Generic Bank Guarantees

It's a pretty poor judgement to not settle the costs in the decision. Maybe the Judge thinks that the costs are too high, particularly in class action lawsuits.

I can understand the 66% reduction in the interest because, from what i've heard from Maria, the interest is applied to the lawsuit all the way from the first day of paying the deposit (6 years in this case, i assume), however, the bank has only been defending this case for the past two years, hence the 66% reduction (2 years out of the full 6). I think that this will be the norm in these types of cases due to the length of time and interest rate percentage - the banks liabilities are already huge without adding upto 40% more onto them. I don't agree with it because the person who has lost their money for all this time deserves compensation.

Do we have any updates relating to fully successful claims against Banks issuing Generic Bank Guarantees?

Has legal precedence now been established in this regard?

Have any Supreme Court rulings been issued in favour of claimants against Generic Guarantors?

Has anyone gained a fully successful claim against Caixa Bank (Banca Civica)?

Has it been confirmed by Litigators that after proven developer breach, cancellation of contract, and subsequent developer insolvency, that General Guarantors remain liable for return of deposits where no individual BGs were issued and deposits were proven to have been presented to developer's Bank(s) which were different to the Bank stipulated in the Generic BG that made reference (link) to the developer?

Also, and most importantly what strategy are lawyers, intent on protecting purchaser/client's rights, taking, in terms of identifying all instances of injustice/abusive timeframes/failures to safeguard the rule of law in Spain by ensuring that adequate time constraints are in place. Abusive delays are in themselves proving a major injustice in Spain and this needs tackling not only by client's endeavours but by those who legally represent them.

Also, are clients/purchasers aware that judges require documenatary evidence from insolvency administration (where developers have been declared insolvent), together with documentation from the Banks (Guarantee, payments etc) before a judge can make a decision.

The questions then remain

• Are there no time constraints placed upon these requests for evidence, to ensure that information is provided from the Bank and administrators in a timely manner, so that judges are not left waiting for an indefinite (abusive) time period? If no time constraints exist to protect the innocent client from abusive delays, then who in this system is responsible to "chase up" this evidence? Is it the judge, the lawyer, or A N Other?
• Once a decision has been reached by the judge based upon documentary evidence, can this be appealed by the Bank?
• Are judges made aware of all the background detail to these cases (especially where, through no fault of their own, clients'/purchasers' costs have been unrecoverable from previous successful rulings proving developer breach of contract) so that moral authority can be demonstrated, with rightful return of all costs and interest associated with such lengthy and stressful litigation processes to recover monies according to existing law and inalienable rights?

In response to recent postings suggesting legal costs associated with Bank claims be recoverable from interest payments, prospective clients need to be aware that some courts in Spain have not awarded return of costs as part of their judicial rulings and the 6% interest rate as stipulated in Ley 57/68 has been over-ridden by later law, which looks to lower interest rates per year (law firms should be able to provide an annual table of interest rates).

Therefore there may be instances where large legal costs may exceed interest payments and costs become unrecoverable.

Likewise many Banks have appealed successful first instance rulings, which add to the legal costs.

Also major court and judicial delays (currently without any time constraints in place) have impacted the time-frames for return of monies in successful cases, which may result in interest being awarded at a much later date, so costs may be taken by law firms before return of any interest (or costs) is achieved.

It's important to have all the details explained and for legal firms to fully advise of costs (and interest) associated with both win and lose scenarios associated with Bank claims. Likewise re realistic time-frames for recovery of monies depending on the region. Full transparency is required.

Also on a wider note, be aware that there are inconsistent judicial rulings across various regions of Spain and there are still some compromising issues relating to contra legem rulings/protectionist rulings in favour of Banks which have not been fully resolved at High Court level (sadly incurring more costs and delay to return of monies.)

Unfortunately one successful ruling does not appear to fit all scenarios, therefore it is important that each case be studied in detail together with realistic appreciation of the outcome of final rulings in favour of clients, depending on which Bank is being claimed against and the region where cases are being heard.

Clients therefore still remain at risk until such time as two identical rulings from the Supreme Court/High Court fully clarify each outstanding issue, thereby achieving greater judicial consistency of rulings across regions. Sadly, although an increasing number of judges are thankfully now ruling in favour of clients, there still remains judicial inconsistency, and therefore the risks currently remain.

Keith Rule many years ago advocated in his BG petition the need for specialised courts to fairly and efficiently deal with Bank Guarantee abuse and the need for timely judicial rulings, given the large numbers of innocent offplan purchasers affected by this BG abuse. What a travesty that this was never realised and employed, and how different could the outcome have been for all those subjected to all too many years struggling to achieve justice in Spain in the interim, with all the serious disruption to social life that subsequently ensues.

Greater clarification by the High Courts and consistency of interpretation of Ley 57/68 is required across the various regions of Spain before these major risks to clients will ever be minimised. Until then, the legal lottery sadly remains.

The requirement for consistent judicial impartiality and freedom from political/economic interference should never be overlooked in this scenario, and whenever this is brought into question by contra legem rulings at whatever level, that fail to adhere to existing law Ley 57/68 in its entirety, then details should be forwarded to MEPs and the European Commission in order to ensure that effective monitoring of instances are correctly recorded so that the rule of law in Spain can be safeguarded.

