1.

Article 6(1) of Directive 93/13 ( 2 ) requires the Member States to ensure that unfair terms used in consumer contracts are not binding on the consumer. Such contracts are to be maintained without the unfair terms, to the extent possible. However, in accordance with settled case-law, where, on an exceptional basis, an unfair term in such a contract is replaced by a new term as a result of legislative intervention, it must be ensured that the legal and factual situation of the consumer in the absence of that unfair term is thereby restored. In particular, the consumer should be able to claim restitution of all advantages wrongly obtained, to his or her detriment, by the seller or supplier on the basis of that unfair term (the ‘restitutory effect’). ( 3 )

2.

In the main proceedings, the applicant takes the view, in essence, that a reform by the Croatian legislature in 2015, which gave consumers the right retroactively to convert loans expressed in Swiss francs into euro, was inadequate in that regard. In particular, the contractual adjustments provided for by law did not lead to consumers being reimbursed all the sums improperly paid.

3.

The distinguishing feature of the case lies in the fact that the applicant’s credit contract was concluded in 2007, and thus before the Republic of Croatia’s accession to the EU. However, the replacement of the unfair terms by virtue of the abovementioned legislative reform did not take place until after the accession. Against that background, the case raises the question of the applicability ratione temporis of Article 6(1) of Directive 93/13 in the main proceedings with regard to the restitutory effect of the statutory provision in question. In other words, it needs to be clarified whether a provision adopted after the accession of a Member State must also guarantee that restitutory effect in respect of unfair terms in a contract concluded before the accession.

4.

According to Article 3(3) of the Treaty between the Member States of the European Union and the Republic of Croatia concerning the accession of the Republic of Croatia to the European Union, ( 4 ) that Treaty is to enter into force on 1 July 2013 provided that all the instruments of ratification have been deposited before that date.

5.

Article 2 of the Act concerning the conditions of accession of the Republic of Croatia and the adjustments to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community, ( 5 ) provides as follows in its first paragraph:

‘From the date of accession, the provisions of the original Treaties and the acts adopted by the institutions before accession shall be binding on Croatia and shall apply in Croatia under the conditions laid down in those Treaties and in this Act.’

6.

According to the first sentence of Article 46 of the 2012 Act of Accession, upon accession, the Republic of Croatia is to be considered as being an addressee, in accordance with the original Treaties, of directives and decisions within the meaning of Article 288 TFEU.

7.

The thirteenth recital of Directive 93/13 reads as follows:

‘Whereas the statutory or regulatory provisions of the Member States which directly or indirectly determine the terms of consumer contracts are presumed not to contain unfair terms; whereas, therefore, it does not appear to be necessary to subject the terms which reflect mandatory statutory or regulatory provisions …; whereas in that respect the wording “mandatory statutory or regulatory provisions” in Article 1(2) also covers rules which, according to the law, shall apply between the contracting parties provided that no other arrangements have been established’.

8.

Accordingly, Article 1(2) of the directive provides as follows:

‘The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive.’

9.

Article 6(1) of the directive states:

‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’

10.

Article 7(1) of the directive provides that Member States are to ensure ‘that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers’.

11.

Article 10(1) of the directive reads as follows:

‘Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 31 December 1994. They shall forthwith inform the Commission thereof.

These provisions shall be applicable to all contracts concluded after 31 December 1994.’

12.

On 30 September 2015, the Zakon o izmjeni i dopunama Zakona o potrošačkom kreditiranju (Law amending the Law on Consumer Credit; ‘the Law of 2015’) ( 6 ) was adopted, giving consumers the possibility to convert their credit liabilities from Swiss francs into euro. Article 19e of the Law of 2015 obliges lenders to offer consumers either a new loan agreement or an annex to the existing loan agreement within 45 days of the entry into force of that law. Consumers can accept the conversion of the loan within 30 days. Otherwise, the loan must be repaid under the same conditions as before.

13.

The Law of 2015 provides for a specific methodology for calculating the new amount of the consumer’s debt for conversion purposes. It consists, in essence, in comparing the consumer’s actual loan repayments with a fictitious loan in euro. This gives a new loan balance in euro as of 30 September 2015, which is decisive for the borrower’s repayment of the loan as of that date.

14.

The purpose of the Law of 2015 is to put Swiss franc borrowers on an equal footing with euro borrowers, as follows from Article 19b thereof.

15.

Article 148(1) and Article 326 of the Zakon o obveznim odnosima (Law on Obligations), in the version of 5 April 2018, ( 7 ) provide that an invalid contract does not become valid by virtue of the subsequent removal of the cause of its invalidity or by virtue of its renewal. In accordance with Article 322 of that law, an invalid legal transaction is deemed not to have taken place at all and cannot be confirmed, replaced or made valid by means of a legal transaction.

