The Court of Justice of the European Union issued a judgment in case C‑212/20. This judgment was a consequence of questions asked by the District Court for Warszawa-Wola in Warsaw concerning Swiss franc cases.
Yesterday, on 18 November 2021, the Court of Justice of the European Union issued a judgment in case C‑212/20. This judgment was a consequence of questions asked by the District Court for Warszawa-Wola in Warsaw regarding Swiss franc cases (decision of 12 May 2020), including two questions on the following issues:
- In the light of Article 3(1), Article 4(1) and Article 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (1) and the recitals therein, which stipulate the obligation to draft contracts in plain and intelligible language and the need to interpret doubts in favour of the consumer, must the contractual provision specifying the buying and selling exchange rate for a foreign currency in a loan agreement indexed to the foreign currency exchange rate be worded unambiguously, i.e. in such a way that the borrower/consumer can determine that exchange rate on a given day, or, in the light of the type of contract referred to in Article 4(1)? 1 of the aforementioned directive, the long-term nature of the contract (several decades) and the fact that the value of the foreign currency is subject to constant (at any time) changes, it is possible to formulate the contractual provision in a more general way, namely referring to the market value of the foreign currency, preventing the introduction of a significant imbalance in the parties' rights and obligations to the detriment of the consumer within the meaning of Art. 3, paragraph 1 of the aforementioned directive.
If the answer to the first question is positive: - In the light of Article 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts and its recitals, is it possible to interpret the contractual provision concerning the determination by the lender (bank) of the buying and selling rate of foreign currency in such a way as to resolve contractual doubts in favour of the consumer and assume that the contract determines the buying and selling rates of foreign currency not in an arbitrary manner, but in a free-market manner, especially in a situation where both parties had the same understanding of the contractual provisions specifying the buying and selling rate of foreign currency or the borrower/consumer was not interested in the disputed contractual provision at the time of conclusion of the contract and its performance, including not having become familiar with the content of the contract at the time of its conclusion and throughout its duration?.
Referring to the first question asked by one of the Warsaw District Courts, it should be noted that the Court of Justice of the European Union stated that the indexation clauses included in the loan agreement should specify a clear and understandable method of determining the exchange rate (the purchase and sale price of the foreign currency to which the loan is indexed) so that the Borrower can independently determine the exchange rate applicable on a given day – which has been repeatedly
This position presented by the CJEU in response to the first question clearly emphasises that consumer rights must be protected.
Although the CJEU answered the first question in the negative, it also attempted to answer the second question, in which it indicated that Articles 5 and 6 of Directive 93/13 should be interpreted in such a way that they preclude a situation in which a national court – which initially found a term in a contract concluded between the Bank and the Borrower to be unfair within the meaning of Article 3(1) of the aforementioned Directive – analysed that term in order to mitigate its abusive nature, even if such an interpretation would correspond to the joint decision of the Parties to the proceedings.
This means that the CJEU referred to Article 65 of the Civil Code and clearly emphasised that this provision cannot be the basis for amending an abusive clause.
This alert is for informational purposes only and does not constitute legal advice.
