Extract from the uniformity decision no. 2/2014 PJE of the Curia of Hungary
According to Point b) of Section 34 (4) of Act CLXI of 2011 on the organisation and management of the courts (Bszi.) the Civil Department of the Curia in order to ensure the uniform application of law, concerning the unfairness of certain clauses of the foreign exchange loan contracts (including the credit agreements, loans and financial leasing) – not assessed in no. 6/2013. PJE – as a uniformity board, has made the following
uniformity decision:
1. The clause of a foreign exchange loan contract which stipulates that the risk of foreign exchange shall be taken without restrictions by the consumer – in exchange for a favourable interest rate – forms part of the main subject matter of the contract, therefore, as a main rule, its unfairness is exempt from assessment. The unfairness of such clause can be assessed and established only if its content, i.e. the text of the contract and the information provided by the financial institution, is not clear and intelligible for the average consumer, who is reasonably well-informed and reasonably observant and circumspect (hereinafter: consumer) when the contract is concluded. If due to insufficient information or lack of information by the financial institution there is reason for the consumer to believe that the risk of exchange is not real or that it burdens him/her only to a limited degree, the contractual clause related to the risk of exchange is unfair, which leads to the invalidity of the contract in part or in full.
2. Contractual clauses enabling unilateral amendment of a contract are unfair if they do not comply with the principles laid down in point 6 of Opinion no. 2/2012 (XII. 10.) of the Civil Department of the Curia on the unfairness of the right to unilateral contract amendment in the general terms and conditions applied by financial institutions in consumer loan contracts (the principle of clear and intelligible drafting, the principle of taxonomic definition, the principle of objectivity, the principle of factuality and proportionality, the principle of transparency, the principle of terminability, and the principle of symmetry). Based on these principles, contractual clauses defining the criteria of unilateral contract amendment are fair if they clearly and intelligibly define how and to what extent changes in the circumstances of causes listed in the above Opinion affect the consumer’s payment obligations and if they make it possible to verify the unilateral amendments’ compliance with the principles of proportionality, factuality and symmetry as well as with the other contractual terms.
3. The application of a different exchange for the purposes of repayment of the loan (selling rate) to that used for the advancement of the loan (buying rate) is unfair because the financial institution does not provide any service directly for the consumer, therefore it is an unjustified cost for the consumer. These clauses are furthermore unfair because the economic reasons for their application are not clear, not intelligible and not transparent for the consumer. In view of the derogatory provisions of Article 231, paragraph (2) of the Civil Code, the buying and selling rates applied in foreign exchange loan contracts as rates of conversion shall be replaced by the official foreign exchange rate of the Hungarian National Bank until mandatory provisions of law enter into force.
The Curia does not uphold decision no. EBH.2013.G.10 in its quality as a decision on principle.
Justification
The clauses of the foreign exchange contracts that allow unilateral amendment are unfair, if they do not comply with the principles laid down in point 6 of Opinion no. 2/2012 (XII. 10.) of the Civil Department of the Curia on the unfairness of the right to unilateral contract amendment in the general terms and conditions applied by financial institutions in consumer loan contracts as follows: ’The clause related to unilateral amendment is unfair, if it provides unjustified and unilateral advantage for the contracting financial institution and disadvantage for the consumer. The clause related to unilateral amendment is particularly unfair – provided, it does not comply with the law - if:
a) its content is not clear or intelligible for the consumer (the principle of clear and intelligible drafting);
b) the conditions of the unilateral amendment are not defined taxonomic, namely the list of causes is missing, or there is a list of causes, though it is not taxonomic (the principle of taxonomic definition);
c) the conditions of the unilateral amendment are not objective, that is the contracting party (other than the consumer) may be able to generate or affect the befall of the condition, or affect the extent of the change that results in amendment (the principle of objectivity);
d) the circumstances outlined in the list of causes do not affect de facto the interest, the cost or the fee, or do not affect them proportionally to the extent of the change of circumstances (the principle of factuality and proportionality);
e) the consumer could not forsee on what grounds and to what extent he/she will be further burdened (the principle of transparency);
f) it does not entitle the consumer to terminate the contract upon amendment (the principle of terminability);
g) it excludes the enforcement of the favourable effect of change for the consumer (the principle of symmetry).’
3. In case of foreign exchange loan contracts the financial institution normally provides the loan on its own selling rate or on another financial institution’s, whereas the consumer redeems the loan according to the buying rate upon advancement of the loan (different exchange). Considering that at a certain point the selling rate is always less than the buying rate, this above contractual clause generates revenue for the financial institution and cost for the consumer. The application of selling rate upon repayment of the loan and the application of buying rate upon advancement of the loan is unfair, since the definition of such rates of conversion generates a disadvantage for the consumer by violating the requirements of bona fide and fairness. The Curia has clearly declared in Point 1 of decision no. 6/2013 PJE that in case of foreign exchange loan contract there is no conversion only recalculation upon both repayment and advancement of the loan. Thus, there is no actual exchange service behind the different exchange provided directly for the consumer in foreign exchange contracts. These contractual clauses are unfair since the economic purpose for their application is unclear and not transparent for an ordinary consumer. Such pricing makes it difficult for the consumer to clearly understand his/her payment obligation, and to take into account its approximate extent. Thus, regardless of the grammatically correct and clear definition of the application of different exchange, it does not comply with the requirement of clear and intelligible definition according to the decision of the Court of Justice of the European Union.
Due to the content of this present uniformity decision the proposition of the conceptional decision cannot be upheld, so that the absence of indication of the margin, as cost generated as a result of the application of the different exchange may quash the contract according to Point c) of Section 213 (1) of Hpt. Since the uniformitiy decision declared/held the use of different exhange unfair, as a consequence of which instead of the unfair contractual clauses the derogatory contractual clauses of the Ptk. shall prevail. And the absence of the indication of an unfair contractual clause may not cause the nullity of the contract according to Point c) of Section 213 (1) of Hpt..
The same shall prevail if the consumer requests the assessment of invalidity of the contract on the grounds of Point c) of Section 213 (1) of Hpt. and expressly declares that he/she opposes to hold the application of different exchange unfair. Since if the consumer has already requested to hold the contractual clause - and the entire contract - invalid on the grounds of another ground of nullity (violating the law), then the provision of Section 209/A (2) of Ptk. that invalidity may only be requested in favour of the consumer (relative invalidity) may not constitute an obsticle to notice the unfariness ex officio. If the consumer declares that he opposes the assesment of unfairness upon the court has held the contractual clause defining the application of different exchange unfair then the court shall not assess that ex officio, though shall dismiss the claim handed in on the grounds of Point c) of Section 213 (1) of Hpt., as the invalidity established on such grounds may only be the consequence of the absence of the otherwise fair contractual clause.
The courts area obliged to ex officio monitor the different exchange applied in foreign exchange loan contracts as of the publication of the present unifority decision.
Budapest, 16 June 2014