On 3 October the Court of Justice of the EU passed a judgement on the effects of abusive clauses used in agreements. 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.
“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 the Office of Competition and Consumer Protection (UOKiK).
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 the disputed clauses. Contractual provisions deemed illegal do not apply from the moment they were included in an agreement and do not bind the consumer.
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 the 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.