Full adherence to Ley 57/68 in its entirety lies at the heart of this problem and clients drawn into this costly perpetual cycle of “corrective judicial interpretations” of this law and subjected to ever increasing legal actions should never be left to suffer the consequences of being denied return of their costs (and interests) during these lengthy and stressful periods, if moral authority is ever to be demonstrated in Spain.

Awarding of costs (and interests backdated to the date each deposited amount was paid to the developers account) acts as an effective and essential disincentive to Banks/Insurers who continue to “play” the system of delays, submit lengthy appeals in full knowledge of their legal obligations and new case law in support of consumers, and/or cynical attempts to influence the outcome by tactically disincentivising clients from proceeding with claims.

Sadly under the current system unless such disincentives are CONSISTENTLY employed by the judiciary, then innocent clients will continue to be subjected to a perpetual cycle of legal actions in order to gain correct interpretation of this good law. A law put in place to adequately protect offplan deposits, and as Keith Rule astutely highlighted in his BG petition, to deter repeated abuses and irreparable damage to trust and good faith, to ensure that inalienable rights of the purchaser are consistently upheld.

Hot off the press:

See http://www.eyeonspain.com/blogs/costaluz/15001/legal-tip-1305-new-won-case-against-zurich-insurance-plc-for-a-group-of-off-plan-buyers-from-the-developer-inmobiliaria-nadalsol-sl-at-medina-golf-residencial.aspx

If only such knowledgeable judicial rulings were consistently applied across Spain, to act as adequate disincentives to those intent on denying their legal responsibilities to adhere to Ley 57/68 in its entirety.

Ads:

Supreme Court has now passed consistent and clear court doctrine in regards to cases where there was no individual certificate of guarantee for the individual buyer but there was a  general guarantee agreement between developer and either Bank or Insutrance Company.

Supreme Court is about to pronunciate about those other cases where there was no even that General Agreement between Bank or Insurance and developer and, therefore, law provision it is to be applied it purely 1 .2 of Law 57/68 about liabilities of Banks receiving amounts in account

We will of course be posting on this here in EyeonSpain

Thank you Maria.

If consistent and clear doctrine has been passed by the Supreme Court, then ALL cases of judicial inconsistent rulings at both first court and provincial court levels should be being reported back by law firms to the authorities for effective monitoring, as this is currently going unrecognised by those responsible to ensure that rule of law is safeguarded in Spain.

All this is doing is delaying justice for an even longer timescale (which in some regions is already abusively long periods of time given there are no time constraints in place) and increasing their legal costs, which again need to be consistently awarded if moral authority is to be demonstrated to act as effective disincentives for those refusing to recognise purchasers' inalienable rights.

The Banks and Insurers appear to be "running rings" around the current justice system in Spain at great cost to innocent clients, and the longer this is allowed to occur the greater the need for reporting and monitoring of both their manipulative ploys to delay return of monies ( in the hope that clients will give up the fight) and the requirement for greater consistency of rulings relating to Ley 57/68 in its entirety.

This message was last edited by ads on 22/06/2015.

Ads:

Thanks for your comments.

Despite a clear doctrine by the Supreme Court being existent, nobody can be denied the right to act or defense himself judicially... despite the action or de defense has no legal  backing. Civil Procedure admission to Courts is a formal check that Courts make with no further analysis of substantive arguments.

Of course, condemnation to pay costs is the most likely consequence of acting against Supreme Coury doctrine

Cheers

Maria

Thank you Maria.

I appreciate that judicial admission is possible for all, but when there are inconsistent judicial rulings that do not take account of SC rulings thereafter, these are the instances that need reporting and monitoring do they not?

Also there appear to be an increase in costs not being awarded by the judiciary in successful cases, so this requires monitoring also, as award of costs (and interest) acts as a necessary disincentive to those intent on cynically  "playing the system of delays and appeals" when Bank and Insurers legal teams have access to current SC doctrine in Spain.

These cynical ploys are doing a grave diservice to the Spanish Justice System, therefore it is essential that a strong message is relayed to those financial institutions intent on denying inalienable rights.... And what better way than to apply financial penalties in the form of interest and costs?

In a recent Court Decission of our Supreme Court, Insurance Company is condemned to pay both legal interest of Law 57/68 plus delay interest of Insurance Act.

Please could you clarify what this means Maria as I haven't heard of delay interest of Insurance Act before so it's difficult to appreciate the overall return on monies with both awarded?

I assume that legal interest according to Ley 57/68 part would incorporate annual interest rates backdated to when deposited monies were placed into developer Bank Accounts, is this correct?

Were costs not awarded in this case?

Many thanks.

Legal reasoning number 7 of this Court Decission by Madrid Appeal Court, section 14 states that interests imposed according to Law 57/68 are compatible with delay interests establshed as a general rule in the Insurance act. First are compensating delay of developer, second are compensating delay of Insurers/ Guarantoors.

Rate, according to provision 20.4º  of Insurance Act are as follows:

Annual interest equivalent to legal money interest plus 5%. They will accrue on a daily basis.

Nevertheless, after two years time since Insurance event, annual interest cannot be lower than 20%.

Thank you Maria. Does this only apply if the claim was against an Insurance Company as opposed to a Bank?

My legal opinion is that  for same reason ( despite not being same law provision applicable) works against Banks when they are the guarantoors

Thank you so much Maria.

I had to smile when I read "Nevertheless, after two years time since Insurance event, annual interest cannot be lower than 20%. "

as some (those who have pioneered for this justice) have been waiting, and still continue to wait, in excess of 10 years!!