Policing unfair terms in insolvency proceedings

Abstract

In its judgment of 21 April 2016, the ECJ (Third Chamber) held that insolvent consumers ought to be able to contest the validity of any unfair terms contained in contracts executed with professional creditors during the insolvency proceedings, irrespective of whether or not the credit rights deriving from the said contracts are secured. Likewise it held that the judicial body should have powers to identify ex officio. The unfair terms from which the loans under investigation in the proceedings derive, as soon as it is in possession of the necessary factual and legal elements. Given that bankruptcy is a situation where enforcement can extend to all of the debtor's assets, the supplementary application of artículos 556 to 559 of the Civil Procedure Act would appear to be essential, as grounds to be alleged by the debtor in the stage of the proceedings for challenging the list of creditors. The same would apply to the existence of unfair terms (art. 557.1.7.ª of the Civil Procedure Act), even when the inclusion of the loan is considered compulsory. With regard to identification ex officio of unfair terms, which cannot be verified by the receivers but is rather the responsibility of the judge according to the Judgment of the ECJ, Fifth Chamber, of 16 February 2017, although there is no specific procedure for this purpose in the proceedings, this should occur — pursuant to the general legal principies that may be deduced from artículos 552.1.II and 815.4 of the Civil Procedure Act and artículo 129.1.f) of the Mortgage Law — at the time at which the receivers file their report with the judge, as this is when the judicial body is in possession of the necessary factual and legal elements.