Critical Legal Studies (CLS) and Banking Regulation in Spain: A Detailed Analysis

CLS is not just a theory of law, it is a critique of how law maintains power. Applied to Spanish banking regulation, it asks: who does banking law really protect?

1. What is Critical Legal Studies?

Born in the US in the late 1970s - Harvard, Duncan Kennedy, Roberto Unger - CLS argues:

a) Law is indeterminate: Statutes do not produce one neutral answer. Judges choose among competing interpretations, and that choice is political.

b) Law is not neutral: It legitimizes hierarchies. Concepts like "freedom of contract" or "legal certainty" often hide protection of the stronger party.

c) False necessity and ideology: What looks like technical, inevitable regulation - like banking prudential rules - is actually a political choice.

For banking, CLS rejects the orthodox view: that regulation is a neutral, technocratic balance between stability and efficiency. Instead, it sees regulation as a field of struggle between banks, State, Banco de España, EU institutions, and consumers.

2. Spanish Banking Regulation Through a CLS Lens

Spanish banking law is a perfect case study for CLS because it shifted dramatically after the 2008 crisis.

The orthodox narrative:

1. Pre-crisis liberalization: Ley 2/1981 de Regulación del Mercado Hipotecario and deregulation allowed mass mortgage expansion. 40 out of 42 banks inserted floor clauses as standard practice.
2. Crisis and bailout: 2012 Royal Decree-Law 24/2012 created FROB and SAREB. Public money rescued Bankia, Catalunya Caixa, etc. Law 10/2014 de ordenación, supervisión y solvencia transposed Basel III/CRD IV.
3. Post-crisis consumer turn: EU Directive 93/13/EEC on Unfair Terms and Directive 2014/17/EU on Mortgage Credit forced Spain to correct.

The CLS reading:

CLS scholars argue that during phase 1 and 2, principles like seguridad jurídica (legal certainty) and estabilidad financiera were used to protect banks at the cost of consumers. The law presented itself as neutral prudential regulation, but the costs were socialized.

Only when lower courts (Juzgados de Primera Instancia) and EU law disrupted the hierarchy did the Tribunal Supremo change course. This is classic CLS indeterminacy: same Civil Code articles produced opposite outcomes depending on whether the court centered bank or consumer.

3. Key Case Law - Where CLS Critique Becomes Visible

These are the cases every Spanish banking law course now studies as examples of power, ideology and counter-movement.

A. The Floor Clauses - Cláusula Suelo

The central saga in Spain.

STS Pleno 241/2013, 9 May 2013: The Tribunal Supremo in a collective action brought by AUSBANC declared floor clauses null and void for lack of transparency. The clauses were lawful in themselves, objective and not unusual, but banks had not informed consumers of their economic burden.

CLS point: The court admitted banks had complied with regulatory transparency requirements, yet still found lack of material transparency. Law was not determinate.

Limitation of retroactivity: Same STS 2013 and STS 25 March and 29 April 2015 decided to exclude retroactive effects - ex nunc - based on legal certainty. Consumers would only get money back from May 2013.

CJEU Joined Cases C-154/15, C-307/15 and C-308/15, Gutiérrez Naranjo, 21 Dec 2016: Two Spanish lower courts asked if the Supremo's limitation was compatible with EU law. The CJEU said no: case-law imposing temporal limitation on repayment was contrary to Article 6(1) of Directive 93/13. Full retroactive repayment was required.

This is CLS in action: national "legal certainty" was revealed as a political choice to protect banks' balance sheets. The ECJ corrected it from above.

STS 15 February 2017 and Royal Decree-Law 1/2017: Supremo then ordered full reimbursement.

B. Mortgage Expenses and Opening Commissions

STS 705/2015, 23 Dec 2015: Declared abusive the clause that indiscriminately attributes all mortgage creation expenses to the consumer.

STS 1670, 1671, 1672/2018, 27 Nov 2018 and RDL 17/2018: After contradictory rulings on who pays AJD (Stamp Duty), the court initially ruled borrower pays, creating massive social protest. The legislator intervened via RDL 17/2018 making banks taxpayers. CLS reading: law as site of direct social struggle, not neutral doctrine.

C. IRPH Index

STS 669/2017, 14 Dec 2017: Supremo held IRPH - an official index managed by Banco de España - was not per se abusive as it was official and transparent.

CJEU C-125/18, Gómez del Moral Guasch v Bankia, 3 March 2020: Declared that IRPH clauses do fall under Directive 93/13 and must be subject to transparency control. Judges must check if average consumer understood economic consequences. Sent back to Spanish courts. Again, EU counter-hegemonic control over national formalism.

D. Revolving Credit and Usury

Classic CLS example of freedom of contract vs substantive justice.

STS 628/2015, 25 Nov 2015 (Wizink): Declared revolving credit at 24% TAE usurious under Ley de Represión de la Usura 1908. Introduced transparency test: interest notably higher than normal money and manifestly disproportionate.

STS 258/2023, 15 Feb 2023 and STS 367/2022: Refined doctrine: compare TAE with average market rates published by Banco de España for same product, not general consumer loans. If >6 points higher, presumption of usury. This shows law's indeterminacy - same 1908 law dormant for 100 years reactivated.

E. Systemic Cases: Preferentes and Bankia

STS Pleno 840/2013, 20 Jan 2014 - Preferentes: Mass selling of participaciones preferentes to retail as safe savings. Supremo declared null for vice of consent (error) due to breach of bonus argentarius - the heightened good faith required of banks. Bank's duty is higher than standard good faith.

STS 23/2016 and Audiencia Nacional 2017 and STS 23/2019 - Bankia IPO: Criminal and civil cases on Bankia's 2011 IPO with false prospectus. The court held banks liable to small investors for inaccurate financial information. Law 20/2015 repealed Law 57/1968 but maintained bank liability for off-plan guarantees.

F. Evictions and Default Interest

CJEU C-415/11 Aziz v Caixa d'Estalvis de Catalunya, 14 March 2013: Found Spanish mortgage enforcement procedure violated Directive 93/13 because consumer could not oppose unfair terms. Led to Ley 1/2013 de medidas para reforzar la protección a los deudores hipotecarios.

STS 265/2015, 22 April 2015: Set that default interest >2 points above ordinary interest is abusive.

4. What CLS Adds to Spanish Banking Law Today

From a CLS perspective, current Spanish regulation Law 5/2019 reguladora de los contratos de crédito inmobiliario (LCCI), which transposes EU Directive, is not a technical fix but a rebalancing of power:

Transparency is not neutral: LCCI imposes notarial pre-contractual checks. CLS says this moves from formal to material transparency - recognizing power asymmetry.

Jurisprudencia as politics: The statement that jurisprudence requires repeated decisions shows how Supremo creates law. A single decision is not settled law, allowing strategic reversals.

The role of lower courts: Juzgados and Audiencias Provinciales using preliminary references to CJEU bypassed Supremo, showing legal hierarchy is contestable.

For your research, frame it as:

Spanish banking cases 2013-2023 demonstrate the three CLS theses: indeterminacy (same Code produces floor clauses valid/invalid), ideology (seguridad jurídica used to limit retroactivity), and counter-hegemonic use of law (consumers + CJEU using EU law to overturn national banking-friendly doctrine).