ECJ Rules On Powers Of National Courts To Modify Or Replace Unfair Terms In Consumer Contracts

In two joined cases, Abanca Corporación Bancaria SA v García Salamanca Santos (Case C-70/17) and Bankia SA v Lau Mendoza and Rodríguez Ramírez (Case C-179/17) EU:2019:250, the European Court of Justice (ECJ) considered the power of national courts to substitute national law provisions to save a loan where deleting unfair terms would prejudice the consumer. Under Article 6(1) of the Unfair Contract Terms Directive (93/13/EEC) member states must ensure that unfair terms in consumer contracts are not binding on consumers, but that the contract will survive if it can do so without the unfair terms. The ECJ ruled that a court can substitute national law for an unfair term where deleting it would end the contract with negative consequences for the consumer.