16.

According to the order for reference, on 15 October 2007, A.H., the applicant in the main proceedings, concluded in her capacity as a consumer a real estate loan agreement with Zagrebačka banka d.d., the defendant in the main proceedings, for an amount expressed in Swiss francs but disbursed in kuna. In the standard-form agreement, the parties agreed, inter alia, that the repayment amount of the loan was linked to the Swiss franc and that the applicable variable interest rate could be changed unilaterally by the bank.

17.

The Law of 2015 was adopted on 30 September 2015. ( 8 )

18.

Subsequently, on 8 January 2016, the applicant in the main proceedings and Zagrebačka banka entered into an annex to the loan agreement in order to effect the conversion provided for in the Law of 2015, with the result that the recalculated principal amount of the loan was linked to the euro with effect from 30 September 2015 and a new interest calculation method was applied.

19.

On 12 June 2019, the applicant in the main proceedings brought an action against Zagrebačka banka before the referring court, the Općinski građanski sud u Zagrebu (Municipal Civil Court, Zagreb, Croatia). By her action, she seeks, first, a declaration that the Swiss franc indexation clause and the variable interest rate clause contained in her original agreement are unfair under both Croatian and EU law and are therefore invalid. In support of her request, she relies on class action proceedings before the Trgovački sud u Zagrebu (Commercial Court, Zagreb, Croatia), in which the unfairness of foreign currency clauses such as those at issue in the main proceedings was established by final judgment.

20.

Second, the applicant seeks, on the basis of an expert’s report that she had commissioned, an order requiring the bank to return to her all the advantages which the bank unduly obtained on the basis of those clauses. The applicant in the main proceedings takes the view that, accordingly, the provisions of the Law of 2015 or the annex provided for by law did not fully restore the situation in which she would have been had the original contract not contained unfair terms. She submits that, moreover, she did not in any way waive those rights, to which she is entitled as a consumer.

21.

On 4 March 2020, in ‘proceedings unifying the interpretation of law’, the Vrhovni sud (Supreme Court, Croatia) ruled, in a manner binding on all lower courts, that an annex concluded on the basis of the Law of 2015 produces legal effects and is valid even if the terms of the loan agreement concerning the variable interest rate and the link to the foreign currency are invalid. In those proceedings, it did not expressly answer the question concerning compensation for consumers in spite of the conversion that had been effected.

22.

However, the bank takes the view that that ruling must be understood as meaning that, as a result of the conversion provided for in the Law of 2015 and the conclusion of the annex to the loan agreement, there is no longer any legal basis for finding that the terms of the original agreement are unfair and thus for the payment of compensation on that basis, since the loan had been retroactively calculated as if it had been expressed in euro.

23.

The referring court found that the applicant in the main proceedings did not waive her right to full compensation and to judicial protection of her interests. According to the referring court, it had also been demonstrated that, despite the conversion, the remaining principal of the loan remained higher than it would have been in the absence of the unfair terms. It found that it is possible to determine the amount of the advantages obtained by the bank as a result of the unfairness of those terms.

24.

Against that background, the Općinski građanski sud u Zagrebu (Municipal Civil Court, Zagreb) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling under Article 267 TFEU:

25.

In the written procedure before the Court, the applicant in the main proceedings, Zagrebačka banka, the Croatian Government and the European Commission submitted observations on those questions referred for a preliminary ruling.

26.

By its first question, the referring court seeks to ascertain, in essence, whether Article 6(1) of Directive 93/13 precludes national legislation, adopted after the accession of a Member State to the EU, which requires banks to offer a consumer with whom they concluded a certain type of loan agreement prior to the accession of that Member State an annex, where the content of the latter, as laid down by law, does not lead to full restitution of all the advantages which the bank obtained from the unfair terms originally contained in the loan agreement.

27.

In other words, that court seeks to ascertain whether, with the provisions of the Law of 2015, the Croatian legislature meets the requirements of Article 6(1) of Directive 93/13, in particular with regard to the restitutory effect ( 9 ) required by the case-law.

28.

In that connection, it has particular doubts as to whether, in the light of Article 1(2) of Directive 93/13, it can review the annex brought about by the Law of 2015 for its compatibility with Article 6(1) of that directive. ( 10 ) This is because, under the former provision, contractual terms which reflect mandatory statutory or regulatory provisions are not to be subject to the provisions of the directive.

29.

