
legislation, the national courts must adopt this criterion once the legislation 
has come into force, or should national courts have regard to the wording of 
the provision as it applied at the time the contract was entered into? In either 
case: would the term be void where the seller or supplier has not provided 
the consumer with a minimum level of information on the application of the 
IRPH in his or her loan agreement, in spite of the foreseeable detriment to 
the consumer, and has omitted basic information such as the fact that the 
IRPH index was an actual rate rather than a nominal interest rate, since the 
definition of the index in the loan agreement referred to an inoperative 
regulation which did not require the application of a negative differential, 
when this would clearly result in the application of an index which would 
produce considerably higher costs as compared with any other index 
applicable at the time the contract was entered into? 
Provisions of European Union law relied on 
Directive 93/13, twelfth, thirteenth, nineteenth, twentieth and twenty-fourth 
recitals, and Article 1, Article 3(1), Article 4, Article 5, Article 6(1) Article 7 and 
Article 8. 
Directive 2014/17, Article 7(1) and Articles 8, 14 and 16. 
Provisions of national law relied on 
a) Royal Legislative Decree 1/2007 of 16 November 2007 approved the 
Consolidated Text of the General Law for the Protection of Consumers and 
Users and other supplementary laws (‘the TRLGDCU’). The following provisions 
of that Law are cited: 
Article 60. Pre-contractual information 
1. Before consumers or users are bound by a contract or similar offer, the 
seller or supplier shall provide them, in plain intelligible language, with relevant, 
accurate and adequate information on the main features of the contract, in 
particular its legal and financial terms, unless this is clear from the context. 
Without prejudice to any applicable sectoral regulations, the terms in which that 
information is provided must, particularly in the case of vulnerable consumers, 
not only be plain, intelligible, accurate and adequate but must also be supplied in 
a readily accessible format, with assistance being provided where necessary, to 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
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enable the consumer properly to understand the terms and to take decisions which 
are in his or her best interests. 
The referring court notes that the wording of paragraph 1 of this article is the 
result of amendments introduced by the Ley 4/2022, de 25 de febrero, de 
protección de los consumidores y usuarios frente a situaciones de vulnerabilidad 
social y económica (Law 4/2022 of 25 February 2022 to provide protection for 
socially and financially vulnerable consumers and users). This Law came into 
force on 2 March 2022. 
2. The following shall be relevant: the obligations to provide information on 
goods or services which are laid down in this and any other applicable laws, as 
well as: 
(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 preparation of an estimate, the manner in which the 
price is to be calculated, as well as all additional transport, delivery or postal 
costs or, where those costs cannot reasonably be calculated in advance, the fact 
that such additional costs may be chargeable. 
All information provided to the consumer or 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, any costs charged to the consumer or user and any additional costs 
connected with ancillary 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. 
The referring court notes that the wording of Article 60 was inserted by Law 
3/2014 of 27 March 2014. The provisions of this Law apply to consumer contracts 
entered into from 13 June 2014. 
Article 80. Requirements for terms not individually negotiated 
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1. In contracts with consumers and users which use terms that have not been 
individually negotiated, including those drafted by public authorities and the 
entities and undertakings which depend on them, such terms must satisfy the 
following requirements: 
(a) Precise, clear and simple wording, enabling immediate understanding 
without reference to texts or documents not supplied before, or at the time 
of, the 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. … 
(c) Good faith and fair balance between the rights and obligations of the 
parties, which, under all circumstances, excludes the use of unfair terms. 
2. Where 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. 
The referring court notes that Article 80(1)(b) was inserted by Law 3/2014 of 
27 March 2014. Its provisions apply to consumer contracts entered into from 
13 June 2014. 
Article 82. Definition 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 parties’ 
rights and obligations 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 
negotiated individually 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. 
3. The unfairness of a contractual term shall be assessed taking into account 
the nature of the contractual goods or services and having regard to all the 
circumstances surrounding the conclusion of the contract and to all the other 
terms of the contract or of any other 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: 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
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[…] 
(c) determine that there is no contractual reciprocity, 
[…] 
e) are disproportionate in relation to the conclusion and performance of the 
contract. … 
Article 83. Nullity 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, having heard 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. 
Terms included in a non-transparent way, to the detriment of consumers, shall 
automatically be void. 
