Nullity of the surety granted in favour of the banks

NULLITY OF THE SURETY GRANTED IN FAVOUR OF THE BANKS AS A CONSEQUENCE OF THE VIOLATION OF THE ANTITRUST REGULATION: A COMPARATIVE PERSPECTIVE

The surety (fideiussione) granted in favour of the banks is a personal guarantee issued by the client or by a third party in order to guarantee the payment of the obligations arising from banking agreements. In the market practice, it often happens that the obligation of the guarantee arises by means of execution of a form unilaterally provided by the bank, without any possibility for the client of modifying the juridical regulation of the personal guarantee. Notwithstanding that the Italian Civil Code expressly provides for a regulation on agreements executed by means of standard form, the compliance of the regulation set forth in the Italian Civil Code does not seem to be sufficient to make the surety granted to the banks by means of forms fully valid and effective. Indeed, it has been pointed out that most of the standard forms used by the Italian banks reproduce the text of the general terms and conditions (condizioni generali di contratto per la fideiussione a garanzia delle operazioni bancarie) set forth by the Association of the Italian Banks (ABI) in 2003 (and later modified by Circolare ABI serie Legale Prot. LG/004231, September 26, 2005). According to the Italian Supreme Court, it may constitute a violation of the regulation on the protection of competition.

In this regard, recently, the ordinance no. 29810 of 2017 of the Italian Supreme Court declared the nullity of the surety entered into downstream of the anticompetitive agreement (i.e., condizioni generali di contratto per la fideiussione a garanzia delle operazioni bancarie predisposed by ABI). The provision no. 55 of 2015, adopted by the Bank of Italy (which, at the time of the adoption of the general terms and conditions and until January 2006 had the role of antitrust authority in Italy in the banking sector) has already affirmed that some clauses of the standard forms provided by the ABI (i.e., the revival clause, the survival clause and the derogation to article 1957 of the Italian Civil Code), to the extent they are applied homogeneously by the associated banks, would constitute a violation of the regulation on the protection of competition; shortly later, the ABI took account of the objections and eliminated those clauses from its standard forms. The Italian Supreme Court noted that the anticompetitive agreement would have not ceased to produce effects at that time, because the ABI did not give notice of the modifications of the standard form with the same means it gave notice of the original form (violating the principle of symmetry between the principal and accessories agreements) and because, in practice, most of the Italian banks are still currently applying the censored clauses. It has been supported the principle pursuant to which the anticompetitive agreement survived to its formal elimination.

In light of the ruling of the Supreme Court, a new phase of applicative uncertainty of law has started and it has caused the courts to provide very different solutions. The debate among the scholars is mainly based upon the identification of the characteristics of the nullity of the surety granted in favour of the banks: then, with reference to the entitlement applicable for a declaration of nullity, the debate is whether such entitlement is deemed to be absolute or relative; relating to the extension of the invalidity, it is debated whether only the censored clauses shall be deemed null or if perhaps, the entire agreement shall be declared null. The opinion of the majority is expressed by a recent ruling of the Court of Salerno, dated 23 August 2018 (no.3016) which declared the nullity of the surety granted to the banks by means of standard forms and clarified that such nullity shall be deemed as total [accordingly, ex multis, Court of Rome, ordinance July 26, 2018; Court of Fermo, ordinance September 24, 2018]. The opposite opinion, pursuant to which the nullity deriving as effect of the antitrust violation would only affect the forbidden clauses, saving the validity of the other clauses of the agreement, as of today, is not followed by many courts [among the others, Court of Rovigo, ordinance June 19, 2018; Court of Rovigo, ordinance September 9, 2018].

