Ruxandra Paula Andriciuc and Others v Banca Românească SAC 186/16, ECLI:EU:C:2017:703
The Court of Justice of the European Union (CJEU) has made a preliminary ruling in relation to the interpretation of Directive 93/13/EEC on Unfair Terms in Consumer Contracts (the Unfair Terms Directive).
Under Article 3 of the Unfair Terms Directive, a term shall be unfair if "it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer". Article 4 provides an exception to this, in so far as: (i) the term is written in "plain intelligible language"; and (ii) the terms relate to the "main subject matter of the contract".
Between 2007 and 2008, Mrs Andriciuc and others (the Borrowers), whose income was denominated in Romanian lei (RON), entered into loan agreements with Banca Românească SA (the Bank) denominated in Swiss francs (CFH) (the Loans). Under the terms of the Loans, the Borrowers were to make monthly repayments in CFH. Subsequently, the CFH appreciated against the RON, and the Borrowers' obligations under the Loans (when converted into RON) significantly increased. The Borrowers argued that the Bank was in a position to foresee, but did not fully explain, this exchange rate risk. Further, it was said the Bank's presentation by which the Loans were sold was biased, emphasising the advantages but not the potential risks.
The Borrowers argued that, following the appreciation of the CFH, there was a significant imbalance between the rights and obligations of the parties and, therefore, the requirement to make monthly repayments in CFH was an unfair term and was consequently invalid.
The referring court asked the CJEU for a preliminary ruling in relation to the following: (i) whether the term requiring repayment in CFH relates to the "main subject matter of the contract"; (ii) whether the requirement that a contract is written in "plain intelligible language" extends to the need to provide all possible consequences of the term as a result of which the price paid may vary; and (iii) whether the imbalance between the parties is to be assessed at the conclusion of the contract or whether it continues throughout the life of the contract.
First, the CJEU decided that the term requiring repayment in CFH did relate to the main subject matter of the contract, and so it could not be considered unfair, provided it was written in plain intelligible language.
Second, the CJEU confirmed that the requirement that a contractual term must be drafted in plain intelligible language requires banks to provide borrowers with sufficient information"to enable them to take prudent and well-informed decisions". This information must be such that "the average consumer, who is reasonably well informed and reasonably observant and circumspect, would be aware both of the possibility of a rise or fall in the value of the foreign currency in which the loan was taken out, and would also be able to assess the potentially significant economic consequences of such a term with regard to his financial obligations".
Finally, the CJEU found that the assessment of the unfairness of a contractual term "must be made by reference to the time of conclusion of the contract at issue, taking account all of the circumstances which could have been known to the seller or supplier at that time, and which were such as to affect the future performance of that contract".
As the reader will be aware, although the CJEU provides interpretation of EU law, the national court alone has jurisdiction to find and assess the facts in the case before it and to interpret and apply national law.
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