JUDGMENT OF THE COURT (Grand Chamber)

26 March 2019 ( *1 )

(Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Articles 6 and 7 — Unfair terms in consumer contracts — Accelerated repayment clause of a mortgage loan contract — Declaration that the clause is unfair in part — Powers of the national court when dealing with a term regarded as ‘unfair’ — Replacement of the unfair term with a provision of national law)

In Joined Cases C‑70/17 and C‑179/17,

REQUESTS for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 8 February 2017, received at the Court on 9 February 2017, and from the Juzgado de Primera Instancia n o 1 de Barcelona (Court of First Instance No 1, Barcelona, Spain), made by decision of 30 March 2017, received at the Court on 7 April 2017, respectively, in the proceedings

Abanca Corporación Bancaria SA

v

Alberto García Salamanca Santos (C‑70/17),

and

Bankia SA

v

Alfonso Antonio Lau Mendoza,

Verónica Yuliana Rodríguez Ramírez (C‑179/17),

THE COURT (Grand Chamber),

composed of K. Lenaerts, President, R. Silva de Lapuerta, Vice-President, A. Prechal, M. Vilaras, F. Biltgen, K. Jürimäe and C. Lycourgos, Presidents of Chambers, E. Juhász, M. Ilešič, E. Levits, L. Bay Larsen, D. Šváby and S. Rodin (Rapporteur), Judges,

Advocate General: M. Szpunar,

Registrar: L. Carrasco Marco, Administrator,

having regard to the written procedure and further to the hearing on 15 May 2018,

after considering the observations submitted on behalf of:

–

Abanca Corporación Bancaria SA, initially by J. Massaguer Fuentes and C. Vendrell Cervantes, abogados, and subsequently by D. Sarmiento Ramírez-Escudero, abogado,

–

Bankia SA, by J.M. Rodríguez Cárcamo and A.M. Rodríguez Conde, abogados,

–

the Spanish Government, by M.J. García-Valdecasas Dorrego, acting as Agent,

–

the Hungarian Government, by M.Z. Fehér, acting as Agent,

–

the Polish Government, by B. Majczyna, acting as Agent,

–

the European Commission, by J. Baquero Cruz, N. Ruiz García and A. Cleenewerck de Crayencour, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 September 2018,

gives the following

Judgment

1These requests for a preliminary ruling concern the interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts ( OJ 1993 L 95, p. 29 ), in particular Articles 6 and 7 thereof.

2The request for a preliminary ruling in Case C‑70/17 has been made in proceedings between Abanca Corporación Bancaria SA and Mr Alberto García Salamanca Santos concerning the conclusions to be drawn from the finding that the accelerated repayment clause set out in Clause 6a of the loan agreement secured by a mortgage concluded between those two parties is unfair.

3The request for a preliminary ruling in Case C‑179/17 has been made in proceedings between Bankia SA and Mr Alfonso Antonio Lau Mendoza and Ms Verónica Yuliana Rodríguez Ramírez concerning the application for mortgage enforcement pending before the referring court concerning property mortgaged to guarantee payment of a loan.

Legal context

European Union law

4The 24th recital of Directive 93/13 states that ‘the courts or administrative authorities of the Member States must have at their disposal adequate and effective means of preventing the continued application of unfair terms in consumer contracts’.

5Article 1(1) of that directive provides:

‘The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer.’

6Article 3 thereof is worded as follows:

‘1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.

…’

7Article 6(1) of the directive provides:

‘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.’

8Under Article 7(1) of Directive 93/13:

‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’

Spanish law

9Article 1124 of the Código Civil (Civil Code) is worded as follows:

‘The power to terminate obligations shall be deemed to be implied in the case of reciprocal obligations, if one of the contracting parties should fail to do what is required of him.

The injured party may choose to demand either the performance or the termination of the obligation, with compensation for damage and payment of interest in both cases. He may also request termination, even after opting for specific performance, if the latter should prove impossible.

The Court shall order the termination requested, unless there are justified grounds allowing it to fix a period for performance of the obligation.’

10Under Article 1303 of the Civil Code:

‘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.’

11The first paragraph of Article 1857 of that code states that an essential feature of mortgage contracts is that they are created ‘in order to guarantee performance of a primary obligation’.

12Article 1858 of the code provides:

‘[another] essential feature of those contracts consists in the fact that, where the primary obligation is outstanding, the goods constituting the security or the mortgage may be sold in order to satisfy the creditor.’

