Section 1 of the Supreme Court, in its recent Judgment No. 538/2020, of October 19, 2020, consolidates its jurisprudence on the expiration periods to exercise the annulment action regarding financial products, such as financial exchanges (“swaps”) and other derivatives.
In this specific judgment, it resolves on an appeal that deals with an action for annulment due to error in the contracting of swaps as a result of the lack of information. In it, apart from questioning the error, it is analyzed which would be considered the starting date of the period to exercise the annulment action.
The very argumentation of the judgment together with the extensive jurisprudence mentioned in it allows us to draw the following conclusion.
In this type of successive tract contracts on a financial product, such as a swap, the client does not receive at a single and punctual moment an essential service with which the consummation of the contract can be identified. There is no consummation of the contract until the exhaustion or termination of the contractual relationship occurs, as this is when the performance of the benefits by both parties and the effective production of the economic consequences of the contract takes place. This is due to the fact that in these contracts there are no fixed benefits, but variable settlements in favor of one or another contractor at all times depending on the evolution of interest rates.
For example, in the specific case of the judgment, the consummation is considered given when the concluded contracts are canceled and not when negative settlements were received.
If you have any questions or problems regarding a contracted financial product, do not hesitate to contact our team of specialized professionals.
