On Wednesday, February 10, the Budapest Metropolitan Court postponed the ruling of the first instance court in a lawsuit filed against Good Finance Bank Zrt. Regarding the fairness of its forint loan contracts, similarly to its ruling on Tuesday in the case of Good Finance Leasing Zrt.
The court also rejected the plaintiff’s financial institution’s
Request for the Tribunal to initiate a preliminary ruling procedure before the Court of Justice of the European Union and to appeal to the Constitutional Court (Ab) for the unconstitutionality of Act 38 of 2014. In its application, Good Finance Bank asked the court to declare that the contractual clauses in its forint-based consumer loan and foreign currency consumer loan contracts are fair and therefore valid.
The defendant’s representative from the Hungarian State asked the court to dismiss the claim because, in his view, the contractual terms did not comply with the legal principles at any one time. The plaintiff, the bank’s legal representative, emphasized during the hearing that the breach of the notification obligation under the Unfairness Directive is of particular importance.
The Court’s rulings on foreign currency
Pairs state that Act 38 of 2014 implements this directive, meaning that Hungary has a notification obligation which it did not fulfill. The consequence of the breach of the Directive is, in their view, a prohibition on the application of the law, since the Directive established certain information and consultation procedures in the Member States which the Commission could not carry out without notification.
The bank’s legal representative explained, among other things, that the referral to the Constitutional Court was justified because last year the panel referred to constitutional doubts about the fairness of the proceedings as a whole in relation to foreign currency loan agreements. He added that, in a previous Ab decision, he had not only referred to Ab as an option, but also as a requirement, in the event of doubts in the court regarding the constitutionality of an applicable law.
The applicant referred to a code of conduct for financial institutions drawn up with the assistance of public bodies. If the terms and conditions of its contracts drawn up on that basis are not fair, the applicant submits that it should be found, inter alia, that the terms and conditions drawn up by the Office for Economic Competition and the Banking Association do not satisfy the legal requirements. The Bank’s legal representative pointed out that there had been divergent opinions on the principle of transparency in the reasoning of previous judgments, making it difficult to interpret the concept. The legal representative of the Hungarian state called it unusual that the applicant had extensively analyzed the relevant law in a proceeding on a particular subject. He said that loan contracts are not privileged contracts, and there is no justification for the very wide list used by the plaintiff.
The plaintiff has the right to unilaterally amend the contract
But the list also includes extensive and subjective elements in the circumstances giving rise to the amendment, the Hungarian state’s legal representative added.
Credit institutions could file a lawsuit between January 5 and December 12 to prove the fairness of the unilateral amendment of forint-based consumer loan agreements, in accordance with the Accounting Act passed last year by Parliament. By law, for example, for forint-based loan agreements and those that are actually repaid in foreign currency, financial institutions are required to send settlement to their clients between August 1 and September 30, or no later than 60 days after the end of civil litigation.