‘... the mortgage makes the goods it covers, regardless of their owner, directly and immediately subject to performance of the obligation with a view to which it was created by way of security.’

14Ley 1/2000 de Enjuiciamiento Civil (Law No 1/2000 on Civil Procedure) of 7 January 2000 (BOE No 7 of 8 January 2000, p. 575) (‘the LEC’) was amended by Ley 1/2013 de medidas para reforzar la protección a los deudores hipotecarios, reestructuración de deuda y alquiler social (Law No 1/2013 on measures to strengthen the protection of mortgage debtors, debt restructuring and social rents) of 14 May 2013 (BOE No 116 of 15 May 2013, p. 36373), by Real Decreto-Ley 7/2013 de medidas urgentes de naturaleza tributaria, presupuestaria y de fomento de la investigación, el desarrollo y la innovación (Royal Decree-Law No 7/2013 on urgent fiscal and budgetary measures and promoting research, development and innovation) of 28 June 2013 (BOE No 155 of 29 June 2013, p. 48767), then by Real Decreto-Ley 11/2014 de medidas urgentes en materia concursal (Royal Decree-Law No 11/2014 on urgent measures in bankruptcy matters) of 5 September 2014 (BOE No 217 of 6 September 2014, p. 69767).

15Article 693(2) of the LEC, in the version in force on the date when the contracts at issue in the main proceedings were signed, indicated:

‘The entirety of the principal and interest owed may be claimed if it has been agreed that the debt shall mature in its entirety in the event of failure to pay one of the agreed repayment instalments, and that agreement is recorded in the register.’

16Under Article 693(2) of the LEC, concerning the accelerated repayment of debts repayable in instalments, in the version subsequent to the signing of the contracts at issue in the main proceedings:

‘The total amount owed by way of principal and interest may be claimed if it has been agreed that repayment of the loan in its entirety is due in the event of failure to pay at least three monthly repayment instalments without the debtor fulfilling his obligation to pay or his failure to pay a number of repayment instalments from which it can be inferred that the debtor has failed to fulfil his obligation for a period at least equivalent to three months, and that agreement is set out in the instrument creating the mortgage and the corresponding entry in the register.’

17Article 695 of the LEC, concerning the procedure for objecting to mortgage enforcement proceedings, in the version subsequent to the signing of the contracts at issue in the main proceedings, is worded as follows:

‘1. In proceedings under this chapter, an objection to enforcement by the party against whom enforcement is sought may be admitted only if it is based on the following grounds:

…

(4) the unfairness of a contractual term constituting the basis for enforcement or which has enabled the amount due to be calculated.

2. If an objection is lodged under the preceding paragraph, the court registry shall stay enforcement and summon the parties to a hearing before the court which ordered the enforcement. There shall be at least 15 days between the summons and the date of the hearing in question. At that hearing, the court shall hear the parties, admit the documents that are submitted and issue the decision that it considers reasonable within two days in the form of an order.

3. …

If ground 4 of paragraph 1 of the present article is upheld, enforcement shall be discontinued where it is based on the contractual term. In other cases, enforcement shall be continued without the application of the unfair term.

4. An appeal may lie against the order discontinuing enforcement or disapplying an unfair term or rejecting the opposition on the ground laid down in paragraph 1(4) of the present article.

Save in those circumstances, no appeal shall lie against orders adjudicating upon the objection to enforcement referred to in the present article and the effects of those orders shall be confined exclusively to the enforcement proceedings in which they are made.’

18Real Decreto Legislativo 1/2007 por el que se aprueba el texto refundido de la Ley General para la Defensa de los Consumidores y Usuarios y otras leyes complementarias (Royal Legislative Decree No 1/2007 approving the consolidated text of the General Law for the protection of consumers and users and other supplementary laws) of 16 November 2007 (BOE No 287 of 30 November 2007, p. 49181), as amended by Ley 3/2014 (Law No 3/2014) of 27 March 2014 (BOE No 76 of 28 March 2014, p. 26967), provides, in Article 83 thereof:

‘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.’

The disputes in the main proceedings and the questions referred for a preliminary ruling

Case C‑70/17

19By contract signed on 30 May 2008, Mr García Salamanca Santos and Ms Varela Pena obtained a loan secured by a mortgage from the banking establishment Abanca Corporación Bancaria in respect of an amount of EUR 100000, granted for a term of 30 years.

20Clause 6a of that contract, concerning its early termination, is worded as follows:

‘6a. Early termination by the credit establishment.