Some scholars [among the others, Carrière P., Lo spinoso tema della validità delle fideiussioni omnibus nel recente orientamento della Cassazione, in dirittobancario.it, 2018] are very cautious in interpreting the ruling of the Supreme Court, sustaining that the words dedicated in the ruling to the nullity of the personal guarantee would be a mere obiter dictum: according to this opinion, the judge had the willingness to only reaffirm the principle pursuant to which the agreement entered into prior to the provision of the antitrust authority, but subsequently the execution of the anticompetitive agreement, may be censored as well [as affirmed, among others, by Court of Treviso, July 26, 2018, no. 1623]. This opinion is not convincing, because it does not make sense to say that the Supreme Court individuated the “amount” of sanction to be applied, without any prior evaluation whether the violation took place or not.

In order to solve those issues, it is useful to compare the treatment provided in the other European systems for the nullity of the downstream agreement/clauses of the anticompetitive agreement.

With reference to the issues concerning civil law, it is clear that a wrong interpretation on the extension and characteristics of the invalidity of the surety granted by means of standard forms may lead to very important consequences on the legal and economic grounds. Considering the nullity as “absolute” (and, therefore, recognizing the legitimation to file a request of declaration of nullity on everyone, including the judge) would cause possible misuses of such instrument (e.g., the exercise of the action by entrepreneurs in competition with the guaranteed debtor, in order to put him in trouble with the creditor bank) and would frustrate the ratio legis which is at the basis of the antitrust regulation. On the other hand, recognizing that the nullity of the downstream agreement shall be deemed as total (the entire agreement would be affected by the nullity) may lead to severe consequences, because the loss of the guarantee usually represents an event of default under the facilities agreement which guarantees its obligations (i.e., termination, withdrawal and acceleration of the agreement). In this context, the borrowers would be in a very difficult situation, having to repay the amounts received and to look for a new guarantee in the shortest time. With reference to the lenders, their risk of credit would increase as a consequence of the loss of the personal guarantee which guaranteed the repayment of their credit.

While waiting for a new decision of the Supreme Court which will clarify the abovementioned issues, it is a priority to correctly identify the effects of the invalidity of the surety granted to the banks by means of standard forms.

Moreover, the results achieved in this subject will produce relevant effects on the entire legal system, as they will be applicable to every sector of the legal system in which the regulation on protection of competition is applicable.

***

Analyzing in detail the most relevant aspects of the issue, it is worth to highlight the following.

On a European level, art. 101 TFEU affirms the nullity of the anticompetitive agreement, but it is silent on the fate of the related agreements. Therefore, it is up to each legal system to identify the consequences affecting such contracts and to determine whether the parties of such contracts who suffered the damage are entitled to request the compensation only or there may be ground for any further consequence, with regards to the validity of the downstream contracts. It is undisputed among the scholars [Lamadrid de Pablo A., Ortiz Blanco L., Nullity/Voidness: An overview of EU and national case law, in e-Competitions National Competition Laws Bulletin, no. 49199] that one of the most controversial characteristics of the antitrust infringement concerns the possible effects of the violation on the related or fruit agreements, because the EU legal system seems to disregard the fate of the downstream clauses/agreements, which do not represent themselves any violation of art. 101 TFEU.

Over the last decade, there has been a long debate on the issue that, among the consequences of the antitrust violation, there may be ground also for the invalidity of the contracts (or the invalidity of the clauses contained in the contracts) entered into downstream of the anticompetitive agreement. In particular, in Germany, some scholars used to affirm that the antitrust sanction would have been ineffective if the agreements executed as a consequence of the anticompetitive agreement had remained fully effective and valid [among the others, Jaeger W., Art 81 Abs 2 EGV in U. Loewenheim (ed), Kartellrecht (Beck, 2009), 22 and 24–25; Cauffman C., The Impact of Voidness for Infringement of Article 101 Tfeu on Related Contracts, in European Competition Journal, April 2012, 95-122].

