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Part I General Part, 2 The Unfair Terms Directive and Its Application to Banking and Financial Contracts

Danny Busch, Matthias Lehmann

From: Unfair Terms in Banking and Financial Contracts

Edited By: Danny Busch, Matthias Lehmann

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 04 March 2024

Subject(s):
Banker-customer contract — Securities — Financial regulation

(p. 7) The Unfair Terms Directive and Its Application to Banking and Financial Contracts

(p. 8) Background and Rationale of the Directive

The Unfair Terms Directive (UTD)1 is one of the cornerstones of the private law of the European Union (EU). It was adopted as early as 1993, and has hardly changed since. Contrary to many other directives, in particular the Consumer Rights Directive,2 it has escaped being merged into a ‘horizontal’ directive. It remains a beacon to the EU’s ambition to harmonize the national contract law of its Member States.

Overview

Excerpt from the Preamble of the UTD:

Whereas it is necessary to adopt measures with the aim of progressively establishing the internal market before 31 December 1992; whereas the internal market comprises an area without internal frontiers in which goods, persons, services and capital move freely;

Whereas the laws of Member States relating to the terms of contract between the seller of goods or supplier of services, on the one hand, and the consumer of them, on the other hand, show many disparities, with the result that the national markets for the sale of goods and services to consumers differ from each other and that distortions of competition may arise amongst the sellers and suppliers, notably when they sell and supply in other Member States;

This excerpt from the Preamble reveals the three main goals pursued by the EU legislator with the UTD: (1) the completion of the Internal Market; (2) consumer protection; and (3) the avoidance of distortions of competition. These three goals are distinct but nevertheless closely intertwined.

Completing the Internal Market

The idea of the Internal Market is still at the heart of the European project. Even though it morphed from the ‘European Economic Community’ into the ‘European Community’ in the same year the UTD was adopted, and thereafter became the ‘European Union’, the EU is still geared towards economic aims. While it now pursues a wide array of objectives, the completion of the Internal Market continues to rank very high on its agenda, as evidenced (p. 9) by its primary law.3 The Preamble of the UTD reflects this goal. Curiously, the Directive suggests that the Internal Market is to be progressively established ‘before 31 December 1992’, five months before the adoption of the UTD, which thus could hardly help to achieve this aim. But even today, the Internal Market is still a work in progress. It resembles an eternal construction site, in which the UTD functions as an important pillar.

The wish expressed in the Preamble relating to the opening and building of the Internal Market thus has not (yet) materialized. To a large extent, markets in the EU continue to be circumscribed by national borders, and this is particularly true in the area of banking and finance. While this fragmentation may be due to factors like existing structures, geography, or language, it is certain that legal divergence also plays a role. The UTD has been unable to change this, even within its limited scope of application. One reason is its legal nature as a directive, meaning that it is binding only with regard to its aims but not with regard to the means adopted to achieve them.4 A further reason may be that the UTD only imposes minimum harmonization; its text even explicitly invites Member States to adopt ‘the most stringent provisions compatible with the Treaty’ in order ‘to ensure a maximum of consumer protection’ (Art 8 UTD). Unsurprisingly, many Member States have followed this call, resulting in a very varied landscape of unfair terms control. As a consequence, it is currently impossible for financial service providers to use a unique set of standard terms for doing business throughout the EU. Instead, they need to adapt their terms to the particular national rules in order to comply with the requirements of each Member State.

Consumer Protection

Excerpt from the Preamble:

Whereas, in particular, the laws of Member States relating to unfair terms in consumer contracts show marked divergences;

Whereas it is the responsibility of the Member States to ensure that contracts concluded with consumers do not contain unfair terms;

Whereas, generally speaking, consumers do not know the rules of law which, in Member States other than their own, govern contracts for the sale of goods or services; whereas this lack of awareness may deter them from direct transactions for the purchase of goods or services in another Member State;

Whereas, in order to facilitate the establishment of the internal market and to safeguard the citizen in his role as consumer when acquiring goods and services under contracts which are governed by the laws of Member States other than his own, it is essential to remove unfair terms from those contracts;

Whereas sellers of goods and suppliers of services will thereby be helped in their task of selling goods and supplying services, both at home and throughout the internal market; (p. 10) whereas competition will thus be stimulated, so contributing to increased choice for Community citizens as consumers;

. . .

Whereas the consumer must receive equal protection under contracts concluded by word of mouth and written contracts regardless, in the latter case, of whether the terms of the contract are contained in one or more documents;

Whereas, however, as they now stand, national laws allow only partial harmonization to be envisaged; whereas, in particular, only contractual terms which have not been individually negotiated are covered by this Directive; whereas Member States should have the option, with due regard for the Treaty, to afford consumers a higher level of protection through national provisions that are more stringent than those of this Directive;

This part of the Preamble puts the UTD in the context of consumer law. The legislative goal to protect the typically weaker party to the contract is certainly a laudable one. As the Court of Justice of the European Union (CJEU) has explained, the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge, which leads him to agree to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms.5

Yet within the last few years, the restriction of the UTD to consumer contracts has become subject to debate. Even though the Directive adopts a very wide definition of the consumer, which is typical for EU law, it leaves out many parties which may often find themselves in a similar situation as the ‘weaker’ party to an agreement. This concerns, in particular, small and medium-sized enterprises (SMEs), which equally lack knowledge or information and may have inferior bargaining power, for instance when they contract with multinational companies for the supply of goods and services that are outside of their market and therefore their area of expertise. The terms offered to them by the big suppliers may be as standard, unfavourable, and similarly excluded from negotiation as those used in relation to consumers. They may, therefore, need similar protection against unfair terms.

That does not mean, however, that the UTD’s focus on consumer protection was a mistake. Quite the contrary in fact since the underpinning policy has improved the EU’s image, providing a helpful counterargument against the usual suspicion that the EU is committed to an agenda of ‘neoliberalism’ and unbridled free-marketism. In the aftermath of the financial crisis in particular, the UTD has proven to be a potent tool in helping the CJEU to implement social protection and prevent grave injustices to individuals. But if the UTD is to develop its full potential as an instrument of economic policy making, its net may have to be cast wider and its scope enlarged.6

(p. 11) Distortions of Competition

Excerpt from the Preamble:

Whereas sellers of goods and suppliers of services will thereby be helped in their task of selling goods and supplying services, both at home and throughout the internal market; whereas competition will thus be stimulated, so contributing to increased choice for Community citizens as consumers;

In this part of the Preamble, it is argued that the harmonization of the rules on unfair terms control would not only help consumers, but also businesses in selling goods and supplying services throughout the Internal Market, which would stimulate competition and increase consumer choice. Although not buttressed with empirical data, the theory of a link between free markets, vibrant competition, and benefits for the consumer is certainly tempting. Yet to the extent that the UTD has failed to complete the Internal Market, one may also suspect it has not stimulated competition as much as intended by the Directive’s drafters. Precise numbers are unavailable, and a meaningful comparison with the targeted goal would be impossible anyway as the drafters failed to substantiate their intentions.

Nevertheless, quite evidently, a level playing field between the businesses of Member States in the area of contract law is lacking. Nowhere can this be seen more clearly than in the area of banking and finance. Given the absence of full harmonization, it is still impossible for banks, securities firms, or insurance companies to use the same set of standard terms throughout the EU, and consequently the products they offer in the different Member States vary greatly. For evidence, look no further than the different mortgage loans on offer in the EU, the terms of which have been the subject of frequent litigation in recent years.

As a consequence, banks and other financial institutions still very much focus on their domestic market. This limits cross-border competition, and where it takes place, it may be distorted, because financial service providers coming from populous and economically strong home countries may have a competitive edge over others. The very few institutions which operate on a pan-European plane typically do so through subsidiaries and using special standard terms for each Member State. The additional costs this entails create a hurdle for the expansion into foreign national markets and thus constitutes a barrier to new entrants.

Provisional Summary

Although not all of the aspirations of the UTD have materialized, it is far from being a failure. The Directive was a milestone in consumer protection. In comparison to its text, it plays a highly significant role because many Member States have extended its rules to the area of business-to-business (B2B) contracts. Its importance has been heightened even more by the case law of the CJEU, which has used the Directive as a way to harmonize various areas of national law.

However, to achieve its original vision, the Directive may have to switch its goal from minimum to maximum harmonization, a change that has already been made to many other Union instruments. It may also be necessary to set out with more precision which clauses (p. 12) are to be considered as unfair and make the list in the Annex binding. To attain the goal of completing the Internal Market, it may also be required to extend the scope of the Directive from business-to-consumer (B2C) contracts to B2B contracts, and make harmonization mandatory in this area as well.

But we leave this discussion for later7 as the rest of this chapter goes on to analyse the Directive in detail.

II  Scope of Application

General Scope and Applicability to Banking and Financial Contracts

Article 1(1) UTD:

The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer.

The UTD applies to all unfair terms in contracts concluded between a seller or supplier and a consumer (Art 1(1) UTD). It does not exclude banking and financial contracts from its scope; hence they are covered. In principle, all Member States of the EU and the European Economic Area (EEA) are thus expected to apply the Directive to such contracts. The national reports included in this book show, however, that the degree to which this is the case varies considerably. In some Member States, the Directive is applied to terms in banking and financial contracts only hesitantly, if at all; in others, it is used in an aggressive way to remedy what courts in those Member States perceive to be the glaring imbalance between the parties and an abuse of economic might by banks and other financial intermediaries. Underpinning these differences seems to be diverging attitudes regarding banking and financial contracts as specialized and complex products, and different assessments as to the possible effects of judicial intervention on the functioning of the financial sector.

Application to Standard Terms

Excerpt from Art 2 UTD:

For the purposes of this Directive:

  1. (a)  ‘unfair terms’ means the contractual terms defined in Article 3; . . .

Excerpt from Art 3 UTD:

  1. 1.  A contractual term which has not been individually negotiated shall be regarded as unfair if . . .

  2. (p. 13) 2.  A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.

The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract.

The UTD governs only contractual terms that have ‘not been individually negotiated’ (Art 3(1) UTD). It further sets out that a term is to be regarded as such ‘where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract’ (Art 3(2) subpara 1 UTD). At issue, in other words, are standard terms and conditions. These require a contractual agreement. Mere business practices, such as the assignment of a claim against a consumer, do not fall under the Directive.8 Individual negotiations by the parties on a specific term take this term out of the purview of the Directive, although some Member States also submit such terms to the unfairness control. Under the Directive, the burden of proof with regard to whether or not individual negotiations have taken place over a specific term lies with the business.9 Where the individually negotiated contract forms part of a longer set of conditions that have not been subject to negotiations, the Directive will apply to the latter (Art 3(2) subpara 2 UTD).

Limitation to Consumer Contracts

The material scope of the Directive is limited to ‘contracts concluded between a seller or a supplier and a consumer’, see Art 1(1) UTD. These are the famous B2C contracts. The question is how to define them.

3.1  Meaning of ‘consumer’

Excerpt from Art 2 UTD:

For the purposes of this Directive: . . .

  1. (b)  ‘consumer’ means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business or profession; . . .

The notion of the consumer is defined as ‘any natural person that is acting for purposes outside his trade, business or profession’.10 A very similar definition is also used in other texts, (p. 14) for instance in the Brussels Ibis Regulation.11 There, the notion is generally interpreted in a very wide sense. For instance, the CJEU has not seen any fundamental impracticality in an investor instructing a broker to carry out currency, securities, and commodities futures transactions as potentially qualifying as a consumer.12 It has also considered a person trading in the FOREX market in US$ 100,000 lots and using the leverage effect to be a consumer.13 Given the similarity of the definitions, it is to be expected that the CJEU would rule in the same way under the UTD.

The Court has also issued some decisions directly concerning the definition of the consumer in Art 2(b) UTD. It has repeatedly held that the level of knowledge, sophistication, and wealth is irrelevant for categorization as a consumer.14 In line with this interpretation, it has ruled that even a lawyer may qualify as a consumer under the Directive where he acts outside his profession.15

3.2  Meaning of ‘seller’ and ‘supplier’

Excerpt from Art 2 UTD:

For the purposes of this Directive: . . .

  1. (c)  ‘seller or supplier’ means any natural or legal person who, in contracts covered by this Directive, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned.

Preamble, Recital 10 UTD:

Whereas more effective protection of the consumer can be achieved by adopting uniform rules of law in the matter of unfair terms; whereas those rules should apply to all contracts concluded between sellers or suppliers and consumers; whereas as a result inter alia contracts relating to employment, contracts relating to succession rights, contracts relating to rights under family law and contracts relating to the incorporation and organization of companies or partnership agreements must be excluded from this Directive;

In order to determine its personal scope, the Directive does not use the term ‘business’, which only entered the Euro-lingo later, but rather ‘seller’ and ‘supplier’. The Directive defines ‘seller’ and ‘supplier’ as a legal or natural person acting for purposes relating to their trade, business, or profession.16 In this context, the Court highlighted that the notions of (p. 15) seller and supplier have to be understood in a functional way, requiring determination of whether the specific contractual relationship is amongst the activities that a person provides in the course of his trade.17 The Commission sees the two terms as equivalent to the notion of ‘trader’ that is used in other directives; in its opinion, the case law relating to these directives is in principle relevant for the UTD as well.18

Thus, the Directive certainly applies to all services offered by banks and other financial service providers in their role as professionals. Importantly, Art 2(c) UTD expressly mentions that sellers and suppliers can be publicly or privately owned. As a result, the vast number of publicly owned banks in some Member States, such as savings banks, are covered by the Directive.

