Possible interest refund for borrowers

The European Court of Justice (ECJ) has significantly strengthened consumer rights with its judgment of 21 December 2016. Residents as well as non-residents, in whose mortgage loan agreements so-called minimum interest clauses ("cláusula suelo") have been agreed, can now in part recover substantial amounts from their banks.


In the past, many banks had written so-called "cláusulas suelo" in their mortgage loan agreements. These floor clauses (also called base clauses) determine that the customer must always pay a certain minimum interest rate, even if the contract stipulates a variable interest rate (eg linked to the EURIBOR). As a result of this provision, banks were able to benefit from rising interest rates but falling interest rates only affected them up to the limit set by the minimum interest rate.

Many clients had filed a suit against that practice and the Spanish supreme court (Tribunal Supremo) denounced on 9 May 2013 this clauses as abusive, as consumers were generally not sufficiently informed of the associated economic burden. Only if a whole series of guidelines has been observed (in particular, extensive clarification and information requirements), the clauses can be effective in individual cases. Although the clauses were thus annulled in principle, the Tribunal Supremo limited the validity of its decision to the future, that is to say, for the interest arising from the judgement on.

ECJ: No temporal limitation for the recovery claims

The ECJ has now objected to this temporal limitation in the abovementioned judgment (Ref. C-154/15, C-307/15 and C-308/15). It would lead to incomplete and inadequate consumer protection, which in the end would not prevent the use of abusive clauses. If the individual clause was ascertained to be abusive, the consumer would have to be placed as if the clauses had never existed (ex tunc effect of the judgment), that is, too much interest paid had to be repaid.

Practical Impact of the ECJ Decision

In practice, this means that all interest paid due to abusive clauses can be recovered. In most cases, this is likely to have been the case since about 2009, when the minimum interest rates were applied due to falling interest rates during the financial crisis. Banco de España expects a total of around € 4 billion of claims for repayment. The individual sums which consumers can reclaim are, in part, substantial because of the consistently low interest rates since 2009. In its decision, the Court of Justice explicitly refers only to loan agreements, where the minimum interest clauses were ascertained to be abusive. Refunding, therefore, by no means an automatism. The judgement explicitly dealt with Cajasur, BBVA and Banco Popular. According to a report of the Banco de España, the BBVA, Caixabank (formerly La Caixa), Banco de Sabadell, Banco Popular, Liberbank and Bankia (formerly Cajamadrid and Bancaja) could be equally affected.

What can affected parties do?

If you have concluded a mortgage loan agreement in Spain, you should check it for possible minimum interest rates, or have it checked accordingly. This applies independetly from the bank you have accepted the loan from and whether it is your primary residence or a holiday home. You should then check whether your clause is also invalid in your indicidual case (which normally will be the case). If so, you should get in touch with the bank and see if it voluntarily offers a refund. Because it is not very likely that the bank itself will take the initiative and approach affected customers. If the bank does not voluntarily refund the too much paid interest, court action must be taken. The Ministry of Economic Affairs has also announced that it will take various measures to speed up and simplify the refunds. Our experts from the Litigation / Dispute Resolution department will be glad to support you on a contingency fee in all the steps described.