The Court of Justice of the European Union has issued a new judgment in favour to the consumers who have contracted bank loans. Thus, on the 20^th of September 2018, the Luxembourg court ruled in legal affair C-51/17, OPT Bank Nyrt. and OTP Faktoring Követeléskezelő Zrt./Teréz Ilyés and Emil Kiss, in which it stated that the unfairness of an unclear contractual term that places the exchange rate risk on the borrower’s account and which does not reflect acts of law can be subject to judicial review.

In its judgment, the Court of Justice recalls that the rule excluding from the scope of the Directive the contractual terms which reflect laws or administrative provisions is justified by the legitimate presumption that the national legislator has established a balance between all the rights and liabilities of the parties to the contract.

However, this does not mean that another contractual term which is not covered by laws, such as the one referring the exchange rate risk in the present case, is also totally excluded from the scope of the Directive. The unfair nature of this term, in this case, may be established by the national court if it assesses, on a case-by-case examination, that it is not worded in a clear and comprehensible manner.

In this respect, the Court considers that the financial institutions are required to provide borrowers with sufficient information to enable them to take prudent and informed decisions. This implies that an exchange rate risk term must be understood by the consumer both formally and grammatically, and in terms of its actual effects. It follows that an average consumer, normally informed, reasonably observant and advised, must be able not only to know the possibility of depreciation of the national currency vis-à-vis the foreign currency in which the loan was expressed, but also to assess the potentially significant economic consequences of such a term on its financial liabilities.

In addition, the Court states that, in the context of contractual interpretation, the clear and intelligible nature of the contractual terms must be assessed by referring, at the time of the conclusion of the contract, to all the circumstances surrounding the conclusion of the contract and to all the other terms of the contract, despite the fact that some of these terms were declared or presumed to be unfair and were therefore subsequently annulled by the national legislator.

Thus, the Court merely confirms that it is for the national court to invoke on its own initiative, instead of the consumer in its capacity as plaintiff, the possible unfairness of contractual terms other than the one concerning the exchange rate risk, since the court has the factual and legal elements necessary for that purpose.

Costaș, Negru & Asociații law firm has extensive experience in this type of litigation and can successfully provide legal representation for consumers in disputes against banks which regulated and implemented various types of unfair terms. All the details of the company’s legal services and lawyers can be found on the firm’s website at https://www.costas-negru.ro.