On 8 September 2022 a judgment has been given before the Court of Justice of the European Union in joined signature cases C-80/21, C-81/21 and C-82/21, which further confirms and strengthens the position of consumers in disputes with banks on so-called franc loans.
The Court answered the questions referred for a preliminary ruling in third similar cases before the District Court for Warsaw – Śródmieście in Warsaw.
Questions raised by the District Court sought in first the order to determine whether the provisions allow the national court to establish the unfair nature of not the whole condition of the contract concluded between the consumer and the trader, but only the elements of that condition, so that, once such an element has been removed, the condition remains partly effective.
The next question was whether the national court could, after finding the annulment of the unfair condition contained in the contract concluded between the consumer and the trader, which does not entail the annulment of the entire contract, replace that condition with a dispositive provision of national law.
The question was further raised as to whether the national court could, after having declared the annulment of an unfair contractual condition, replace the condition or interpretation of declarations of will by the parties in order to avoid the annulment of the contract, or by a provision of national law of a dispositive nature, even if the consumer was informed of the consequences of the annulment of the contract and accepted it.
In the last joined case, the question of the referring court was whether ten-year the time limit for the limitation of the consumer’s claim for reimbursement of sums unduly paid to the bank begins to run on the day of each benefit performed by that consumer, even if the latter was unable on that date to assess on its own the unfair nature of the contractual condition or did not have knowledge of the unfair nature of the condition and without taking into account the fact that the contract provided for a repayment period – in the facts of the case under consideration thirty-year – far exceeding ten-year statutory limitation period.
TEU position
Following a thorough examination, the Court held that:
- Article 6(1) and Article 7(1) Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts, it must be interpreted that: they prevent national jurisprudence, according to which the national court may find not the unfair nature of the whole condition of the contract concluded between the consumer and the trader, but only the elements of that condition which give it unfair character, and therefore this condition remains, after the removal of such elements, partly effective, if such removal would lead to a change in the content of that condition which affects its substance, the verification of which belongs to the referring court.
- Article 6(1) and Article 7(1) Directive 93/13 it must be interpreted as meaning that: they preclude national jurisprudence, according to which the national court may, after having declared the nullity of an unfair condition contained in a contract concluded between the consumer and the entrepreneur, which does not entail the annulment of that contract in its entirety, replace that condition by a dispositive provision of national law.
- Article 6(1) and Article 7(1) Directive 93/13 it must be interpreted as meaning that: they preclude national jurisprudence, according to which the national court may, after having declared the nullity of an unfair condition contained in a contract concluded between the consumer and the trader which entails the nullity of that contract in its entirety, replace the contractual condition which nullity has been established, or interpret a declaration of will by the parties in order to avoid the annulment of that contract, or a provision of national law of a dispositive nature, even if the consumer has been informed of the consequences of the invalidity of that contract and has accepted it.
- Directive 93/13, analysed in the light of the principle of effectiveness, it must be interpreted that: ten-year the time limit for the limitation of the consumer’s claim to obtain reimbursement of sums unduly paid to the trader in the performance of the unfair condition of the credit agreement begins to run on the day of each benefit performed by the consumer, even if the latter was unable on that date to assess the unfair nature of the contractual condition or failed to take knowledge of the unfair nature of the condition and without taking into account the fact that the contract provided for a repayment period – in the present case thirty-year – far exceeding ten-year statutory limitation period.
What does that mean for the Franks?
As is apparent from the judgment, the national court cannot declare dishonesty merely of the selected elements of the terms of the contract and leave in force the remainder of the credit agreement, where removing these specific elements from the terms of the contract would lead to a change in their substance.
In its judgment, the Court pointed out that the national court cannot replace an invalid provision by a provision of national law or by a judicial interpretation even in accordance with a declaration of the will of the parties because the national courts are obliged not to apply an unfair contractual condition and are not entitled to change its content.
Finally, referring to the limitation period, the Court held that ‘the limitation period for the right of the consumer to reimbursement should not begin to run until the consumer has learned of the unfair nature of the contractual condition, or at least before the moment when he should reasonably have known about it’.
The Court stressed that due to the principle of effectiveness, a narrower understanding of this issue cannot be accepted.
This means that it is against EU law (Directive 93/13) it would be assumed that the limitation period for a consumer's claim to the bank for reimbursement of the amounts paid to the bank had begun, without taking into account the fact that the consumer was not able to assess on that date the unfair nature of the contractual condition or did not know the unfair nature of the condition.