Covid-19 brought with it challenges in terms of health, social assistance, education and naturally on a financial level, specially in the banking sector. Challenges for this sector as the possibility of non-payment of the debtors, brought consequently governments measures well known as financial reliefs explained in past newsflashes.
Those financial reliefs, in many cases, involved a change in the contractual conditions and reflected certain necessity that the financial institutions, particularly banking institutions, renegotiate their contracts.
Regardless of the judgment that the reliefs deserve in the future, some considerations should be made in regard to the renegotiation of banking contracts.
The renegotiation of contacts is not mandatory, on the contrary it is based on one of the secondary duties of conduct, which is, the cooperation duty. This duty involved an act of the parties together, in such way that it is possible to achieve the purpose of the contract and overcome difficulties that arise during its execution.[1] However, cooperation as a duty does not imply necessary that the other party can demand it as a right.
Banking contracts are binding on the parties in the terms that they previously agreed, even though they intrinsically contain the cooperation duty for the parties. Nonetheless, this can´t lead to affirm that, based on this duty, the parties are absolutely obligated to renegotiate the initial contractual conditions that they agreed. This must result from a negotiation process.
As it is well known, financial activity, within which is banking activity, involve a public interest since it must protect the savings of the public.[2] Consequently, the institutions that are in the financial sector should make their decisions taking into account the responsibility that this implies. And the first one is to keep intact their ability to answer for the deposits entrusted.
Based on the above, it could be considered that the possibility of renegotiating banking contracts, must be subject to an exhaustive analysis by the financial institutions, that understand that, even there is a cooperation duty, it must, first of all, assess whether or not such renegotiation may lead to inadequate exposure of public savings.
It is worth assuring that financial institutions did not see themselves in the need to make this exam, since the Government, due to Covid-19, determined the conditions in which the different measures must be assumed by financial institutions.
[1] San Martín, L Sobre la naturaleza jurídica de la ‘cooperación’ del acreedor al cumplimiento de la obligación. Revista de Derecho Privado. 21 (dic. 2011), 273-325.
[2] Corte Constitucional, Sentencia C-793 de 2014. MP: Gabriel Mendoza.