[The bank] may, without first making a demand, call in the loan and require, by legal proceedings, repayment of the debt in its entirety, both sums that have fallen due and those yet to fall due, with interest, default interest, expenses and costs, in the following cases:

(a) Failure to pay any instalment of interest or any repayment instalment, including all the components thereof, the parties expressly requesting that this stipulation be noted in the records of the Land Registry, in accordance with Article 693 of Law No 1/2000.

…’

21Mr García Salamanca Santos brought an action for annulment before the Spanish court of first instance having jurisdiction concerning several terms of the mortgage loan contract, including Clause 6a, on the ground that those terms were unfair.

22That court upheld that action and annulled, inter alia, Clause 6a of that mortgage loan contract.

23Abanca Corporación Bancaria brought an appeal against that judgment before the Audiencia Provincial de Pontevedra (Provincial Court, Pontevedra, Spain), which dismissed that appeal by judgment of 14 May 2014, thereby confirming the judgment delivered at first instance.

24Abanca Corporación Bancaria brought an appeal on a point of law before the Tribunal Supremo (Supreme Court, Spain) against the judgment of the Audiencia Provincial de Pontevedra (Provincial Court, Pontevedra).

26The referring court questions, next, whether it is consistent with the provisions of Directive 93/13 to apply a provision of national law as a supplementary provision in order to enable the continuation of mortgage enforcement proceedings launched on the basis of a term concerning the early termination of a loan contract which has been declared unfair by a national court, where those proceedings are considered more favourable to consumers than ordinary enforcement proceedings.

27In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Must Article 6(1) of Directive 93/13 be interpreted to the effect that a national court, in appraising the unfairness of an accelerated repayment clause in a mortgage loan contract concluded with a consumer that provides for acceleration upon failure to pay [a single] instalment, in addition to other cases of non-payment of further instalments, may assess the unfairness only of the contractual term or case of non-payment of an instalment and treat the accelerated repayment clause covering non-payment of instalments also laid down on a general basis in the clause as still valid, regardless of whether any specific finding of validity or unfairness has to be deferred to the time when the power [to declare the early maturity of the loan] is exercised?

(2)

Does a national court have powers under Directive 93/13 — once an accelerated repayment clause in a loan or credit contract secured by a mortgage is declared unfair — whereby it may take the view that the supplementary application of a provision of national law, even though giving rise to the commencement or continuation of enforcement proceedings against the consumer, appears more favourable to the consumer than a stay of that special mortgage enforcement procedure and may allow the creditor to initiate proceedings to terminate the loan or credit contract, or to claim the sums owing, and ensure the subsequent enforcement of the adverse judgment, without the advantages which the special mortgage enforcement procedure makes available to consumers?’

Case C‑179/17

28On 22 June 2005 Ms Rodríguez Ramírez and Mr Lau Mendoza concluded a mortgage loan contract with the bank Bankia in respect of an amount of EUR 188000, granted for a term of 37 years.

29Clause 6a of that contract, entitled ‘Early termination by the credit institution’, provides as follows:

‘Notwithstanding the stipulated term of this contract, the lending bank may declare the loan due, considering the contract terminated and the debt as being prematurely due in its entirety, for example in the event of failure to pay one, several or all of the repayment instalments set out in the second clause [concerning amortisation].’

30Following 36 missed monthly payments by the defendants in the main proceedings, Bankia filed an application with the Juzgado de Primera Instancia no 1 de Barcelona (Court of First Instance No 1, Barcelona, Spain) for mortgage enforcement concerning the property mortgaged to guarantee payment of the loan granted.

31The referring court notes that, according to the case-law of the Tribunal Supremo (Supreme Court), where a court examining a special mortgage enforcement procedure finds that that procedure is based on an unfair term which provides for, inter alia, the early termination of the loan contract in the event that the debtor misses a single monthly repayment, that court, rather than ordering discontinuation of enforcement under Article 695(1) and (3) of the LEC, must maintain that procedure. This would be achieved by replacing such a term with the rule laid down in Article 693(2) of the LEC, in the version subsequent to the signing of the mortgage loan contract referred to in paragraph 28 above, which permits the early maturity of the loan in the event of failure to pay at least three monthly repayment instalments.

32According to the referring court, it is apparent from that case-law that discontinuation of enforcement means that the bank may, after such discontinuation is ordered, rely on Article 1124 of the Civil Code, which permits an action to be brought requesting the court seised to declare the termination of the contract. The judicial decision resulting from that action would be the subject of ordinary enforcement proceedings whereby all the debtor’s goods, including his home, may be seized.