The referring court notes that the second paragraph of Article 83 was inserted by 
Law 5/2019 of 15 March 2019 governing property loan agreements and came into 
force on 16 June 2019. 
b) Código Civil (Civil Code, ‘the CC’) 
Article 1258 of the CC provides as follows: ‘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, depending on 
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.’ 
c) 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 
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writing and they comply with the specific rules concerning transparency of 
contractual clauses in that sector.’ 
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 ….’ 
Succinct presentation of the facts and procedure in the main proceedings 
1 On 31 January 2001 the applicants, who are classed as consumers, signed a 
mortgage loan agreement with the financial institution CAIXABANK to purchase 
their family home for a capital sum of EUR 78 131.57, repayable over 30 years, at 
a variable interest rate calculated on the basis of the IRPH plus a fixed differential 
of 0.50%. 
2 The referring court provides an extensive description of the calculation method 
and operation of the IRPH in which it refers to a study on financial imbalances in 
contracts using the IRPH produced by economics experts and published by the 
regional government of the Balearic Islands, and draws attention to the following 
points: 
– The IRPH is an official index overseen by the Bank of Spain and 
published monthly in the Official State Gazette. According to the 
definition in Bank of Spain Notice 5/1994, published in the Official 
State Gazette, the IRPH is ‘the simple average of the weighted average 
interest rates for the principal amounts of loan transactions secured by 
a mortgage with a term equal to or greater than 3 years for the 
purchase of a residential property on the private housing market which 
were granted or renewed by all savings banks in the month to which 
the index refers. The said weighted average interest rates shall be the 
annual equivalent rates declared to the Bank of Spain in respect of 
these terms.’ The IRPH is one of the indices that has been used in 
mortgage loan agreements to calculate the amount of variable interest. 
Another of the available indices, and the one most commonly used for 
this purpose, is the Euribor. It is the parties to the agreement who agree 
the method for calculating interest. 
– Bank of Spain Notice 5/1994 issued to credit institutions, concerning 
amendments to notice 8/1990 on the transparency of transactions and 
protection of customers (Official State Gazette of 3 August 1994), 
states with regard to calculating the IRPH that ‘the average rates 
selected are, in the final analysis, annual equivalent rates [AER]. The 
average rates for mortgage loans for the purchase of a residential 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
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property on the private housing market charged by the banks and by 
institutions in general are clearly annual equivalent rates, since they 
also incorporate the effect of charges. Consequently, if they were 
simply used directly as contractual rates, the AER for the transaction 
would be higher than the market rate. In order to bring the AER for the 
transaction into line with the market rate it would be necessary to 
apply a negative differential, the amount of which would vary 
depending on the fees charged for the transaction and the frequency of 
payments.’ In other words, while the Euribor is a nominal interest rate 
(NIR), the IRPH is an actual rate which includes other items (charges 
and other loan costs) in addition to the interest rate. The values of 
actual rates (or annual equivalent rates) are higher than nominal rates 
(or simple rates). In other words, in any mortgage agreement, it can be 
seen that while the initial interest rate is 5%, for example, the AER 
(actual rate) is 5.68%, for example. The AER is always higher than the 
NIR, and the average of the AERs (as used in the IRPH) is always 
higher than the average of the NIRs, as can be seen from this graph: 
 
– Given that the IRPH is calculated on the basis of the interest rates 
proposed by the banks themselves in their mortgage agreements (by 
reference to the Euribor or other indices), in the final analysis the 
banks are able to alter the IRPH. The banks can ensure that variable-
interest clauses based on the IRPH operate as a ‘brake clause’ which 
means that, when interest rates are falling, the banks do not receive 
less interest. 
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3 With regard to the inclusion of the IRPH in the contract at issue in the 
proceedings, the referring court contends that the term which introduces this index 
can be classed as a general contractual term and that it is not transparent nor did it 
enable consumers to know exactly what the reference index was, for the following 
reasons: 
– In the agreement, the bank refers to the IRPH by reference to an 
obsolete Bank of Spain Notice and omits information included in 
Notice 5/1994 which the referring court considers essential. Thus, the 
agreement includes the following clause: ‘B) reference index used. 