Recital 10 UTD indicates that employment contracts are excluded from the scope of the Directive. Nonetheless, in the opinion of the CJEU, a loan granted by an employer to an employee falls under the Directive’s scope.19 Decisive for this ruling were the employer’s superior technical expertise, knowledge, as well as human and material resources in comparison to those of the employee.20 In the Court of Justice’s view, it did not matter whether the services provided are part of the professional’s main or secondary and ancillary activities.21 As a result, it regarded the loan contract between the employer and the employee as being covered by the UTD. The case is a good reminder that the provider of a financial service need not necessarily be a bank or financial intermediary, but can also be any natural or legal person acting for purposes relating to his trade, business, or profession.

Exclusion of Statutory and Regulatory Provisions

Article 1(2) UTD:

The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive.

Preamble, Recital 13:

Whereas the statutory or regulatory provisions of the Member States which directly or indirectly determine the terms of consumer contracts are presumed not to contain unfair terms; whereas, therefore, it does not appear to be necessary to subject the terms which reflect mandatory statutory or regulatory provisions and the principles or provisions of international conventions to which the Member States or the Community are party; whereas in that respect the wording ‘mandatory statutory or regulatory provisions’ (p. 16) in Article 1 (2) also covers rules which, according to the law, shall apply between the contracting parties provided that no other arrangements have been established;

Article 1(2) UTD contains a carve-out from the scope of the Directive. It concerns (1) terms that reflect mandatory statutory or regulatory provisions; and (2) the provisions of international conventions.

4.1  Mandatory statutory or regulatory provisions

The most problematic is the first carve-out, relating to mandatory statutory or regulatory provisions of the Member States. This exception is based on the presumption that such provisions do not contain unfair terms.22 According to the CJEU, ‘in principle, it may legitimately be supposed that the national legislature struck a balance between all the rights and obligations of the parties to certain contracts’.23 Whether a contractual term merely reflects a mandatory statutory or regulatory provision is for the national court to determine.24

Determining the meaning of this carve-out has created some headaches. A particularly enlightening illustration is the case OTP Bank and OTP Faktoring,25 in which the CJEU was faced with a Hungarian law that replaced the contractually provided exchange rate in foreign currency loans with the official exchange rate published by the Hungarian central bank. This law was itself a reaction to the earlier case law of the CJEU and of national courts relating to foreign currency loans and was meant to alleviate the burden such loans placed on the consumer. The law helped, however, only to a limited extent and left the consumer with the bulk of the exchange rate risk until the conversion into Hungarian forints took place. A Hungarian court therefore asked whether it could control the fairness of the term providing for the link to the foreign currency, despite the explicit intervention by the Hungarian legislator, which had not questioned the validity or fairness of such a link in principle. Though the referring court’s view quite obviously clashed with the wording of Art 1(2) UTD, the CJEU answered in the affirmative. It argued that the Hungarian law was not intended to address in full the issue of the foreign exchange risk in respect of the period between the time when the loan contract at issue was concluded and its conversion into Hungarian forints by the law.26 In the end, the CJEU allowed the referring court to control the terms of the contract despite the fact that the Hungarian legislator had already tried to address the question through a specific act. This case nicely illustrates the triangular interaction between the CJEU, national courts, and national legislators. It also demonstrates the Court of Justice’s readiness to assist national courts in remedying shortcomings in their legislation.

Provisions not pertaining to unfair terms control but to other subjects do not fall under the Directive in any case, so there is no need to apply the carve-out in their regard. This concerns, for instance, the assignment of a claim under a contract between a bank and a consumer and the replacement of the assignor with the assignee in ongoing judicial proceedings.27

(p. 17) Nevertheless, the CJEU applies the carve-out provided for in Art 1(2) UTD where this is compatible with the goal of consumer protection. Thus, it has excluded the control of a national provision according to which a loan was declared to be immediately due and repayable in the event of early termination from the scope of the UTD.28 The Court ruled that such a provision was not a ‘contractual term’ in the proper sense but a legislative rule, and that the parties could not deviate from it through agreement, so that its control could not be demanded.

The CJEU has however gone further, ruling the carve-out would also exclude supplementary provisions from fairness control, despite the explicit use of the word ‘mandatory’ in the text of Art 1(2) UTD.29 The Court of Justice has justified this view with Recital 13 UTD (reprinted above), according to which the expression ‘mandatory statutory or regulatory rules’ includes rules that, under the law, apply in the absence of other arrangements between parties. In the eyes of the CJEU, this language means the carve-out also applies to provisions from which the parties may diverge by agreement where they have not made any other arrangement.30

This interpretation is highly questionable. A supplementary provision does not become mandatory merely because the parties have not deviated from it. The leading case concerned a (Hungarian) national provision enshrining the principle of nominalism, according to which a loan has to be repaid in the same amount in which it has been disbursed independently of a change of value of the currency. According to the CJEU, this rule falls outside of the scope of Directive and cannot be controlled for its fairness.31 The result is understandable to some extent because the Court of Justice cannot be expected to control all supplementary provisions of national law for their fairness. However, it is hard to square with the text of Art 1(2) UTD, which explicitly speaks of ‘mandatory’ provisions.

On the other hand, according to the CJEU a contractual term does not fall outside of the unfairness control merely because it complies with mandatory law. For instance, a contractual determination of non-interest cost in line with a maximum ceiling set by national legislation can be subject to judicial review.32 The same is true of a contractual term that is based on a statutorily recognized benchmark, such as a term in a mortgage loan according to which interest rates are calculated in line with an official reference index.33 Both types of terms have been reviewed by the CJEU with regard to their fairness or unfairness. This results in a deep encroachment of EU law into the national law of the Member States.

4.2  International conventions

The second carve-out of Art 1(2) UTD, relating to international conventions, is of little practical importance in the area of banking and financial law, given the general absence of binding treaties or conventions in this area. Among the few exceptions are the Geneva Conventions on Bills of Exchanges and Cheques.34 These could have played a role in the (p. 18) case Profi Credit Polska S.A. v Bogumiła Włostowska and Others and Profi Credit Polska S.A. v OH,35 which dealt with a blank promissory note. The CJEU ruled that while the promissory note as such is not subject to unfair terms control, the national court has to verify whether a contractual term requiring a borrower to issue such a note is in conformity with Arts 3 and 5 UTD.36 It failed to mention the possible application of the Geneva Convention on bills of exchanges to such notes. In the end, this did not matter though, as the case was about the obligation to issue a note and not the note itself. There seem to be no other international conventions that could have an impact on unfair terms control so far.

III  Core Terms

Article 4(2) of the Unfair Terms Directive

In the system of the UTD, ‘core terms’ are exempted from the unfairness test unless they fail to meet the requirement of transparency (which is dealt with in Section V). Article 4(2) UTD formulates this as follows:

Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other, in so far as these terms are in plain, intelligible language.

The Preamble, Recital 19, provides as follows:

Whereas, for the purposes of this Directive, assessment of unfair character shall not be made of terms which describe the main subject matter of the contract nor the quality/price ratio of the goods or services supplied; whereas the main subject matter of the contract and the price/quality ratio may nevertheless be taken into account in assessing the fairness of other terms; whereas it follows, inter alia, that in insurance contracts, the terms which clearly define or circumscribe the insured risk and the insurer’s liability shall not be subject to such assessment since these restrictions are taken into account in calculating the premium paid by the consumer.

The Test to be Applied

The settled case law of the CJEU on core terms can be summarized as follows.

(p. 19) 2.1  Strict interpretation

Article 4(2) UTD provides an exception to the mechanism for reviewing the substance of unfair terms. As the UTD is intended to protect consumers, this exception must be strictly interpreted.37

2.2  Autonomous interpretation

The expressions ‘main subject matter of the contract’ and ‘the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other’ in Art 4(2) UTD must normally be given an autonomous and uniform interpretation throughout the EU, which must take into account the context and the purpose of the provision in question.38 Autonomous interpretation is a key tool to ensure the uniform application of the Directive throughout the Union, and is in line with the general methodology for interpreting EU law. Determining the main subject matter of the contract and the price and remuneration may be particularly challenging in banking and financial contracts in light of the many different duties of the bank or other financial intermediary and the various fees that are charged. In such circumstances, the case law of the CJEU must be relied upon, which will be presented below.

2.3  ‘Main subject matter of the contract’

According to the Court of Justice, contractual terms that fall within the concept of the ‘main subject matter of the contract’ within the meaning of Art 4(2) UTD are terms that lay down the essential obligations of the contract and, as such, characterize it.39 Terms that are purely ancillary cannot fall within the concept of ‘main subject matter of the contract’.40 To determine whether a term falls within the concept of the ‘main subject matter of the contract’, it is necessary to take into account the nature, general scheme, and the stipulations of the contract, as well as its legal and factual context.41

A distinction must therefore be made between:

  1. (1)  terms that define the very essence of the contractual relationship and thus characterize it; and

  2. (2)  terms ancillary to those that define the essence of the contractual relationship.

The category of contractual term referred to at (2) does not fall within the concept of the expression ‘main subject matter of the contract’, but the category referred to at (1) does.42

(p. 20) By way of example, the CJEU has repeatedly ruled that terms of loan agreements providing that the foreign currency is the account currency and the domestic currency the settlement currency, and which have the effect that the foreign exchange risk is borne by the borrower, come within the concept of the ‘main subject matter of the contract’ and are thus excluded from the unfairness test.43

Incidentally, it is apparent from Recital 19 UTD (reprinted above) that the main subject matter of the contract may nevertheless be taken into account in assessing the fairness of other terms. Little seems to have been made from this interpretative hint by the Court of Justice and national courts.

Terms that define the very essence of the contract must still be drafted in a transparent way, see Art 4(2) UTD in fine (‘in so far as these terms are in plain intelligible language’).44 Thus, the CJEU has repeatedly ruled that the above-mentioned terms of loan agreements, which provide that the foreign currency is the account currency and the domestic currency the settlement currency and which have the effect that the foreign exchange risk is borne by the borrower, must meet the transparency requirement.45

However, terms that merely determine the conversion rate of the foreign currency in which the loan agreement is denominated, in order to calculate the repayment instalments, are not core terms but instead terms ancillary to those that define the essence of the contractual relationship.46 Furthermore, a term in a loan agreement denominated in a foreign currency allowing the borrower to exercise an option to convert the loan into domestic currency on predetermined dates cannot mean that terms relating to the foreign exchange risk thereby take on an ancillary role. The fact that the parties are able to amend, at certain stages, one of the essential terms of the agreement enables the borrower to alter the terms of his loan ex nunc, without having a direct effect on the assessment of the essential obligation characterizing the agreement at issue.47

2.4  ‘Adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other’

Article 4(2) UTD refers to terms that relate to the ‘adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other’. Recital (p. 21) 19 UTD (reprinted above) makes clear that this concerns terms that relate to ‘the quality/price ratio of the goods or services supplied’.

This concept does not include the possibility of, or mechanism for, unilateral price changes. Price change terms must therefore also be tested for unfairness if they are transparent. This is consistent with the fact that the Annex to the UTD includes requirements that price change terms should normally fulfil if they are not to be considered unfair (see points 1(j) and 1(l) and 2(b) and (d) of the Annex to the UTD).48

Incidentally, it is apparent from Recital 19 UTD that the price/quality ratio may nevertheless be taken into account in assessing the fairness or unfairness of other terms. This provision may allow an ‘indirect review’ of the economic equivalence of the contract.49 However, the national reports included in this book did not reveal any practical importance of such review in the law of the Member States.

As already mentioned, terms that merely determine the conversion rate of the foreign currency in which a loan agreement is denominated, in order to calculate the repayment instalments, are not core terms but instead terms ancillary to those that define the essence of the contractual relationship. However, the situation is different if the lender provides a foreign exchange service for a fee when calculating the repayment (ie such a term does constitute a core term). The terms relating to the adequacy of the remuneration charged for the foreign exchange service, on the one hand, as against the foreign exchange service itself, on the other, are then excluded from the unfairness test (provided they are in plain, intelligible language) since they constitute core terms.50

IV  The Transparency Requirement

Article 5(1) of the Unfair Terms Directive

The transparency requirement is laid down in Art 5, first sentence UTD, as follows:

In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language.

. . .

(p. 22) Functions

The transparency requirement has three functions in the system of the UTD. First, only transparent core terms are excluded from the unfairness test under the UTD.51 Hence, non-transparent core terms are subject to the unfairness test, just as are ‘ancillary terms’ (non-core terms), regardless of whether or not they are transparent. To determine whether or not a core term should be excluded from the unfairness test, it is therefore necessary to examine whether it meets the transparency requirement. As regards core terms, see above.52

Second, the transparency requirement plays a role in the unfairness test. According to the CJEU’s settled case law, if a term is not transparent, this may (but not must) lead to the conclusion that it is unfair within the system of the UTD.53

Third, non-transparent terms can result in the application of the contra proferentem rule, as set out in Art 5, second sentence UTD.54 This means that the interpretation most favourable to the customer is to be applied.

