On 8 September 2022, the Court of Justice of the European Union answered further preliminary questions referred by the Polish court in the so-called “franc cases”.

The judgment concerns as many as 3 cases that have been joined for joint consideration: C-80/21, C-81/21 and C-82/21.

The link to the ECJ document can be found here: https://curia.europa.eu/juris/document/document.jsf?text=&docid=265064&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=13074166

In general, all questions addressed to the CJEU are important for assessing the legitimacy of Swiss franc borrowers´ claims against banks, although the ECJ has repeatedly dealt with similar issues, and the expectation is that the current line of jurisprudence, which is beneficial view for consumers, is maintained. The answer of the ECJ is a confirmation of prior decisions in favour of the Swiss franc
borrower.

The CJEU issued in the same set of answers another favourable judgment for consumers (judgment in joined cases C-80/21 to C-82/21), which is in relation to the limitation of claims in favour of consumers. The consumer´s claim does not expire if he did not know about the abusive nature of the clauses.

Moreover, the CJEU confirmed once again that prohibited contractual provisions may not be supplemented or replaced with other supplementary provisions if the consumer has not consented to it. If the loan agreement cannot continue to apply without this provision, it should be declared absolutely null and void.

Question 1 for case C‑80/21: Is it possible to remove an unfair contractual term from a credit agreement?

By this question, the referring court asks, in essence, whether Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national case-law according to which the national court may declare a term of a contract concluded between a consumer and a seller or supplier to be unfair, not in its entirety, but only those elements of the term which give it an unfair character, so that that term remains partially effective after the removal of those elements.

In order to answer that question, it should first be noted that, in accordance with Article 6(1) of Directive 93/13, it is for the national courts to exclude the application of unfair terms so that they do not produce binding effects with regard to the consumer, unless the consumer objects (judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑179/17, EU:C:2019:250, paragraph 52 and the case-law cited).

Finally, if it were possible for the national court to review the content of unfair terms in such a contract, such an option would be likely to undermine the achievement of the long-term objective referred to in Article 7 of Directive 93/13. Such an option would help to eliminate the deterrent effect on sellers or suppliers of the mere non-application to consumers of such unfair terms, in so far as they would remain tempted to use those terms, in the knowledge that, even if they were to be invalidated, the contract could nevertheless be modified, in so far as necessary, by the national court so as to guarantee the interests of those sellers or suppliers (judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑179/17, EU:C:2019:250, paragraph 54 and the case- law cited).

In the present case, it is clear from the order for reference that the part of the conversion clauses which are unfair under Polish case-law relates to the bank’s consent to the payment and repayment of the loan in CHF.

In that regard, the Court has held that Article 6(1) and Article 7(1) of Directive 93/13 do not preclude the national court from removing only the unfair element of a term from a contract concluded between a seller or supplier and a consumer where the objective of deterrence pursued by that directive is ensured by national legislative provisions regulating its use, in so far as that element consists of a separate contractual obligation which is capable of being examined individually for its unfairness. By contrast, those provisions preclude the national court from deleting only the unfair element of a term of a contract concluded between a seller or supplier and a consumer where such deletion would amount to revising the content of that term by affecting its substance (see, to that effect, judgment of 29 April 2021, Bank BPH, C‑19/20, EU:C:2021:341, paragraph 80 and the case-law cited).

In the present case, there is nothing in the file before the Court to indicate that there are national provisions governing the use of a conversion clause which help to ensure the deterrent effect sought by Directive 93/13, or that the unfair part of the conversion clause constitutes a separate contractual obligation, so that the removal of that part would not amount to revising that clause by altering its substance. It is, however, for the national court to ascertain whether the conditions set out in the case-law cited in the preceding paragraph of the present judgment are satisfied.

The ECJ ruled that it follows from the foregoing presented considerations that Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national case-law according to which the national court may declare unfair, not the entire term of a contract concluded between a consumer and a seller or supplier, but only those parts of it which are unfair, so that that term remains partially effective after the removal of those parts, where such removal would be tantamount to revising the content of the term by affecting its substance, which is a matter for the referring court to determine.

Question 2 for case C‑81/21: Is it possible to replace an unfair contract term with provisions of a general nature in national law?

By this question, the referring court asks, in essence, whether Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national case-law according to which the national court may, after finding that an unfair term contained in a contract concluded between a consumer and a seller or supplier which does not result in the invalidity of that contract in its entirety, is void, replace a supplementary provision of national law for that term.

It should be noted that the purpose of Article 6(1) of Directive 93/13, and in particular its second part, is not to annul all contracts containing unfair terms, but to replace the formal balance which the contract establishes between the rights and obligations of the parties to the contract with an effective balance capable of restoring equality between them, it being noted that the contract in question must, in principle, continue to exist without any modification other than that resulting from the removal of the unfair terms. Provided that the latter condition is satisfied, the contract at issue may, under Article 6(1) of Directive 93/13, be maintained in so far as, in accordance with the rules of national law, such a continuation of the contract without the unfair terms is legally possible, which must be verified according to an objective approach (judgment of 3 October 2019, Dziubak, C‑260/18, EU:C:2019:819, paragraph 39).

The exceptional possibility of replacing an unfair term which has been annulled with a supplementary national provision is limited to cases in which the removal of that unfair term would oblige the national court to invalidate the contract in question as a whole, thereby exposing the consumer to particularly harmful consequences, so that the latter would be penalised (see, to that effect, judgment of 3 October 2019, Dziubak, C‑260/18, EU:C:2019:819, paragraph 48 and the case-law cited).

Therefore, where a contract may remain in force after the removal of unfair terms, the national court cannot replace those terms with a supplementary national provision.

It follows that Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national case-law according to which the national court may, after declaring an unfair term contained in a contract concluded between a consumer and a seller or supplier to be void but which does not entail the nullity of that contract as a whole, replace that term with a supplementary provision of national law.

Questions 1b and 2b: the second question in Case C‑80/21 and the second question in Case C‑81/21

By these questions, which must be considered together, the national court asks, in essence, whether Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national case-law according to which the national court may, after finding that an unfair term contained in a contract concluded between a consumer and a seller or supplier is void and that the contract in its entirety is invalid, replace the annulled term either with an interpretation of the wishes of the parties in order to avoid the annulment of the contract, or with a supplementary provision of national law, even though the consumer has been informed of the consequences of the annulment of that contract and has accepted them.

It follows from that case-law that a national court is not entitled to revise the content of an unfair term which has been annulled in order to maintain in force a contract which cannot remain in force after the removal of that term, where the consumer concerned has been informed of the consequences of the annulment of the contract and has accepted the consequences thereof.

It follows from all the foregoing considerations that Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as meaning that they preclude national case-law according to which the national court may, after finding that an unfair term contained in a contract concluded between a consumer and a seller or supplier is invalid and that the contract as a whole is void, replace the annulled term either with an interpretation of the wishes of the parties in order to avoid the annulment of the contract, or with a supplementary provision of national law, even though the consumer has been informed of the consequences of the annulment of that contract and has accepted them.