This is the “Average rate for mortgage loans for terms of more than 
3 years charged by savings banks” which is published by the Bank of 
Spain every month in the Official State Gazette. This index is defined 
by paragraph 2 of Annex VIII to Bank of Spain Notice 8/90 as the 
simple average of the weighted average interest rates for the principal 
amounts of loan transactions secured by a mortgage with a term equal 
to or greater than 3 years for the purchase of a residential property on 
the private housing market which were granted or renewed by all 
Savings Banks in the month to which the index refers, as declared to 
the Bank of Spain …. The index will be applied directly, in other 
words, as though it were expressed in terms of nominal annual 
interest.’ This provision therefore fails to include the statement 
included in Notice 5/1994 that, if the interest rate on a loan is 
calculated by reference to an AER (such as the IPRH), a negative 
differential must be applied to that AER. As can be seen from question 
12 of the questions referred for a preliminary ruling, the referring court 
considers that ‘the national legislation establishes that a negative 
differential should be applied [to the IRPH] to enable it to be used as a 
nominal interest rate’. 
– Instead of defining the IRPH by reference to an official mechanism 
published in the Official State Gazette, the bank should have included 
a full description of the index and how it operated in the agreement, 
particularly as it was an essential element concerning the price of the 
loan. 
– The bank did not offer consumers any type of pre-contractual 
information or any warning that the IRPH was more costly for 
borrowers than the index that was normally used (the Euribor). 
– When marketing the mortgages based on the IRPH, the banks 
emphasised the smaller positive differential (of between 0.25% and 
1%) applied to the IRPH as compared with the differential added to the 
Euribor for mortgages calculated using the latter index, but omitted to 
state that the IRPH was inherently higher than the Euribor. 
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– Borrowers could not reasonably discover for themselves how the IRPH 
referred to in their agreement operated or the economic consequences 
for them, for the following reasons: a) the bank portrayed an AER (the 
IRPH) as an NIR and did not refer to the index by name; b) a positive 
differential was added to the IRPH, contrary to logic, which dictated 
that a negative differential should be added to an AER, leading 
consumers mistakenly to believe that the IRPH was a NIR; c) the 
wording of the term was unintelligible, thus preventing the applicants 
from realising that this index applied to them and from seeking 
information about the operation of the IRPH. 
– There is an asymmetry of information in that, unlike the consumer, the 
bank knows how the IRPH operates, its actual cost, and fluctuations in 
the indices over time, meaning that it knows that when other indices 
are falling, the IRPH will either hold its level or fall by a smaller 
amount. 
4 The referring court infers from the above points that there was no transparency in 
the way in which the IRPH was included in the agreement, nor good faith on the 
part of the seller or supplier, which took advantage of its greater knowledge, and 
that the clause in question operated to the financial detriment to the applicants – 
specifically, after the agreement had been in operation for 20 years, on a loan of a 
principal sum of EUR 78 131.57 the bank would have received EUR 53 746.76 
plus EUR 9 151.20 from the application of the differential (0.5%). If the Euribor 
or Mibor had been used instead of the IRPH, the consumers would have paid 
EUR 21 820.86 less. 
5 On 28 July 2021 the applicants filed an action under the ordinary procedure 
seeking a declaration that the term establishing the IRPH as the reference index 
was void, the substitution of the IRPH, and reimbursement of the sums paid under 
the term in question, plus interest on the amounts paid; in the alternative, they 
sought a declaration that the term establishing the IRPH as the reference index 
was void, the substitution of the IRPH, and an order for the institution to apply the 
Euribor as the reference index instead, and, in consequence, to refund the 
difference between the amount of interest due under the IRPH and the amount due 
as a result of applying the Euribor, plus interest on the difference. 
6 In addition, during the initial contract period, the agreement stipulated that fixed 
interest would be paid for a limited period. The referring court confirms that this 
led to additional costs for the consumers; the consumers were unaware of the 
existence of this clause when they signed the agreement, and the defendant bank 
has failed to demonstrate that it informed them of this provision. 
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The essential arguments of the parties in the main proceedings 
7 The applicants propose that a series of questions should be referred for a 
preliminary ruling, which are in essence the same as the questions put by the 
referring court. 
8 The defendant argues that the IRPH term was drafted plainly and simply and that 
it enables borrowers to know that the repayments on their loan will be calculated 
on the basis of a reference rate that is set and overseen by the Bank of Spain. It 
also argues that the term was subject to negotiation, and that the borrowers could 
readily access information on how the IRPH operated and how it was calculated, 
together with information on past fluctuations in the index. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
9 The referring court begins by outlining the relevant national and EU case-law, 
before offering a critique of the case-law and setting out the reasons why it 
considers that, taking account also of the most recent amendments to the 
legislation, the view of the Tribunal Supremo (Supreme Court) is not consistent 
with EU law. 
