The Seville Commercial Court (Spain) issued a Judgment on 30 September 2010 that found the “floor clauses” (cláusulas suelo) that several Spanish banks and savings banks include in their mortgage loans to be null and void.
Spanish banks and savings banks frequently include clauses in mortgage loans clauses that prevent the interest rate on the loan falling below a certain threshold, even when the benchmark rate used for the calculation drops (EURIBOR in most cases).
The Consumer Association of Banking Services in Spain (AUSBANK) filed a class action seeking the annulment of such clauses in the mortgage loans of the Spanish BBVA bank, and the LA CAIXA and CAJAMAR savings banks. The Consumer Association argued that these clauses were abusive General Conditions and detrimental to consumers.
In their response to the claim, the defendants argued that the “floor clauses” are not General Conditions, but are negotiated with each client and not included in all loan agreements. They further claimed that in addition to the floor clauses, the contracts include ceiling clauses that limit any upward change in interest rates, and therefore the rights of the parties are balanced in the contract.
The Court accepted the arguments put by the Consumer Association and ruled that floor clauses are General Conditions as banks and savings banks impose them on Consumers. The latter are not offered the option of negotiating or to eliminating such terms and merely have to accept them or not sign the agreement.
As regards the contents of the clauses, the Court considered that there was a disproportionate difference between the floor and ceilings clauses in place, as the high ceiling levels put in place are unlikely to be reached. Therefore, floor clauses in the contracts range from 2.75 to 3.50% and ceiling clauses from 12 to 15%.
The Court found that the clauses only cover the risk of one of the contractual parties, the Bank, but the risk assumed by the consumers is not covered in in similar terms. Therefore, the clauses are abusive and detrimental to the consumers.
The Judgment, which has been appealed by the bank and saving banks in question, found that floor clauses in the mortgage loans of BBVA, LA CAIXA and CAJAMAR are null and void. It likewise ordered these entities to remove them from their contracts and refraining from their use in the future. However, should consumers wish to seek the reimbursement of the overpaid amounts in question, the Judgment found that they would have to file new actions against the bank and savings banks.