The Supreme Court of Justice (STJ) confirmed the validity of a contract of swap signed between Banco Santander Totta and a construction company, Cardoso and Costa. In a unanimous decision, the judges concluded that the contract in question “is not about gambling or betting”.
This is the first decision of the Supreme Court in favor of the banks, after two judgments declaring void contracts to exchange interest rates, one by change of circumstances (shar p decline in interest rates) of BBVA, and another for “offense public order “, Santander.
Now judgment may be subject to appeal to the full from the Supreme Court, to be fixed case, the fact that there Supreme decisions in a different sense.
PUBLIC found that the law firm Nuno Cherry Flirt and Peter Marino Falcon and Associates, legal representative of the company is examining the possibility of appeal, which, if accepted, will mean that all supreme judges vote on the meaning of the last two judgments, fixing case.
About the decision of the Supreme Court, the Navy Hawk’s office, who took the process already after the Court of Appeal’s ruling, declined to make statements claiming that this is the customer orientation.
However, Cardoso and Costa already put forward a new action in court against Santander, requesting the nullity of contracts swap by changed circumstances, a request that had not yet done the first action or in subsequent resources.
In the case which has just come to the Supreme, the Cardoso and Costa called for nullity on the ground “in error-addiction”, claiming that the information provided by the bank was that it was a product “risk-free”.
The bank disputed the claim of lack of information, and added that its officials had different models of swap . He also said that “the purpose of the contract was set the maximum cost of debt capital (liabilities / business financing from the bank).” And even if the decline in the interest rate was expressly provided, so that the company “only bear negative flows when the Euribor descend from 3.80%.”
The Cardoso e Costa, who claims losses 320 000 euros, saw dismissed his application at first instance and in relationship. On appeal to the Supreme, the company demanded to know “whether a particular contract, the parties called interest rate swap may be declared invalid by degrade a game contract and bet.”
maintains the company in the appeal that the contract in question “does not mention or refer to any operation in concrete, ie not specific what is the customer’s debt whose risk of interest rate fluctuations is aimed putatively manage.” And even if the debt “whose contract aimed manage in no way make compatible with the clauses of the supposed swap , with different capital, the maturity, the type of debt, depreciation, the indexing of interest rates , deadlines, etc. “.
On appeal, the supreme judgment came to the conclusion that the” swap is a contractual agreement between two parties who agree to exchange, over time and in a manner predetermined, a series of payments on a notional value (hypothetical) of capital between them traded “.
In a unanimous decision, the judges also concluded that” there is hedging [coverage risk] when the trader made use of the swap to decrease its exposure to tilt [range] of an interest rate which was already exposed in another legal relationship, intending to minimize possible losses. “
Among other findings, the board judges say that the contract in question “is not about gambling or betting”. They argue further that “the contracts swap of interest rates, which have no direct purpose hedging, are not prohibited by law, such as are not those whose notional value does not correspond to a taxable real. “
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