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Office of Competition and Consumer Protection

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Abusive clauses - judgment of the CJEU

< previous | next > 07.10.2019

Abusive clauses - judgment of the CJEU
  • The Court of Justice of the EU passed a judgement regarding the effects of applying prohibited provisions.
  • The judgement does not mean an automatic conversion of currency loan, it has, however, considerable archaeological importance to court proceedings and consumers who signed agreements containing abusive clauses.
  • According to UOKiK, banks should remove illegal contractual provisions from their agreements.

The Court of Justice of the EU passed a judgement on the effects of abusive clauses used in agreements. This is the result of a preliminary question from the Warsaw Regional Court. It settled the case between consumers and the Raiffeisen bank. The dispute concerned the use of prohibited contractual provisions (also known as abusive clauses) in mortgage credit agreement indexed to the Swiss franc, specifically the conversion of the loan balance from Polish złoty to Swiss franc.

The Court’s judgement does not directly address the question whether, after removing conversion clauses from agreement on loan denominated in or indexed to foreign currency, the loan currency will be automatically changed based on current interest rate. This issue will have to be judged by courts in individual cases. The Court’s judgement is a guide mainly for Polish courts, banks and consumers as to how to interpret the provisions of the Unfair Contract Terms Directive. It gives instructions on how to proceed in disputes over determining whether some clause is abusive or not and what circumstances to consider when deciding on the effects of provisions recognized as abusive. Despite the CJEU ruling, the situation of the banking sector is and will be stable.

Therefore, the Court’s ruling refers not only to PLN loans denominated in foreign currency, but to every case regarding the effects of applying unfair contract terms in Poland. For banks, however, the CJEU’s judgement is a clear message of consequences of leaving abusive clauses in agreements with consumers and the bank’s strategy dragging out the case in court, says Marek Niechciał, President of UOKiK. This is about time for banks to sit at the table with borrowers and settle the issue of abusive clauses in mortgage loan agreements. This way, they will avoid long and costly lawsuits, added Marek Niechciał.

The Polish court asked the CJEU the following questions:

  • Can the court fill in gaps created when prohibited provisions (abusive clauses) were removed with other provisions (e.g. good practice) if without these provisions an agreement must be terminated but its termination is detrimental to the consumer?
  • Can the court replace abusive clauses against the will of the consumer?
  • Is it possible and under what conditions is it possible to keep to an agreement containing illegal provisions if they would be beneficial to the consumer?

According to the CJEU, the provisions of the Unfair Contract Terms Directive do not allow the national court to replace clauses considered to be abusive with general clauses relating to, for example, the unanimous will of the parties or good practice. E.g. the court cannot replace the provision regarding instalment conversion with the average exchange rate listed by the National Bank of Poland. The court may only apply non-mandatory provisions, i.e. provisions that apply “unless the parties agreed otherwise” and, according to the CJEU, ensure contractual balance of the parties to an agreement.

The conclusions following from the CJEU judgement prove its previous opinion that the national court is obliged to examine ex officio whether an agreement contains abusive clauses and then assess whether it can be performed without such a provision. If the national court decides that it is possible, an agreement between a consumer and a trader is still in force, but without disputed clauses. Contractual provisions deemed illegal do not apply from the moment they were included in an agreement and do not bind the consumer.

For example: if a clause based on which the mortgage loan balance was converted from Polish złoty to Swiss franc is considered illegal, then the national court will examine whether an agreement can be performed without this clause. If so, the court, having analysed individual provisions thereof, may decide that there was no conversion of the loan into a foreign currency and the loan will remain a loan in złotys in the amount originally specified in an agreement with all consequences thereof resulting from the application of other contractual provisions (e.g. the method of calculating interest rate).

However, if the national court finds that an agreement cannot be performed without clauses considered to be abusive and they cannot be replaced with a non-mandatory provision because such a provision has not been adopted, an agreement may be terminated and considered invalid, and the parties will settle accounts with each other. Also, according to the Court’s ruling, a provision containing general clauses cannot be deemed a non-mandatory provision.

An agreement may be considered void only with the express and informed consent of consumers, who grant it as at the date of dispute resolution. However, the court must inform them about consequences of agreement termination, e.g. settlement rules. The borrower must be fully aware of the consequences of the court’s decision on the agreement termination because it has serious consequences.

The Office of Competition and Consumer Protection has taken such a stand in over a thousand important opinions, which it has been giving for three years at the request of consumers on current court cases. Find out more about the stand of the President of UOKiK on valorisation clauses.

The CJEU judgement is not a surprise; it is rather a contribution to judicial decisions on the effects of using abusive clauses made thus far. It is not a tide that will wipe out the Polish banking sector, either. It is a warning against the use of abusive clauses and a clear message for bank to respect consumers’ rights. For a long time the Officer has been calling on the banking sector to develop constructive and reasonable proposals for solving the problem of prohibited clauses. There was time to develop acceptable solutions but apparently not enough decisiveness to make it happen. Today, our appeal to the banking sector is even more timely. We also encourage consumers to significantly speed up actions, thus saving time and avoiding additional litigation costs for both the sector and the consumers. It is the banking sector’s responsibility towards its clients, and our responsibility towards consumers, says Tomasz Chróstny, Vice President of UOKiK.

Case reference number in the CJEU: C-260/18 (Dziubak)

Consumer service:

Phone: 801 440 220 or 22 290 89 16 – consumer helpline
E-mail: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Consumers’ ombudsmen – in your town or district
Regional Consumer Centres: 22 299 60 90 -
Financial Ombudsman - following complaint rejection -

Additional information for the media:

The UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone: 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL


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