33The referring court also states that, according to the Tribunal Supremo (Supreme Court), where the mortgaged property is the debtor’s home, the special mortgage enforcement procedure, unlike the ordinary enforcement procedure, has several distinctive features designed to protect that debtor. Those features include, inter alia, the possibility for the debtor to release the property, the application of a minimum price below which the debtor’s home may not be sold at auction, and the recognised power of the debtor to pay off his debt where the amount obtained from the sale at auction is insufficient to cover the entirety of the claim. In the light of those distinctive features, the Tribunal Supremo (Supreme Court) has held that the special mortgage enforcement procedure is more favourable to consumers’ interests than the ordinary enforcement procedure that would apply following a declaratory action based on Article 1124 of the Civil Code.

34However, the referring court has doubts as to whether the case-law of the Tribunal Supremo (Supreme Court) is compatible with Articles 6 and 7 of Directive 93/13.

35First, it questions whether the mortgage enforcement procedure is more favourable in comparison with the termination of the mortgage loan contract by judicial decision on the basis of Article 1124 of the Civil Code followed by an ordinary enforcement procedure. It notes in that regard that, in an ordinary enforcement procedure, the consumer is, in practice, in a position to buy some time and will avoid, for the moment, being evicted from his home. In addition, an analysis of the case-law of the Tribunal Supremo (Supreme Court) and the wording of Article 1124 of the Civil Code shows that, in cases of loans secured by a mortgage granted for the purchase of accommodation, it is relatively likely that a declaratory action based on Article 1124 of the Civil Code will be dismissed, because that provision is not applicable to loan contracts. Even if it were to be accepted that Article 1124 of the Civil Code is applicable to loan contracts, the referring court states that it cannot be ruled out that an action for termination may be dismissed if the court considers that there are justified grounds allowing it to fix a period for [performance of the obligation by] the debtor, as is expressly provided for in that article.

36Second, the supplementary application of Article 693(2) of the LEC, in the version in force subsequent to the signing of the mortgage loan contract, instead of the contractual term which has been found to be unfair would, according to the referring court, be problematic in two respects.

37In the first place, according to the case-law of the Court, in particular its 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 ), the national court may replace an unfair term with a supplementary provision of national law only in ‘cases in which the invalidity of the unfair term would require the court to annul the contract in its entirety, thereby exposing the consumer to disadvantageous consequences’.

38In the second place, assuming that the supplementary application of Article 693(2) of the LEC, in the version in force subsequent to the signing of the mortgage loan contract, is considered to be feasible in the abstract, the existence of an agreement between the parties is a fundamental condition for the applicability of that provision laid down by the provision itself. In the present case, such an agreement did indeed arise from the conclusion of the mortgage loan contract, but that agreement has in fact been regarded as unfair and declared void.

39For all those reasons, which point to legal issues likely to be important in the context of responding to the request for a preliminary ruling submitted by the Tribunal Supremo (Supreme Court) in Case C‑70/17, the referring court considered it appropriate and necessary to submit a new request to the Court for a preliminary ruling so that it may, where appropriate, be joined to the request previously submitted in Case C‑70/17.

40In those circumstances, the Juzgado de Primera Instancia no 1 de Barcelona (Court of First Instance No 1, Barcelona) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Is case-law incompatible with Articles 6 and 7 of [Directive 93/13] when it (a judgment of the Tribunal Supremo (Supreme Court) of 18 February 2016) holds that, despite the unfairness of the early repayment term and even though the application for enforcement is based on that term, mortgage enforcement proceedings are not to be closed because their continuation is more favourable to the consumer, given that, in the event of any enforcement of a judgment given [following] proceedings brought under Article 1124 of the Civil Code, a consumer would not enjoy the procedural privileges applicable in mortgage enforcement proceedings, and when that case-law does not take into account the settled case-law of the Tribunal Supremo (Supreme Court) to the effect that Article 1124 of the Civil Code (laid down for contracts creating reciprocal obligations) is not applicable to loan agreements, because such an agreement is a real, unilateral contract which does not become valid until the money is handed over and which, therefore, creates obligations for the borrower alone and not for the lender (creditor), so that, if that case-law of the Tribunal Supremo (Supreme Court) were to be applied in declaratory proceedings, a consumer could obtain a ruling dismissing the claim for termination and compensation and it could no longer be argued that continuation of the mortgage enforcement proceedings was more favourable to him?

