Analysis of the CJEU Judgment on IRPH clause
Analysis of the CJEU Judgment of March 3, 2020, on the IRPH clause
The CJEU ruling on IRPH mortgages no. 669/2017 of December 14, 2017 upheld the Appeal of Cassation filed by the entity KUTXABANK, S.L. agreeing with the bank that maintained that the IRPH clauses were not subject to the transparency control provided for in Directive 93/13/EEC, and this since, as stated, it is an official legally regulated index of whose regulatory control is the responsibility of the Public Administration, and consequently cannot be considered a general contracting condition (art. 4 General Contracting Conditions Law).
This sentence, however, had a Particular Opinion formulated by the then Judge D. Francisco Javier Orduña Moreno (and to which the also Judge D. Francisco Javier Arroyo Fiestas adhered ), which served as a basis for the Court of First Instance no. IRPH clause contained in his loan with a mortgage guarantee, to formulate a preliminary ruling before the Court of Justice of the European Union in order for it to decide on the following three essential questions, to which he has responded in his Judgment of March 3, 2020 :
Can the national judge submit the IRPH clauses to the control of transparency regulated in art. 1, section 2, of Directive 93/13/EEC or, on the contrary, is it outside its scope of applicability as it is an index regulated by regulatory and/or administrative provisions?
On this matter, the CJEU has emphatically concluded that, contrary to what was indicated by the Supreme Court in its Judgment of December 14, 2017 (and as held in the dissenting vote contained therein), the IRPH clauses, as a reference index for mortgage-backed loans granted to consumers, are suitable for being subjected to the transparency control provided for in Directive 93/13/CEE. strong>
In this way, the CJEU confirms that the incorporation of the IPRH index to a loan, despite constituting an official index, does not imply the incorporation of a “contractual clause that reflects mandatory legal or regulatory provisions” and, consequently, the exemption to the scope of application of the Directive contained in article 1, section 2 is not applicable to it.
The CJEU Judgment emphasizes that the application of the double control of transparency provided for in Directive 93/2013 must also be done by those EU member states that have not transposed the same to their respective legal systems.
Does the bank have to inform the consumer, in whose mortgage loan it intends to include an IRPH clause, how it is configured, how it has evolved in the past, and how could it evolve in the future in reference to the most used index (Euribor)?
Indeed, banks are and were obliged to inform consumers about (i) how the IRPH index was configured, (ii) how it had evolved in the past and (iii) how it could evolve in the future, all referenced to the EURIBOR index.
Such obligation materialized (and currently materializes) in the need for lending entities, prior to formalizing loans with IRPH clause with consumers, to offer them the data of the last value of the IRPH index published, a graph or table with the data related to its evolution during the last two years, and sufficient data (transmitted in an understandable way) to be able to know its possible evolution in the future.< /p>
Only with the supply of such data could the consumer have the necessary and essential information to be able to know, in a certain way, the consequences that the incorporation of an IRPH clause could have on the Obligations assumed when formalizing the loan in relation to the rest of the existing reference indices, thereby exceeding the required transparency control.
What would be the consequence of a hypothetical declaration of invalidity of the IRPH clause incorporated into a loan agreement with a mortgage guarantee, its substitution by the Euribor or, directly, the elimination of the obligation to pay interest?
The Judgment does not pronounce clearly on this matter, limiting itself to indicating that the national Judge, when declaring the nullity of the IRPH index, may replace it with another index that is more balanced for the contract in accordance with the provisions of Directive 93/2013, provided that this prevents the declaration of nullity of the IRPH from leading to the declaration of nullity of the entire contract, an absolutely undesirable effect that must be avoided by all means.< /p>
The solution to this dilemma will have to be given by the Spanish Courts and Tribunals when issuing their Judgments, and it should be noted that, to date, the only two existing judicial pronouncements in this regard have opted , after annulling the respective IRPH clauses submitted to its knowledge, for additionally applying the EURIBOR as the reference index of the contracts (Judgment of March 4, 2020 of the Court of First Instance No. 4 of Burgos and Judgment dated March 9, 2020 of the Court of First Instance No. 6 of Lleida).
It may interest you:”Claim for IRPH mortgage compensation”
María Olivares Sánchez
Lawyer member of the Commercial Law Department