Ciutadella court´s ruling could set a precedent

Court rejects bank´s demands for 16 years´ interest at 21%

Justice. The bank has the right to appeal against this decision

The bank was claiming 5,082 euros in interest on an original loan of 1,200 euros; a claim rejected on the grounds of protecting the consumers´ rights

c.m.w..Maó

Ciutadella´s No. 2 Court of First Instance has denied a bank the right to demand interest from a client on the grounds of consumers´ rights.

The court found in favour of a customer from whom the bank was demanding moratoria interests which had accrued over 16 years, during which time the bank had not asked for the contract to be settled.

The defendant had requested a 1,200 euro loan in October 1989. By 31st March the debt had risen to 1,808 euros but, from 1991 until June 2004, the defendant made no repayments. In the case the bank were claiming 6,890 euros, 1,808 in capital and 5,082 in moratoria interests for breach of conditions of the credit card contracted in 1989.

At first sight, the documents presented by the claimant fulfil the requirements of Article 812 of the Law of Civil Suits as the debt is considered to be mature and exactable. However, in the demand presented the interest payable from the day following the day the loan fell due has been calculated at 21% per annum.

The bank´s demand has been analysed on the basis of abuse of rights and in relation to the community regulation protecting the interests of consumers and clients. The judicial decree is upheld by the constitution which states that "public authorities will guarantee the defence of consumers and clients, protecting, through efficacious proceedings, the safety, health and legitimate financial interests of the same".

The court rejected the bank´s claim for the interest accrued during the 16 years as it had allowed the debt to go unpaid knowing that it was attracting 21% interest during that time, tripling the debt at today´s date. The defendant only has to repay the 1,808 euros.