The Test to be Applied

The settled case law of the CJEU on the transparency requirement can be summarized as follows:55

  1. (1)  It is of fundamental importance for a consumer to be aware, before entering into a contract, of all contractual terms and the consequences of concluding that contract.56 It is on the basis of this information in particular that he decides whether he wishes to be bound by the terms previously drawn up by the other party.57

  2. (2)  The system of protection introduced by the UTD implies that the requirement of transparency must be understood in a broad sense. This means, among other things, that the contract should set out transparently the specific functioning of the mechanism to which the relevant term relates and the relationship between that mechanism and that provided for by other contractual terms, so that the consumer is in a position to evaluate, on the basis of clear, intelligible criteria, the economic consequences which derive from it for him.58

(p. 23) It follows that the transparency requirement must be understood as meaning:

  1. (1)  that the term in question must not only be formally and grammatically intelligible to the consumer, but also

  2. (2)  that an average consumer, who is reasonably well informed and reasonably observant and circumspect, is in a position to understand the specific functioning of that term and thus evaluate, on the basis of clear, intelligible criteria, the potentially significant economic consequences of such a term for his financial obligations (material transparency).59

In particular, the absence of terms or explanations expressly informing the consumer of the existence of specific risks may confirm that the requirement of transparency is not satisfied.60

The fact that the consumer declared himself to be fully aware of the potential risks arising from entering into the agreement does not, in itself, have any relevance for the purposes of the assessment of whether the seller has met the transparency requirement.61

The mere fact that there is an unfair B2C commercial practice within the meaning of the Unfair Commercial Practices Directive (or the national legislation implementing it) does not necessarily mean that the transparency requirement has not been met, since this is a question to be considered in relation to all the circumstances of the particular case.62 It seems to us that the opposite is also true: the mere fact that there is not an unfair commercial practice does not necessarily mean that the transparency requirement has been met; this too must be assessed against the background of all the circumstances of the case. A parallel can be drawn between this situation and cases in which a financial institution has duly complied with all supervisory rules of conduct regarding the provision of adequate information to a consumer: the latter also offers no guarantee that the transparency requirement has been met.63

  1. (3)  A lack of transparency is a factor that must be taken into account when assessing the unfairness of a contractual term. The mere lack of transparency of a term may result in a finding that it is unfair.64

We understand point 3 to mean the following: Even where it has been established that the transparency requirement has been breached, this does not necessarily mean that the relevant term is also unfair. This is because the unfairness test requires that all circumstances of the case that are relevant at the time of the conclusion of the contract must be taken into (p. 24) account. Once all these relevant circumstances have been assessed, the outcome may be that the standard term in question is considered to be unfair, and that the breach of the transparency requirement is considered decisive. The opposite may however also be true, that is the intransparent standard term might nevertheless be considered to be fair.

Burden of Proof

According to the CJEU, the consumer must not bear the burden of proof that a contractual term was plain and intelligible.65 The Court of Justice uses the following reasoning to explain its view:

  1. (1)  The UTD contains no provision relating to the burden of proof as regards the plain and intelligible nature of a contractual term for the purposes of Art 4(2) UTD.66 In accordance with the principle of the procedural autonomy of the Member States, this is a matter for the domestic legal order of the Member States. Yet the Court has also stressed that those rules must not be less favourable than those governing similar domestic actions (principle of equivalence) and must not be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by EU law (principle of effectiveness).67

  2. (2)  The effective exercise of the rights conferred by the UTD cannot be ensured if consumers were required to prove a negative fact, namely that the seller did not provide them with all the information necessary to satisfy the transparency requirement.68

  3. (3)  The effective exercise of the rights conferred by the UTD may be ensured where the seller is, in principle, required to prove to the court that its pre-contractual and contractual obligations, relating in particular to the requirement of transparency of contractual terms, have been fulfilled. Consumer protection may thus be ensured, without disproportionately interfering with the right of the seller to a fair trial.69

  4. (4)  The obligation on the seller to prove that his pre-contractual and contractual obligations have been fulfilled must also include proof that the information contained in such documents has been provided to the consumer by (i) the seller or (ii) any other person who participated, on behalf of that seller, in marketing the loans at issue (ie where the contract has been concluded through intermediaries engaged by the seller). That is the case, in particular, where it is considered that those documents may be useful for assessing whether a contractual term is plain and intelligible for the purposes of the transparency requirement.70 It is ultimately for the seller to control the distribution channels for its products, whether with respect to the choice of intermediaries or of marketing material vis-à-vis the consumer. He should therefore be able to provide evidence that the documents at issue were not used or were no (p. 25) longer used at the date of conclusion of the agreement in order to prove that its pre-contractual and contractual obligations relating in particular to the requirement of transparency of contractual terms have been fulfilled.71

It follows from the above that, in principle, the consumer need only state that the seller has not provided him with all the information necessary to satisfy the transparency requirement. In fact, it is the seller which must, in principle, demonstrate that he has fulfilled that requirement. This means that the burden of proof as to whether the requirement of transparency has been fulfilled is reversed. The situation is no different if contracts have been concluded through intermediaries engaged by the seller.

Sector-specific Information Obligations and the Transparency Requirement

Sector-specific information obligations are not confined to the detailed obligations under the Mortgage Credit Directive (MCD), but also include, for example, obligations under the Consumer Credit Directive (CCD), the Markets in Financial Instruments Directive II (MiFID II), Solvency II, the Investment Distribution Directive (IDD), the Crowdfunding Regulation, the Sustainable Finance Disclosure Regulation (SFDR), and the Markets in Crypto Assets Regulation (MiCAR) (not yet in force).72

As regards mortgage loan agreements with consumers, all judgments rendered hitherto by the CJEU relate to contracts concluded before the entry into force of the MCD.73 This is why the CJEU has not yet ruled on the relationship between the specific information requirements under the MCD and the transparency requirement under the UTD.74

The MCD requires a high level of transparency by providing that Member States must ensure that consumers receive clear and comprehensible general information about credit agreements, which must be made available to them through a European Standardised Information Sheet (ESIS) and the calculation of the Annual Percentage Rate of Charge (APRC). As regards foreign currency loans, Art 23(6) MCD requires lenders (p. 26) and intermediaries to provide the consumer with information in the ESIS and in the loan agreement about the arrangements he can use to reduce the exposure to exchange rate risk during the term of the loan. Where there is no provision in the credit agreement to limit the exchange rate risk to which the consumer is exposed to a fluctuation of less than 20 per cent, the ESIS must include an illustrative example of the impact of a 20 per cent fluctuation in the exchange rate.75

Whether a seller has complied with the sector-specific requirements is an important element in assessing compliance with the transparency requirement under the UTD. However, given the parallel applicability of the UTD with sectoral legislation, compliance with such instruments does not automatically indicate compliance with all transparency requirements under the UTD. Furthermore, the fact that a particular act does not contain specific information requirements does not exclude information obligations under the UTD on contract terms that sellers add on their own initiative.76

Unfairness Test

Article 4(1) and Article 3(1) of the Unfair Terms Directive

The unfairness test forms the heart of the UTD. Article 3(1) UTD provides as follows:

A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

Article 4(1) UTD then lays down criteria for the manner in which the unfairness test is to be carried out:

Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

The Preamble in Recital 16 UTD provides as follows:

Whereas the assessment, according to the general criteria chosen, of the unfair character of terms, in particular in sale or supply activities of a public nature providing collective services which take account of solidarity among users, must be supplemented by a means of making an overall evaluation of the different interests involved; whereas this constitutes the requirement of good faith; whereas, in making an assessment of good faith, particular (p. 27) regard shall be had to the strength of the bargaining positions of the parties, whether the consumer had an inducement to agree to the term and whether the goods or services were sold or supplied to the special order of the consumer; whereas the requirement of good faith may be satisfied by the seller or supplier where he deals fairly and equitably with the other party whose legitimate interests he has to take into account; . . .

The Unfairness Test

The settled case law of the CJEU on the unfairness test can be summarized as follows.77

2.1  Circumstances of the case

  1. (1)  The basis for assessing the unfairness of a contractual term should be the time of conclusion of the contract, taking into account all the circumstances

    1. (i)  which could have been known to the seller at that time and

    2. (ii)  which were of such a nature that they could affect the future performance of the contract, since a contractual term may give rise to an imbalance between the parties which only manifests itself during the performance of the contract.78

  2. (2)  The transparent nature of a contractual term is one of the elements to be taken into account in the assessment of whether that term is unfair.79

  3. (3)  When assessing whether a contractual term is unfair, it is also necessary to assess the cumulative effect of all contractual terms in the contract in question. Such an assessment is justified because all those terms are applicable, regardless of whether the creditor actually insists they all be fully performed.80

  4. (4)  The CJEU leaves it to the national courts to consider, in the light of the particular circumstances of the case in question, whether a specific term is unfair within the meaning of the UTD.81

2.2  Significant imbalance

  1. (5)  To determine whether a term causes a ‘significant imbalance’ in the rights and obligations of the parties under a contract, particular account should be taken of which rules of national law would apply in the absence of agreement by the parties in that regard. Such a comparative analysis will enable the national court to evaluate whether and, as the case may be, to what extent, the contract places the consumer in a legal situation less favourable than that provided for by the national law in force.82

  2. (p. 28) (6)  A significant imbalance can result solely from a sufficiently serious impairment of the legal situation in which the consumer, as a party to the contract in question, is placed by reason of the relevant national provisions, whether this be in the form of a restriction of the rights which, in accordance with those provisions, he enjoys under the contract, or a constraint on the exercise of those rights, or the imposition on him of an additional obligation not envisaged by the national rules.83

By way of example, the CJEU has ruled that terms of loan agreements providing that the foreign currency is the account currency and the domestic currency the settlement currency, and having the effect of transferring the foreign exchange risk to the borrower may give rise to a significant imbalance in the parties’ rights and obligations arising under the loan agreement concerned, to the detriment of the consumer, because:

  1. (a)  the seller has more knowledge and greater means to foresee the foreign exchange risk (which may materialize at any time during the term of the agreement); and

  2. (b)  the risk of exchange rate fluctuations is not subject to an upper limit for the consumer (unlike for the seller) and therefore rests on the consumer.84

According to the CJEU, these contractual terms seem to place on the consumer a risk which is disproportionate in relation to the services provided and to the amount of the loan received. After all, the consumer may be placed in a situation in which (1) the outstanding capital due in the settlement currency (in this case the euro) is considerably higher than the sum initially borrowed; and (2) the monthly instalments paid have, almost exclusively, covered the interest alone. That is the case, in particular, where the increase in the outstanding capital due in the national currency is not offset by the difference between the interest rate of the foreign currency and that of the national currency, whereby the fact that there is such a difference constitutes the principal advantage of a loan denominated in a foreign currency for the borrower.85

2.3  Contrary to the requirement of good faith

  1. (7)  With regard to the question of the circumstances in which a significant imbalance arises ‘contrary to the requirement of good faith’, the national court must assess for those purposes whether the seller, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to such a term in individual contract negotiations.86

The CJEU has not yet ruled on the relationship between the criteria of (1) significant imbalance, and (2) the absence of good faith. Yet, the wording of Art 3(1) UTD and Recital 16 (p. 29) suggest that the absence of good faith is linked to the significant imbalance in the rights and obligations created by a contract term. After all, Art 3(1) UTD states that the ‘significant imbalance’ should be ‘contrary to the requirement of good faith’, whereas Recital 16 provides that ‘in making an assessment of good faith, particular regard shall be had to the strength of the bargaining positions of the parties’, and that ‘the requirement of good faith may be satisfied by the seller or supplier where he deals fairly and equitably with the other party whose legitimate interests he has to take into account’.87

For the purposes of Art 3(1) UTD, and in the words of the European Commission, ‘the concept of good faith is an objective concept linked to the question of whether, in light of its content, the contract term in question is compatible with fair and equitable market practices that take the consumer’s legitimate interests sufficiently into account. It is, thereby, closely linked to the (im)balance in the rights and obligations of the parties.’88

The Annex to the Unfair Terms Directive

According to Art 3(3) UTD, the Annex contains an indicative and non-exhaustive list of terms which may be regarded as unfair. The Preamble in Recital 17 UTD provides as follows in relation to the Annex:

Whereas, for the purposes of this Directive, the annexed list of terms can be of indicative value only and, because of the cause of the minimal character of the Directive, the scope of these terms may be the subject of amplification or more restrictive editing by the Member States in their national laws.

The fact that a contractual term appears in the Annex to the UTD does not automatically warrant the conclusion that it is unfair. However, according to the CJEU, the presence of a term in the Annex to the UTD is a significant factor which the courts may consider when deciding whether it is unfair.89

VI  Legal Consequences of Unfair Terms

Article 6(1) UTD provides:

1. Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.

(p. 30) Setting the Scene: The Underpinning (and Partially Conflicting) Ideas

The consequences of the unfairness of a term are one of the most intricate and disputed areas of the UTD. Already the text is quite obscure: Art 6(1) UTD provides that the contract is ‘not binding on the consumer’, without specifying what this means. Furthermore, it foresees that the contract shall continue to bind the parties—thus also the consumer—under certain circumstances. These circumstances are described by the phrase ‘if it is capable of continuing in existence without the unfair terms’. The EU legislator could hardly have chosen a more abstract and vague formula to regulate what is a very important exception to the principle of non-bindingness of unfair terms.

Given this lack of precision, it is small wonder the courts have had considerable difficulties in applying this provision. There have been waves of submissions for preliminary rulings and subsequent replies from the CJEU. These back-and-forth communications between the national and European judiciaries highlight not only the variety of ways in which the UTD is understood in the Member States, but also the very wide range of situations to which it must be applied. The Court has made great efforts to provide appropriate responses, yet its decisions have vacillated between different solutions, to the point that they sometimes seem inconsistent or even contradictory. In order not to get lost on the way through the jungle of case law, it may be helpful to remind ourselves of the guiding ideas of the UTD, which also have—or at least should have—served as the North Star for the CJEU.

