On July 9, 2020, and on July 16, 2020, the EU Court ruled a decision on joined cases C‑698/18 and C‑699/18 and a decision on joined cases C-224/19 and C-259/19, which will overturn the practice of our courts regarding cases of bank abuses in credit contracts. They address the issues of when the statute of limitations begins for restitution claims for overcharged interest, exchange rate differences, and fees, the costs of litigation, and management fees. The decisions of the EU Court (ECJ) are binding, and every national judge examining your case is obliged to rule in accordance with ECJ practice.
Following this decision, the EU Court ruled on September 8, 2022, on joined cases C‑80/21—C‑82/21. With the decision on joined cases C‑80/21—C‑82/21, the ECJ reaffirmed its practice, derived from the decision of July 16, 2020, on joined cases C-224/19 and C-259/19, the decision of July 9, 2020, in SC Raiffeisen Bank SA vs. JB and BRD Groupe Société Générale SA on joined cases C‑698/18 and C‑699/18, and the decision of April 21, 2021, in case C-485/19. It accepts that Directive 93/13/EEC on unfair terms, considering the principle of effectiveness, should be interpreted to mean that not only three or five-year limitation periods but also ten-year limitation periods for asserting condictio claims for repayment of what was paid on the basis of unfair terms, although they do not violate the principle of effectiveness, the Directive does not allow national judicial practice according to which the limitation period starts from the date of unjust enrichment of the creditor. It is stated as a mandatory view that it is incompatible with Union law for a national provision to regulate that the beginning of the limitation period is linked to the maturity/with the moment of performance of a service performed under an unfair clause if the consumer had no chance to know about his consumer rights and the unfair nature of a contractual clause before this period begins or expires.
The decisions of the EU Court address the following key issues for borrowers:
Regarding the moment from which the limitation period begins. /You can read what limitation means in my article “Limitation – how to be freed from a debt after a certain period of time has passed”./ According to the ECJ, it contradicts Union law for a national law to stipulate that the limitation begins from the moment of claimability /=liability/ of the claim. The ECJ believes that, in restitution claims by borrowers, the limitation provided in national laws begins from the moment the consumer realized there are unfair clauses in their contract.
The practical significance of the ECJ’s stance is enormous. Up to now, when you filed cases for overcharged interest, exchange rate differences, and/or fees, you would seek via legal means only the overcharged amounts from the past five years, counting from the filing of the claim in court. That’s how you filed your claims because, according to the law, there’s a five-year limitation for a person to legally reclaim their money, and everything appropriated beyond those five years would be lost due to the limitation.
All the attempts we made based on our national law, with a few exceptions, hit a dead end. Now that is changing, but the judicial practice still has fluctuations and contradictions. Following the decisions of the EU Court, the rules are drastically overturned. You can now seek even the amounts overcharged before those five years, with one condition – you shouldn’t have known at the time of the overcharge that there were unfair clauses in your contract and yet remained inactive and did not file a case for the return of what was taken by the bank based on those clauses.
I will clarify the aforementioned with examples:
When entering into a credit agreement, the bank charged you a commission/management fee, approximately 1.5% of the granted loan. According to our previous laws, if you request the court to reimburse this amount, arguing it was collected based on an unfair clause in your contract, the bank would object citing an expired five-year limitation period, and the court would accept this objection.
According to the ECJ decision of 16.07.2020, if you learn from this article now (let’s say you read it on 22.07.2020) that this credit commission was obtained by the bank based on an unfair contract clause, you can claim the unlawfully paid fee within a five-year period, starting from 22.07.2020 and expiring on 22.07.2025.
You can also apply these rules when the bank sues you. Until now, you could ask the court to offset (subtract) from the bank’s claimed obligations only the amounts that the bank had overcharged you five years back, counted from your response to the claim. Now, you can extend your defense to include everything overcharged to reduce your debt, with the limitation period for the bank’s debt from the overcharged amount calculated again from the date you learned about the unfair clauses in your contract (see the explanation above).
Regarding court costs, the ECJ also establishes new rules. According to the ECJ, national legislation that stipulates the borrower must pay part of the court costs, in cases where they have filed restitution claims for amounts overcharged by the bank which the court has only partially upheld, contradicts EU law. The ECJ believes such national rules are incompatible with consumer protection guaranteed by Directive 93/13 on unfair terms, as they have a deterrent effect. If the consumer realizes that if they partially lose their case, they will be ordered to pay part of the bank’s expenses (for lawyers, state fees, expert reports, etc.), it might discourage the borrower from filing a lawsuit to reclaim overcharged amounts.
Our law states in Art. 78, Para. 3 of the Code of Civil Procedure (CCP) precisely what the ECJ denies – that if you partially lose your case, you will have to pay the bank’s costs for the dismissed part of your claim. For example, if you sue for 12k overcharged interest, the court awards you 10k. According to our law, you should proportionally pay the bank’s costs for the difference of 2k, owed for unjustly suing them and for the bank having to organize its defense. The ECJ considers this incompatible with Directive 93/13, and in such cases of partially dismissed claims, our courts should no longer charge you for these costs. Note: In my subsequent article, I will explain how to conduct cases without initially paying a state fee, or by paying it at a reduced rate precisely because of EU law requirements and the new practice of the Supreme Court of Cassation in applying these requirements.
According to the ECJ, a credit arrangement fee is not owed if the bank did not provide a service against this fee. Due to a poor translation, this fee has been translated as a “processing commission.” Despite the erroneous translation, it has been determined by credit institutions in cases which raised questions to the ECJ as administrative fees for credit approval.
The credit arrangement fee has the same legal and economic nature as the management fee periodically charged in your contracts, and it’s a fee collected without you receiving a particular service. It’s charged for the bank’s actions in servicing the loan – checking if you’ve paid on time and potentially charging you interest for delayed payment. However, with the contractual interest, the bank has calculated all its costs, from servicing your loan and the risk of you not paying on time or at all, to its net profit for lending you money. This management fee is a ruse, charging you for something not owed, exploiting your lack of legal and economic knowledge and your weak negotiating position.
For several years, I have been litigating to recover unjustifiably obtained fees for bank management. As I mentioned, based on our national legislation and the generally conservative practice of our courts concerning national rules, we could only reclaim the unlawfully collected management fees from banks for the past five years. Now, with the new ECJ decision, we can claim restitution for all amounts owed within a five-year period, not from the time of their payment/due date, but from the moment you became aware that the bank was deceiving you through unfair clauses.
