Abusive clauses in banking contracts. Recent interpretations

On 19.03.2020, Attorney General Juliane Kokott presented his conclusions in the case C-81/19, Șerban vs. Banca Transilvania SA, which is in the role of the Court of Justice of the European Union, having as its object, once again, the protection of consumers against the abusive clauses inserted in the credit agreements in foreign currency.

By the decision of reference dated on 27.12.2018, the Cluj Court of Appeal, the Second Civil Section, ordered the referral of the Court of Justice of the European Union with the request for a preliminary ruling on the following questions regarding the interpretation of Directive 93/13 / CEE, respectively consumer protection against abusive clauses inserted in foreign currency credit agreements:

  1. Article 1 (paragraph 2) of Directive 93/13 / EEC must be interpreted as following:  it is not opposing to a contractual clause which takes over an additional rule from which the parties could derogate, but in particular did not derogate because there was no negotiation on it, as in the specific case analyzed, the clause that requires the repayment of the credit in the same foreign currency in which the credit was granted, to be analyzed from the perspective of the abusive character?
  2. In the context in which, when granting the loan in foreign currency, the consumer was not presented with calculations / predictions regarding the economic impact that a possible fluctuation of the exchange rate will have on the total payment obligations in the contract, it can be argued on the basis that such a clause, taking the currency risk entirely by the consumer (on the basis of the nominalism principle), is clear and intelligible and that the professional / bank has fulfilled in good faith the obligation to inform his co-contractor, under the conditions in which the maximum degree of consumer indebtedness imposed by the National Bank of Romania was calculated by reference to the exchange rate from the date of granting the credit?
  3. Does Directive 93/13 / EEC and the case-law developed on its basis, as well as the principle of effectiveness, oppose to the situation in which after finding of an abusive clause regarding the currency risk, the contract will continue unchanged? What would be the possible modification to remove the abusive clause and to respect the principle of effectiveness? “

The clause in question in the main proceedings obliges the applicants in this case to repay a loan expressed in Swiss francs in this currency. However, due to the strong depreciation of the Romanian leu – the currency in which the applicants obtain their income, the amount to be repaid by them became almost double in the years following the conclusion of the credit agreement.

This reference no longer explicitly raises the question of principle, namely whether the granting of credits in foreign currency to consumers can be considered in conformity with Union law[1]. Thus, even though previous case law of the Court shows that, in the case of such credit agreements, currency risk cannot be automatically charged to a consumer, it also follows from this case-law that this practice is not in itself contrary to Union law. According to this case-law, the determining factor is whether the consumer has been clearly and intelligently informed of this risk[2]. Instead, at the heart of this case are the consequences that a national court must, if necessary, deduce from the finding of an abusive clause on currency risk. Thus, according to the referring court, all the legal consequences of the abusive nature highlighted so far in the case-law determine an excessive burden for the consumer. Comparable legal issues are faced by the referring courts in three other pending cases[3].

To better understand the legal issue under discussion, we recall a few relevant issues regarding the factual status of the main dispute. Thus, according to the findings of the referring court, on March 31, 2006, the plaintiffs in the main dispute concluded, as consumers, with Volksbank Romania SA (subsequently called Banca Transilvania), a credit agreement amounting to 90,000 Romanian lei (RON) .

On October 15, 2008, the parties entered into a second credit agreement with a view to refinancing the contract of March 31, 2006. The object was a loan in foreign currency worth CHF 65,000. This amount was the equivalent of about 159 126 RON or 33 488 euros[4]. The applicants obtain their income in Romanian lei.

Point 1 of Chapter 4 of the General Conditions of the second credit agreement provided that “any payment made under the agreement shall be made in the currency of the credit, except as expressly mentioned in the special conditions or in the general conditions” (hereinafter, “The clause in dispute”).

The depreciation of the leu and the appreciation of the Swiss franc between October 2008 and April 2017 determined an increase of the amount to be reimbursed by RON 117,760 (approximately EUR 24 772).

In these circumstances, the applicants brought an action at the Special Court of Cluj (Romania). They argue that the bank has not sufficiently fulfilled its obligation to disclose currency risk. They also claim that they would have been unreasonably disadvantaged as a result of taking over this risk. Accordingly, they essentially request that the exchange rate be frozen at the date of conclusion of the contract.

