Opinion of Advocate General Wahl delivered on 21 March 2018.

• Jurisdiction: European Union
• Celex Number: 62017CC0109
• ECLI: ECLI:EU:C:2018:201
• Docket Number: C-109/17
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 21 March 2018

Provisional text

OPINION OF ADVOCATE GENERAL

WAHL

delivered on 21 March 2018(1)

Case C‑109/17

Bankia SA

v

Juan Carlos Marí Merino

Juan Pérez Gavilán

María de la Concepción Marí Merino

(Request for a preliminary ruling from the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance No 5, Cartagena, Spain))

(Consumer protection — Directive 2005/29/EC — Unfair business-to-consumer commercial practices — Loan agreement secured by a mortgage — Re-evaluation of property before sale by auction — Review of unfair commercial practices in mortgage enforcement proceedings — ‘Adequate and effective means’ to combat unfair commercial practices — Interplay with Directive 93/13/EEC — Whether a national court may enforce a code of conduct on the basis of Directive 2005/29)

1. Is it necessary for an argument of unfair commercial practices to be raised by a court in mortgage enforcement proceedings, either ex officio or at the request of one of the parties, in order to ensure consumer protection as provided for by Directive 2005/29/EC? (2) This is the underlying issue in the case referred by the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance No 5, Cartagena, Spain).

2. The issue thus raised by the case before the referring court brings to mind similar issues dealt with by the Court in connection with Directive 93/13/EEC on unfair terms in consumer contracts. (3) Therefore one aspect of the present Opinion will be an analysis of the levels of protection provided by those two consumer protection instruments.

I. Legal framework

A. EU law

3. Article 2(f) of Directive 2005/29 defines a ‘code of conduct’ as ‘an agreement or set of rules not imposed by law, regulation or administrative provision of a Member State which defines the behaviour of traders who undertake to be bound by the code in relation to one or more particular commercial practices or business sectors’.

4. Article 3 defines the scope of Directive 2005/29 as follows:

‘1. This Directive shall apply to unfair business-to-consumer commercial practices, as laid down in Article 5, before, during and after a commercial transaction in relation to a product.

2. This Directive is without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract.

...

4. In the case of conflict between the provisions of this Directive and other Community rules regulating specific aspects of unfair commercial practices, the latter shall prevail and apply to those specific aspects.

…’

5. Article 10 of Directive 2005/29 (‘Codes of conduct’) provides:

‘This Directive does not exclude the control, which Member States may encourage, of unfair commercial practices by code owners and recourse to such bodies by the persons or organisations referred to in Article 11 if proceedings before such bodies are in addition to the court or administrative proceedings referred to in that Article.

Recourse to such control bodies shall never be deemed the equivalent of foregoing a means of judicial or administrative recourse as provided for in Article 11.’

6. Article 11 of that directive deals with the enforcement of its provisions. It states:

‘1. Member States shall ensure that adequate and effective means exist to combat unfair commercial practices in order to enforce compliance with the provisions of this Directive in the interest of consumers.

Such means shall include legal provisions under which persons or organisations regarded under national law as having a legitimate interest in combating unfair commercial practices, including competitors, may:

(a) take legal action against such unfair commercial practices;

and/or

(b) bring such unfair commercial practices before an administrative authority competent either to decide on complaints or to initiate appropriate legal proceedings.

…

2. Under the legal provisions referred to in paragraph 1, Member States shall confer upon the courts or administrative authorities powers enabling them, in cases where they deem such measures to be necessary taking into account all the interests involved and in particular the public interest:

(a) to order the cessation of, or to institute appropriate legal proceedings for an order for the cessation of, unfair commercial practices;

or

(b) if the unfair commercial practice has not yet been carried out but is imminent, to order the prohibition of the practice, or to institute appropriate legal proceedings for an order for the prohibition of the practice,

even without proof of actual loss or damage or of intention or negligence on the part of the trader.

…’

7. Under Article 13 of Directive 2005/29 (‘Penalties’) ‘Member States shall lay down penalties for infringements of national provisions adopted in application of this Directive and shall take all necessary measures to ensure that these are enforced. These penalties must be effective, proportionate and dissuasive’.