I) Evolution of the case-law on variable-interest terms based on the IRPH 
A) Judgment of the Supreme Court of 14 December 2017 
10 The wording of the term at issue in these proceedings was as follows: ‘the interest 
rate will be the rate arrived at by adding the MARGIN (0.5%) to the average rate 
for mortgage loans for terms of more than 3 years for the purchase of a 
residential property on the private housing market charged by the set of credit 
institutions defined by Notice 5/94 issued by the Bank of Spain on 22.7.94, and 
published in the Official State Gazette of 3.8.94.’ The term also stipulated that the 
replacement interest rate was the IRPH for savings banks plus a margin of 0.5%. 
11 The Supreme Court ruled that that term was valid for the following reasons: 
– The party proposing the clause (the bank) does not define the reference 
index in the contract, but instead refers to one of the official indices 
governed by legal provisions applicable to this type of contract. It is 
therefore for the public administration to ensure that those indices 
comply with the regulations, meaning that such oversight is outside the 
jurisdiction of the civil courts. The courts cannot assess how a 
reference index established by law has been set, nor examine whether 
that index can be manipulated by the financial institutions since, in 
these situations, control of the balance between the obligations and 
rights of the parties is ensured by the intervention of the public 
administration. 
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– Terms dealing with how remunerative interest is determined affect the 
essential elements of the contract which determine its main subject 
matter and therefore, under Article 4(2) of Directive 93/13, they cannot 
be assessed for possible unfairness, provided that they are in plain 
intelligible language. All that can be reviewed is whether the general 
contract term by which the IRPH is included in a consumer contract is 
drafted in plain intelligible language and is transparent. The Supreme 
Court took the view that, grammatically, the term is plain and 
intelligible and enables the borrower to know, understand and accept 
that the variable interest on its mortgage loan is calculated by reference 
to a rate that is set and overseen by the Bank of Spain, and therefore, 
from this perspective, the term passes the test for inclusion. 
– With regard to the review of the transparency of those terms, the 
Supreme Court noted that since the indices were official indices used 
by the various financial institutions in their commercial offerings, it is 
reasonably easy for an average consumer who is reasonably well 
informed and reasonably observant and circumspect to be aware that 
different systems are used for calculating variable interest and to 
compare the conditions offered by the various lenders on such a key 
element of a loan agreement. It also considered that the lender was not 
required to provide a detailed explanation of how the reference index is 
determined, because the index was prepared under the supervision of 
the Bank of Spain. Moreover, in this case, the index is not even 
referred to by a name, which might not be known to the consumer, but 
by its basic definition, which was explanatory: ‘average rate for 
mortgage loans for terms of more than 3 years for the purchase of a 
residential property on the private housing market charged by all credit 
institutions’. Nor did the court consider it necessary, for the purposes 
of the transparency test, for the borrower to be offered the option of an 
agreement that used other reference indices, such as the Euribor, which 
was only subsequently found to operate in a way that was more 
advantageous to the consumer. The reference indices applicable to 
mortgage loans are overseen by the Bank of Spain and published in the 
Official State Gazette each month, and the information is therefore 
publicly available to anyone. Moreover, they are published together, 
making it possible to compare them. The only point that could have 
been included in the information was that, if fluctuations in the IRPH 
were more disadvantageous than those in the Euribor, this could 
produce a worse outcome for the borrower if, in spite of the different 
margins, they resulted in a higher rate. But that was obvious, because it 
is clear that, where various official indices are available, borrowers 
whose loans are linked to the index which performs best in future (in 
the sense that it falls further or increases less) will do better, and those 
on the index which performs less well will be worse off. 
CAIXABANK 
 
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12 However, two of the Supreme Court judges who heard the case issued a dissenting 
opinion. In their view, the judgment was not consistent with the case-law of the 
Court of Justice of the European Union as far as the review of transparency was 
concerned, because it found that use of this official reference index was sufficient 
in itself to pass the transparency test, without any need for the bank to provide any 
other information. The two judges stated that the conclusion in the judgment of 
the Supreme Court – which, in their view, was mistaken – was arrived at by: 
– linking the subject matter of the transparency review to more general 
or descriptive concepts or references (remunerative interest or interest 
rate fluctuations in the case of variable rates); 
– taking for granted that the ‘average consumer’ knows that different 
systems are used to calculate variable interest and that, therefore, 
reference indices are not configured or compiled in the same way, and 
there may be significant differences between them; 
– ‘reversing’ or ‘altering’ the burden of the duty of information, because 
it considered that, since the reference indices are overseen by the Bank 
of Spain and published every month in the Official State Gazette, the 
information is ‘publicly available’ to anyone. 
