''Aziz v Caixa d'Estalvis de Catalunya'' (2013) Case C-415/11 is an

EU law European Union law is a system of Supranational union, supranational Law, laws operating within the 27 member states of the European Union (EU). It has grown over time since the 1952 founding of the European Coal and Steel Community, to promote ...

and

consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...

case, concerning the

Unfair Terms in Consumer Contracts Directive Unfair may refer to: * The negative form of the adjective ''fair''; unfairness or injustice Injustice is a quality relating to unfairness or undeserved outcomes. The term may be applied in reference to a particular event or situation, or to a ...

. It emphasises the foundations of consumer protection on

inequality of bargaining power Inequality of bargaining power in law, economics and social sciences refers to a situation where one party to a bargain, contract or agreement, has more and better alternatives than the other party. This results in one party having greater power ...

and imbalances in information.

Facts

Mohammed Aziz was a resident in Spain. He took out a mortgage with Caixa d'Estalvis de Catalunya (the Savings Bank of Catalonia), secured on his home at an annual default interest rate of 18.75%. The Caixa was entitled to call in the loan upon a default by Aziz. Clause 15 of the contract also purported to give the right to reclaim any debt, quantifiable immediately. Aziz did default, and the Caixa quantified the debt through a

notary A notary is a person authorised to perform acts in legal affairs, in particular witnessing signatures on documents. The form that the notarial profession takes varies with local legal systems. A notary, while a legal professional, is distin ...

, adding contractual and default

interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...

. The bank began repossession of the property and a week before eviction, Aziz applied to the Spanish court to annul clause 15 on grounds of unfairness under the

. No provision in Spanish law foresaw this possibility, nor was there any interim relief. Under Spanish law, final vesting of the mortgaged property was irreversible even if a term was challenged as unfair before the court. The only exception was where a consumer made preliminary registration for the application to be annulled before a marginal note regarding a security certificate.

Judgment

Spanish courts

The Spanish Court asked the European Court of Justice (1) whether national law was compatible with the Unfair Contract Terms Directive 93/13/EC, (2) what the concept of 'unfair term' in articles 3(1) and (3) meant, to assess the fairness of terms relating to acceleration in long terms contracts, in setting default interest rates and quantification. The Caixa said this was inadmissible, as being irrelevant to the dispute, because it related to declaratory rather than enforcement proceedings.

European Court of Justice

The Court of Justice, First Chamber, held that the terms were capable of being assessed for fairness.

Notes

References