The first idea is obvious but nevertheless crucial to bear in mind: The consumer must be protected against unfair terms. This requires a realistic look at the situation. The purpose of Art 6(1) UTD is, in the words of the CJEU, ‘to substitute for the formal balance established by the contract between the rights and obligations of the parties real balance re-establishing equality between them’.90 At least at first blush, this implies the replacement of unfair terms by terms that are considered to be ‘fair’.

The last point may, however, be in direct conflict with a second guiding idea: the dissuasive effect of unfair terms control. This idea is laid down in Art 7(1) UTD, which obliges Member States, in the interest of both consumers and competitors, to ensure the existence of adequate and effective means to prevent the continued use by sellers or suppliers of unfair terms in contracts with consumers. This goal, which is related to market regulation rather than to the protection of the individual, is more of a long-term than a short-term objective.91 To achieve it, the CJEU has prohibited national courts from revising or partially deleting unfair terms.92 In other words, standard terms that are unfair must simply be eliminated and not be reduced to their legally valid minimum.

(p. 31) It is clear that this can cause a gap in the agreement, which may lead to an imbalance of the parties’ rights and obligations thereunder. This gap may be so big that the contract is no longer be ‘capable of continuing in existence without the unfair terms’, as stated at the end of Art 6(1) UTD. Here, a third, and again possibly contradictory, idea comes into play, that of maintaining the contract. As the CJEU has underlined, the goal of the UTD is not to annul all contracts containing unfair terms, but rather to preserve, as much as possible, the validity of the contract as a whole.93 This goal is explained not only by the principle of freedom of contract and the need for economic efficiency as well as legal certainty, but also by the interests of the consumer. Indeed, the latter’s interests might be seriously compromised if the contractual agreement with the business were to end suddenly.

To maintain the contract, it may often be necessary to fill the gap left by the unfair term. Methods and rules for this exist in most Member States, yet they are widely divergent. Employing them would thus conflict with another goal of the UTD, namely the provision of harmonized standards across the Internal Market. Repairing an unfair term in this way may also be in direct conflict with the goal of dissuading the use of such terms.

This short sketch is quite disturbing. The UTD, at least in its interpretation by the CJEU, pursues a number of goals that may contradict each other. The objectives to protect the consumer and the maintenance of the contract are not always compatible with the need to deter the business from using unfair terms. On the other hand, the annulment of the contract may, in certain circumstances, neither deter the business nor adequately protect the consumer. One answer to this may be gap-filling the contract, either through interpretation or through supplementary law, but this should not be done in a way that the business is favoured and able to reap the benefits from its unfair terms. It is here that push comes to shove, and where most problems exist in practice.94

The cause of the difficulties described is, at its heart, the incompatibility between two conflicting ideas. On the one hand, the EU wants to have free markets, with freedom of contract for the parties, and freely negotiated terms. On the other hand, it interferes with the terms of these contracts and invalidates some of them in the name of consumer protection. While this is arguably necessary to safeguard freedom of contract in a material or ‘real’ sense, it may provoke some unwanted consequences: if courts exercise unfair terms control too widely and without restraint, the parties’ intentions risk ultimately being replaced by the will of the judge. This would not only have drastic consequences for private law within the Member States, but also threaten the foundations of their economic systems, which is built on the free market, including social protection.

Courts must therefore attempt to strike a balance between the protection of the consumer against unfair terms and the maintenance of contractual undertakings. Their model must be what has been elegantly called ‘nuanced intervention’.95 This may prove challenging, since it is not at all easy to eliminate one clause of the parties’ agreement but maintain the rest without greatly disturbing the balance between the rights and obligations of both parties. Many a CJEU decision demonstrates the difficulties of such an endeavour.

(p. 32) Lack of Bindingness for Consumer

The UTD does not spell out the consequences of unfairness in precise terms of private law, but merely uses the term ‘not be binding’ to describe them. Most likely the EU legislator was seeking to provide the Member States with some leeway to define the precise consequence in their law in line with the concepts, notions, and the legal tradition of their own system. In line with this, the CJEU has stressed that the Directive does not seek to prescribe uniform solutions as regards the consequences that should follow from a finding that a contractual term is unfair. Even simply disapplying the unfair term in question with regard to the consumer could satisfy the Directive’s aims.96 It thus matters little whether the term is considered as ‘void’, ‘null and void’, ‘invalid’, ‘non-existent’, or simply ‘inapplicable’. All of these sanctions are compatible with the Directive.

The consequences of unfairness are, however, qualified because they only apply to the consumer. In the words of the UTD, the term is non-binding ‘on the consumer’, but binding on the business. This one-sided sanction is explained by the background of consumer protection, which is the core aim of the Directive. Accordingly, the business cannot invoke the lack of bindingness against the consumer or before a court of law. This seems fair enough given the standard term was offered and, at least in most cases, also drafted by the business.

The position of the consumer is less clear. The Directive seems to leave him the choice of whether to invoke the lack of bindingness of the term or not. This could be understood as implying a requirement on the consumer to rely on the non-bindingness in a procedure before a court of law as a precondition for unfair terms control. Such an interpretation is, however, sternly rejected by the CJEU, which consistently calls on national courts to apply the UTD including its sanctions of their own motion, or ex officio.97 Consequently, it does not matter whether the consumer has invoked unfairness or not; the court must test and verify each of the terms of the contract regardless.

On the other hand, the CJEU does not see the rules of the Directive as invariably having a mandatory character and as applying under all circumstances. Specifically, the Dziubak judgment underlines the inapplicability of the UTD’s system where the consumer prefers not to rely on it.98 When exactly this is the case and how the consumer needs to express his preferences will be discussed below.99

Restoration of the Previous Situation

In practice, the obligations under a contract have quite often already been performed—in full or partially—before the courts get a look at the terms it contains. At this point, the mere possibility of relying on the lack of bindingness of a term found to be unfair would be insufficient for the protection of the consumer. For this reason, the CJEU requires that (p. 33) the consumer be restored ‘to the legal and factual situation that he would have been in if that term had not existed’.100 Even though the precise consequences of this are to be determined by the law of the Member States, the Directive entails, in the eyes of the Court, that the consumer must be able to demand all advantages that have been wrongly obtained by the seller or supplier to his—the consumer’s—detriment.101 In most cases, this implies the consumer’s right to demand restitution.

The exact implementation of such a right is anything but easy. This is illustrated by one of the many cases decided by the CJEU concerning a loan contract that was denominated in Swiss francs but paid out and to be repaid in Hungarian forint.102 The referring Hungarian court had ‘reclassified’ the contract as a loan agreement denominated in Hungarian forint, then fixed the annual interest rate in this currency, and ordered the defendant to reimburse, on the grounds of unjust enrichment, the difference between the capital sum plus the interest so-calculated on the one hand and the payments already made by the consumer on the other. The CJEU seems to condone this approach.103

However, the Court has also warned that the national tribunals’ powers cannot extend beyond what is strictly necessary to restore the contractual balance between the parties and thus to protect the consumer from the particularly unfavourable consequences which could result from annulment of the loan agreement at issue.104 In particular, it has denied the national court the power to freely modify or reduce the content of the unfair term, as such power could undermine the Directive’s objectives.105 It would, in its view, neither serve to restore the equality of the parties, nor would it deter the business from continuing to use unfair terms. More generally, one could see such a power as being at odds with the principle of freedom of contract and the general functioning of the market economy.

Prohibition of Revising and Partially Deleting Unfair Terms

The CJEU consistently rules that national courts may not revise the content of unfair terms.106 This prohibition is justified by the objective of dissuading the use of such terms: If national courts were allowed to revise their content, such a power would be liable to compromise attainment of the long-term objective of Art 7 UTD. Sellers and suppliers would still be tempted to use those terms in the knowledge that, even if they were declared invalid, the contract could nevertheless be adjusted, to the extent necessary, by the national court in such a way as to safeguard the interest of those sellers or suppliers.107

(p. 34) An illustration of the prohibition to revise the contract is the CJEU’s judgment in Dexia Nederland BV.108 This case concerned a penalty clause that was held to be unfair by the referring court. The latter asked whether it could fill the gap that has arisen by applying a statutory provision of supplementary law on damages.109 Unlike the Dutch Supreme Court in its earlier judgment,110 the CJEU answered this question in the negative.111 It held that where a national court finds that a term in a contract concluded between a seller or supplier and a consumer is unfair and therefore void, it cannot modify the contract by revising the content of that term, even by substituting a supplementary provision of national law. Such a power would contribute to eliminating the dissuasive effect on sellers of the straightforward non-application with regard to the consumer of those terms: The sellers or suppliers would still be tempted to use those terms in the knowledge that, even if they were declared invalid, the contract could nevertheless be modified, to the extent necessary, by the national court in such a way as to safeguard the interest of those sellers or suppliers.112

For much the same reasons, the partial deletion of an unfair contractual term is also unacceptable under the UTD. Such a practice would equally compromise the dissuasive character of the Directive. Indeed, in most cases, deleting the unfair part would be tantamount to revising the content of the terms by altering its substance.113

If a contract term is in fact composed of two or more different terms, this may be different. Consider, in particular, the situation where a term includes two or more stipulations that can easily be separated from one another. In that case, the deletion of one of them has no impact on the remaining stipulations.114

The CJEU has thus far given only a few leads on when a contract term is to be considered as being, in fact, composed of two or more different terms. It has, for example, distinguished between: (1) terms regarding the fundamental obligations for the consumer to pay back a loan in a given currency, and terms setting out the currency conversion mechanism;115 (2) terms setting out the price to be paid by the consumer, and a price change mechanism (p. 35) in long-term contractual relations;116 (3) terms determining the ordinary interest rate to be paid for a mortgage loan, and terms on late payment interest, even if the latter are defined as a top-up to the ordinary interest rate.117 The aforementioned terms are therefore separate contract terms by definition.118

In this context, the German Supreme Court draws a distinction between inadmissible revision119 of a term and permissible deletion of an unfair stipulation contained in a term if the remaining content of the term can apply without any further intervention (the so-called ‘blue pencil doctrine’). Thus far the CJEU has not confirmed that this approach is compatible with the UTD.120

Be that as it may, in relation to a term in a mortgage credit agreement which allowed the bank to call in the entire loan after the consumer had failed to pay a single monthly instalment, the CJEU has ruled that the early repayment obligation cannot be separated from the condition of (only) one unpaid monthly instalment without altering the substance of those terms. Partial deletion was therefore not permitted.121

In the words of the European Commission, (1) ‘what matters for the severability of contract terms is the content or function of particular stipulations rather than the way in which they are presented in a given contract’; and that (2) ‘a partial deletion is not possible where two parts of a contract term are linked in such a way that the removal of one part would affect the substance of the remaining contract term’. In this connection, the Commission remarks that ‘it is not excluded that a single paragraph/number in a contract contains more than one contract term within the meaning of Article 3(1) UTD’ and that, conversely ‘it is possible that two paragraphs/numbers or even provisions in different documents form a single contract term, in light of their content’.122

Consequences for the Existence of the Contract as a Whole

5.1  General framework for maintenance or invalidity of the contract

As the CJEU has underlined numerous times, the goal of the UTD is not to annul contractual agreements, but to preserve, as much as possible, the validity of the contract as (p. 36) a whole.123 This follows directly from the wording of Art 6(1) UTD in fine, according to which ‘the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms’. Yet this provision also implies that it must be possible, under certain circumstances, for the court to annul or invalidate the whole agreement between the parties.

The key question is when one or the other is the case. The text of the provision does not set out any criteria to make that determination. Therefore, such criteria must be taken from the legal systems of the Member States, as the CJEU has acknowledged.124 Nevertheless, the Court has provided a number of guidelines on how this assessment shall be made. In particular, it has distinguished in this respect between non-core and core terms of the contract.

5.2  Non-core unfair term

The contract will normally be able to continue in existence if the contractual term that is deleted is not a core term. In this case, the contract’s essence will remain intact, and there is no reason to annul it.

An example of such a situation is the judgment of the CJEU in the case of Gutiérrez Naranjo. The case concerned Spanish mortgage loan agreements containing a so-called ‘floor clause’.125 This term provided that the applicable variable rate of interest could not fall below the level specified in the term. The operation of the floor clause became an issue when, as a consequence of the financial crisis, the variable rate of interest fell below the rate specified in the floor clause. Ruling on a collective action for an injunction brought by a consumer association against several credit institutions, the Spanish Tribunal Supremo (Supreme Court) held that the floor clauses were unfair and declared them void.126

According to the Spanish Supreme Court, the nullity of the term was subject to two important limitations in the interests of the principle of legal certainty:

  1. (1)  the declaration of nullity could not have retroactive effect to before the date of publication of the Supreme Court judgment;

  2. (2)  the declaration of nullity could not affect situations in which final decisions had been made in judgments with the force of res judicata.127

Lower Spanish courts facing floor clauses in individual cases wondered whether the limitations imposed by the Supreme Court on nullity were compatible with the UTD, and therefore applied to the CJEU for a preliminary ruling on these matters.128 The CJEU made short shrift of the Spanish Supreme Court’s limitation that the declaration of nullity did not have (p. 37) retroactive effect to the time before the date of publication of the Supreme Court judgment (9 May 2013). The lower Spanish courts could therefore disapply the Supreme Court judgment in this respect because that limitation was incompatible with the UTD. Only the CJEU could decide on a temporal limitation and it was not prepared to introduce one in this case because this would detract from the effectiveness of the UTD (Art 7(1)).129 However, the CJEU considers that this does not, in principle, affect situations in respect of which a judgment with the force of res judicata has been given.130

Consequently, consumers who had concluded mortgage loan agreements of this kind were entitled, without any temporal limitation, to recover from the banks the difference between the minimum rate below which the variable rate of interest could not fall under the ‘floor clause’ and the market interest rate, except in situations where a final judgment had already acquired the force of res judicata. In all other respects, the mortgage loans remained intact.131

5.3  Core unfair term

If a core term is unfair, the situation is different. In such a case, the contract can normally not continue in existence without the deleted term. Therefore, as a matter of principle, the contract is void in its entirety.

