Reference indicator

Facts

The Spanish dispute afraid the validity of the condition for a periodic interest rate review for a mortgage credit agreement concluded by the consumer. Under this condition, the contractual interest rate is variable and the fresh interest rate should be fixed periodically by mention to the average interest rates on mortgage loans granted for a period of more than 3 years for the acquisition of residential housing at free marketplace prices (hereinafter IRPH).

The Court of San Sebastian referred to the Court many questions relating to the interpretation, first, of Article 3(1), Article 5(1) and Article 7(1) of Council Directive 93/13/EEC of 5.4.1993 on unfair terms in consumer contracts (OJ L L 1993, No 95, p. 29), second, Article 7 of Directive 2005/29/EC of the European Parliament and of the Council of 11.5.2005 concerning unfair commercial practices by undertakings in relation to consumers in the interior marketplace and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (Directives on unfair commercial practices) (OJ L 149, 222).

TS Position

In the assessment of the TS, Articles 4(2) and 5 of Directive 93/13 are to be interpreted as meaning that Transparency requirements the resulting provisions are fulfilled erstwhile concluding a mortgage credit agreement with respect to the condition of that contract providing for a periodic adjustment of the interest rate according to the value of the authoritative rate specified in the administrative act which contains its definition, only due to the fact that that act and the erstwhile values of that indicator have been published in the authoritative diary of the associate State concerned. Therefore, the creditor does not gotta inform the consumer himself of the definition of this indicator and its past of changes to date. This besides applies to situations where, due to the method of calculating this indicator, it corresponds not to the capital interest rate but to the actual yearly interest rate (RRSO). However, provided that, due to their publication, this information is sufficiently accessible for the average consumer thanks to the indications given for this intent by that entrepreneur. In the absence of specified information, the trader should straight supply a full definition of this indicator, as well as any applicable information, in peculiar regarding a possible informing by the authority which established that indicator, relating to its circumstantial characteristics and consequences which may be considered applicable to the consumer in order to decently measure the economical impact of the conclusion of the proposed mortgage credit agreement. In any event, the trader should supply the consumer with all information required by the national government in force at the time of conclusion of the contract.

According to the TS, Article 3(1) of Directive 93/13 must be interpreted as meaning that, for the assessment of the possible unfair nature of the condition of a variable rate mortgage credit agreement providing for periodic adjustment of the interest rate depending on the value of the authoritative indicator, it is crucial that this condition simply refers straight to this indicator. It follows from the indications in the administrative act in which that indicator is established that due to the circumstantial characteristics resulting from the method of calculating it, it is essential to apply a negative spread to bring the actual yearly interest rate (RRSO) of the transaction into line with the RRSO on the market, unless the trader has informed the consumer of these indicators and they were not sufficiently available to the average consumer.

The Court besides held that Article 3(1) of Directive 93/13 must be interpreted as meaning that, in the event of application in a condition providing for the periodic adjustment of the interest rate of the mortgage credit agreement of the benchmark established on the basis of the actual yearly interest rates (RRSO) applicable to contracts which are taken into account for the calculation of the subsequent values of that indicator, the fact that those RRSOs contain elements resulting from conditions the unfairness of which will subsequently be established, does not mean that the condition for adjusting the interest rate of the contract should be considered unfair, and so not effective towards the consumer.

The Court considers that Article 3(1) of Directive 93/13 must be interpreted as meaning that, in the event of application in a condition providing for the periodic adjustment of the interest rate of the benchmark’s mortgage credit agreement, it is not appropriate to To presume that an entrepreneur acts in good faith due to the fact that it is an authoritative indicator established by the administration and utilized by public administrations. The assessment of the possible unfair nature of specified a condition should be made on the basis of the circumstances applicable to the case, taking into account in peculiar the non-compliance with the request of transparency and by comparing the method of calculation of the standard interest rate provided for by that condition and the actual rate of specified interest with the usual calculation methods utilized and, inter alia, the interest rates applied on the marketplace at the time of the conclusion of the contract in respect of a debt of an equivalent amount and granted for an equivalent period as for that contract.

The Court has explained that Article 3(1) of Directive 93/13 must be interpreted as meaning that, in order to measure the possible unfair nature of the condition of a variable rate mortgage credit agreement providing for periodic adjustment of the interest rate depending on the value of the benchmark, it is crucial to adjust the interest rate periodically according to the value of the benchmark in question. comparison of the calculation method the average interest rates provided for by that condition and the actual rate of those interest rates with the usual calculation methods and, in particular, the interest rates applied on the marketplace at the time of the conclusion of the credit agreement in question in respect of a debt of an equivalent amount and granted for an equivalent period as for that contract. another aspects of the method of calculating the contractual interest rate or benchmark may be applicable if they may origin imbalance to the detriment of the consumer.

Articles 6(1) and 7(1) of Directive 93/13 should be interpreted as meaning that, in principle, a variable interest rate mortgage credit agreement could not proceed without a condition providing for a periodic adjustment of the interest rate depending on the value of the benchmark, the unfair nature of which has been established, but annulment of the full contract would exposure the consumer to peculiarly adverse consequences, they do not prevent that the national court has replaced this condition with a dispositive provision of national law. Provided that the scope of this provision is equivalent to the scope of the condition to be replaced. That court cannot, on the another hand, modify this condition by adding an component to it that could remedy the imbalance that it causes to the detriment of the consumer.

The Court has stressed that Articles 6(1) and 7(1) of Directive 93/13 must be interpreted as meaning that, where a mortgage credit agreement could not proceed without a condition of unfair character, they preclude the application of a provision of national law under which An entrepreneur would be entitled to a refund of the full amount of credit plus statutory interest from the date on which that amount was made available to the consumer.