ECJ: Time Limits for Consumer Debt Repayment

May 31, 2024 Benn-Ibler Rechtsanwälte

The start of the limitation period for consumers’ claims for repayment of money owed to them under unfair contract terms has been ruled on by the European Court of Justice (ECJ).

The case at hand arose out of a mortgage contract that the plaintiffs had entered into with the defendant bank in 2007. The contract contained a clause requiring the plaintiffs to pay the entire fees for the mortgage. In 2019, this clause was declared null and void by a court in Barcelona, Spain, and the plaintiffs were awarded reimbursement of the fees.

In 2021, the plaintiffs brought an action before the referring court in Barcelona for reimbursement of the land registry and settlement company fees. The defendant argued that the claim was time-barred. Under the Catalan civil code, the limitation period is 10 years and had been in effect since the creation of the mortgage in 2007.

The ECJ had to clarify the starting point of the limitation period for repayment claims on the basis of unfair contract terms. In principle, national law governs the rules on limitation periods. However, national rules must not render impossible or excessively difficult the exercise of rights conferred by EU law, in accordance with the principle of effectiveness.

Compared to traders, consumers are less able to negotiate and tend to be less informed. The unfairness of a term in a contract is often not apparent to consumers. Therefore, it is likely to be excessively difficult for consumers to exercise their rights if the limitation period runs from the conclusion of the contract.

A limitation period which begins to run on the day on which the decision establishing that a contractual term is unfair becomes final is compatible with the principle of effectiveness. The consumer has the opportunity to become aware of their rights before the limitation period begins to run or before it has expired. However, before a decision on the nullity of a term is given, the trader may prove that the consumer was aware or could reasonably have been aware of the unfairness of the clause.

ECJ C-484/21 (25 April 2024)