An example of a situation of this kind underlies the CJEU’s decision in Kamil Dziubak and Justyna Dziubak.132 The case concerned mortgage loans denominated in Polish zloty (PLN), but indexed to a foreign currency, namely the Swiss franc (CHF). The rules for indexing the loan to the currency at issue were specified in the mortgage loan regulations used by the bank in question (Raiffeisen) and incorporated into the agreement. The interest rate on the loan at issue in the main proceedings was fixed at a variable rate and set as the sum of the three-month LIBOR CHF benchmark and Raiffeisen’s fixed margin.133

Polish consumers initially benefited from this arrangement as the Swiss interest rate was much lower than the Polish interest rate. However, it had one major disadvantage: consumers ran the risk that the Swiss franc would appreciate in value against the Polish zloty (exchange rate risk). When this had happened, the borrowers contested the mechanism whereby the mortgage loan was indexed to the Swiss franc in such a way that the borrowers had to bear the costs associated with the exchange difference between the buying rate of the Swiss franc as the currency used for the disbursement of the funds, and the selling rate of the Swiss franc as the currency used for the monthly repayments.134

(p. 38) According to the referring court in Warsaw, these terms were unfair. It was conceivable to continue the contract without them, but the referring court considered that under Polish law the agreement could not continue in existence without those unfair terms because the effect of their removal would be to modify the nature of the main subject matter of the contract. The Polish court wished to know, in a rather confusingly formulated reference, whether the UTD precluded it from taking the view that in accordance with its domestic law, the contract could not continue in existence.135

The CJEU answered this question in the negative.136 It held that the UTD did not preclude national courts from considering a consumer contract to be incapable of continuing in existence without the unfair term and therefore invalid. Indeed, this possibility is implied in the text of Art 6(1) UTD. This ruling opened the door for the annulment of the contract under national law.

However, if the entire loan agreement were to be annulled with retroactive effect, this would naturally have far-reaching consequences, as the contract would be deemed never to have existed. This could be very disadvantageous for the consumer as a borrower because he would then have to repay the loan amount to the bank all at once. Therefore, maintaining the contract, even where this is feasible only by the use of a supplementary provision of national law, must be an option.

The possibility of maintaining the contract was explicitly foreseen in the CJEU’s earlier decision in Kásler.137 In this case, the Court noted that if the outstanding balance of the loan becomes due forthwith, this is likely to be in excess of the consumer’s financial capacities.138 As a result, annulling the clause tends to penalize the consumer rather than the lender who, as a consequence, might not be dissuaded from inserting such terms in its contracts.139 In the end, the CJEU held that maintaining the existence of the contract was permissible where the ‘consumer might be exposed to particularly unfavourable circumstances, so that the dissuasive effect resulting from the annulment of the contract could well be jeopardised’.140

Against this background, the Polish court in Dziubak asked whether it should assess the consequences of the annulment of the agreement at the time of its conclusion or at the time when the dispute arose. These two perspectives may well yield different results, depending on the development of the exchange rate of the foreign currency to which the loan contract is indexed. The CJEU held that the assessment must be carried out at the time when the dispute arose, and not when the contract was concluded, because it was necessary to take account of the actual, and therefore current, interests of the consumer when assessing the consequences of annulment.141 That finding would not be called into question by the fact that Art 4(1) UTD links the assessment of the unfairness of a contractual term at ‘the time (p. 39) of conclusion of the contract’ to all the circumstances attending its conclusion. The Court of Justice argued, quite convincingly, that the purpose of this assessment is fundamentally different from the assessment of the consequences resulting from a contract being annulled.142 Hence the relevant time for assessing the consequences of annulment is the time when the dispute arose, not when the contract was concluded. From the reference by the Polish court, it follows that ‘the time when the dispute arose’ refers to the moment when the consumer (first) claimed that the term is unfair.143

5.4  Application of supplementary law as a gap-filler

In Kásler, the CJEU had demanded the contract be maintained where its invalidity as a whole would expose the consumer to particularly unfavourable consequences.144 One key question is how this goal can be achieved where the contract cannot continue in existence, particularly where a core term is affected. The CJEU has allowed the invalidity of the unfair term to be remedied by substituting for it a supplementary provision of national law or one which is applicable where the parties to the contract so agree.145

However, this method is in a certain tension with the prohibition to revise the terms of the contract, which is necessary to dissuade businesses from the use of unfair terms.146 In light of this, the Dziubak decision limits the possibility of substitution to those provisions that have been subject to a specific assessment by the legislature with a view to establishing a balance between all the rights and obligations of the parties to certain contracts.147 In contrast, it excludes the substitution of standard terms by national provisions of a general nature, such as those of Polish law in question, which provide that the effects expressed in a legal transaction are to be supplemented, inter alia, by the effects arising from the principle of reasonableness and fairness or from established customs.148

As the reason for this distinction, the Court cites the UTD’s Preamble, according to which ‘statutory or regulatory provisions of the Member States which directly or indirectly determine the terms of consumer contracts are presumed not to contain unfair terms’.149 Apparently, the CJEU views this presumption as comprising only those statutory or regulatory provisions that take into account the consumer’s specific situation, while excluding more abstract provisions of general private law, such as those relating to reasonableness or fairness. Yet this reasoning seems to conflate two different questions, namely the consequences of unfair terms on the one hand and the control of statutory or regulatory provisions on the other. While it is true that the courts are unable to control statutory or regulatory provisions of their law for their fairness, they are not necessarily precluded from (p. 40) using such provisions to fill a gap in a contract that is left by an unfair and void term. As a matter of fact, this is an entirely different question.

The line of reasoning in the Dziubak case has proved to be a source of confusion and has unsettled courts and the literature in the Member States.150 The CJEU’s reasoning seems to question key provisions of national laws and well-established methods of contract interpretation. Many civil codes provide for principles or standards such as ‘reasonableness’, ‘fairness’, ‘good faith’, or similar principles when interpreting contracts. It seems only natural for national courts to use the same standard when trying to fill a gap in a contract that is left by an unfair term. Yet the CJEU does not allow them to do so, but instead requires the legislature to provide a rule specifically assessing the situation and establishing a balance between all the rights and obligations.

There are various problems with this line of reasoning: First, most Member States’ laws do not contain any special rules addressing the situation of a gap left by an unfair contract term. This is hardly surprising given the relative age of the codes in comparison to the much more recent UTD.

Second, the legislator is not necessarily in a better position than the courts to assess the consequences of a non-binding unfair term with a view of balancing all the rights and obligations emanating from the contract. Quite to the contrary, courts are arguably much better placed to make such an assessment, given that they are facing individual disputes and can understand all the implications of the validity or invalidity of the contract in the situation at hand.

Third, the CJEU’s reasoning imposes a distinction between those provisions of national law that qualify for gap-filling under the UTD from those that do not. This distinction inexorably leads to hair-splitting characterization issues and is difficult to carry out given the broadness of the criteria provided by the CJEU, which contrasts with the variety of Member States’ laws. It is not straightforward, for instance, to determine whether or not a legislator who condones a long-established court practice of filling gaps through the principle of good faith has done enough in the eyes of the CJEU so as to allow the principle’s application with a view to maintain a contract containing a void clause. This creates significant uncertainty as to the rules that may be applied by national courts.

At the basis of this is a fundamental fallacy committed by the CJEU: it has deeply interfered with the principle of separation of powers in the form of the national distribution of competences between legislative and judicial power. This is not only contrary to its usual assurances that the consequences of an unfair term are to be provided by national law,151 but also exceeds its powers under the UTD. As a directive, the UTD only demands that certain goals be achieved, but does not determine the means to do so. Such means could be specific rules provided by the legislator, but also case-based assessments by the courts. Either solution satisfies the requirements of the Directive. A Member State could thus fill a gap in a contract left by an unfair term by legislation or case law. The CJEU should not have demanded a legislative solution to what is essentially a judicial problem.

(p. 41) Limitation Periods and Unfair Terms

The UTD is silent on the limitation period for claims that can be brought on the basis of unfair terms. However, the CJEU has ruled on this issue.152

6.1  Declaration of unfairness of a term

First, the Court of Justice has held that the consumer must be able at any time to raise the unfairness of a term not only as a defence, but also in order to obtain a declaration that a term in a consumer contract is unfair.153 Consequently, a claim for a declaration that a term in a consumer contract is unfair cannot be subject to a limitation period.154 This was deemed necessary to ensure that the rights derived by the consumer from the UTD are effectively protected. At first blush, it may seem strange that the consumer can still bring a claim for declaring a term unfair even after thirty or more years. However, this may be justified by the interests of other consumers who have entered into contracts with the same or a similar term more recently. The consumer who applies for such declaration thus acts not only in his personal interests, but in that of the other consumers as well.

6.2  Claim for repayment of sums paid but not due

However, the CJEU has also ruled that national law may prescribe a limitation period for bringing a claim for repayment of that which has been paid but is not due, on the basis of an unfair term. Limitation periods of three or five years, which are fixed and known in advance, are permitted provided that they do not make it in practice impossible or excessively difficult to exercise the rights conferred by the UTD, that is, provided that the principle of effectiveness is respected.155 A limitation period can be compatible with the principle of effectiveness only if the consumer has had the opportunity to become aware of his rights before that period begins to run or expires.156

In BNP Paribas Personal Finance, the CJEU held that a limitation period which begins to run from the date of acceptance of the loan offer is not capable of affording the consumer effective protection, since that period is likely to have expired even before the consumer becomes aware of the unfair nature of a term in the contract at issue. Such a period makes (p. 42) it excessively difficult for the consumer to exercise the rights deriving from the UTD and therefore infringes the principle of effectiveness.157

In D.B.P. (Crédit hypothécaire libellé en devises étrangères), the CJEU held furthermore that a ten-year limitation period for a consumer’s action for the restitution of sums unduly paid to a seller or supplier in performance of an unfair term contained in a loan agreement that begins to run on the date of each performance by the consumer is not capable of affording the consumer effective protection.158 The Court of Justice bemoaned the fact the consumer was not in a position, at the date of each performance, to assess the unfairness of the contractual term himself and was not necessarily aware of the latter. It did not matter that the contract in this case had a repayment period of thirty years, which was much longer than the statutory limitation period of ten years.

VII  National Procedural Law and Unfair Terms Control

Article 7(1) UTD provides:

Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.

Basic Relationship: Independence

The UTD concerns the control of unfair contract terms, but does not harmonize the procedures applicable to examining whether a contractual term is unfair. Accordingly, the rules governing those procedures fall within the domestic legal system of the Member States. This follows directly from the principle of procedural autonomy of those States, which the CJEU has rightly emphasized.159 National law will therefore determine the procedure for the assessment of an allegedly unfair contractual term,160 the notarial procedure for affixing an enforcement clause to an authentic debt instrument,161 or the procedure following an auction of immovable property that had been mortgaged by a consumer.162

(p. 43) Principles of Equivalence and Effectiveness

Nevertheless, the CJEU has made significant advances into the area of procedural law whilst interpreting the UTD. For this purpose, it has used the principles of equivalence and effectiveness as its chief tools.163 The principle of equivalence requires national legislators to foresee rules and procedures for actions under EU law that are no less favourable than those governing similar domestic actions. The principle of effectiveness (effet utile) demands that national courts do not make it impossible in practice or excessively difficult to exercise the rights conferred by EU law.164 This principle is also alluded to when Art 7(1) UTD requires Member States to provide courts or administrative authorities with adequate and effective means to prevent the continued application of unfair terms in consumer contracts.

The principle of effectiveness especially has played a significant role in the case law. Inter alia, the CJEU has derived from it that national law must provide consumers with guaranteed effective judicial protection by enabling them to contest the contract at issue in legal proceedings under reasonable procedural conditions.165 On the basis of this principle, the Court of Justice has, for instance, required the availability of interim relief in the case of unfair terms during mortgage enforcement proceedings.166 In this regard, it has taken issue with the national procedural rules for mortgage enforcement which provided short time limits for the objections by the consumer, dealt with them in a separate procedure which merely offered compensation as a remedy but not the stay or termination of the enforcement proceedings, and provided a right to appeal only to the enforcing party but not to the consumer.167 The CJEU has also declared incompatible with the UTD a time limit in transitional law for bringing an objection that started to run independently of the consumer’s action or knowledge.168 In this way, the Court of Justice has left a foot in the door to control rules of national procedural law.

However, the CJEU is careful to underline that the protection of the consumer is not absolute.169 It has also stressed that whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress, and its special features, viewed as a whole, before the various national bodies.170

(p. 44) Ex Officio Control

One issue where the impact of the UTD on national procedural law is fairly obvious is the question of whether the customer needs to invoke the unfairness of a term for it to become subject to fairness control. According to the CJEU, a national court is obliged to assess, of its own motion, whether a contractual term falling within the scope of the UTD is unfair, and thereby to compensate for the imbalance existing between the consumer and the seller, when the legal and factual elements necessary to that end are available to the national court.171 To understand the background of this jurisprudence, it must be remembered that the goals of the UTD not only encompass consumer protection, but also the completion of the Internal Market as well as the stimulation of competition.172 The achievement of these goals, which are objective in nature and of wide societal concern, cannot depend on the litigation behaviour of one of the parties. In addition, even the goal of consumer protection could not be fully achieved if fairness control were conditioned on an explicit attack by the consumer. Typically, the consumer does not know about the terms, nor about their possible unfairness and the remedies available in that case.

