Case C‑598/21

SP
and
CI

Všeobecná úverová banka a.s.

(Request for a preliminary ruling from the Krajský súd v Prešove)

Judgment of the Court (Fourth Chamber) of 9 November 2023

(Reference for a preliminary ruling – Unfair terms in consumer contracts – Consumer credit contract – Directive 93/13/EEC – Article 1(2) – Term reflecting a mandatory statutory provision – Article 3(1), Article 4(1), Article 6(1) and Article 7(1) – Acceleration clause – Judicial review – Proportionality with regard to the consumer breaches of contract – Articles 7 and 38 of the Charter of Fundamental Rights of the European Union – Contract secured by a charge on immovable property – Extrajudicial sale of the consumer’s home)

Consumer protection – Unfair terms in consumer contracts – Directive 93/13 – Scope – Exclusion provided for contractual terms reflecting mandatory statutory or regulatory provisions – Acceleration clause – Application of the directive

(Council Directive 93/13, Art. 1(2))

(see paragraphs 63-71)
Consumer protection – Unfair terms in consumer contracts – Directive 93/13 – Unfair term within the meaning of Article 3 – Assessment of unfair nature by the national court – Criteria

(Council Directive 93/13, Arts 3(1), 4(1) and 6(1))

(see paragraphs 74-79)
Consumer protection – Unfair terms in consumer contracts – Directive 93/13 – Finding that a term is unfair – Scope – National legislation relating to the extrajudicial enforcement of a charge on the home of the consumer – Failure to take into account, during judicial review of the unfairness of an acceleration clause, of the proportionality of the option available to the seller or supplier to exercise the right under that clause – Not permissible

(Charter of Fundamental Rights of the European Union, Arts 7 and 38; Council Directive 93/13, Arts 3(1), 4(1), 6(1) and 7(1))

(see paragraphs 80-90, operative part)

Résumé

SP and CI, the applicants in the main proceedings, took out a consumer credit repayable over a period of 20 years and secured by a charge on immovable property, namely the family home in which they were resident.

Less than a year after the conclusion of that agreement, since the applicants in the main proceedings were in default of payment, the lender demanded repayment in full of the sums due under the credit agreement, on the basis of an acceleration clause contained in that agreement. It then proceeded to enforce its charge by extrajudicial auction of the pledged property.

Hearing an application by the applicants for suspension of that sale, the Okresný súd Prešov (District Court, Prešov, Slovakia) dismissed their application by a first judgment, which it subsequently confirmed, on remittal, notwithstanding the annulment of that judgment by the Krajský súd v Prešove (Regional Court, Prešov, Slovakia). The applicants brought an appeal against that second judgment before the Prešov Regional Court, the referring court. According to that court, the national legislation authorising the extrajudicial enforcement of a charge by auction of the property constituting the home of the consumers may be contrary to Directive 93/13 and to the principle of proportionality.

In its judgment, the Court of Justice examines the interpretation of Directive 93/13 ( 1 ) and, more specifically, the scope of judicial review of the unfairness of a clause accelerating the term contained in a consumer credit agreement, where that clause allows the extrajudicial sale of the consumer’s family home.

Findings of the Court

In the first place, the Court finds that an acceleration clause which allows the creditor to claim repayment in advance of the entire outstanding balance in the event of the debtor’s failure to fulfil his or her contractual obligations falls within the scope of Directive 93/13. Thus, it points out that, subject to verification by the referring court, that clause is not to be classified as a ‘[term] which reflect[s] mandatory statutory or regulatory provisions’ within the meaning of Article 1(2) of Directive 93/13. Although that clause reproduces certain provisions of national law, ( 2 ) those provisions are not mandatory and do not satisfy the second condition laid down in Article 1(2) for the application of the exclusion provided for therein.

In the second place, after recalling the general rules governing judicial review of the unfairness of contractual terms falling within the scope of Directive 93/13, the Court recalls the criteria in the light of which the national court may determine whether a term in a long-term mortgage loan agreement determining the conditions under which the creditor is authorised to demand early repayment, such as the acceleration clause, is unfair.

Thus, in making that assessment, it is important to know, first, whether the right of the seller or supplier to call in the totality of the loan is conditional upon the non-compliance by the consumer with an obligation of essential importance in the context of the contractual relationship in question and, second, whether that right is provided for in cases in which such non-compliance is sufficiently serious in the light of the term and amount of the loan. It is also important to know, third, whether the seller or supplier’s right derogates from the ordinary law applicable, in the absence of specific contractual provisions and, fourth, whether national law provides for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in.

Therefore, when assessing whether an acceleration clause is unfair, the national court must, inter alia, examine the proportionality of the option available to the creditor under that clause to demand all the sums due under the contract. Therefore, that court must take into account, inter alia, the extent to which the consumer fails to fulfil his or her contractual obligations, such as the amount of the instalments which have not been paid in relation to the total amount of the credit and the duration of the contract.

However, the criteria set out above are neither cumulative or alternative nor exhaustive. Thus, first, when reviewing the proportionality of the acceleration clause, additional criteria, such as any contractual imbalance created by that acceleration clause and the fact that the application of that clause may, where appropriate, lead to the recovery by the creditor of the sums owed under the contract by the sale of the family home of the consumer without any judicial process, may be added. Second, when assessing the means enabling the consumer to remedy the effects of the loan becoming due, the national court must take into account, in particular with regard to the fundamental right to housing, ( 3 ) the consequences of the consumer and his or her family being evicted from the dwelling constituting their principal residence. Therefore, applying those criteria and taking into account all the circumstances in which the contract was concluded, the national court could conclude that the acceleration clause was unfair if it finds that the seller or supplier may, under that clause, exercise its right to claim early repayment of the outstanding balance due under the loan without taking into account the extent of the consumer’s failure to fulfil obligations in relation to the amount granted and the duration of the loan.

In those circumstances, the Court ruled that Directive 93/13, read in the light of the Charter, ( 4 ) precludes national legislation under which the judicial review of the unfairness of an acceleration clause contained in a consumer credit agreement does not take account of the proportionality of the option given to the seller or supplier to exercise his or her right under that clause, in the light of specific criteria. Those include criteria linked, in particular, to the extent of the consumer’s failure to fulfil his or her contractual obligations, such as the amount of the instalments that have not been paid in relation to the total amount of credit and the duration of the contract, as well as the possibility that implementation of the clause would result in the seller or supplier being able to recover the sums due under that clause by selling the consumer’s family home without any judicial process.

( 1 ) See, in particular, Article 3(1), Article 4(2), Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).

( 2 ) In the present case, Paragraph 53(9) and Paragraph 565 of the Slovak Civil Code.

( 3 ) See Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

( 4 ) Articles 7 and 38 of the Charter.