Litigation and Arbitration

On September 10, the Advocate General (AG) issued his opinion on a preliminary ruling to be rendered by the Court of Justice of the European Union (CJEU) regarding a lawsuit in Spain over the validity, under the European directive on unfair terms in consumer contracts (Directive 93/13), of a contractual clause referencing a local interest rate benchmark in floating rate residential mortgage loans. The press has regarded the opinion as unfavorable to the banks. If upheld by the CJEU, it could mark a turning point in the underlying lawsuits. A final negative outcome could provoke massive losses for a number of Spanish banks with the possibility to accelerate a wave of domestic and European bank mergers.
Continuing our series of articles on the practical aspects of international arbitration we consider the question of applicable law. Much focus and emphasis is given to the procedural aspects of international arbitration. What is often overlooked is the complex interplay between the myriad of potential applicable laws.