According to the defendant, the clause at issue is not based on the principle of nominalism enshrined in Article 1578 of the Civil Code and, consequently, Article 1 (2) of Directive 93/13 does not allow its abuse to be assessed.

The court of first instance has dismissed the action. However, he considered that this clause was subject to background checks. However, the bank and would have sufficiently fulfilled the information obligations. Thus, it could not have foreseen the significant fluctuations of the exchange rate.

The dispute is currently before the referring court, the Cluj Court of Appeal, following the appeal declared by the two parties. This court has doubts about the interpretation of Directive 93/13 as regards its scope, the information obligations of professionals and the legal consequences arising from the possibly abusive nature of the clause in question.

We therefore find that the three questions referred concern three successive stages of the examination by a court of a Member State on the occasion of the substantive review of the clauses previously drafted by an accession contract under Directive 93/13.

Referring to the questions addressed to the Court, regarding the applicable law as well as to the factual status of the main dispute, the Advocate General proposed to the Court of Justice of the European Union to answer the preliminary questions asked by the Cluj Court of Appeal, Civil Section II, after as follows:

  1. Article 1 (2) of Directive 93/13 / EEC on unfair terms in consumer contracts must be interpreted as following: the meaning of a contractual clause which expresses a general principle enshrined in law is subject to the provisions of this Directive if the legislator national did not intend, by creating the respective legal provision, to strike a balance between the whole of the rights and obligations of the parties to the type of contract in question. It is within the competence of the national court to proceed with the necessary findings in this regard.
  2. The requirement, contained in Article 4 (2) of Directive 93/13 / EEC, for clear and intelligible wording of a clause in a credit agreement concluded in foreign currency, which ultimately puts the consumer at risk of foreign exchange it requires the latter to be fully informed of the potentially significant economic consequences of such a clause on its financial obligations. This is valid regardless of whether the specific depreciation of the currency in question could already be foreseen at the time of the conclusion of the contract. It is within the competence of the national court to carry out the necessary checks in this regard.
  3. Article 6 (1) of Directive 93/13 / EEC must be interpreted as following: it is not against a national court to remove an abusive clause and to replace it with a supplementary provision replacing the formal balance established by the contract between the rights and obligations of the contracting parties with a real balance, which can restore the equality between these parties, when: first, the contract in question cannot be maintained after the abusive clause has been replaced without a replacement; secondly, the cancellation of the contract would have particularly harmful consequences for the consumer; and, thirdly, there is no provision of national law which is supplementary or applicable in the case of an agreement of the parties to the respective contract which can replace the deleted clause.

The Advocate General’s conclusions of 19.03.2020, do nothing more than confirm that Directive 93/13 / EEC guarantees consumers’ rights by setting up the following obligations before the national courts: first, the obligation to carry out an exhaustive analysis of the clauses contained in the credit agreements, then to eliminate the abusive clauses and last but not least, to replace the abusive clauses with complementary provisions meant to confer equality on the contracting parties.

[1] This problem of principle received clarifications by the Decision of September 20, 2017, Andriciuc and others (C 186/16, EU: C: 2017: 703, paragraph 41); see also, in this respect, the Opinion of Advocate General Wahl in Andriciuc and Others (C 186/16, EU: C: 2017: 313, point 2)

[2] See also Judgment of 30 April 2014, Kásler and Káslerné Rábai (C 26/13, EU: C: 2014: 282, paragraphs 40 and 41), Judgment of 20 September 2017, Andriciuc and Others (C 186/16, EU: C: 2017: 703, paragraph 41, Judgment of 20 September 2018, OTP Bank and OTP Faktoring (C 51/17, EU: C: 2018: 750, paragraph 68), Judgment of 14 March 2019, Dunai (C 118/17, EU: C: 2019: 207, paragraph 48). This is the subject of the second question.

[3] Opinion of Mr Advocate General Szpunar delivered in Gómez del Moral Guasch (C-125/18, EU: C: 2019: 695), as well as cases C-269/19, Bank B. (OJ 2019, C 238, p. 7) , and C-346/19, Credit Europe Mortgage IFN and Credit Europe Bank (OJ 2019, C 288, p. 19).

[4] The exchange rate valid at the date of signing the contract, March 31, 2008.