In recent years a number of timeshare management groups have tried to hide behind the fact that, despite where the timeshare was sold, the contractual jurisdiction is not in fact where the contract was signed but somewhere else. The major reason for this is to avoid any repercussions that could occur in the future, if the contract was challenged.
The case we are about to review relates to a timeshare retailed in Spain. By now we assume that you have become aware of Spanish legislation introduced in early 1999 relating to Law 42/98, which in turn was strengthened by the EU timeshare directive in 2008. Without going over all the salient points this legislation was introduced to reinforce the then existing law protecting consumers purchasing timeshare in Spain or her sovereign territories. Sadly a large number of timeshare retailers chose to ignore this law or attempt to circumvent it, Diamond were one such company.
The Background
In law, it is generally accepted that a contract legally executed when signed by both parties and is then binding; however the jurisdiction of the contract may be challenged. The EU timeshare Directive introduced in 2008 stated the following:
Article 18
1. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled.
2. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled.
3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.
Article 19
The provisions of this Section may be departed from only by an agreement:
(1) which is entered into after the dispute has arisen;
(2) which allows the consumer to bring proceedings in courts other than those indicated in this Section; or
(3) which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which confers jurisdiction on the courts of that Member State, provided that such an agreement is not contrary to the law of that Member State.
Simplifying this into laymen’s terms
It means that a contract issued in one EU members state or another may be challenged in the jurisdiction of a fellow member state. Albeit a small section of a much larger legislation, it is of paramount importance as it removes the ability from the company issuing a contract to hide behind the local law of the member state regardless of whether or not the contract states that any dispute arising will be adjudicated either exclusively or non exclusively in the country stated in the contract, i.e. not the country where the contact was completed.
What does this mean?
Simply put, If you purchased a timeshare contract through a UK company who has a legal presence in Spain, such as Diamond, then as a consumer you have the right to challenge the contract in Spain regardless of the stipulated terms of the contact stating that any dispute will be governed by the law of the UK. The major significance of this was felt in full from 2015; however this does not mean that contracts issued prior to 2015 are exempt from challenge, quite the contrary.
The latest case
The latest case involves Diamond Resorts (Europe) Ltd, a UK registered company which was operating sales of timeshare in Spain. Their contract stipulated that it was subject to “the jurisdiction of UK law and UK Courts” which attempts to blatantly take away EU consumers rights.
Obviously, the use of the “jurisdiction” clause is a potential breach of the EU rules. This particular case was heard at the Court of First Instance Number 1 in Fuengirola, Spain and the case was once again brought on behalf of an English client by a leading Spanish law firm
As we have seen in all previous cases of this nature, the Judge immediately dismissed Diamond’s appeal on Jurisdiction, referring once again to the rulings of the High Court of Malaga. This court along with High Courts in other provinces have all consistently ruled in favour of the consumer that they (Spanish Courts) do and will have full jurisdiction on any contract sold in Spain.
In this case, the Judge ordered that Diamond repay the client €17,572 plus legal interest and the return of all legal costs. The client will also receive a further €8,513 in respect of original purchases and a further €9,059 which doubles the deposit taken illegally on the day.
The contract has also been declared null and void leaving the client timeshare and maintenance-free.
The Resort Development Organisation (RDO)
The RDO is the self appointed organisation for the future development and promotion of timeshare. As an organisation, as you would expect, they have a code of conduct by which their members should abide. It should also be noted that under the RDO Code of Conduct, Part I, Chapter 3, Paragraph 3.5 actually states:
“To comply with all laws, which apply to Member’s, business in the jurisdiction in which the Member operates.”
Diamond Resorts are of course fully paid up members of the RDO, so not only do they choose to ignore EU/Spanish law; they choose to ignore a very important ethical point in the RDO code of conduct.
The end is nigh
Over the past few years it has become patently obvious the Spanish courts have, and still are, taking a very dim view on companies with legal status operating in the Spanish territories choosing to ignore the law of the land. From the various reports we receive from courts all over Spain it can be confirmed that the authorities are not allowing this practice to continue.
Of all the cases presented to the courts surrounding potentially illegal contracts we have not heard of a single instance where the court has sided with the timeshare company. Naturally, to mount an attack on a multimillion dollar concern, such as Diamond, is not a “do it yourself” option. In all cases the engagement of a specialist Spanish legal firm is 100% essential, of course this will involve costs but as can be demonstrated from the recent case above restitution and compensation is really achievable.
Consistent judgement proved!
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk