CJEU judgment C-520/21 – full text

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JUDGMENT OF THE COURT (Fourth Chamber)

of June 15, 2023 (*)

Reference for a preliminary ruling - Unfair terms in consumer contracts - Directive 93/13/EEC - Article 6(1) 1 and art. 7 section 1 – Mortgage loan indexed to a foreign currency – Conversion clauses – Determination of the exchange rate between this foreign currency and the domestic currency – Effects of finding the unfair nature of a term – Effects of recognizing the contract as invalid in its entirety – Possibility of pursuing claims beyond the refund of the amounts agreed in the contract and beyond payment default interest – Damage to the consumer – Inability to dispose of the amount of monthly installments transferred to the bank – Damage to the bank – Inability to dispose of the amount of capital transferred to the consumer – Deterrent effect of the prohibition on the use of unfair contract terms – Effective consumer protection – Judicial interpretation of national provisions

In case C‑520/21

relating to an application for issuance, pursuant to Art. 267 TFEU, preliminary ruling, submitted by the District Court for Warsaw-Śródmieście in Warsaw (Poland) by order of 12 August 2021, received by the Court on 24 August 2021, in the proceedings:

Arkadiusz Szcześniak

against

Bank M. SA,

with the participation of:

Commissioner for Human Rights,

Financial Ombudsman,

Prosecutor of the Warsaw-Śródmieście District Prosecutor's Office in Warsaw,

Chairman of the Polish Financial Supervision Authority,

COURT (Fourth Chamber),

composed of: C. Lycourgos, president of the chamber, LS Rossi, J.-C. Bonichot, S. Rodin (Rapporteur) and O. Spineanu-Matei, Judges,

Advocate General: AM Collins,

secretary: M. Siekierzyńska, administrator,

having regard to the written procedure and following the hearing on 12 October 2022

having considered the comments they have submitted:

– on behalf of Arkadiusz Szcześniak – R. Górski and P. Pląsk, legal advisors,

– on behalf of Bank M. SA – A. Cudna-Wagner, G. Marzec, legal advisors, B. Miąskiewicz and M. Minkiewicz, attorneys-at-law,

– on behalf of the Commissioner for Human Rights – M. Taborowski, Deputy Commissioner for Human Rights, B. Wojciechowska, legal advisor and G. Heleniak, attorney,

– on behalf of the Financial Ombudsman – B. Pretkel, Financial Ombudsman, supported by P. Tronowska and M. Obroślak, legal advisors,

– on behalf of the Prosecutor of the Warsaw-Śródmieście District Prosecutor's Office in Warsaw – M. Dejak, prosecutor delegated to the Regional Prosecutor's Office in Warsaw and M. Dubowski, District Prosecutor in Warsaw,

– on behalf of the Chairman of the Polish Financial Supervision Authority – J. Jastrzębski, Chairman of the Polish Financial Supervision Authority, K. Liberadzki and A. Tupaj-Cholewa, legal advisor,

– on behalf of the Polish Government – B. Majczyna and S. Żyrek, as attorneys-in-fact,

– the Portuguese Government – P. Barros da Costa, C. Chambel Alves, A. Cunha and S. Fernandes, as Agents,

– on behalf of the European Commission – N. Ruiz García and A. Szmytkowska, as Agents,

Having heard the opinion of the Advocate General at the meeting of 16 February 2023,

seems as follows

Judgment

1 The request for a preliminary ruling concerns the interpretation of Art. 6 section 1 and art. 7 section 1 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29) and the principles of effectiveness, legal certainty and proportionality.

2 The request was made in the context of a dispute between Arkadiusz Szcześniak (hereinafter referred to as "AS") and Bank M. SA concerning an action for the satisfaction of a claim arising from the use of money under a mortgage loan agreement, which should be considered invalid for the reason that that the contract cannot continue in force once the unfair terms have been removed.

 Legal framework

 Union law

3 The tenth and twenty-fourth recitals in the preamble to Directive 93/13 read as follows:

'more effective consumer protection can be achieved by adopting uniform legal standards on unfair terms; […]

[…]

"The courts and administrative authorities of the Member States must have at their disposal appropriate and effective measures to prevent the continued use of unfair terms in consumer contracts."

4 Article 6(1) 1 of this directive has the following wording:

"Member States shall provide that, under national law, unfair terms in contracts concluded by sellers or suppliers [traders] with consumers shall not be binding on the consumer and the remainder of the contract shall continue to bind the parties, where that is possible after the unfair terms have been excluded from the contract." ".

5 Article 7(1) 1 of this directive states:

"In the interests of both consumers and competitors, Member States shall ensure that appropriate and effective measures are taken to prevent the continued use of unfair terms in contracts concluded by sellers or suppliers [traders] with consumers."

 Polish recipes.

6 Article 5 of the Act of 23 April 1964 - Civil Code (OJ 1964, No. 16), in the version applicable to the dispute in the main proceedings ('the Civil Code'), provides:

“You cannot use your right in a way that would be contrary to the socio-economic purpose of this right or to the principles of social coexistence. Such action or omission by the entitled person is not considered to be the exercise of the right and is not protected.

7 Article 222 § 1 of that code provides:

"The owner may demand from the person who actually has possession of his thing that the thing be handed over to him, unless that person has an effective right to possess the thing in relation to the owner."

8 Pursuant to Art. 3581 §§ 1–4 of this code:

'§ 1. If the subject of the obligation is a sum of money from the moment it is created, the benefit is satisfied by payment of the nominal sum, unless specific provisions provide otherwise.

§ 2. The parties may stipulate in the contract that the amount of the monetary benefit will be determined according to a measure of value other than money.

§ 3. In the event of a significant change in the purchasing power of money after the obligation has arisen, the court may, after considering the interests of the parties, in accordance with the principles of social coexistence, change the amount or method of fulfilling the monetary benefit, even if it was established in a judgment or contract.

§ 4. A party running an enterprise may not request a change in the amount or method of fulfilling a monetary benefit if the benefit is related to running the enterprise.

9 Article 361 §§ 1 and 2 of that Code provides:

'§ 1. The person liable for compensation shall be liable only for the normal consequences of the act or omission from which the damage resulted.

§ 2. Within the above limits, in the absence of a different provision of the Act or contract provision, compensation for damage covers the losses that the injured party has suffered and the benefits that he could have achieved if the damage had not been caused to him.

10 Article 3851 §§ 1 and 2 of the said code reads as follows:

"§ 1. Provisions of a contract concluded with a consumer that have not been individually agreed are not binding on him if they shape his rights and obligations in a manner contrary to good practices and grossly violate his interests (prohibited contractual provisions). This does not apply to provisions specifying the main services of the parties, including price or remuneration, if they were formulated unambiguously.

§ 2. If the provision of the contract in accordance with § 1 is not binding on the consumer, the parties are bound by the contract in the remaining scope.

11 Article 405 of that code reads:

"Whoever obtains a material benefit at the expense of another person without a legal basis is obliged to deliver the benefit in kind, and if this is not possible, to refund its value."

12 Article 410 §§ 1 and 2 of that Code provides:

"§ 1. The provisions of the preceding articles apply in particular to undue performance.

§ 2. A benefit is undue if the person who provided it was not obliged at all or was not obliged to the person to whom he provided it, or if the basis for the benefit was eliminated or the intended purpose of the benefit was not achieved, or if the legal act requiring the benefit was invalid and did not become valid after performance.

 Main proceedings and question for a preliminary ruling

13 On July 25, 2008, AS and his wife ES concluded a mortgage loan agreement with Bank M. for a period of 336 months in the amount of 329,707.24 Polish zlotys (PLN) (approximately EUR 73,000), together with interest at a variable rate interest rate (hereinafter referred to as the "mortgage loan agreement"). The terms of this agreement were not negotiated individually. The loan was indexed to the Swiss franc (CHF), and the agreement provided that the monthly loan installments should be repaid in Polish zloty after conversion in accordance with the Swiss franc sales rate according to the foreign currency exchange rate table used by Bank M. on the date of payment of each installment. Following the conclusion of an annex to this agreement on September 6, 2011, AS and ES were able to pay monthly loan installments directly in Swiss francs.

14 In a lawsuit filed on May 31, 2021, AS demanded from Bank M. the payment of PLN 3,660.76 (approximately EUR 800), plus statutory default interest from June 8, 2021 until the date of payment. In support of its claim, AS argued that the mortgage loan agreement contained unfair terms making it invalid, and therefore Bank M. collected monthly loan installments without a legal basis.

15 According to AS, using in the period from October 1, 2011 to December 31, 2020 the amount of PLN 7,769.06 (approximately EUR 1,700) corresponding to the monthly installments paid in the period from June 2011 to September 2011, the Bank M. obtained a benefit of PLN 7,321.51 (approximately EUR 1,600). Consequently, AS demanded that Bank M. pay half of that amount, that is, PLN 3,660.76 (approximately EUR 800), as the other half was due to his wife ES, who was not a party to the main proceedings.

16 In its response to the claim, filed on July 1, 2021, Bank M. moved to dismiss AS's claim, arguing that the mortgage loan agreement should not be considered invalid because it did not contain unfair terms and, in any event, if it had if it was deemed invalid, only Bank M., and not AS, could claim payment for the use of capital without a legal basis.

17 The District Court for Warszawa-Śródmieście in Warsaw (Poland), which is the referring court, stated that AS was challenging the provisions contained in § 2(1) 2 and § 7 section 1 of the mortgage loan agreement, according to which the loan capital and monthly loan installments are converted from Swiss francs to Polish zlotys and from Polish zlotys to Swiss francs using the exchange rate set by Bank M. (so-called "conversion clauses").