However, it is first necessary to clarify whether Directive 93/13, in particular Article 6(1), is applicable to the facts of the present case. This is because, in accordance with settled case-law, the jurisdiction of the Court to answer a question referred for a preliminary ruling concerning a provision of EU law presupposes that that provision is applicable to the facts of the main proceedings. ( 11 )

30.

The original loan agreement, expressed in Swiss francs, was concluded between the applicant in the main proceedings and Zagrebačka banka on 15 October 2007. However, it was not until 1 July 2013 that the accession of the Republic of Croatia to the EU took effect. On 8 January 2016, the parties entered into the annex brought about by the Law of 2015, which retroactively linked the loan to the euro.

31.

The Court has jurisdiction to interpret EU law only as regards its application in a Member State with effect from the date of that State’s accession to the European Union. ( 12 ) EU law cannot, in principle, be automatically applied to events prior to the accession of a new Member State. At the same time, the Act of Accession of a new Member State is based essentially on the general principle that the provisions of EU law apply ab initio and in toto to that State, derogations being allowed only in so far as they are expressly laid down by transitional provisions. ( 13 ) Therefore, unless the Treaty concerning the accession of a new Member State provides otherwise, EU law also applies, in principle, to the future effects of situations arising prior to its accession, as from the date of accession. ( 14 )

32.

However, as regards Directive 93/13, it contains a specific rule regarding its applicability ratione temporis.

33.

According to the second subparagraph of Article 10(1) of Directive 93/13, the latter is applicable only to contracts concluded after 31 December 1994, the date by which the directive must have been transposed into national law. The Court has concluded from this that the only relevant factor for the applicability ratione temporis of the provisions of Directive 93/13 to a consumer contract is the date of the conclusion of that contract, and the period during which the contract produced effects is not relevant. ( 15 ) Accordingly, with regard to Member States which did not accede to the EU until after 31 December 1994, and in respect of which Directive 93/13 became binding only upon their accession, that directive applies only to contracts concluded after the date of accession of the Member State concerned. ( 16 )

34.

Therefore, Directive 93/13 is not applicable to the original loan agreement of October 2007.

35.

Therefore, for the purposes of the application of EU law, only the conclusion of the annex in 2016 or the adoption of the Law of 2015 remains as a connecting factor post-dating the accession of the Republic of Croatia to the EU.

36.

However, the subject matter of the main proceedings is precisely not the alleged unfairness of the terms of the annex as such, which are based on the Law of 2015, or the restitution of the advantages derived from that annex. ( 17 ) Rather, the form of order sought by the applicant in the main proceedings is the restitution of all the advantages which the bank derived from the alleged unfairness of the terms contained in the agreement of 2007. Against that background, the referring court asks whether the Law of 2015 and the annex to the loan agreement based on that law may restrict the applicant’s rights with regard to the unfairness of those original terms.

37.

Therefore, similar to the Dunai and OTP Jelzálogbank and Others cases, ( 18 ) the issue is the effects of that annex or the Law of 2015 on the obligation of the Republic of Croatia under Article 6(1) of Directive 93/13 to ensure full restitution of all advantages obtained by the bank in connection with the terms originally contained in the loan agreement.

38.

However, it is only if the directive is applicable to the original agreement that such an obligation can arise from Article 6(1) of Directive 93/13 at all. ( 19 ) However, as already stated, ( 20 ) this is not the case.

39.

This is because, even after the Republic of Croatia’s accession to the EU – and thus at the time of the adoption of the Law of 2015 – that Member State was, first, under no obligation from the point of view of EU law to take measures, in respect of consumer contracts concluded before its accession to the EU, to ensure that any unfair terms that those contracts may have contained were not binding on consumers (Article 6(1) of Directive 93/13). Second, the Republic of Croatia was not required, in respect of such contracts, to provide adequate and effective means to prevent the continued use of unfair terms by sellers or suppliers (see Article 7(1) of Directive 93/13). Without such an obligation, however, the possible restriction of the possibilities of restitution by a new law or the annex based on it cannot fall within the scope of Directive 93/13.

40.

Nor does an obligation to guarantee full restitution exist with regard to the advantages which the bank derived from such a contract only after accession, that is to say, in the present case, in the period from 1 July 2013 to 8 January 2016. This is because those advantages are also based on the potential unfairness of the clauses from the agreement of 2007, for which, however, Directive 93/13 cannot provide a remedy due to the fact that it is not applicable.

41.

Such a division into a pre-accession period and a post-accession period, as was done, for example, in the Milivojević case with regard to the applicability of the fundamental freedoms, ( 21 ) is not possible for the purposes of the application of Directive 93/13. Such an approach would run counter to the purpose of the second subparagraph of Article 10(1) of the directive. Accordingly, the directive is either to apply to a contract overall, including all its legal effects, or – in the case of a contract concluded before 1 January 1995 or before the accession of the Member State concerned – not to apply at all, even if that contract continues to produce effects after that date. ( 22 )

42.

