Unfair Contract Terms Directive, Article 3, 1. Unfair Contract Terms Directive, Article 4, 2. Unfair Contract Terms Directive, Article 5 Unfair Contract Terms Directive, Article 5 Unfair Contract Terms Directive, Article 8 Unfair Contract Terms Directive, Article 8 Unfair Contract Terms Directive, Article 8a

The Constitutional Court decided on a constitutional complaint against the judgements of lower courts in which the courts rejected the claim of the complainants (consumers) to establish that their credit agreement in Swiss francs, along with the insurance agreement regarding such, is null and void and ordered the repayment of the allegedly excessive payments. During the proceedings, the complainants emphasised the sensitivity of the case, which concerned the purchase of a family home, and the risky nature of the agreement. They further stressed the bank’s expertise regarding the risks connected to the foreign exchange market and contrasted it with the long-term nature of the credit agreement and the transparency of their own financial position in the contractual relationship. The challenged judgements were based on two independent positions, each of which could have substantiated the decisions of the courts. The first position consisted of the premise that there is no need to assess the (un)fairness of the main subject matter of the contract (i.e., the currency clause) in the event that the duty to provide information was fulfilled, and of the assessment that this duty was fulfilled in the case at issue. Due to the precedential importance of the constitutional issues raised by the two positions of the courts in different stages of the review, the Constitutional Court upheld the constitutional complaint and clearly examined both positions of the courts in their entirety.

The consumers (the applicants) entered into a long-term loan agreement with the bank (the defendant) with a currency clause in CHF, according to which the bank granted them a loan. After the conclusion of the credit agreement, the currency ratio between CHF and EUR changed significantly - the value of CHF increased against EUR - which significantly increased the creditors' credit obligation. Therefore, the applicants claimed that the credit agreement was null and void, arguing that the contractual condition (currency clause) was unfair due to a breach of the bank's explanatory duty and a breach of the principles of conscientiousness and fairness in relation to bad faith.

- Does the obligation to assess the (un)fairness of the main subject matter of the contract (i.e., the currency clause) exist in the event that the duty to provide information was fulfilled?

- Was the duty to provide information fulfilled in the case at issue in the meaning of Directive 93/13/EEC, Consumer Protection Act and Constitution of the Republic of Slovenia?

In reviewing the first position, the Constitutional Court emphasised that in the case at hand, there is the obligation to assess the need for legal protection (i.e., the assessment of unfairness) on the basis of the broader legal position of the complainants. This need is particularly accentuated in the context of a relationship between a bank and a consumer, which is unbalanced (as regards the information, financial assets, and expertise at the parties’ disposal). In such a relationship, the possibility of excessive (or exclusive) consideration of the interests of the stronger party and thus the risk that merely ostensible autonomy is established cannot be entirely ruled out.

Moreover, as the courts failed to adopt positions regarding the applicants' allegation that there is a lack of the (direct) transposition of the second paragraph of Article 4 of Directive 93/13/EEC in relation to minimum harmonization and the admissibility of a broader review under this Directive, the Constitutional Court held that they also violated the complainants’ right to be heard determined by Article 22 of the Constitution.

Additionally, about the review of the standard of the content of the duty to provide information, the Constitutional Court held that it is not clear from the reasoning of the challenged judgements which of the bank’s explanations (or materials) could and should have resulted in awareness of the actual effect of a significant depreciation of the domestic currency on the amount of the assumed credit obligations. Since such entails part of the essential content of the standard of the duty to provide information, as it is interpreted by the CJEU on the basis of Directive 93/13/EEC, the courts further violated the right to a reasoned judicial decision determined by Article 22 of the Constitution.

Regarding the courts’ second position (the assessment of unfairness), the complainants have, throughout the proceedings, stressed the bank’s professional expertise regarding the risks connected to the foreign exchange market, contrasting it to the long-term nature of the credit agreement and the transparency of their own financial position in the contractual relationship. These assertions entail relevant elements of an assessment of the (un)fairness of the relevant contractual term already based on the Article 3(1) of Directive 93/13/EEC and the criteria the CJEU developed for its interpretation. As the courts failed to adopt positions regarding these statements, they violated the complainants’ right to be heard determined by Article 22 of the Constitution.

URL: https://www.us-rs.si/wp-content/uploads/2022/02/Up-14-21-2.pdf

Celotno besedilo: Celotno besedilo

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As a result of the established violations, the Constitutional Court abrogated the challenged judgements and remanded the case to the Court of First Instance for new adjudication. There are no possible ordinary or extraordinary legal remedies against this judgement.