The two judges considered that the duties of information on the seller or supplier 
extended beyond simply including a reference to this official index in the contract 
term and included a duty to provide information on the scope and specific 
functioning of the mechanism for this reference index, to enable the consumer to 
assess, on the basis of specific intelligible criteria, the economic consequences of 
the index on his or her financial obligations and to make a proper evaluation of 
other possible offers. This led them to conclude that the term should have been 
declared unfair and that the Euribor should have been used as the reference index 
for the mortgage loan (without the differential of 0.5% that had been agreed). 
B) Judgment of the Court of Justice of 3 March 2020 (C-125/18, Gómez del Moral 
Guasch) given in response to a request for a preliminary ruling 
13 The term at issue in the main proceedings stipulated that the index to be used in 
calculating the variable interest was the IRPH. The questions referred for a 
preliminary ruling were as follows: 
– whether, having regard to Article 1(2) of Directive 93/13, the IRPH 
index could be subject to judicial review since, although it was 
governed by legal or administrative provisions, it is included in the 
contract by agreement between the parties; 
– what criteria were to be used as the basis for reviewing the 
transparency of this type of term and what information the bank should 
provide to the consumer and, in particular, whether it was necessary i) 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
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to explain how the reference rate was calculated, that is to say, to state 
that the index includes charges and other costs on top of the nominal 
interest rate, that it is a simple, unweighted average, that the seller or 
supplier had to know and notify the fact that it must apply a negative 
differential and that the data provided is not public, compared with the 
usual index, the Euribor; ii) to explain past and possible future 
fluctuations, with information and graphs that explain clearly and 
intelligibly to the consumer the fluctuations in this specific rate in 
relation to the Euribor, the usual rate on loans secured by a mortgage; 
– whether, where the term is unintelligible, inasmuch as it is not clear to 
the average consumer, this amounts to unfair conduct by the seller or 
supplier and means that the consumer would not have agreed to the 
term; 
– what the consequence of a declaration that the term was null and void 
should be: whether i) the contract should be adjusted by applying the 
usual replacement index, the Euribor, since the contract is essentially 
linked to a profitable rate of interest for the benefit of the institution, 
which is classed as a seller or supplier; or ii) the interest rate should 
cease to be applied, with the sole obligation for the borrower or debtor 
being to repay the loan capital in the instalments stipulated. 
14 The response by the Court of Justice was as follows: 
‘1) Article 1(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms 
in consumer contracts must be interpreted as meaning that a contractual term in a 
mortgage loan agreement concluded between a consumer and a seller or supplier, 
which provides that the interest rate applicable to the loan is based on one of the 
official reference indices provided for by the national legislation that may be 
applied by credit institutions to mortgage loans, falls within the scope of that 
directive, where that national legislation does not provide either for the mandatory 
application of that index independently of the choice of the parties to the 
agreement or for the supplementary application thereof in the absence of other 
arrangements established by those parties. 
2) Directive 93/13, in particular Article 4(2) and Article 8 thereof, must be 
interpreted as meaning that the court of a Member State is required to verify that a 
contractual term relating to the main subject matter of the agreement is plain and 
intelligible, irrespective of whether or not Article 4(2) of that directive was 
transposed into the legal order of that Member State. 
3) Directive 93/13, in particular Article 4(2) and Article 5 thereof, must be 
interpreted as meaning that, with a view to complying with the transparency 
requirement of a contractual term setting a variable interest rate under a mortgage 
loan agreement, that term not only must be formally and grammatically 
intelligible but also enable an average consumer, who is reasonably well-informed 
CAIXABANK 
 
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and reasonably observant and circumspect, to be in a position to understand the 
specific functioning of the method used for calculating that rate and thus evaluate, 
on the basis of clear, intelligible criteria, the potentially significant economic 
consequences of such a term on his or her financial obligations. Information that is 
particularly relevant for the purposes of the assessment to be carried out by the 
national court in that regard includes (i) the fact that essential information relating 
to the calculation of that rate is easily accessible to anyone intending to take out a 
mortgage loan, on account of the publication of the method used for calculating 
that rate, and (ii) the provision of data relating to past fluctuations of the index on 
the basis of which that rate is calculated. 
4) Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as not 
precluding the national court, where an unfair contractual term setting a reference 
index for calculating the variable interest of a loan is null and void, from replacing 
that index with a statutory index applicable in the absence of an agreement to the 
contrary between the parties to the contract, in so far as the mortgage loan 
agreement in question is not capable of continuing in existence if the unfair term 
is removed and annulment of that agreement in its entirety would expose the 
consumer to particularly unfavourable consequences.’ 
