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Hungary / Supreme Court / Pfv.VI.20.453/2015/4

A financial institution v the Hungarian State

Policy area:
Consumers
Deciding Body type:
National Court/Tribunal
Deciding Body:
Supreme Court
Decision date:
14/04/2015

Key facts of the case:

The plaintiff, a financial institution requested the Curia to quash the first and second instance courts’ judgments in an extraordinary review procedure. The case concerned the fairness of the clause in the foreign currency loan agreements that allowed for unilateral modification. The plaintiff urged the Curia to accept that the challenged clauses were in the examined period fair and thus valid. The Curia Unity of Law Decision no. 2/2004 declared that the fairness of clauses, under which the risk of foreign exchange is borne by the customer and the exchange rate is set by the lender, can be challenged only if the clause was not clear and understandable when the agreement was concluded. Act no. XXXVIII of 2014 adopted in response to the allegedly lenient solution repealed the exchange rate gap clauses and set a fixed rate. The Act introduced a statutory presumption of unfairness for the unilateral amendment option clauses and prescribed the procedure in which the presumption could be rebutted by the financial institutions. The plaintiff asked the Curia to suspend the trial and petition the Constitutional Court and request a preliminary ruling from the Court of Justice of the European Union as the Hungarian legislation violates Council Directive on unfair terms in consumer contracts and Article 17 of the Charter.

Outcome of the case:

The Curia rejected the petition for review and upheld the second instance court’s judgment. As to the necessity of constitutional review, the court referred to Constitutional Court Decisions no. 34/2014 (XI. 14.) and 2/2015 (II. 2.) where the Constitutional Court ruled that the legal framework applicable to the issue presented by the case does not contradict the principle of rule of law, and does not violate the right against retroactive legislation, the right to a fair trial and the right to a remedy. The Curia failed to accept that the presumption of unfairness of the unilateral amendment clauses in loan agreements contradicts the Council Directive on unfair terms in consumer contracts or the Charter, thus no preliminary ruling was requested.