In a long line of cases, the CJEU has therefore ruled that a national court is required to assess of its own motion whether a standard term is unfair.173 Another expression for this is ex officio control. As a justification, the Court has relied on both the principle of equivalence and the principle of effectiveness. On the basis of the first, it has ruled, for instance, that Art 6(1) UTD must be regarded as a provision of equal standing with those that have the role of public policy rules in the domestic legal system.174 On the basis of the second, it has concluded that a national court must carry out unfair terms control on its own motion.175

In any case falling within the scope of the Directive, the national judge must thus play an active part, and has to verify whether the requirements of the Directive are complied with or not, even in the absence of an application by either of the parties. As noted above, the CJEU has made the caveat that the judge must have available the legal and factual elements necessary for carrying out this task.176 But this condition is mostly met as the judge will have access to the standard terms and know the basic roles of the parties as business and consumer. Judicial prudence, therefore, suggests that an unfairness control should be undertaken any time a standard term comes to the knowledge of the court and the other conditions for applying the Directive are present.

(p. 45) A recent illustration of how this is implemented in practice is the judgment of the CJEU in the case of Impulse Leasing România IFN SA.177 The referring Romanian court wished to know whether the UTD had to be interpreted as precluding national legislation which did not allow the court hearing enforcement proceedings to assess, of its own motion or at the request of the consumer, whether the terms of the underlying contract were unfair, on the ground that the terms of such a contract can be reviewed in the preceding litigation regarding the substance of the case. The CJEU answered this question in the affirmative, citing previous judgments. It also took issue with another rule of Romanian procedural law, under which the suspension of enforcement proceedings is conditioned upon the consumer providing security. In the eyes of the Court of Justice, the level of such security may dissuade the consumer from bringing and maintaining such an action. In this respect, Romanian procedural law was therefore considered to be at odds with the European principle of effectiveness.178

Exception: Objection by the Consumer

According to the CJEU, the system of the UTD does not apply where the consumer prefers not to rely on it.179 What exactly the consumer must do to state his preference is unclear.

Several decisions hold that the national court must apply unfair terms control unless the consumer ‘objects’.180 Other decisions require the replacement of an unfair term insofar as the consumer ‘has not expressed his or her wish to retain the unfair clauses’.181 The Court has, however, also stated that a national court which has found of its own motion a contractual term to be unfair would not be obliged to wait for the consumer, having been informed of his rights, to submit a statement to that effect, provided the principle of audi alteram partem has been complied with.182 Another description between ex officio control and the possible waiver is that the sanction of Art 6(1) UTD is inapplicable if the consumer, after having been informed of the unfairness of a term by the court, ‘does not intend to assert its unfair or non-binding status, thus giving his free and informed consent to the term in question’.183 Such information by the court about the potential unfairness of a term is necessary even where the consumer is represented by a professional in the proceedings.184

These seemingly confused statements of the law can be summarized by the following principle: courts must always apply the consequences of unfairness of their own (p. 46) motion, or ex officio, unless the consumer expressly accepts to be bound by the term during trial, having been informed by the court about its unfairness or non-binding character.

Res Judicata

The principle of res judicata is known to virtually all Member State laws and is also part of EU law itself. It ensures that judicial decisions which have become definitive, that is, after all rights of appeal have been exhausted or after expiry of the time limits provided for their exercise, can no longer be called into question. The CJEU has rightly stressed the importance of this principle to ensure stability of the law and legal relations as well as the sound administration of justice.185

Nevertheless, the CJEU has also deemed that national rules on res judicata are not sacrosanct, but must comply with the UTD. As justification, it has invoked not only the principles of equivalence and effectiveness, but also the need for effective judicial protection, which is guaranteed, inter alia, by Art 47 Charter of Fundamental Rights.186 In the case Banco Primus, the Court of Justice ruled that a national court must check the fairness of contractual terms even at the enforcement stage.187 The case was one of many concerning enforcement proceedings over mortgage loans, which threatened to result in the eviction of the borrower from their home. The CJEU ruled that the principle of res judicata forecloses the re-examination of the terms of the contract by the national court at the enforcement stage where those terms have been checked during an earlier judicial review.188 However, where this is not the case, the enforcement court would have to control the fairness of the terms of the contract, either on application by the consumer or on its own motion, even where the decision to be enforced has already become binding.189 As the CJEU has clarified, this not only affects judgments, but also payment orders.190

But the Court of Justice has gone further. In the case MA v Ibercaja Banco,191 it gave more precision to the meaning of review in the original proceedings. In this context, it allowed a re-examination of the contractual terms where the judicial decision authorizing the mortgage enforcement ‘does not contain any grounds, at least of a summary nature, attesting to the existence of that examination, nor state that the assessment of that court at the end of that examination could no longer be called into question if an objection were not lodged within the aforementioned period’.192 In other words, a mere fairness control by the court of origin no longer suffices; the court’s reasoning must also reflect that such control has (p. 47) been carried out and warn the consumer about the consequences of a failure to object to its assessment. This is a very far-reaching requirement, which many national judgments will not meet, and which opens avenues for additional challenges at the enforcement stage. As the CJEU has clarified, this jurisprudence not only affects judgments, but also payment orders.193

Despite these far-reaching intrusions into the binding force of judgments, the principle of res judicata is still held up high by the CJEU. It has stressed that ‘consumer protection is not absolute’, and that the UTD does not require a national court to disapply domestic rules of procedure conferring finality on a decision, even if to do so would allow an infringement of the Directive to be remedied.194 Moreover, the Court of Justice has held that the principle of effectiveness cannot be stretched so far as to make up fully for the complete inaction on the part of the consumer concerned.195 Obviously, these statements are increasingly difficult to reconcile with the line of decisions that require Member State courts to carry out the fairness control of their own motion, subject only to an objection by the consumer.196

Further Procedural Issues

The CJEU has not stopped there, but has made further inroads into procedural law in the name of ensuring the correct implementation of the UTD. It has, for instance, scrutinized the limitation a national rule poses for the recoverability of lawyer’s fees by the winning party.197 While it has ruled that the Directive does not preclude such a limit, it has made the proviso that the successful consumer must be able to recover a ‘reasonable and proportionate amount’ of the costs he incurred in bringing the proceedings concerning an unfair term.198 This ruling effectively tasks courts of Member States with reviewing any limitations to the recoverability of costs in their national law and potentially disapply them where they do not comply with the standard set by the CJEU.

Interpreted in this way, the UTD, together with the principles of equivalence and effectiveness, provides ample opportunities for the review of provisions of procedural law. The potential for intervention by the CJEU is, in fact, vast. Virtually no rule of national law can be deemed secure. The Directive is increasingly being used as a springboard to the approximation of national rules of civil procedure. The future will tell how far this will lead to the gradual harmonization of Member States’ procedural law through the backdoor of unfair terms control.

(p. 48) Collective Redress

Article 7(2) UTD provides:

2. The means referred to in paragraph 1 shall include provisions whereby persons or organizations, having a legitimate interest under national law in protecting consumers, may take action according to the national law concerned before the courts or before competent administrative bodies for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms.

Article 7(2) UTD calls on Member States to include in their law provisions allowing consumer protection organizations or similar persons to take action against unfair terms. This is part of the plan to provide adequate and effective means against the continued used of unfair terms, as foreseen by Art 7(1) UTD. In response to this call, Member States have created legal means of collective redress in their national legal systems. These have proven to be particularly useful in the private enforcement of the Directive. Many cases that have reached the CJEU have been initiated by consumer associations.

It must be borne in mind, though, that Art 7(2) UTD merely calls on the Member States to provide for the possibility of collective redress, but does not introduce such a mechanism itself. The CJEU therefore refused to criticize a national law that excluded the intervention of consumer organizations in enforcement proceedings concerning an arbitration award in Pohotovost’.199 Although the Court had underlined the importance of the principles of equivalence and effectiveness in this decision, it saw no contradiction with them, specifically because the law in question excluded the intervention of any third party in enforcement proceedings.

Things were different, though, in EOS KSI Slovensko.200 The case concerned a law that subjected the intervention by a consumer association in a payment proceeding to various conditions, including written consent by the consumer. The Court deemed that this provision violated the principle of equivalence because it made the collective proceedings subject to less favourable conditions than those applying to disputes falling within the exclusive scope of domestic law.201 Hence, it ruled that the consumer association must be allowed to intervene in the proceedings, independently of the intentions of the defendant in the specific case. This may appear to be a far-reaching interference with national law, but it must also be borne in mind that consumers often lack information about their rights and remedies, so that ultimately the ruling seems to be justified.

Although collective redress mechanisms are important, they should not get in the way of effective consumer protection. The CJEU has therefore taken issue with a national provision providing for the automatic suspension of the consumer’s claim in case of a pending collective action against a similar standard term. In the joined cases Jorge Sales Sinués v Caixabank SA and Youssouf Drame Ba v Catalunya Caixa SA, the Court of Justice prohibited such a provision from preventing the national tribunal from taking account of the (p. 49) relevance of the suspension for the goal of consumer protection. It also demanded that national law reserves the right for the consumer to opt out of the collective proceedings, thus opening the door for the continuance of the individual action.202 The Court’s ruling implies that the rights of the consumer to effective individual protection should not be trumped by collective redress, despite its superior efficiency in remedying unfair terms. As a matter of fact, collective redress is a sword that cuts in two directions: it may favour the consumer, but it may also lead to unfavourable results for him, so that the avenue of individual litigation must not be closed.

VIII  Conclusion

The UTD is a remarkably short and pithy text, explicitly stating its goals and comparatively easy to read. Nevertheless, it has given rise to issues of contention, especially in the area of banking and financial contracts. One reason for this is the typically significant economic importance of such contracts. Another is the complex and sometimes confused case law of the CJEU. In a bid to strengthen the implementation of EU law and to help consumers, the Court of Justice has interpreted the Directive in a fairly extensive manner. It has set very strict criteria for the fairness and transparency of contract terms, such as those relating to foreign exchange or interest rate risks, and has established far-reaching information duties in this regard. The Court of Justice has also strengthened the sanctions of unfair terms, for instance by prohibiting national tribunals from their revision. Furthermore, it has tasked national courts with reviewing the fairness of terms on their own motion, even after a supposedly final decision or payment order has been rendered.

Seen from a distance, this case law marks a significant increase in the scope and impact of the UTD, with the Directive becoming a potent tool to harmonize many areas of national law, from consumer and contract law to procedural law. This development could hardly have been foreseen during its adoption in 1993. At the same time, the Directive and the case law of the CJEU have also become sources of legal uncertainty. Virtually any standard term in consumer contracts now risks being declared invalid by the courts. This can have significant consequences for the financial institutions concerned, especially where they are regional and small or medium-sized.

The interests of the latter have to be weighed against the interests of the consumers. While the CJEU has tried to find a balance between them, it has often displayed a willingness to err on the side of consumer protection. This is understandable given the individual interests at stake. It has to be borne in mind that consumers are sometimes threatened with life-changing consequences, inter alia, with evictions from their homes because of their failure to pay mortgages. The interests of the banks and other financial intermediaries involved pale in comparison.

Still, the importance of a functioning financial sector for the provision of liquidity to the economy and for the well-being of citizens should not be neglected, and needs to be taken into consideration. The best result would be rules that are fair, easy to apply, and foreseeable (p. 50) for all parties concerned. This would also decrease the number of court proceedings and references for preliminary rulings to the CJEU.

How will the UTD evolve in the future? Will it remain the prime tool to harmonize Member States’ national laws, or will other texts take its place? Will there be a reform, and possible extension? If not, will the CJEU be able to extend its meaning even further? These questions are hard to answer without having a crystal ball at one’s disposal. What seems certain is that unfair terms control will continue to play a significant role in the EU. Whether its precise configuration can be left to the CJEU alone is another matter. Given the sprawling case law and the uncertainty surrounding its application, it seems time for the legislator to set some clear guidelines. These would be especially relevant for banking and financial contracts and could be included in the UTD or in another text. We will consider this idea further in the last chapter of the book.203

Footnotes:

1  Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29 (hereafter UTD).

2  Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council [2011] OJ L304/64 (hereafter Consumer Rights Directive 2011).

3  See Art 3(3) Consolidated Version of the Treaty on European Union [2012] OJ C326/13 (hereafter TEU); Art 26 Consolidated Version of the Treaty on the Functioning of the European Union [2012] OJ C326/47 (hereafter TFEU).

4  See Art 288(3) TFEU.

5  Case C–260/18 Kamil Dziubak and Justyna Dziubak [2019] ECLI:EU:C:2019:819, para 37.

6  More on this in Chapter 21.

7  See Chapter 21.

8  Joined Cases C–96/16 and C–94/17 Banco Santander SA v Mahamadou Demba, Mercedes Godoy Bonet and Rafael Ramón Escobedo Cortés v Banco de Sabadell SA [2018] ECLI:EU:C:2018:643, paras 39–41.