15 The referring court draws attention to paragraph 54 of the judgment, which states 
that ‘of relevance also to assess the transparency of the term at issue is the fact 
that, under the national legislation in force at the time the agreement at issue in the 
main proceedings was entered into, credit institutions were required to provide 
consumers with data relating to the fluctuations of the IRPH of the Spanish 
savings banks during the two calendar years preceding the conclusion of loan 
agreements as well as with the last available value. Such data is also capable of 
giving the consumer an objective indication as to the economic consequences 
arising from the application of such an index and constitutes a useful point of 
comparison between the calculation of the variable interest rate based on the IRPH 
of the Spanish savings banks and other formulas for calculating interest rates.’ 
16 In summary, the referring court infers the following points from this judgment: 
– The protection offered by Directive 93/13 applies to the IRPH, since it 
is not the only index available and is freely chosen from among the 
available indices for inclusion in the agreement. 
– The IRPH term is unfair if it does not enable any consumer to 
understand the calculation method in order to assess its economic 
consequences. 
– The bank is required to provide prior information on how the IRPH 
operates and how interest is calculated and also on past fluctuations in 
rates. 
– The national court may replace the IRPH index with another official 
index such as the Euribor. 
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C) Judgment of the Supreme Court of 12 November 2020 
17 The Supreme Court interpreted the judgment in Case C-125/18 differently, and 
concluded that the IRPH term is not transparent but that it cannot be considered 
unfair either, because there is no bad faith on the part of the financial institution 
nor a significant imbalance for the consumer, since future fluctuations in the IRPH 
could not be predicted at the point when the agreement was signed. 
D) Order of the Court of Justice of 17 November 2021 (C-655/20, Gómez del 
Moral Guasch II) given in response to a request for a preliminary ruling 
18 The operative part of this order is as follows: 
‘1) Article 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in 
consumer contracts and the requirement of transparency of contractual terms in 
the context of a mortgage loan must be interpreted as allowing the seller or 
supplier not to include in such a contract the full definition of the reference index 
used to calculate a variable interest rate or not to provide to the consumer an 
information booklet setting out past fluctuations in that index prior to signature of 
that contract, on the basis that the information related to that index has been 
officially published, provided that, in the light of publicly available and accessible 
information, as well as the information provided, where appropriate, by the seller 
or supplier, an average consumer who is reasonably well informed and reasonably 
observant and circumspect was able to understand the specific functioning of the 
method used for calculating the reference index and thus evaluate, on the basis of 
clear, intelligible criteria, the potentially significant economic consequences of 
such a term on his or her financial obligations. 
2) Article 3(1), Article 4(2) and Article 5 of Directive 93/13 must be 
interpreted as meaning that, where a national court takes the view that a 
contractual term the purpose of which is to determine the method for calculating a 
variable interest rate under a mortgage contract is not drafted in plain intelligible 
language within the meaning of Article 4(2) or Article 5 of that directive, that 
court is required to examine whether that term is “unfair” within the meaning of 
Article 3(1) of that directive. 
3) Article 6(1) of Directive 93/13 must be interpreted as requiring the national 
court to offer the consumer a choice between, on the one hand, amending the 
contract by substituting a contractual term fixing a variable rate of interest found 
to be unfair with a term referring to a supplementary index provided for by law, 
and, on the other hand, annulment of the mortgage loan agreement in its entirety if 
that contract is not capable of continuing in existence without that term. 
4) Article 6(1) and Article 7(1) of Directive 93/13, read in the light of 
Article 1(2) of that directive, must be interpreted as not precluding the national 
court, where an unfair term setting a reference index for calculating the variable 
interest of a loan is null and void, from replacing that index with a statutory index 
CAIXABANK 
 
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applicable in the absence of an agreement to the contrary between the parties to 
the contract, in accordance with the conditions laid down in paragraph 67 of the 
judgment of 3 March 2020, Gómez del Moral Guasch (C-125/18, 
EU:C:2020:138), where those two indices are determined by a method of 
calculation of equivalent complexity and national law provides for that 
replacement to be made where there is no dispute and the objective is to preserve 
the balance of the parties’ obligations, provided that the substitute index does in 
fact reflect a supplementary provision of national law. 