18 That court explains, first, that conversion clauses such as those at issue in the main proceedings are uniformly recognized by Polish courts as prohibited contract terms and that they have been entered in the Register of prohibited clauses kept by the President of the Office of Competition and Consumer Protection (Poland). .

19 Secondly, the referring court states that the national case-law is not yet unanimous as to the effects of the presence of such unfair conversion clauses in a mortgage loan agreement. However, since the Court issued its judgment in the Dziubak case (C‑260/18, EU:C:2019:819), i.e. on October 3, 2019, the position in national jurisprudence clearly predominates that the inclusion in a loan agreement such provisions invalidate this contract.

20 As to the effects of declaring a contract invalid under national law, the referring court explained that a contract declared invalid is deemed to have never been concluded (ex tunc invalid). Since the parties have provided certain services under this contract, they may demand their return because they are undue benefits.

21 More specifically, the referring court explains that, on the one hand, a bank may require the borrower to repay the equivalent of the principal amount of the loan granted to him and, on the other hand, the borrower may recover from the bank the equivalent of the monthly loan installments paid and the amounts collected by the bank. The court indicated that each party may also demand payment of statutory interest for delay, due from the date of sending the request for payment.

22 However, the referring court emphasizes that there is no uniform national case-law as to whether the parties to a void credit agreement may demand, in addition to the payment of the amounts mentioned in paragraph 21 of the present judgment, the payment of other amounts in respect of the use of funds for a certain period without a legal basis . The legal basis most often cited by the parties to support such claims is unjust enrichment and return of undue benefits.

23 According to that court, the Court has not yet ruled on the possibility, in the light of Directive 93/13, of the parties to a credit agreement declared invalid to claim the repayment of amounts exceeding the amounts paid by them in execution of that agreement.

24 The referring court considers that any claim by the bank which goes beyond the repayment of the capital paid to the consumer (and beyond the payment, where appropriate, default interest at the statutory rate from the date of the demand for payment) cannot be accepted, as otherwise there would be a breach of the objectives implemented by Directive 93/13. According to that court, since the invalidity of the loan agreement results from the conduct of the bank that applied unfair terms, that bank must be precluded from benefiting from its conduct, which is contrary not only to Directive 93/13 but also to the requirements of good faith and good morals. . Granting an advantage to traders who have benefited from unfair terms would also be contrary to the need to maintain the deterrent effect of the prohibition on the use of such terms laid down in Directive 93/13.

25 Therefore, according to the referring court, the adoption of such a solution would result in a consumer who becomes aware of the existence of an unfair term preferring to continue performing the contract rather than assert his rights, since the invalidity of the contract could expose him to negative financial consequences, such as payment remuneration for the use of capital.

26 However, as regards the consumer, the referring court observes that the possibility for him to demand payment of amounts exceeding the monthly installments which he has paid to the bank and, if any, interest on late payment at the statutory rate from the moment of request for payment, costs, commissions and insurance premiums, does not contradicts the principle of effectiveness.

27 However, according to that court, allowing consumers to require traders to pay such sums for using the amount of monthly installments without a legal basis would amount to imposing a disproportionate penalty on traders.

28 Moreover, the referring court considers that the possible legal bases for such claims by consumers are very similar in nature and that it would therefore not be justified to create the possibility of bringing so many claims at the same time without violating the principle of proportionality. According to this court, granting such a possibility would also be contrary to the principle of legal certainty, which should be understood to mean that if a loan agreement is deemed invalid in its entirety, both parties are obliged to return all pecuniary benefits provided in the performance of that agreement, excluding any other claims.

29 In these circumstances, the District Court for Warszawa-Śródmieście in Warsaw decided to stay the proceedings and refer the following question to the Court for a preliminary ruling:

"Is Art. 6 section 1 and art. 7 section 1 [of Directive 93/13], as well as the principles of effectiveness, legal certainty and proportionality, must be interpreted as precluding a judicial interpretation of national provisions according to which, where it is held that a credit agreement concluded by a bank and a consumer is initially invalid due to the inclusion of unfair contract terms, the parties, in addition to the refund of the money paid in the performance of this contract (bank - loan capital, consumer - installments, fees, commissions and insurance premiums) and statutory interest for delay from the moment of request for payment, may demand any other benefits, including receivables (in particular remuneration, compensation, reimbursement of costs or indexation of benefits) due to the fact that:

1. the recipient of the cash benefit was temporarily deprived of the ability to use his money, which resulted in him losing the opportunity to invest it and derive benefits from it,

2. the party making the monetary payment incurred the costs of servicing the loan agreement and transferring the money to the other party,

3. the recipient of the cash benefit benefited from being able to temporarily use other people's money, including investing it and thus obtaining benefits,

4. the recipient of the cash benefit was temporarily able to use other people's money free of charge, which would be impossible under market conditions,

5. the purchasing value of the money has decreased due to the passage of time, which means a real loss for the person making the monetary payment,

6. temporarily making money available for use may be treated as providing a service for which the person providing the cash benefit did not receive any remuneration.