9  See European Commission, Guidance on the interpretation and application of Council UTD 93/13/EEC of 5 April 1993 on unfair contract terms in consumer contracts [2019] OJ C323/4, 13 (hereafter European Commission, Guidance on Council UTD 93/13/EEC).

10  Art 2(b) UTD.

11  Art 17(1) Regulation (EU) 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [2012] OJ L 351/1 (hereafter Brussels Ibis Regulation), which speaks of ‘a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession’.

12  Case C–89/91 Shearson Lehman Hutton v TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH [1993] ECLI:EU:C:1993:15, paras 12–24 holding, however, in this case that ‘a plaintiff acting in pursuance to his trade or professional activity’ shall not qualify as a consumer.

13  Case C–208/18 Jana Petruchová v FIBO Group Holdings Limited [2019] ECLI:EU:C:2019:825, paras 57–59.

14  Case C–110/14 Costea [2015] ECLI:EU:C:2015:538, para 21; Case C–590/17 Henri Pouvin and Marie Dijoux v Electricité de France (EDF) [2019] ECLI:EU:C:2019:232, para 24; Case C–198/20 X Bank [2021] ECLI:EU:C:2021:481, para 25.

15  Case C–110/14 Costea [2015] ECLI:EU:C:2015:538, para 30.

16  Art 2(c) UTD.

17  Case C–147/16 Karel de Grote—Hogeschool Katholieke Hogeschool Antwerpen [2018] EU:C:2018:320, para 55; Case C–590/17 Pouvin and Dijoux [2019] ECLI:EU:C:2019:232, para 36.

18  European Commission, Guidance on Council UTD 93/13/EEC (n 9), 10.

19  Case C–590/17 Pouvin and Dijoux [2019] ECLI:EU:C:2019:232, para 43.

20  ibid para 40.

21  ibid para 41.

22  Recital 13 UTD.

23  Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750, para 53; Case C–81/19 Banca Transilvania [2020] ECLI:EU:C:2020:532, para 26.

24  Case C–34/13 Kušionová [2014] ECLI:EU:C:2014:2189, para 73.

25  Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750.

26  Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750, para 67.

27  Joined Cases C–96/16 and C–94/17 Banco Santander [2018] ECLI:EU:C:2018:643, paras 45–46.

28  Case C–192/20 Prima banka Slovensko [2021] ECLI:EU:C:2021:480, para 42.

29  Case C–81/19 Banca Transilvania [2020] ECLI:EU:C:2020:532, paras 25, 34–36.

30  ibid para 34.

31  ibid para 37.

32  Case C–779/18 Mikrokasa and Revenue Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty w Warszawie [2020] ECLI:EU:C:2020:236, para 58.

33  Case C–125/18 Marc Gómez del Moral Guasch [2020] ECLI:EU:C:2020:138, para 37.

34  Convention providing a Uniform Law for Bills of Exchange and Promissory Notes, 7 June 1930, available at: <https://treaties.un.org/Pages/LONViewDetails.aspx?src=LON&id=555&chapter=30&clang=_en> accessed 17 October 2022; Convention Providing a Uniform Law for Cheques, 19 March 1931, available at: <https://treaties.un.org/Pages/LONViewDetails.aspx?src=LON&id=556&chapter=30&clang=_en> accessed 17 October 2022.

35  Joined Cases C–419/18 and C–483/18 Profi Credit Polska [2019] ECLI:EU:C:2019:930.

36  ibid para 60.

37  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 34; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 42; Case C–96/14 Van Hove [2015] ECLI:EU:C:2015:262, para 31; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 51.

38  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 34; Case C–143/13 Matei [2015] EU:ECLI:C:2015:127, para 50; see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 23.

39  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 35; Case C–484/08 Caja de Ahorros y Monte de Piedad de Madrid [2010] ECLI:EU:C:2010:309, para 34; Case C–96/14 Van Hove [2015] ECLI:EU:C:2015:262, para 33.

40  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 36; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 50; Case C–96/14 Van Hove [2015] ECLI:EU:C:2015:262, para 33.

41  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 51; see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 23.

42  Case C–621/17 Kiss and CIB Bank [2019] ECLI:EU:C:2019:820, para 32; Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, paras 35–36; Case C–484/08 Caja de Ahorros y Monte de Piedad de Madrid [2010] ECLI:EU:C:2010:309, para 34; Case C–96/14 Van Hove [2015] ECLI:EU:C:2015:262, para 33; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 50; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 52.

43  Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750, para 68; Case C–118/17 Dunai [2019] ECLI:EU:C:2019:207, para 48; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 60; see Emilia Mišćenić, ‘Currency Clauses in CHF Credit Agreements: A “Small Wheel” in the Swiss Loans’ Mechanism’ (2020) 6 Journal of European Consumer and Market Law 226–35 (hereafter Mišćenić, ‘Currency Clauses in CHF Credit Agreements’); Judit Fazekas, ‘The Consumer Credit Crisis and Unfair Terms Regulation—Before and After Kásler’ (2017) 6 Journal of European Consumer and Market Law 99–106 (hereafter Fazekas, ‘The Consumer Credit Crisis and Unfair Terms Regulation’).

44  See also Section IV.

45  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 43; Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750, para 68; C–118/17 Dunai [2019] ECLI:EU:C:2019:207, para 48; Joint Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 60. cf Mišćenić, ‘Currency Clauses in CHF Credit Agreements’ (n 43); Fazekas, ‘The Consumer Credit Crisis and Unfair Terms Regulation’ (n 43).

46  Case C–26/13, Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 58; Joint Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 55.

47  Joint Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 59.

48  See European Commission, Guidance on Council UTD 93/13/EEC (n 9), 23, where reference is made to Case C–143/13 Matei [2015] ECLI:EU:C:2015:127, para 56; Case C–472/10 Invitel [2012] ECLI:EU:C:2012:242, paras 23–24; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, paras 56–58; for further consideration of this subject, see Sergio Cámara Lapuente, ‘Control of Price Related Terms in Standard Form Contracts in the European Union: The Innovative Role of the CJEU’s Case-Law’ in Yeşim M Atamer and Pascal Pichonnaz (eds), Control of Price Related Terms in Standard Form Contracts (Ius Comparatum—Global Studies in Comparative Law 36, Springer Nature 2019) 67–104.

49  See Sergio Cámara Lapuente, ‘Control of Price Related Terms in Standard Form Contracts in the European Union: The Innovative Role of the CJEU’s Case-Law’ in Yeşim M Atamer and Pascal Pichonnaz (eds), Control of Price Related Terms in Standard Form Contracts (Ius Comparatum—Global Studies in Comparative Law 36, Springer Nature 2019) 84.

50  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 58; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 55.

51  See Section III 1.

52  Section III.

53  See Section V 2.1.

54  See also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 22, where these three functions of the transparency requirement are also distinguished.

55  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 25–27.

56  See also Recital 20 UTD, where it is stated that ‘the consumer should actually be given an opportunity to examine all the terms’. See also point 1(i) of the Annex to the UTD, where terms are mentioned which have the object or effect of ‘irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract’.

57  Case C–125/18 Gómez del Moral Guasch [2020] ECLI:EU:C:2020:138, para 49; Case C–92/11 RWE Vertrieb [2013] ECLI:EU:C:2013:180, para 44; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 70; Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 50; Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 48.

58  Case C–186/16 Andriciuc v Banca Românească [2017] ECLI:EU:C:2017:703, paras 44–48; Case C–92/11 RWE Vertrieb [2013] ECLI:EU:C:2013:180, paras 43–44.

59  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 75; Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 51; Case C–125/18 Gómez del Moral Guasch [2020], para 51; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 64.

60  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 75.

61  Case C–670/20 ERSTE Bank Hungary [2021] ECLI:EU:C:2021:1002, para 32.

62  Case C–237/02 Freiburger Kommunalbauten [2004] ECLI:EU:C:2004:209, paras 19–22; Case C–243/08 Pannon GSM [2009] ECLI:EU:C:2009:350, paras 37–43; Case C–137/08 VB Pénzügyi Lízing [2010] ECLI:EU:C:2010:659, paras 42–43; Case C–76/10 Pohotovosť [2010] ECLI:EU:C:2010:685, paras 56–60; Case C–453/10 Pereničová and Perenič [2012] ECLI:EU:C:2012:144, para 44; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 77.

63  See also Section IV 5.

64  Case C–191/15 Verein für Konsumenteninformation [2016] ECLI:EU:C:2016:612, para 68.

65  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 89.

66  ibid para 80.

67  ibid para 81.

68  ibid para 85.

69  ibid para 86.

70  ibid para 87.

71  ibid para 88.

72  Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 [2014] OJ L60/34 (MCD); Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66 (CCD); Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (recast) [2014] OJ L173/349 (MiFID II); Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast) [2009] OJ L335/1 (Solvency II); Directive 2016/97/EU of the European Parliament and of the Council of 20 January 2016 on insurance distribution (recast) [2016] OJ L26/19 (IDD); Regulation (EU) 2020/1503/EU of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 [2020] OJ L347/1 (Crowdfunding Regulation); Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector [2019] OJ L317/1, as amended by Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 [2020] OJ L198/13 (SFDR); Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, [2023] OJ L 150/40 (MiCAR).

73  Art 43 MCD provides that the Directive does not apply to credit agreements existing before 21 March 2016.

74  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 29.

75  See European Commission, Guidance on Council UTD 93/13/EEC (n 9), 29.

76  On this point, see also ibid. In this sense, see also the case law of the Dutch Supreme Court (HR), namely Case ABN AMRO Bank N.V. v Stichting SDB & Stichting EURIBAR [2019] ECLI:NL:HR:2019:1830; Case Vereniging Woekerpolis v Nationale Nederlanden [2022] ECLI:NL:HR:2022:166. See Chapter 9 (The Netherlands), Section IV 3 in this volume.

77  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 29–35.

78  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 54.

79  Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703 para 56; Case C–621/17 Kiss and CIB Bank [2019] ECLI:EU:C:2019:820, para 49; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 94.

80  Case C–377/14 Radlinger und Radlingerová [2016] ECLI:EU:C:2016:283, para 95.

81  Case C–237/02 Freiburger Kommunalbauten [2004] ECLI:EU:C:2004:209, para 22.

82  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 68; Case C–226/12 Constructora Principado [2014] ECLI:EU:C:2014:10, paras 22–23.

83  Case C–226/12 Constructora Principado [2014] ECLI:EU:C:2014:10, paras 22–23.

84  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 100.

85  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 101.

86  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 69.

87  European Commission, Guidance on Council UTD 93/13/EEC (n 9), 29.

88  ibid, 30.

89  Case C–472/10 Invitel [2012] ECLI:EU:C:2012:242, para 26.

90  Case C–453/10 Pereničová and Perenič [2012] ECLI:EU:C:2012:144, para 28; see also Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 38; Case C–125/18 Gómez del Moral Guasch [2020] ECLI:EU:C:2020:138, para 62.

91  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 79; Joined Cases C–482/13, C–484/13, C–485/13, and C–487/13 Unicaja Banco and Caixabank [2015] ECLI:EU:C:2015:21, para 31; Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, para 69.

92  See, eg, Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, para 69; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 79; Joined Cases C–482/13, C–484/13, C–485/13, and C–487/13 Unicaja Banco and Caixabank [2015] ECLI:EU:C:2015:21, para 31; Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 60; Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, para 54; Case C–125/18 Gómez del Moral Guasch [2020] ECLI:EU:C:2020:138, para 60.

93  Case C–453/10 Pereničová and Perenič [2012] ECLI:EU:C:2012:144, para 31; Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, para 65; Case C–118/17 Dunai [2019] ECLI:EU:C:2019:207, para 40; Case C–932/19 OTP Jelzálogbank and Others [2021] ECLI:EU:C:2021:673, para 40.

94  See Section VI 5.4.

95  Ola Svensson, ‘The Unfair Terms Directive: Meaning and Further Development’ (2020) 3(2) Nordic Journal of European Law 24, 32.

96  Case C–269/19 Banca B. [2020] ECLI:EU:C:2020:954, para 39.

97  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 46; Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 58; Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, para 43.

98  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 54.

99  See Section VII 4.

100  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 61; Case C–483/16 Sziber [2018] ECLI:EU:C:2018:367, para 34; Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 50.

101  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 66; Case C–483/16 Sziber [2018] ECLI:EU:C:2018:367, para 34; Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 55.

102  Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 2.

103  Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 58.

104  Case C–269/19 Banca B. [2020] ECLI:EU:C:2020:954, para 44; Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 59.

105  Case C–269/19 Banca B. [2020] ECLI:EU:C:2020:954, para 44.

106  See n 92.

107  Joined Cases C–482/13, C–484/13, C–485/13, and C–487/13 Unicaja Banco and Caixabank [2015] ECLI:EU:C:2015:21, para 31; Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, para 69; Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 79. However, the prohibition of judicial revision of an unfair term does not affect the right of the parties to amend or replace an unfair contract term with a new one, within their contractual freedom. See, eg, European Commission, Guidance on Council UTD 93/13/EEC (n 9), 41.

108  Case C–229/19 Dexia Nederland [2021] ECLI:EU:C:2021:68, discussed, eg, by Marco BM Loos, ‘No Plan B for Traders Using Unfair Terms. Court of Justice Excludes Application of Default Rules Replacing an Unfair Term’ (2022) 1(23) Journal of European Consumer and Market Law 23–26.

109  On the more general question of the use of supplementary terms to fill a gap in the agreement, see Section VI 5.4.

110  Case Hoge Raad 16/04081 Dexia v Tijhuis [2017] ECLI:NL:HR:2017:773. As regards this judgment, see Chapter 9 (The Netherlands), Section III 4.2 in this volume.