5) Article 6(1) of Directive 93/13 must be interpreted as meaning that, where a 
contract concluded between a seller or supplier and a consumer is not capable of 
continuing in existence after the removal of an unfair term and the annulment of 
the contract in its entirety would expose the consumer to particularly unfavourable 
consequences, the national court may cure the invalidity of that term by 
substituting it with a supplementary provision of national law, with the application 
of the rate resulting from the substitute index taking effect at the date of the 
conclusion of the contract.’ 
19 In summary, the referring court infers the following points from this order: 
– The Court of Justice removes the requirement to provide information 
on past fluctuations in the index, which had been required in Case 
C-125/18, and the full definition of the index, but does not exempt the 
seller or supplier from providing the consumer with information prior 
to signature of the contract. Indeed, the Court of Justice uses 
expressions such as ‘information provided’. 
– Once again, the Court of Justice indicates that there is nothing to 
prevent the IRPH being replaced by another official index, such as the 
index most habitually used at the time the loan contract was signed 
(the Euribor). Nor does it remove the possibility of the contract 
continuing in existence without the IRPH term, since there is 
remuneration. 
– Replacing the index is envisaged only where the contract is not 
capable of continuing in existence. 
E) Order of the Court of Justice of 17 November 2021 (C-79/21, Unión de 
Créditos Inmobiliarios) given in response to a request for a preliminary ruling 
20 The operative part of this order is as follows: 
‘1) Article 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in 
consumer contracts and the requirement of transparency of contractual terms 
in the context of a mortgage loan must be interpreted as not precluding 
national legislation and case-law which exempt the seller or supplier from 
providing to the consumer, at the time of conclusion of a mortgage loan 
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20  
agreement, information related to the previous fluctuations of the reference 
index over at least the previous two years by means of a comparison with at 
least one different index such as the Euribor index, provided that that 
national legislation and case-law nevertheless enable the court to satisfy 
itself that the average consumer who is reasonably well informed and 
reasonably observant and circumspect was able, in the light of the publicly 
available and accessible information and, where appropriate, the information 
provided by the seller or supplier, to understand the specific functioning of 
the method used for calculating the reference index and thus evaluate, on the 
basis of clear, intelligible criteria, the potentially significant economic 
consequences of such a term on his or her financial obligations. 
2) Article 3(1) of Directive 93/13 must be interpreted as precluding national 
legislation and case-law which consider an absence of good faith on the part 
of the seller or supplier to be a necessary precondition for any review of the 
content of a non-transparent clause in a consumer contract. It is for the 
national court to determine whether, in the light of all the relevant 
circumstances of the main proceedings, the seller or supplier must be 
regarded as having acted in good faith by selecting an index provided for by 
law, and whether the term incorporating such an index is such as to create a 
significant imbalance, to the detriment of the consumer, between the rights 
and obligations of the parties arising under the contract. 
3) Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as not 
precluding the national court, where an unfair term setting a reference index 
for calculating the variable interest of a loan is null and void, from replacing 
that index with a statutory index applicable in the absence of an agreement 
to the contrary between the parties to the contract, where those two indices 
produce the same effects, provided that the conditions laid down in 
paragraph 67 of the judgment of 3 March 2020, Gómez del Moral Guasch 
(C-125/18, EU:C:2020:138) are met.’ 
21 In summary, the referring court infers a new conclusion from this order, namely 
that the Court of Justice corrects the Supreme Court by stating that the absence of 
good faith is not a prerequisite for reviewing the content of the term where it gives 
rise to an imbalance to the detriment of the consumer. 
F) Judgment of the Supreme Court of 27 January 2022 
22 The referring court interprets this judgment as meaning that the Supreme Court 
essentially maintains that the mere publication of the index in the Official State 
Gazette satisfies the transparency requirements as far as the composition and 
calculation of the IRPH are concerned and that, in any event, while the absence of 
information in the agreement means that the term is not transparent it does not 
make it unfair if it has not caused an imbalance to the detriment of the consumer. 
The referring court argues that, according to this judgment, the seller or supplier is 
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not required to inform the consumer of past fluctuations in the index, contrary to 
what has been stated by the Court of Justice. 
23 Moreover, according to the Supreme Court, the review of unfairness must be 
performed having regard to a) the possible significant imbalance in the rights and 
obligations of the parties to the detriment of the consumer, having regard to the 
applicable rules of national law in the absence of any agreement between the 
parties; and b) the requirements of good faith, considering whether the seller or 
supplier could reasonably believe that, when dealing fairly and equitably with the 
consumer, the consumer would accept a term of this type in the course of 
individual negotiations. Neither of these criteria is met in respect of the IRPH term 
under examination, as we explain below. 