 Regarding the request to reopen the oral part of the procedure

30 Bank M., after the Advocate General had delivered his Opinion, by documents lodged at the Registry of the Court on 10 March 2023 and 26 April 2023, requested that the oral part of the procedure be reopened pursuant to Article 83 of the Rules of Procedure of the Court.

31 In support of its application, Bank M. submits, first of all, that the Opinion of the Advocate General, and in particular his observations in points 17, 19, 28, 29, 61, 62 and 66, do not make it possible to understand the scope of the claims of the trader and the consumer, which makes it impossible correct application of the principles of proportionality and effectiveness.

32 Secondly, Bank M. wonders whether consumers who took out a mortgage loan in Poland would be in a more favorable situation than consumers who took out such a loan in another Member State if they obtained the right to claim, in addition to the refund of monthly installments and costs, other claims against the bank.

33 Third, Bank M. criticizes certain observations contained in the Opinion of the Advocate General.

34 Fourthly and finally, Bank M. submits that the oral part of the procedure should be reopened to enable the Court to clarify the impact of the judgment of 21 March 2023, Mercedes-Benz Group (Liability of manufacturers of vehicles equipped with defeat devices) (C‑100/21, EU:C:2023:229), on the case in the main proceedings.

35 In this regard, it should be recalled, first, that the Statute of the Court of Justice of the European Union and the Rules of Procedure do not give the interested parties referred to in Article 23 of that Statute, the possibility of submitting observations in response to the opinion delivered by the Advocate General [judgment of 21 March 2023, Mercedes-Benz Group (Liability of manufacturers of vehicles equipped with defeat devices), C‑100/21, EU:C :2023:229, point 43 and case law cited therein].

36 Secondly, pursuant to Art. Pursuant to the second paragraph of 252 TFEU, the Advocate General shall publicly present, with complete impartiality and independence, a reasoned opinion on matters which, in accordance with the Statute of the Court of Justice of the European Union, require his involvement. The Court is not bound by that opinion or by the reasons on the basis of which the Advocate General reaches the conclusions contained in his opinion. Consequently, the fact that one of the interested parties disagrees with the Opinion of the Advocate General, whatever the issues raised in that Opinion, cannot in itself constitute a justification for reopening the oral part of the procedure [judgment of 21 March 2023 r., Mercedes-Benz Group (Liability of manufacturers of vehicles equipped with defeat devices), C‑100/21, EU:C:2023:229, point 44 and the case-law cited therein].

37 It is true that pursuant to Art. Pursuant to Article 83 of the Rules of Procedure, the Court may at any time, after hearing the views of the Advocate General, decide to reopen the oral part of the procedure, in particular if it considers that the circumstances of the case before it have not been sufficiently clarified or if, after the conclusion of the oral part of the procedure, a party presented a new fact that may be decisive for the Court's decision, or if the case is to be resolved on the basis of an argument that has not been the subject of discussion between the interested parties referred to in Article 23 of the Statute of the Court of Justice of the European Union.

38 However, in the present case, the Court finds that it has all the information necessary to render a judgment and that the decision in the present case is not based on arguments which have not been the subject of discussion between the parties concerned. Finally, in the two applications for the reopening of the oral part of the procedure referred to in paragraph 30 of this judgment, no new fact was identified that was likely to have a decisive influence on the judgment to be given by the Court in this case.

39 In those circumstances, the Court considers, after hearing the Advocate General, that there is no need to order a reopening of the oral part of the procedure.

 The question referred for a preliminary ruling

 The admissibility of the question asked and jurisdiction of the Court to answer them

40 In its request for a preliminary ruling, the referring court raised the question of the admissibility of the question it referred to the Court, since that question concerned both the claims of the consumer and the claims of the bank in the event that the mortgage loan agreement was declared invalid, even though it was referred to only at the request of the consumer.

41 In this regard, it should be recalled that within the framework established by Art. Pursuant to Article 267 TFEU of cooperation between the Court and national courts, it is solely for the national court seised of the dispute and which must assume responsibility for the judicial decision to be made to assess, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to that the national court would be able to deliver its judgment, as well as the relevance of the questions submitted to the Court. Therefore, if the questions raised concern the interpretation of EU law, the Court is in principle obliged to give a ruling (judgment of 13 October 2022, Baltijas Starptautiskā Akadēmija and Stockholm School of Economics in Riga, C‑164/21 and C‑ 318/21, EU:C:2022:785, point 32 and the case-law cited therein).

42 This means that questions relating to EU law benefit from a presumption of relevance. The Court may refuse to give a ruling on a question referred for a preliminary ruling by a national court only if it is clear that the interpretation of EU law sought has no connection with the facts or the subject-matter of the main proceedings, and the Court has no information at its disposal factual or legal matters necessary to provide a useful answer to the questions put to it or where the problem is of a hypothetical nature (judgment of 13 October 2022, Baltijas Starptautiskā Akadēmija and Stockholm School of Economics in Riga, C‑164/21 and C‑318 /21, EU:C:2022:785, point 33 and case-law cited therein).

43 Since, in the present case, part of the question referred for a preliminary ruling concerns the trader's claims against the consumer, while in the present case no request in that regard was made by Bank M. on the date on which the request for a preliminary ruling was lodged, the referring court is is of the opinion that the admissibility of this part of the question referred for a preliminary ruling is justified, first of all, by the fact that recognizing the contract as invalid ex tunc means the reimbursement of undue services provided by each of the two contracting parties, and therefore the answer to the entire question for a preliminary ruling is necessary for it to give a ruling on the possible objections of the entrepreneur in order to oppose the consumer's request.

44 Secondly, this court informs the Court that, according to the interpretation prevailing in national case-law, if both parties to a contract have provided undue performance of the same type and their performance resulted from the same legal relationship, only that party may be considered unjustly enriched, who received benefits to a greater extent. Consequently, in the case before the national court, that court is in any event obliged to examine the merits of the claims of both contracting parties.

45 Thirdly, and lastly, the referring court considers that failure to answer the question referred in its entirety would have a negative impact on the deterrent effect of Directive 93/13, since banks operating publicly in Poland threaten consumers with serious consequences if they decide to persist in demanding that mortgage loan agreements be recognized as invalid, due to the fact that these entrepreneurs will pursue claims from consumers related to the non-contractual use of capital by consumers.

46 Moreover, at the hearing held before the Court on October 12, 2022, Bank M. informed the Court that it had initiated separate proceedings to obtain compensation from AS for the non-contractual use of borrowed capital. However, these proceedings have been suspended pending the conclusion of these proceedings before the Court.

47 As the Advocate General observed in points 31 to 33 of his Opinion, the present case does not fall within any of the situations mentioned in paragraph 42 of this judgment in which the presumption of relevance of a question referred for a preliminary ruling may be rebutted. It is clear from the explanations provided to the Court, summarized in paragraphs 43 to 46 of this judgment, that the interpretation of EU law sought, in so far as it concerns a bank's claims for compensation beyond the refund of the principal amount in the event of the invalidity of a mortgage loan agreement, is related to with the subject-matter of the dispute in the main proceedings, since the referring court may be forced, if necessary of its own motion, to examine such claims. Moreover, the Court has the legal and factual information necessary to provide a useful answer to the question referred. Consequently, the question asked is admissible.

48 Moreover, it should be recalled that the national court must indicate to the parties, within the framework of national procedural rules and in the light of the principle of equity in civil proceedings, in an objective and comprehensive manner, the legal consequences which the removal of the unfair term may entail, regardless of whether the parties are represented by a professional representative or not (judgment of 29 April 2021, Bank BPH, C‑19/20, EU:C:2021:341, paragraph 97).

49 Such information is particularly important when failure to apply an unfair term may lead to the invalidity of the entire contract, possibly exposing the consumer to restitution claims (see similarly judgment of 29 April 2021, Bank BPH, C‑19/20, EU :C:2021:341, paragraph 98).

50 In the present case, it is clear from the file before the Court that the dispute before the referring court concerns precisely the legal consequences which may result from a mortgage loan agreement being declared null and void in its entirety on the grounds that that agreement cannot continue to be in force after the removal of unfair terms, and therefore an answer to the part of the question referred for a preliminary ruling relating to the trader's claims against the consumer is necessary to enable the referring court to fulfill its obligation to inform AS of such consequences.

51 Moreover, Bank M. stated that the Court did not have jurisdiction to answer that question because it concerned the effects of declaring a contract invalid, which are governed not by Directive 93/13 but by various provisions of national law, the interpretation of which is for the exclusive jurisdiction of national courts.

52 In this regard, although it is common ground that it is not within the jurisdiction of the Court to rule, in the context of a preliminary ruling procedure, on the interpretation of national provisions or to rule on the correctness of their interpretation applied by the referring court, since such an interpretation falls within the exclusive jurisdiction of the national courts (see, v. similarly judgment of 3 July 2019, UniCredit Leasing, C‑242/18, EU:C:2019:558, point 47 and the case-law cited therein), however - as the Advocate General stated in point 35 of his Opinion - the question referred for a preliminary ruling is not concerns the interpretation of Polish law, but the interpretation of Art. 6 section 1 and art. 7 section 1 of Directive 93/13, as well as the principles of effectiveness, legal certainty and proportionality.

53 Consequently, the Court has jurisdiction to answer the question referred and it is admissible.

 As to the essence

 Introductory remarks

54 According to settled case-law, the system of protection established by Directive 93/13 is based on the assumption that the consumer is in a worse position than the trader, both in terms of his negotiating opportunities and in terms of his level of information, and that he therefore accepts on the terms of the contract previously drawn up by the entrepreneur, the content of which cannot be influenced (judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑179/17, EU:C:2019:250 , point 49 and the case-law cited therein).

55 Due to such a disadvantage, Directive 93/13 requires Member States to establish a mechanism ensuring that any contract terms which have not been individually negotiated may be subject to review for the purposes of assessing their possible unfair nature. In this respect, it is for the national court to determine, taking into account the criteria set out in Art. 3 section 1 and art. 5 of Directive 93/13, whether, in the light of the circumstances of a particular case, a given condition satisfies the requirements of good faith, balance and transparency laid down in that directive (judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑ 179/17, EU:C:2019:250, point 50 and the case-law cited therein).

56 Given the nature and importance of the public interest in consumer protection, Directive 93/13 obliges the Member States, which follows from Article thereof. 7 section 1 in conjunction with its twenty-fourth recital, to ensure appropriate and effective measures to prevent the further use of unfair terms in contracts concluded by traders with consumers. To this end, the referring courts are obliged to refrain from applying unfair contract terms so that they do not, in the absence of the consumer's objection, produce binding effects on him [judgment of 10 June 2021, BNP Paribas Personal Finance, case C‑776/19 to C‑782/19, EU:C:2021:470, point 36 and the case-law cited therein; and similarly the judgment of September 8, 2022, DBP et al. (Mortgage loan denominated in foreign currency), C‑80/21 to C‑82/21, EU:C:2022:646, paragraph 58 and the case-law cited therein].

57 A contract term found to be unfair must, in principle, be deemed to have never existed, so that it has no effect on the consumer. Therefore, a judicial finding of the unfair nature of such a term should, in principle, have the effect of restoring the consumer's legal and factual situation in which he would have been in the absence of the term in question (judgment of 21 December 2016, Gutiérrez Naranjo et al., C‑154/15, C‑307/15 and C‑308/15, EU:C:2016:980, point 61).

58 In this regard, the Court clarified that the obligation for a national court to refrain from applying an unfair contract term requiring the payment of sums which turn out to be undue entails, in principle, an appropriate restorative effect in respect of those sums, since the absence of such an effect could prejudice the effect deterrent, what art. 6 section 1 of Directive 93/13 in connection with Art. 7 section 1 of that directive intends to attribute the finding of the unfair nature of terms contained in contracts concluded by a trader with consumers (see, similarly, judgment of 21 December 2016, Gutiérrez Naranjo and others, C‑154/15, C‑307/15 and C‑ 308/15, EU:C:2016:980, paragraphs 62, 63).

59 It should also be recalled that Art. 6 section 1 of Directive 93/13 requires Member States to provide that unfair terms do not bind consumers "under national law" (judgment of 21 December 2016, Gutiérrez Naranjo and Others, C‑154/15, C‑307/ 15 and C‑308/15, EU:C:2016:980, point 64 and the case-law cited therein).

60 However, the establishment by national law of the legal framework for the protection guaranteed to consumers by Directive 93/13 cannot alter the scope and, therefore, the substance of that protection, thereby calling into question the strengthening of the effectiveness of that protection through the adoption of uniform rules on unfair terms, which strengthens was the intention of the European Union legislature, as set out in the tenth recital in the preamble to Directive 93/13 (judgment of 21 December 2016, Gutiérrez Naranjo and Others, C‑154/15, C‑307/15 and C‑308/15, EU :C:2016:980, point 65).

61 Consequently, although it is for the Member States to determine, by means of national law, the conditions under which a term contained in a contract is found to be unfair and under which the specific consequences of that finding occur, such a finding must make it possible to restore the legal and factual situation, in which the consumer would be in the absence of such an unfair term, justifying, in particular, the right to restitution of advantages unduly acquired by the trader, to the detriment of the consumer, on the basis of that unfair term (judgment of 21 December 2016, Gutiérrez Naranjo and Others, C‑154/15, C‑307/15 and C‑308/15, EU:C:2016:980, point 66).

62 The question referred for a preliminary ruling must be examined in the light of those considerations.

 The question referred for a preliminary ruling

63 By its question for a preliminary ruling, the referring court essentially asks whether, in the context of declaring a mortgage loan agreement to be invalid in its entirety on the ground that it cannot continue to be in force after the unfair terms have been removed, Article 6 section 1 and art. 7 section 1 of Directive 93/13 must be interpreted as meaning that:

– they preclude the judicial interpretation of national law according to which the consumer is entitled to claim from the credit institution compensation going beyond the reimbursement of the monthly installments and costs paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment, and

– they preclude the judicial interpretation of national law according to which a credit institution is entitled to demand from the consumer compensation that goes beyond the repayment of the capital paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment.

64 It must be held, as the Advocate General observed in point 44 of his Opinion, that Directive 93/13 does not expressly regulate the consequences of the invalidity of a contract concluded between a trader and a consumer once the unfair terms contained in it have been removed. It is therefore up to the Member States to determine the consequences of such a finding, and the provisions they lay down in that regard should be consistent with Union law and, in particular, with the objectives of that Directive.

65 Furthermore, as stated in paragraph 57 of this judgment, a contract term deemed 'unfair' must, in principle, be regarded as having never existed, so as not to produce any effects on the consumer. Therefore, a judicial finding of the unfair nature of such a term should, in principle, result in the restoration of the legal and factual situation in which the consumer would have been in the absence of such a term, justifying in particular the right to reimbursement of benefits unduly acquired by the trader, to the detriment of the consumer, based on for that unfair term (see, to that effect, judgment of 31 March 2022, Lombard Lízing, C‑472/20, EU:C:2022:242, paragraphs 50 and 55 and the case-law cited therein).

66 In so far as, as is clear from the case-law cited in paragraph 58 of this judgment, the absence of such an effect could undermine the deterrent effect of Article 6 section 1 of Directive 93/13 in connection with Art. 7 section 1 of that directive intends to attribute the finding of the unfair nature of terms contained in contracts concluded by a trader with consumers, a similar restorative effect should be recognized in a situation where the unfair nature of the terms of a contract concluded between a trader and a consumer results not only in the invalidity of those terms, but also in the invalidity of the contract as a whole .

67 Moreover, pursuant to Art. 7 section 1 of Directive 93/13, read in conjunction with the twenty-fourth recital therein, it follows that that directive also aims to discourage traders from using unfair terms in consumer contracts.

68 It follows that the compatibility with EU law of national provisions governing the practical consequences of the invalidity of a mortgage loan contract on the ground of unfair terms depends on whether those provisions, first, make it possible to restore, legally and factually, the situation in which the consumer would have been in the absence of that agreement and, secondly, do not jeopardize the deterrent effect intended by Directive 93/13.

69 In the present case, as concerns, first of all, the consumer's ability to seek, in the event that a mortgage loan agreement is found invalid, claims beyond the reimbursement of monthly installments and costs paid in connection with the performance of that contract and, where appropriate, beyond the payment of statutory interest for late payment from the date of demand for payment, it does not appear, subject to verification by the referring court, that such a possibility would undermine the objectives set out in paragraph 68 of this judgment.

70 In that regard, it is for the referring court to examine, in the light of all the circumstances of the case before it, whether the relevant national provisions make it possible to restore, legally and factually, the consumer's situation in which he would have been in the absence of that contract.

71 As regards the deterrent effect intended by Article 7 section 1 of Directive 93/13, it should be noted that the possibility referred to in paragraph 69 of this judgment may contribute to discouraging traders from including unfair terms in contracts concluded with consumers, since the inclusion of such terms rendering the contract invalid as a whole could have financial consequences beyond the refund of the sums paid by the consumer and beyond the payment, where appropriate, of default interest.

72 It should be added that the adoption by the competent court of measures such as those referred to in paragraph 69 of this judgment cannot be considered contrary to the principle of legal certainty, since it constitutes a concrete implementation of the prohibition of unfair terms provided for in Directive 93/ 13.

73 Furthermore, the principle of proportionality, which constitutes a general principle of EU law, requires that national provisions implementing that law do not go beyond what is necessary to achieve the objectives pursued (see, to that effect, judgments of 14 March 2013, Aziz, C‑ 415/11, EU:C:2013:164, point 74; of 8 December 2022, BTA Baltic Insurance Company, C‑769/21, EU:C:2022:973, point 34). Consequently, it is for the referring court to assess, in the light of all the circumstances of the dispute in the main proceedings, whether and to what extent the granting of consumer claims such as those referred to in paragraph 69 of this judgment goes beyond what is necessary to achieve the objectives set out in paragraph 68 of this judgment.

74 It follows that, in the context of declaring a mortgage loan agreement to be invalid in its entirety on the ground that that agreement cannot continue to be in force after the unfair terms contained therein are removed, Directive 93/13 does not preclude the interpretation of national law in accordance with which the consumer has the right to demand from the credit institution compensation beyond the reimbursement of the monthly installments and costs paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment, provided that the objectives of Directive 93/13 and the principle of proportionality are respected.

75 Secondly, as regards the trader's claims against the consumer, it should be noted that, just as in the case of the consumer's ability to pursue claims arising from the invalidity of the mortgage loan agreement, such claims may be admissible only if they do not jeopardize the objectives set out in paragraph 68 of this judgment .

76 However, granting a credit institution the right to require compensation from the consumer going beyond the repayment of the capital paid for the performance of that contract and beyond the payment, where appropriate, interest on late payment, could undermine the deterrent effect intended by Directive 93/13, as the Advocate General observed in point 60 opinions.

77 The Court has already had occasion to explain in another context that if a national court were able to vary the content of unfair terms contained in such contracts, such a power could jeopardize the achievement of the long-term objective established in Article 7 of Directive 93/13. This power would contribute to eliminating the deterrent effect on traders by simply not applying such unfair terms to consumers, since they would still be encouraged to apply the terms in question, knowing that, even if they were to be declared invalid, the contract could nevertheless be supplemented to the extent necessary by the national court, so as to guarantee the interests of the undertakings concerned (judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 69).

78 Similarly, an interpretation of national law according to which a credit institution is entitled to demand from the consumer compensation that goes beyond the repayment of the capital paid for the performance of that contract, and thus to receive remuneration for the use of that capital by the consumer, would contribute to eliminating the dissuasive effect on traders by recognizing this agreement as invalid.

79 Moreover, the effectiveness of the protection afforded to consumers by Directive 93/13 would be jeopardized if they were exposed, in the context of invoking their rights under that directive, to the risk of having to pay such compensation. As the Advocate General emphasized in point 61 of his Opinion, such an interpretation would risk creating situations in which it would be more advantageous for the consumer to continue to perform a contract containing an unfair term rather than to exercise the rights he derives from that directive.

80 This reasoning cannot be undermined by the argument of Bank M., according to which, if entrepreneurs were unable to demand compensation beyond the return of the capital paid for the performance of this contract and beyond the payment, if applicable, of late payment interest, consumers would receive a "free" loan. It cannot also be undermined by the arguments of Bank M. and the Chairman of the Polish Financial Supervision Authority (Poland), according to which the stability of financial markets would be at risk if banks were unable to demand such compensation from consumers.

81 In this regard, first, in accordance with the principle of nemo auditur propriam turpitudinem allegans (a person who pleads his own wrongdoing will not be heard) a party cannot be allowed to derive economic benefits from its unlawful conduct or to be allowed to received compensation for the inconvenience caused by it.

82 In the present case, as the Advocate General observed in point 58 of his Opinion, the possible declaration of the mortgage loan agreement as invalid is the result of the use of unfair terms by Bank M. Therefore, it cannot obtain compensation for the loss of profit similar to that which it intended achieved from the said agreement.

83 Secondly, as the Advocate General pointed out in point 63 of his Opinion, the argument relating to the stability of financial markets is irrelevant in the context of the interpretation of Directive 93/13, which is intended to protect consumers. Moreover, it cannot be allowed for entrepreneurs to circumvent the objectives pursued by Directive 93/13 in order to maintain the stability of financial markets. It is up to banking institutions to organize their activities in a manner consistent with this directive.

84 Consequently, in the context of declaring a mortgage loan agreement to be invalid in its entirety on the ground that it cannot continue to be in force once the unfair terms contained in it are removed, Directive 93/13 precludes an interpretation of national law according to which a credit institution is entitled demand compensation from the consumer that goes beyond the refund of the capital paid for the performance of this contract and beyond the payment of statutory default interest from the date of the request for payment.

85 In the light of all the above considerations, the answer to the question asked is that, in the context of declaring a mortgage loan agreement invalid in its entirety on the grounds that it cannot continue to be in force after the unfair terms have been removed from it, Art. 6 section 1 and art. 7 section 1 of Directive 93/13 must be interpreted as meaning that:

– they do not preclude a judicial interpretation of national law according to which the consumer has the right to demand from the credit institution compensation beyond the reimbursement of the monthly installments and costs paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment, provided that respecting the objectives of Directive 93/13 and the principle of proportionality, and

– they preclude the judicial interpretation of national law according to which a credit institution is entitled to demand from the consumer compensation that goes beyond the repayment of the capital paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment.

 As to costs

86 For the parties in the main proceedings, these proceedings are incidental in nature because they concern an issue raised before the referring court and it is therefore for the referring court to decide on costs. Costs incurred in submitting observations to the Court, other than those of the parties to the main proceedings, are not recoverable.

On the above grounds, the Court (Fourth Chamber) hereby rules:

In the context of recognizing a mortgage loan agreement as invalid in its entirety due to the fact that it cannot continue to be in force after the unfair terms have been removed from it,

art. 6 section 1 and art. 7 section 1 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

should be interpreted as follows:

–        they do not preclude a judicial interpretation of national law according to which the consumer has the right to claim from the credit institution compensation beyond the reimbursement of the monthly installments and costs paid in connection with the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment, provided that the the objectives of Directive 93/13 and the principle of proportionality, and

–        they preclude a judicial interpretation of national law according to which a credit institution is entitled to demand from the consumer compensation that goes beyond the repayment of the capital paid for the performance of that contract and beyond the payment of statutory default interest from the date of the request for payment.

 

\The judgment was announced at a public hearing in Luxembourg on June 15, 2023.

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