On 14 April 2016, the First Chamber of the European Court of Justice (the ECJ) published its decision on Jorge Sales Sinué v Caixabank SA (C-381/14) and Youssouf Drame Ba v Catalunya Caixa SA (Catalunya Banc SA) (C‑385/14).  The ECJ confirmed that (in this instance, Spanish) national law provisions allowing for the automatic suspension of an individual action pending the final judgment of an ongoing collective action brought by a consumer association on the same issue, does not provide adequate protection for the consumer and therefore is not in line with the spirit of Article 7 of the Unfair Terms Directive 93/13 (the Directive).

Two Spanish consumers issued individual proceedings against their respective mortgage providers  claiming that a term setting out the lowest interest rate that may be charged (‘floor’ clause), created detrimental imbalance and was unfair. Prior to this, a consumer association brought a collective action against 72 banking institutions seeking, among other matters, an injunction to prohibit the use of such terms in similar contracts. The Spanish national court sought guidance from the ECJ on whether adopting the Spanish national provision of automatic suspension was in line with the Directive.

In reaching its conclusion the ECJ considered the wider scope of the Directive, the relevant national laws (in this instance, the laws of Spain) and previous case law. The ECJ also contrasted the position of an individual consumer litigant to that of a consumer association and found the former to be weaker thus necessitating a greater level of protection from the courts. 

The Spanish national provision on automatic suspension of individual claims pending outcome of a collective action was, in this instance, deemed incompatible with the Directive if applied ‘automatically’ without consideration as to how the suspension would affect the level of protection to the consumer and without enabling the consumer to decide whether it wished to be disassociated from the collective action.

The UK national courts have the power to stay matters in one set of proceedings pending the outcome of group litigation, if the outcome of the group litigation would have a direct impact.  This decision will therefore be of relevance should the UK national courts opt to exercise this power in matters of consumer protection.