Clarification on the November 2024 Diamond Resorts Europe appeal after the September 2023 ECJ ruling

Diamond Resorts Europe’s attempt to sidestep its obligations by relying on a disputed European Court of Justice (ECJ) ruling has suffered a major setback.

ECJ ruling (September 2023)

In September 2023, the European Court of Justice issued what some observers described as a confusing ruling on uncertainty about which jurisdiction certain holiday ownership contract disputes and claims should be heard in.

The decision related specifically to points-based contracts (including Pure Points) and was relevant to claims involving Diamond Resorts Europe and Club La Costa.

This lack of clarity was quickly seized upon by the resorts, which sought to use the ruling to file appeals and pleas intended to avoid paying compensation to people they had issued illegal contracts to under Spanish law.

Effect of the ECJ ruling

While the ECJ ruling was not definitive on jurisdiction, it clearly did not excuse timeshare companies from responsibility for the previous 25 years of consumer abuse. The judge simply confirmed that, in some circumstances, UK law may apply instead of Spanish law — and that, in some cases, UK law may be applied by courts in Spain.

The resorts appeared to be aiming for additional delay and added complexity in the claims process. Broadly speaking, these have been their main tactics since consumers began suing successfully in 2016.

Ultimately, attempts to exploit grey areas do not remove legal accountability — particularly when consumer lawyers such as the teams at M1 Legal, M1 Law and Pinder Reaux are acting on behalf of customers.

Spanish Supreme Court ruling (October 2024)

European Consumer Claims (ECC) clients Mr and Mrs Gillies issued a claim against Diamond in 2019. Diamond later filed a plea relying on the ECJ ruling, arguing that Spain had no jurisdiction. That plea was rejected. Diamond then sought to have English law applied to the contract; this was also rejected, and the claim succeeded, with all contracts declared null and void.

Diamond’s next appeal — consistent with the “any delay possible” approach often used by timeshare resort lawyers — to the Provincial Court of Malaga was dismissed. Diamond appealed again to the Spanish Supreme Court on two grounds:

1. Breach of procedure: Diamond argued that English courts had jurisdiction
2. 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 accepted that English consumer law applied.

In other words, English law must be applied — but by Spanish judges, in Spanish courts.

Effect of the Spanish Supreme Court ruling

What does this mean for holiday ownership claims that may have been affected by the 2023 ECJ ruling?

ECC specialists consider the October 2024 Spanish Supreme Court decision to be positive for the following 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 (often via a “submission clause”). While English law differs from Spanish law in a number of respects, it also contains consumer protections that claimants may now benefit from
• The ruling helps to close “grey areas” that timeshare resorts previously relied on to appeal — and, in turn, delay the final outcome
• Depending on the contract type, claimants may have more routes to pursue legal action in more than one jurisdiction

Want to know more?

Are you deciding whether to bring a claim against your holiday ownership resort?

Get in touch with our team today to talk through your options.