Legal Literature

Unfair Contract Terms Directive, link

In this article, the author provides a detailed examination of the ‘own motion’ rule in relation to the Unfair Contract Terms Directive, in particular in light of relevant EU case law, namely Aziz v Caixa d'Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa) (C-415/11) and its application in Ireland pursuant to the judgment of Barrett J in AIB Plc v Counihan [2016] IEHC 752. He then assesses the evidence for the claim by some commentators that Irish Courts are unfairly prioritising the property rights of powerful financial institutions over the human rights of vulnerable consumers. In doing so, he identifies a number of sample standard terms in consumer loan agreements in Ireland, including default interest clauses, acceleration clauses and clauses allowing the original lending bank to assign the borrower's loan and security to a third party, making an assessment of fairness under pre-existing common law and the Directive. In doing so, he finds that it is unlikely that the Unfair Contract Terms Directive will prove a fertile source of arguable defences for defendants in summary judgment or repossession proceedings. In conclusion, the author notes that to date nobody has identified a contractual term being relied upon by creditors in debt recovery actions which is actually unfair. He asserts that all borrowers understand that the fundamental essence of mortgage agreements is that if scheduled loan repayments are missed, the secured asset may be repossessed. Noting the sad reality that the overwhelming majority of repossession cases turn on this fundamental principle, the author argues that in the absence of reliance on unusual or unconventional terms, the potential impact of the Unfair Contract Terms Directive is largely academic in an Irish context.