(2)

If the application of Article 1124 of the Civil Code to loan agreements or in the case of all credit agreements should be accepted, is case-law like that referred to incompatible with Articles 6 and 7 of [Directive 93/13] when that case-law does not take into account, for the purpose of assessing whether it is more favourable to the consumer for the mortgage enforcement proceedings to continue or more detrimental to hold declaratory proceedings under Article 1124 of the Civil Code, the fact that, in declaratory proceedings, the claim for termination of the agreement and the claim for compensation may be dismissed if the court applies the stipulation in Article 1124 of the Civil Code that “the court shall order the termination requested, unless there are justified grounds allowing it to fix a period [for performance of the obligation]”, bearing in mind that, precisely in the context of long-term (20 or 30 years) loans and mortgages for the purchase of dwellings, it is relatively likely that the courts will apply that ground for dismissal, particularly where the non-performance of the payment obligation has not been very serious?

(3)

If it were to be accepted that it is more favourable to the consumer to continue enforcement of the mortgage with the effects of early repayment, is case-law like that referred to incompatible with Articles 6 and 7 of [Directive 93/13] when that case-law applies on a supplementary basis a statutory provision (Article 693(2) [of the LEC]), even though the contract is capable of continuing to exist without the early repayment term, and when that case-law gives effects to Article 693(2) of the LEC, even though the essential condition stipulated therein has not been met: that there should be in the contract a valid and effective agreement regarding early repayment, and the early repayment term has in fact been declared unfair, void and ineffective?’

Joinder of Cases C‑70/17 and C‑179/17

41In view of the connection between Cases C‑70/17 and C‑179/17, it is appropriate, in accordance with Article 54 of the Rules of Procedure of the Court, to join them for the purpose of this judgment.

Consideration of the questions referred

Admissibility of the request for a preliminary ruling in Case C‑179/17

42The Spanish Government contests the admissibility of the request for a preliminary ruling in Case C‑179/17 on the ground that the objective pursued by that request is that of supplementing the legal context set out by the Tribunal Supremo (Supreme Court) in Case C‑70/17 in order to make available to the Court all the relevant evidence for the purposes of answering the questions referred for a preliminary ruling in that case. However, the purpose of a reference for a preliminary ruling is to obtain an interpretation of EU law and not to correct the content of questions referred for a preliminary ruling in other cases pending before the Court. In addition, the Spanish Government contends that the questions raised by the referring court are solely concerned with the interpretation of rules of national law.

45In the present case, the request for a preliminary ruling concerns the interpretation of Articles 6 and 7 of Directive 93/13. In addition, the order for reference sets out the factual and legal context in sufficient detail to enable the scope of the questions referred to be determined. Furthermore, it does not seem that the interpretation sought bears no relation to the actual facts or the purpose of the dispute in the main proceedings; nor does the problem appear to be hypothetical.

46Lastly, having regard to the case-law cited in paragraph 44 above, the question whether the referring court wishes to supplement the legal context of the request for a preliminary ruling submitted by the Tribunal Supremo (Supreme Court) in Case C‑70/17 is irrelevant for the purpose of assessing the admissibility of the request for a preliminary ruling in Case C‑179/17.

47It follows that the request for a preliminary ruling in Case C‑179/17 is admissible.

Substance

51In the present case, it is apparent from the findings of the referring courts that the terms at issue in the main proceedings, although they were based on Article 693(2) of the LEC, in the version in force on the date when the mortgage loan contracts at issue in the main proceedings containing those terms were signed, must be regarded as unfair, inasmuch as they provide that the financial establishment may declare the early termination of the contract and require repayment of the loan where the debtor has missed a single monthly repayment.

Costs

65Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Grand Chamber) hereby rules:

Articles 6 and 7 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted, first, as precluding an accelerated repayment clause of a mortgage loan contract that has been found to be unfair from being maintained in part, with the elements which make it unfair removed, where the removal of those elements would be tantamount to revising the content of that clause by altering its substance, and, second, as not precluding the national court from compensating for the invalidity of such an unfair term by replacing that term with the new wording of the legislative provision on which it was based, which is applicable where the parties to the contract so agree, provided that the mortgage loan contract in question cannot continue in existence if that unfair term is removed, and that the annulment of the contract in its entirety would expose the consumer to particularly unfavourable consequences.

[Signatures]

( *1 ) Language of the case: Spanish.