In its writ dated February 2, 2016, the First Instance Civil Court No. 38 of Barcelona raised a preliminary issue to the Court of Justice of the European Union. In that writ, it requested the EU court to determine whether the business practice of assigning or buying credits without offering consumers the possibility to settle the debt by paying the assignee the outstanding amount is in line with EU law.

The Barcelona court indicates that article 1535 of the Spanish Civil Code, governing the preemptive buy-back of litigious credits, does not adequately protect consumers’ interests because (i) its scope for application is limited, and (ii) it does not include cases of buying credits outside of court or in the enforcement stage. 

The Court of Justice of the European Union’s ruling will be especially relevant for the many transfers of portfolios of NPLs the banks have carried out recently to reduce their default rates, improve their liquidity and reduce costs.