Νομική βιβλιογραφία

Unfair Contract Terms Directive, Article 6

This case note discusses the recent CJEU judgement Lombard Pénzügyi és Lízing Zrt

(C-472/20, ECLI:EU:C:2022:242) which is also published in the journal (pp. 123-128). The case, building on existing CJEU case law, involves a loan denominated in foreign currency (and payable in the domestic currency). This is a matter of relative importance in past Cypriot banking practice, and this is the first doctrinal text on the matter addressed to a Cypriot legal audience and written in Greek. The main subject of interest to the author, however, concerns the fate of the entire agreement in the case an unfair term is invalidated. Cyprus courts have been reluctant to intervene in the contract and would thus be likely to either hold the entire agreement invalid or, in order to avert such a result, to avoid holding such terms invalid, which happened in the vast majority of cases.

The author notes that the CJEU has held that it is up to the national court to determine whether the invalidity of a term carries over to the agreement in its entirety. Such determination however should take into account the Directive’s purpose, which is to restore, if possible, the bargaining balance between the parties. Invalidating the entire agreement should therefore be avoided if it would have harmful consequences for the consumer; this is especially the case in mortgage-backed housing loans, in which invalidating the agreement might mean that the borrower has to return the entire amount lent, while the mortgage remains to ensure repayment. In such instances, the national court should seek solutions for redress within the national legal system.

One such solution would be to insert a dispositive law norm, if such a specific provision exists (in this case, CJEU held that non-binding recommendations by the national Supreme Court do not constitute such a norm). Another solution might be to invite parties to negotiate a replacement term, within the framework set by the national judge. In this case, the CJEU proposes a third solution: reforming the main object of the agreement, so its invalidity is cured, while establishing an unjustified enrichment basis for the consumer to seek restitution of sums paid under the unfair term. Such intervention by the national judge should however be limited to what is absolutely necessary for restoring the contractual balance.