In that connection, the second subparagraph of Article 10(1) of Directive 93/13 makes clear that the legislature did not intend that a contract already concluded between a seller or supplier and a consumer must comply with the provisions of that directive from the date on which that directive has full legally binding force in the Member States or even retroactively. Facts preceding that date should not be subject to a retrospective substantive reassessment. ( 23 )

43.

In that respect, the Commission’s argument that the only decisive factor is that the Law of 2015 was adopted after the date from which the Republic of Croatia was bound by Directive 93/13 and that that law must therefore comply with the requirements of the directive, in particular Article 6(1) thereof, cannot be accepted. This is because the main proceedings do not concern the abstract compatibility of the Law of 2015 with the provisions of the directive. Such a matter in isolation could not in fact be the subject of a question of interpretation concerning Directive 93/13; rather, there must always be a connection with a consumer contract in that regard. ( 24 )

44.

Accordingly, the Court ruled in SKP that the purpose of Directive 93/13 is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer. Consequently, it covers only the terms contained in contracts and not, for instance, national (procedural) provisions. ( 25 ) However, since the only contract which played a role in those proceedings had been concluded before the accession of the Slovak Republic to the EU, the Court declared the question referred for a preliminary ruling to be manifestly inadmissible. ( 26 )

45.

In conclusion, having regard to the form of order sought by the applicant in the main proceedings and the subject matter of the questions referred for a preliminary ruling, it is therefore only the applicability of Directive 93/13 to the original loan agreement that is relevant. Since it is not applicable in the present case, the Court does not have jurisdiction to answer the questions referred.

46.

It is true that the questions referred for a preliminary ruling relate only to the obligation to return all advantages derived from the terms originally contained in the loan agreement. However, it follows from the order for reference that the applicant in the main proceedings also claims that unfair variable interest rates were applied in the conversion effected by the annex.

47.

It is true that, in so far as the main proceedings therefore (also) concern the unfairness of the terms contained in the annex itself – a matter which is for the referring court to assess – they fall within the temporal scope of Directive 93/13. However, a review of the content of the terms in question is nevertheless excluded.

48.

This is because the annex based on the Law of 2015 is excluded from the scope of Directive 93/13 pursuant to Article 1(2) of that directive. According to that provision, the contractual terms which reflect mandatory statutory or regulatory provisions are not to be subject to the provisions of that directive.

49.

The Court interprets Article 1(2) of Directive 93/13 as meaning that the scope of that directive does not cover terms which reflect mandatory provisions of national law, inserted in that contract by virtue of a law after it had been concluded with a consumer, and intended to remove a term which is null and void from that contract. ( 27 )

50.

It is true that, in the present case, unlike in the cases cited in the previous point, the replacement of the terms is not brought about directly by the Law of 2015. Rather, it is subject to the consumer’s consent. In that respect, the law provides the parties with the options of entering into either a new loan agreement or an annex to the existing loan agreement. However, the mere requirement of the consumer’s consent does not mean that the clauses are not to be regarded as reflecting a mandatory statutory or regulatory provision. In the present case, the Law of 2015 requires banks to make such an offer to consumers within a prescribed period of time. For consumers, the only alternative to consent is to maintain the original agreement, including the terms which the legislature deems to be unfair and detrimental to them. In addition, the content of the potential annex is entirely determined by the law and is not set by the sellers or suppliers.

51.

As follows from the thirteenth recital of Directive 93/13, Article 1(2) thereof is based on the presumption that the statutory or regulatory provisions of the Member States which directly or indirectly determine the terms of consumer contracts do not contain unfair terms, but strike a balance between the rights of consumers and sellers or suppliers. ( 28 ) As is apparent from the order for reference, this was also precisely the aim of the Croatian legislature. In those circumstances, it must be assumed that the terms in question ‘reflect’ a mandatory statutory or regulatory provision within the meaning of Article 1(2) of Directive 93/13.

52.

It follows that the matter does not fall within the material scope of Directive 93/13 either.

53.

Having regard to the foregoing considerations, I propose that the Court answer the questions referred by the Općinski građanski sud u Zagrebu (Municipal Civil Court, Zagreb, Croatia) as follows:

The Court of Justice of the European Union does not have jurisdiction to answer the questions referred by the Općinski građanski sud u Zagrebu (Municipal Civil Court, Zagreb, Croatia), in its order for reference of 15 October 2020.