Recently, with regards to the agreements containing standard clauses predisposed by the trade associations, the Bundeskartellamt (federal office for control on the anticompetitive agreements) convicted the Deutsche Kreditwirtschaft because it published general terms for online services of payment which were considered to restrict or distort competition. In that occasion, the single clauses censored were considered to be null [Restriction of online payment services by German banking industry in violation of competition law, in www.bundeskartellamt.de, July 2016]. Parallelly to the administrative ruling, the censorship of such clauses was also taken into account by civil courts, with reference to the single agreements entered into with private customers, pursuant to the censored agreement; however, such rulings have been suspended pending the establishment of discussion with the Deutsche Kreditwirtschaft and, as of today, it seems that these rulings have not been concluded yet. It is significant that also in the German legal system, the anticompetitive practices in the banking sector are object of specific attention.

The French legal system, like the Belgian system, the German one and many more, does not provide for any specific provision regulating the downstream consequences of the anticompetitive agreement. Art. L420-3 of the French Code of Commerce affirms that “Est nul tout engagement, convention ou clause contractuelle se rapportant à une pratique prohibée par les articles L. 420-1, L. 420-2, L. 420-2-1 et L. 420-2-2”; pursuant to an historically based interpretation, based on the text of the now repealed art. 59 bis of the Ordonnance of June 30, 1915, which extended the nullity of the anticompetitive cartel to all the agreements linked to the cartel itself or put in place in order to execute the cartel, it seems that also the downstream agreement could be considered as lying under article L420-3 of the Code du Commerce. However, it is undisputed that the nullity of the “convention ou clause contractuelle se rapportant à une pratique prohibée” may be partial and, therefore, only the contractual clauses which are effectively restrictive of the competition shall be deemed to be null.

In the French legal system, another basis for reflection can be found: the Association française des banques (AFB) has got a similar structure to the one of the Italian ABI and it usually issues contractual schemes, which are generally followed by the associated banks; therefore, it seems reasonable, to hypothesize that the principle of law affirmed by the Italian Supreme Court could be applicable also in that context. Moreover, the French Cour de cassation developed a theory pursuant to which, with reference to the contracts and the ensembles contractuels, the nullity of one of the contracts included in the ensemble contractuel determines the removal of the other agreements which are part of the unity: such argument may be easily applied to the contract executed by means of a form unilaterally provided by the bank, predisposed as a result of an anticompetitive agreement.

In the European context there are other legal systems which are more reluctant to the recognition of consequences on the validity/effectivity of the agreements entered into downstream of the anticompetitive agreement. Among these, the Hungarian jurisprudence [Fejes G., Marosi Z., The Hungarian Metropolitan Court of Appeal rules on the validity of the agreements concluded by members of a horizontal cartel with their customers (Fruit contracts), December 2010, in e-Competitions, no. 34056, on Court of Appeal of Budapest (Fővárosi Ítélőtábla), December 2010, Case n. 14.Gf.40.137/2010/5] affirmed that the fruit contracts are, in principle, fully valid in case they do not represent themselves an anticompetitive agreement.

Moreover, the Swedish Supreme Court [NJA 2004 s 804, 805] with reference to the so- called “follow on clauses” and agreements, which are executed downstream an horizontal agreement pursuant to art. 101 TFEU, implemented by means of publication of standard clauses by a trade association, declared the nullity of the downstream agreements/clauses [Strand M., Beyond the Competition Damages Directive, in Bergström M., Iacovides M., Strand M.(cured by), in Harmonising EU Competition Litigation: The New Directive and Beyond, Hart Publishing, 2016, 288- 289]. In that occasion, the Swedish Court highlighted that the nullity of clauses and downstream agreements could not be declared only on the basis of the mere existence of an upstream anticompetitive agreement. By contrast, an evaluation shall be carried out, on a case by case basis, on the degree of connection between the violation of the antitrust regulation and the downstream clauses/agreement. The importance to be recognized to the public interest to competition shall be evaluated on a case by case basis as well.

The case law analyzed in the previous paragraphs shows that, even if the clear trend among the European countries is to recognize, among the effects of the anticompetitive agreement, additional consequences on the validity of the downstream agreements, some legal systems deny such effects by leveraging on the fact that there is not any specific provision (both in the EU regulation and in the national ones) regulating the issue.