Finally, a guiding decision which is favourable for commercial
banks has been passed by the Supreme Court in Hungary
("Curia"). This is the Curia's third
resolution on general legal instructions in connection with
consumer foreign exchange ("FX") loan
agreements and it has just been published under uniformity decision
no. 1/2016 PJE.
In short, the story behind the decision begins around 2007 when
FX (for instance Swiss Franc or Euro) based loan agreements became
far more popular than those based on the Hungarian Forint,
primarily due to the fact that they offered remarkably lower
interest rates than those based on the Hungarian Forint. A couple
of years later, these agreements landed on the table of the Curia.
The banks had a unilateral right to modify the loan agreements and
these amendments turned out to be disadvantageous to consumers.
Additionally, as time passed, the exchange rates changed adversely
due to the global financial crisis. This ultimately led to a rise
in installments – some consumers needed to pay exactly double
the initial installment paid, and as a result some debtors could no
longer afford to pay their debts.
The public spirit grew tense and hundreds of lawsuits were filed
at the courts. The plaintiffs argued that the loan agreements were
null and void or at least invalid. The courts however, reached
completely contradictory decisions.
Though Hungary traditionally is not a common-law country, if
there is a discrepancy in court decisions on such a grand scale,
the Curia, in order to unify and improve case law, can express a
guideline to be followed by lower courts in similar cases. The
first guideline was issued in 2013, then a second in 2014, and as
creativity regarding argumentative conditions of loan agreements
seems to be infinite, the need for a third guideline emerged.
A large number of plaintiffs claimed that the FX loan agreements
did not specify the main obligations under the agreements in
sufficient detail, nor were the number, amount and due dates of the
installments detailed enough. As a result, the Curia decided to
express a third guideline regarding these issues and clarified that
the subject of the agreement (the loan) is well determined if the
exact amount of the loan can be calculated either at a later given
date or, in the absence of such date, at the time of disbursement.
The same rule applies to the number, the amount and the due dates
of the installments. The Curia's guiding decision is now
compulsory for lower courts and thus, such a guideline has to be
followed when ruling on claims addressing these stipulations in
The Curia's third guiding decision regarding FX loan
agreements is truly favourable to commercial banks and thus, was
eagerly awaited by them.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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