111  Case C–229/19 Dexia Nederland [2021] ECLI:EU:C:2021:68, para 67.

112  Case C–229/19 Dexia Nederland [2021] ECLI:EU:C:2021:68, paras 62–67, citing Case C–125/18 Gómez del Moral Guasch [2020] ECLI:EU:C:2020:138, paras 58–60; Case C–243/08 Pannon GSM [2009] ECLI:EU:C:2009:350, para 35; Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, paras 65, 69, 73; Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, paras 52–54 (see para 62 of Dexia); Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, paras 77, 79.

113  Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, paras 52–54, para 55: ‘In the present case, the mere removal of the ground for termination making the terms at issue in the main proceedings unfair would ultimately be tantamount to revising the content of those terms by altering their substance. Therefore, those terms cannot be maintained in part without directly adversely affecting the dissuasive effect referred to in the preceding para’; see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

114  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

115  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282; Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703.

116  Case C–472/10 Invitel [2012] ECLI:EU:C:2012:242; CJEU 21 March 2013, Case C–92/11 RWE Vertrieb [2013] ECLI:EU:C:2013:180; see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

117  Joined Cases C–96/16 and C–94/17 Banco Santander [2018] ECLI:EU:C:2018:643, in particular para 76; further see para 77: ‘ . . . those considerations apply regardless of the way in which the contractual term determining the default interest rate and that fixing the ordinary rate of interest are worded. In particular, they apply not only when the default interest rate is fixed independently of the ordinary interest rate, in a separate contractual term, but also when the default interest rate is fixed in the form of an increase in the ordinary interest rate by a certain number of percentage points. In the latter case, as the unfair term consists in that increase, UTD 93/13 requires solely that that increase be annulled’; European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

118  European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

119  This is also known as ‘reduction to the legally valid’ (geltungserhaltende Reduktion) in the German literature and case law.

120  In Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, the CJEU did not deal with the issue directly, although the Spanish Supreme Court had specifically referred to this doctrine in Case C–70/17. See European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

121  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 40.

122  ibid.

123  See references at n 94.

124  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 40.

125  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 22; as regards this judgment, see also Charlotte Leskinen and Francisco de Elizalde, ‘The Control of Terms that Define the Essential Obligations of the Parties under the Unfair Contract Terms Directive: Gutiérrez Naranjo’ (2018) 55(5) Common Market Law Review 1595.

126  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 18.

127  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, paras 23–26.

128  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, paras 27–45.

129  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, paras 72–75, where reference is made to Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 60; Case C–173/09 Elchinov [2010] ECLI:EU:C:2010:581, paras 29–32; Case C–441/14 DI [2016] ECLI:EU:C:2016:278, paras 33–34; Case C–614/14 Ognyanov [2016] ECLI:EU:C:2016:514, para 36; Case C–554/14 Ognyanov [2016] ECLI:EU:C:2016:835, paras 67–70.

130  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 68; on the relation between unfair terms control and the res judicata rule under the UTD, see in more detail Section VII 5.

131  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, paras 22, 68, and 74; upheld in Case C–869/19 Unicaja Banco [2022] ECLI:EU:C:2022:397, paras 31–40.

132  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 47; the judgment has been discussed by various commentators, including Aneta Wiewiórowska-Domagalska, ‘Unfair Contract Terms in CHF Mortage Loans, Case C–260/18 Dziubak—Where Do We Go from Here?’ (2020) 9(5) Journal of European Consumer and Market Law 206.

133  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, paras 14–17.

134  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 35.

135  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 34.

136  Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, paras 34–45, where reference is made to Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, paras 49–50, 57 (see para 37 of Dziubak); Case C–118/17 Dunai [2019] ECLI:EU:C:2019:207, paras 40, 48, and 51–52; Case C–453/10 Pereničová and Perenič [2012] ECLI:EU:C:2012:144, para 32 (see para 41 of Dziubak); Case C–51/17 OTP Bank and OTP Faktoring [2018] ECLI:EU:C:2018:750, para 68; Case C–186/16 Andriciuc and Others [2017] ECLI:EU:C:2017:703, para 43 (see para 44 of Dziubak).

137  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282.

138  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 84.

139  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 84.

140  Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, paras 83–85.

141  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, paras 50–52.

142  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, paras 50–52.

143  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 28, question 2.

144  See Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, para 83.

145  See Case C–26/13 Kásler and Káslerné Rábai [2014] ECLI:EU:C:2014:282, paras 80–84; Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, paras 59–64; Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 48.

146  See Section VI 4.

147  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, paras 60–61.

148  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 57.

149  Recital 13 UTD (reprinted Section II 4.1), referred to in Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 59.

150  See for instance on Austrian law: Chapter 15, Section IV.3.

151  See references in Section VI 2.

152  On this point, see also European Commission, Guidance on Council UTD 93/13/EEC (n 9), 56–58.

153  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 38; Joined Cases C–80/21, C–81/21, and C–82/21 D.B.P. (Crédit hypothécaire libellé en devises étrangères) [2022] ECLI:EU:C:2022:646, para 90.

154  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 38; Joined Cases C–80/21, C–81/21, and C–82/21 D.B.P. (Crédit hypothécaire libellé en devises étrangères) [2022] ECLI:EU:C:2022:646, para 90.

155  Case C–542/08 Barth [2010] ECLI:EU:C:2010:193, para 28; Case C–427/10 Banca Antoniana Popolare Veneta [2011] ECLI:EU:C:2011:844, para 25; Joined Cases C–698/18 and C–699/18 Raiffeisen Bank [2020] ECLI:EU:C:2020:537, paras 62 and 64; Joined Cases C–224/19 and C–259/19 Caixabank [2020] ECLI:EU:C:2020:578, para 87; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, paras 39–42; Joined Cases C–80/21, C–81/21, and C–82/21 D.B.P. (Crédit hypothécaire libellé en devises étrangères) [2022] ECLI:EU:C:2022:646, paras 90–92.

156  Case C–40/08 Asturcom Telecomunicaciones [2009] ECLI:EU:C:2009:615, para 45; Joined Cases C–698/18 and C–699/18 Raiffeisen Bank [2020] ECLI:EU:C:2020:537, para 67; Joined Cases C–224/19 and C–259/19 Caixabank [2020] ECLI:EU:C:2020:578, para 91; Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 46; Joined Cases C–80/21, C–81/21, and C–82/21 D.B.P. (Crédit hypothécaire libellé en devises étrangères) [2022] ECLI:EU:C:2022:646, para 98.

157  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, paras 47–48, where reference is made to Joined Cases C–698/18 and C–699/18 Raiffeisen Bank [2020] ECLI:EU:C:2020:537, paras 67 and 75, and Joined Cases C‑224/19 and C‑259/19 Caixabank [2020] ECLI:EU:C:2020:578, para 91 (both by analogy).

158  Joined Cases C–80/21, C–81/21, and C–82/21 D.B.P. (Crédit hypothécaire libellé en devises étrangères) [2022] ECLI:EU:C:2022:646, para 100.

159  Case C–280/13 Barclays Bank [2014] ECLI:EU:C:2014:279, para 37; Case C–407/18 Addiko Bank [2019] ECLI:EU:C:2019:537, para 46; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, para 55.

160  Case C–483/16 Sziber [2018] ECLI:EU:C:2018:367, para 35.

161  Case C–32/14 ERSTE Bank Hungary [2015] ECLI:EU:C:2015:637, paras 46–47.

162  Case C–598/15 Banco Santander [2017] ECLI:EU:C:2017:945, paras 39–47.

163  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 50; Case C–280/13 Barclays Bank [2014] ECLI:EU:C:2014:279, para 37; Case C–169/14 Sánchez Morcillo und Abril García, SA [2014] ECLI:EU:C:2014:2099, para 31; Case C–34/13 Kušionová [2014] ECLI:EU:C:2014:2189, para 50; Case C–8/14 BBVA [2015] ECLI:EU:C:2015:731, para 24; Case C–49/14 Finanmadrid EFC [2016] ECLI:EU:C:2016:98, para 40; Case C–32/14 ERSTE Bank Hungary [2015] ECLI:EU:C:2015:637, para 49; Case C–483/16 Sziber [2018] ECLI:EU:C:2018:367, para 35.

164  See, eg, Case C–49/14 Finanmadrid EFC [2016] ECLI:EU:C:2016:98, para 40; Case C–407/18 Addiko Bank [2019] ECLI:EU:C:2019:537, para 46.

165  Case C–32/14 ERSTE Bank Hungary [2015] ECLI:EU:C:2015:637, para 59; Case C–598/15 Banco Santander [2017] ECLI:EU:C:2017:945, para 38.

166  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 64; Case C–280/13 Barclays Bank [2014] ECLI:EU:C:2014:279, para 36; Joined Cases C–537/12 and C–116/13 Banco Popular Espaňol [2013] ECLI:EU:C:2013:759, para 60; Case C–169/14 Sánchez Morcillo und Abril García [2014] ECLI:EU:C:2014:2099, paras 27–28.

167  Case C–169/14 Sánchez Morcillo und Abril García [2014] ECLI:EU:C:2014:2099, paras 36–43.

168  Case C–8/14 BBVA [2015] ECLI:EU:C:2015:731, para 39.

169  Joined Cases C–698/18 and C–699/18 Raiffeisen Bank [2020] ECLI:EU:C:2020:537, para 56; Joined Cases C‑224/19 and C‑259/19 Caixabank [2020] ECLI:EU:C:2020:578, para 82; Case C–485/19 Profi Credit Slovakia [2021] ECLI:EU:C:2021:313, para 57; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, para 58.

170  Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, para 49.

171  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 58.

172  See Section I.

173  See references in n 99.

174  Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 54; Case C–488/11 Asbeek Brusse and de Man Garabito [2013] ECLI:EU:C:2013:341, para 44.

175  Case C–415/11 Aziz [2013] ECLI:EU:C:2013:164, para 46; Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 58; Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, para 43.

176  Case C–243/08 Pannon GSM [2009] ECLI:EU:C:2009:350, paras 31–32; Case C–618/10 Banco Español de Crédito [2012] ECLI:EU:C:2012:349, paras 42–43.

177  Case C–725/19 Impuls Leasing România IFN SA [2022] ECLI:EU:C:2022:396; other recent examples in relation to banking and financial contracts include: Case C–869/19 Unicaja Banco [2022] ECLI:EU:C:2022:397; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395; Case C–600/19 Ibercaja Banco [2022] ECLI:EU:C:2022:394.

178  Case C–725/19 Impuls Leasing România IFN SA [2022] ECLI:EU:C:2022:396, paras 38–61.

179  See Case C–260/18 Dziubak [2019] ECLI:EU:C:2019:819, para 54.

180  Case C–243/08 Pannon GSM [2009] ECLI:EU:C:2009:350, para 35; Joined Cases C–70/17 and C–179/17 Abanca Corporación Bancaria [2019] ECLI:EU:C:2019:250, para 52.

181  Case C–472/20 Lombard Lízing [2022] ECLI:EU:C:2022:242, para 56.

182  Case C–472/11 Banif Plus Bank [2013] ECLI:EU:C:2013:88, para 36; Case C–32/14 ERSTE Bank Hungary [2015] ECLI:EU:C:2015:637, para 42.

183  Case C–472/11 Banif Plus Bank [2013] ECLI:EU:C:2013:88, para 27.

184  Case C–19/20 Bank BPH [2021] ECLI:EU:C2021:341, para 99.

185  Case C–40/08 Asturcom Telecomunicaciones [2009] ECLI:EU:C:2009:615, paras 35–36; Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, para 46; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, para 57.

186  Joined Cases C–776/19 to C–782/19 BNP Paribas Personal Finance [2021] ECLI:EU:C:2021:470, para 29.

187  Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, para 52.

188  Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, para 50.

189  Case C–421/14 Banco Primus [2017] ECLI:EU:C:2017:60, paras 52–54.

190  Case C–448/17 EOS KSI Slovensko [2018] ECLI:EU:C:2018:745, para 54; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, paras 66–68.

191  Case C–600/19 Ibercaja Banco [2022] ECLI:EU:C:2022:394.

192  Case C–600/19 Ibercaja Banco [2022] ECLI:EU:C:2022:394, para 56.

193  Case C–448/17 EOS KSI Slovensko [2018] ECLI:EU:C:2018:745, para 54; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, paras 66–68.

194  Case C–40/08 Asturcom Telecomunicaciones [2009] ECLI:EU:C:2009:615, para 37; Joined Cases C–154/15, C–307/15, and C–308/15 Gutiérrez Naranjo and Others [2016] ECLI:EU:C:2016:980, para 68; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, para 58.

195  Case C–32/14 ERSTE Bank Hungary [2015] ECLI:EU:C:2015:637, para 62; Joined Cases C–693/19 and C–831/19 SPV Project 1503 [2022] ECLI:EU:C:2022:395, para 60.

196  See Section VII 4.

197  Case C–385/20 Caixabank [2022] ECLI:EU:C:2022:278, paras 53–58.

198  Case C–385/20 Caixabank [2022] ECLI:EU:C:2022:278, para 58.

199  Case C–470/12 Pohotovosť [2014] ECLI:EU:C:2014:101.

200  Case C–448/17 EOS KSI Slovensko [2018] ECLI:EU:C:2018:745.

201  Case C–448/17 EOS KSI Slovensko [2018] ECLI:EU:C:2018:745, para 43.

202  Joined Cases C–381/14 and C–385/14 Sales Sinués [2016] ECLI:EU:C:2016:252, paras 35–43.

203  Chapter 21.