Case Watch: Europe’s Economic Crisis Goes to Court

In “Case Watch” reports, lawyers at the Open Society Justice Initiative provide analysis of notable court decisions and cases that relate to their work to advance human rights law around the world.

The financial crisis in Europe over the past five years has been punctuated by outpourings of public anger over economic inequality, manifest in street protests, occupations, and strikes. Not surprisingly, some of the arguments over economic justice have also reached the courts. Here are four recent cases which show how European courts have responded:


On 14 March 2013, the Court of Justice of the European Union held Spanish mortgage legislation to be invalid under the EU’s Directive on Unfair Terms in Consumer Contracts.

The ruling highlighted the draconian nature of the repossession laws in effect in Spain when the crisis broke in 2007, which led to tens of thousands of people losing their homes for failing to keep up with mortgage payments, as well as to a surge in suicides by homeowners facing eviction.

Two years ago, Catalunya Caixa, a regional savings bank, evicted a Moroccan immigrant from his home before he could challenge his case in a legal proceeding. The Court of Justice found that he and other consumers were refused compensation for the bank’s abuses that occurred prior to their court proceedings. This process was neither an adequate nor effective form of protection for the consumer, and failed to satisfy the EU Effectiveness Principle, which European domestic legislation is required to meet.

The court concluded that Spanish courts hearing eviction disputes should be permitted to halt evictions until consumers have had their chance in court. This applies even more strongly in the context of a residential eviction, because the interests at stake are so much greater and the damage can be irreversible. The court also found that while mortgage enforcement proceedings are matters reserved to national courts, the legislation must also meet the EU Equivalence Principle, i.e. the procedure for cases involving EU law should be the same as for other domestic proceedings. The interest rates for default mortgages in Spain at 18.75 percent are much higher than the standard 5 percent statutory rate, leading the court to require that the Spanish government re-evaluate rates for fairness purposes.

While this case was not litigated and decided under traditional human rights principles, the principles of fairness, due process, and the right to one’s home were important considerations taken by the Court of Justice in its evaluation of the mortgage law.

United Kingdom

The UK Department for Work and Pensions is appealing a recent decision from the Court of Appeal, in which the Court found the Department’s “back-to-work” scheme to be unlawful because it had not been properly introduced by the department.

The scheme required unemployed people in the UK to undertake unpaid work in order to continue to receive unemployment benefit payments, which in some cases resulted in people being required to stack store shelves and clean floors for private employers without pay. The claimants—a truck driver and a recent graduate, argued that these conditions amounted to forced labor.

The Court of Appeal found the scheme illegal, though not based on the merits of the jobseeker’s forced labor claim on, but rather because it felt that only Parliament had the authority to authorize such a scheme. The Court of Appeal left open the prospect that Parliament had the authority to coerce jobseekers to work for free, and given that the Department has sought to appeal the decision, this is something that could be decided by the UK Supreme Court.


Amid growing budget pressures, Hungary passed a series of laws last year amending its Pension Act, and renaming its pension fund as the Pension Reform and Debt Reduction Fund. These laws mandated that individual contributions to private funds be directed instead to the state fund. In E.B. (No.2) v. Hungary, the applicant complained that the new legislation amounted to an unjust taking of her private pension and that the new state pension fell short of her former private pension scheme, which directly related to her contributions and investment strategy. The Court re-iterated its past ruling in Maggio and Others v Italy that the protection of property in Article 1 of Protocol 1 does not guarantee any right to a particular amount in pension, and that there had been no interference with her expectation to receive a pension in the future. This decision, read together with an older Finnish case, suggests a tendency at the European Court of Human Rights of allowing states to regulate individual wealth in the name of debt reduction.


In another case alleging a state taking of property, the Court overruled a law allowing a state to temporarily deprive a citizen of his savings. In A and B v. Montenegro, the applicants complained of Montenegro’s legislation that allowed the conversion of foreign currency deposits in certain banks into a public debt. Although the State promised to gradually pay back the clients by 2017, the applicants complained that this legislation had constituted a government taking within the meaning of Article 1 of Protocol 1. The court held that foreign currency savings are protected property under the meaning of that article, and that there had been an interference with the applicants’ legitimate expectation to obtain their savings. The court also found the legislation to be confusing because it was unclear as to whether the bank or the state authorities were responsible for the transfer, and consequently found a violation of the applicant’s right to property.

These four cases highlight how financial crisis has exacerbated the already present economic inequality in many countries, hitting vulnerable groups harder than the rest of the population. The debt crisis continues to affect human rights across the board, illustrating that human rights deserve more protection now more than ever in the face of European austerity policies.

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