Nullity of the IRPH clause in mortgages

Consequences of the declaration of nullity of the IRPH Reference Index: Analysis of the first sentences handed down by the Courts of First Instance.

The publication on March 3, 2020 of the Judgment of the Court of Justice of the European Union (CJEU) (Read: CJEU ruling on IRPH mortgages), which determines that the so-called “IRPH clauses” may be subject to the transparency control provided for in Directive 93/13/EEC and, consequently, can be declared null and void for being abusive, once again opened the door for thousands of those affected by said index so that they can claim the amounts that they consider unduly paid, a possibility that until now was vetoed as a result of the last Judgment issued by the Supreme Court on this matter on December 14, 2017.

However, the CJEU Judgment does not resolve the essential question that all affected legal operators and individuals ask themselves: what consequences derive from said declaration of nullity? or, what amounts to the same thing, what happens after the declaration of nullity of the clause that incorporates the IRPH index into my mortgage loan contract?.

The “Mortgage Loan Reference Index” or IRPH is an interest rate index that, since 1994, has been published by the Bank of Spain and constitutes one of the six bank interest rate indices provided for in Circular 8/1990 of the Bank of Spain, of September 7, on transparency of operations and protection of customers (BOE No. 226, of September 20, 1990, page 27498).

The CJEU Judgment does not resolve whether, once the IRPH clause of a specific loan contract is annulled, it must be replaced by another index (generally, the Euribor), or if it is appropriate to leave the loan without any remuneration for the lending bank, referring in this regard to the decision that each national Judge adopts, stating that they may replace the annulled index with another index “in the absence of an agreement to the contrary of the parties to the contract, provided that the mortgage loan contract could not subsist after the suppression of the abusive clause and that the annulment of the contract in its entirety would leave “. We see how the CJEU establishes subsistence as a limit for the interpretative ratio of the contracts signed so that, in no case, the declaration of nullity of the IRPH index can determine the cancellation of the loan contract with mortgage guarantee and, consequently, its early expiration, an absolutely pernicious effect and contrary to the purpose pursued by the resolution.

Well, said lack of specificity is being partially resolved by the minor jurisprudence of the Spanish First Instance Courts which, despite the short time elapsed since the publication of the CJEU Judgment , they have already proceeded to apply it when resolving the procedures raised by individuals.

The first to do so was Burgos Court of First Instance no. publication of the CJUE Judgment) agrees to declare the nullity of the IPRH clause established by the entity CAIXABANK, S.A. in a loan with a mortgage guarantee signed in 2006 with a consumer and, in addition, condemn the bank:

“to recalculate the mortgage loan installments as if the aforementioned clause had never been applied, ordering the defendant to recalculate the installments as if the index applied was the Euribor plus the agreed differential, henceforth ceasing to apply the IRPH Cajas which will be replaced by the Euribor plus the agreed differential of 0.5”.

We see how, in this case, the Judge chooses to integrate the contract and replace the annulled index by the Euribor, motivating such decision by reference to the Particular Opinion issued by Mr. Francisco Javier Orduña in the Supreme Court Judgment of December 14, 2017, which, in turn, motivates such a position in the previous pronouncement contained in Supreme Court Judgment No. 607/2017.

The same conclusion (although less reasoned) was reached by the Court of First Instance No. 6 of Lleida in its Judgment dated March 9, 2020, where it also annulled the IRPH index incorporated into a loan contract with a mortgage guarantee signed by a consumer and orders the condemned bank (in this case, BANCO SANTANDER) to recalculate the accrued interest by applying the Euribor instead of the canceled index, also condemning it to return to the claimants the excess paid and the interest accrued for such amounts, also ordering BANCO SANTANDER to pay the costs caused.

Although we must be prudent when extrapolating to other cases the conclusions reached by the aforementioned Judgments (which, with total certainty, will be appealed before the respective Provincial Courts and, subsequently, , before the Supreme Court), we can see where the jurisprudence points in terms of the consequences of the nullity of the IRPH index: substitution by the Euribor index and the obligation of the bank to recalculate and return to the consumer the amounts improperly paid , increased by the corresponding interest, with the possibility of even imposing costs.

Based on such criteria, and without prejudice to the need to analyze the specific conditions of each case (date of formalization of the loan, borrowed capital, repayment term, etc. ), it is estimated that consumers who claim will be able to recover amounts that will range, on average, between €12,000.00 and €20,000.00.

It may interest you:”Claim for IRPH mortgage compensation”