Can Ownership Limit the Effectiveness of EU Consumer Contract Law Directives? A Suggestion to Employ a ‘Functional Approach’

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Wolfgang Faber
Claes Martinson

Abstract

Does the acquisition of ownership form a strict barrier to the application of EU consumer contract law rules? In particular: does the acquisition of ownership prevent a national court from reviewing unfair terms in a mortgage agreement? The CJEU said so in its recent judgement C-598/15 Banco Santander, where a bank itself acquired a mortgaged apartment in a forced sale. We consider this a too formal way of reasoning. In order to make a constructive suggestion of a better suited methodological alternative, we contrast this view by applying a ‘functional approach’ as developed in property law (especially Nordic and American). A ‘functional approach’ deals with each type of conflict directly and on its own merits, by involving various kinds of arguments relevant for the specific conflict without making the decision depend on broad general concepts like ‘ownership’. We conclude that this kind of approach offers an appropriate framework, in particular for the difficult task of determining the scope of the ‘principle of effectiveness’ of consumer contract law directives.

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