Diamond Resorts Europe’s efforts to use a controversial European Court of Justice (ECJ) decision to sidestep obligations have suffered a major setback
September 2023 ECJ ruling: what it said (and what it didn’t)
In September 2023, the European Court of Justice issued what some observers described as a confusing ruling on uncertainty around which jurisdiction certain holiday ownership contract disputes and claims should be heard in.
Importantly, the decision related to points-based contracts (including Pure Points) and, in practice, it was being relied on mainly in claims involving Diamond Resorts Europe and Club La Costa.
This lack of clarity was quickly seized on by resorts looking to file appeals and procedural arguments designed to delay or avoid paying compensation to customers issued contracts that were illegal under Spanish law.
Effect of the September 2023 ECJ ruling on timeshare and holiday ownership claims
While the ECJ ruling was not definitive on jurisdiction, it did not wipe away timeshare companies’ responsibility for the previous 25 years of consumer abuse. The court simply confirmed that, in some situations, UK law may apply rather than Spanish law, and that in some cases UK law may be applied by courts in Spain.
Resorts appeared to be aiming for extra delay and added complexity in the claims process. Broadly speaking, that has been the strategy since consumers began successfully suing from 2016 onwards.
Ultimately, attempts to exploit grey areas are often challenged—particularly when specialist consumer lawyers such as M1 Legal, M1 Law and Pinder Reaux pursue claims on behalf of affected customers.
October 2024 Spanish Supreme Court ruling: the Diamond appeal and what changed
European Consumer Claims (ECC) clients Mr and Mrs Gillies filed a claim against Diamond in 2019. Diamond later submitted a plea based on the ECJ ruling, arguing that Spain had no jurisdiction. That plea was rejected. Diamond then asked for English law to be applied to the contract; this was also rejected, and the claim was upheld, with all contracts declared null and void.
Diamond’s next appeal—consistent with an “any delay possible” approach often adopted by resort lawyers—to the Provincial Court of Malaga was dismissed. Diamond appealed again to the Spanish Supreme Court on two grounds:
- Breach of procedure: Diamond argued that English courts had jurisdiction.
- Breach of Article 6.2 (Regulation 593/2008): Diamond argued that English consumer law was the applicable law.
The Supreme Court dismissed the breach of procedure (jurisdiction) argument.
However, the court upheld that English Consumer Law was applicable.
In other words, English law must be applied—but by Spanish judges in Spain.
What the Spanish Supreme Court decision means for claims impacted by the 2023 ECJ ruling
So what does this mean for holiday ownership claims that may have been affected by the September 2023 ECJ decision?
ECC’s experts view the Spanish Supreme Court ruling as positive for several reasons:
- Claims against Spanish companies (or Spanish branches of foreign companies) can still proceed.
- English consumer law can be applied in a Spanish court by a Spanish judge where both parties agreed that English law governs the contract—typically via a ‘submission clause’. While English law differs from Spanish law in many respects, it includes its own consumer protections that claimants should now be able to rely on.
- The decision helps close off “grey areas” that some resorts previously exploited to appeal and prolong cases.
- Depending on contract type, claimants may have more options to pursue action across more than one jurisdiction.
Want to know more?
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