24 In order to determine whether there is an imbalance, it is not sufficient to compare 
the IRPH with another reference index (essentially, the Euribor), because the 
calculation of the IRPH takes into account not only loans based on the Euribor, 
but also loans based on other variable rates and fixed-rate loans. Moreover, the 
differentials applicable to the indices are not the same and are determined by the 
assessment of the risk and other characteristics of the transaction (such as the 
debtor’s solvency, the quality of the security provided, the term and amount of the 
loan, and the purchase of other goods or services). Furthermore, the imbalance 
must be assessed at the time the agreement is entered into, which means that 
whether or not fluctuations in the index over the lifetime of the loan prove 
favourable cannot be decisive. The review of the content of the term cannot 
become a price review, and the Court of Justice has ruled that banks are not 
required to provide comparative information on the various official indices or 
future fluctuations in indices and are not under a duty to advise their customers on 
the best possible loan. 
25 With regard to good faith, where the bank offers an official index approved by the 
banking authority, this cannot in itself be a breach of good faith. Moreover, it has 
not been demonstrated that the IRPH index, which is in any event overseen by the 
public administration, is more easily manipulated than other official indices. 
II) Critique by the referring court of the Supreme Court case-law, and proposed 
solution for consideration by the Court of Justice 
26 Beginning with the transparency requirement, the referring court has reached the 
conclusion that the term was not included in the agreement in a transparent 
manner (see paragraph 3 of this summary) and that the Supreme Court is incorrect 
in stating that if the consumer had investigated the matter beforehand, he or she 
would have known the actual cost of the loan and would not have agreed to it. In 
the view of the referring court, the complexity of the IRPH and the lack of 
transparency in the way it was included in the agreement excluded this possibility 
(see paragraphs 2 and 3 of this summary). Consequently, it believes that the 
second paragraph of Article 83 of the TRLGDCU applies, and that the term is 
void. The fact that this paragraph came into force after the agreement was signed 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-254/22 
 
22  
is no obstacle, since the relevant factor is the level of protection which the 
legislature wishes to provide for consumers in general. It also believes that the 
aforesaid provision establishes a higher degree of protection for the consumer 
within the terms of Article 8 of Directive 93/13. 
27 In any event, once the term has been found not to be transparent, one has to 
analyse whether it is unfair. 
28 With regard to the imbalance caused by this term to the detriment of the 
consumer, the referring court states that, contrary to what has been suggested by 
the Supreme Court, while it was not possible to know at the time of signature of 
the agreement what future levels of the IRPH would be, the bank did know 
beforehand that, regardless of circumstances, the IRPH would always be higher 
than any other index. In paragraph 2 of this summary we set out the basic 
principles and economic consequences of using the IRPH as the reference index to 
calculate the interest. The referring court stresses the fact that the use of the IRPH 
coupled with a positive differential means that the loan will always be more 
expensive than one based on another index. 
29 Turning to good faith, the referring court considers that, contrary to what was 
maintained by the Supreme Court, simply including a reference to the official 
index in the contract was not sufficient to satisfy the seller or supplier’s 
information obligations, and that the bank acted in bad faith when it omitted the 
definition of the IRPH and its mode of operation, and sought to lure the consumer 
by offering a positive differential (of between 0% and 0.5%) which was lower 
than the differential applied to loans based on the Euribor. Through the provision 
of a comparison based principally on the differentials, the consumer was thus led 
to believe that interest calculated on the basis of the IRPH plus a positive, but not 
very high, differential was economically more advantageous. 
30 The referring court concludes that, had the consumers been informed that the 
interest was based on the IRPH and of the cost of this loan compared with others 
based on the Euribor, which was the most commonly used index, they would not 
have taken out the loan. 
31 Lastly, the referring court analyses what the consequences of declaring the term at 
issue void should be, and contends in the reasoning for the request for a 
preliminary ruling that a) the agreement can continue in existence because there is 
remuneration for the loan; and b) this remuneration for the loan should consist 
solely of interest calculated on the basis of the differential (excluding the IRPH). 
It is only if this remuneration has to be deemed insufficient to enable the 
agreement to continue in existence that the IRPH should be replaced by the 
Euribor with retrospective effect from the start of the agreement. In any event, an 
order should be made requiring the consumer to be reimbursed the excess amounts 
paid under the IRPH term.