B. Spanish law

1. Law on Unfair Competition

8. Articles 4, 5, 7 and 8 of the Ley de Competencia Desleal (Law on Unfair Competition) of 10 January 1991, as amended by Law No 29 of 30 December 2009, define the types of act that are to be considered as unfair in dealings between traders and consumers under Spanish law.

9. Article 32 of the Law on Unfair Competition governs the actions which may be brought against acts of unfair competition and lists, inter alia, the following: (i) action for a declaration of unfair competition; (ii) action seeking an order to cease and desist from the unfair competition; (iii) action for annulment of the effects of the unfair competition; and (iv) action for damages for the loss or damage caused by the unfair competition, where there is fault or intention on the part of the agent.

2. General Law on the Protection of Consumers and Users

10. The Ley General de Defensa de Consumidores y Usuarios (General Law on the Protection of Consumers and Users), as approved by Royal Legislative Decree 1/2007 of 16 November 2007 and amended by Law No 29 of 30 December 2009, defines commercial practices and lays down requirements for traders to provide certain information in their dealings with consumers.

3. Royal Decree-Law 6

11. Royal Decree-Law No 6 of 9 March 2012 established a code of good practice to which credit institutions could voluntarily subscribe (‘the Code of Good Banking Practice’). That code promotes the involvement of the Spanish financial sector in alleviating the difficult economic and social situation in the wake of the 2008 crisis by restructuring debt secured by a mortgage over the debtor’s home. This is done by dint of three measures: (i) restructuring the mortgage; (ii) reducing the capital to be repaid; and (iii) datio in solutum, that is to say, giving property in full settlement of the debt.

12. Article 5 provides that as soon as a credit institution agrees to be bound by the Code of Good Banking Practice, the provisions of the code become mandatory.

13. In accordance with Article 6, compliance with the Code of Good Banking Practice is to be monitored by a supervisory committee. Complaints based on a credit institution’s alleged failure to comply with the code may be lodged with the Banco de España (Bank of Spain).

4. Law on Civil Procedure

14. The enforcement of mortgages and other enforceable titles in Spain is regulated by the Ley de Enjuiciamiento Civil (Law on Civil Procedure). The version applicable to the facts in the main proceedings is the one amended by Law No 13 of 3 November 2009 (4) and by Act No 1 of 14 May 2013. (5)

15. Article 517 of the Law on Civil Procedure lists enforceable titles, such as authenticated public documents.

16. Article 552 provides for the review by a court of its own motion of applications for enforcement of non-judicial instruments, but only in relation to unfair clauses in the enforceable instrument concerned.

17. Article 670 governs the acceptance of the best offer, payment and acquisition of property by the creditor in case of auction. The provision seeks to ensure that in the majority of cases at least 70% of the starting price at auction are paid by the highest bidder or the party seeking enforcement. In circumstances where the party seeking enforcement does not avail itself of the option of being awarded the property, the property will be awarded to the highest bidder, even if its bid is less than 70% of the starting price. In that case, the bid must be higher than 50% of the property’s valuation or at least cover the amount owed.

18. Article 671 of the Law on Civil Procedure covers situations where no bids are made at auction. In that case, the creditor may, within a period of 20 days following closure of the auction, ask to be awarded the property. Where the property is the debtor’s habitual residence, it will be awarded at an amount equal to 70% of what would have been the starting price at auction or, if the amount owed to the creditor for all purposes is lower than that percentage, at an amount equal to 60% thereof. Where the creditor does not exercise that right, the court may, upon application by the debtor, order the cessation of the mortgage enforcement.

19. Article 682 governs the preconditions for bringing mortgage enforcement proceedings. It provides that recourse to such proceedings is only possible where the instrument creating the mortgage determines the price at which the persons concerned set the value of the property or mortgaged asset, so that it may serve as the starting price in the auction. The starting price may in no case be less than 75% of the value indicated in the assessment used for the grant of the loan.

20. The first paragraph of Article 695 provides an exhaustive list of grounds of objection to the forced sale of mortgaged property. These are: (i) extinction of the guarantee or the obligation guaranteed; (ii) an error in the amount owed where the debt guaranteed results from an indebted account necessitating closure of the account...