Case C‑186/16

Ruxandra Paula Andriciuc and Others

v

Banca Românească SA

(Request for a preliminary ruling from the Curtea de Apel Oradea)

(Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Unfair terms in consumer contracts — Article 3(1) and Article 4(2) — Assessment of the unfairness of contractual terms — Loan agreement concluded in a foreign currency — Exchange rate risk born entirely by the consumer — Significant imbalance in the parties’ rights and obligations arising under the contract — Time at which the imbalance must be assessed — Scope of the concept of terms drafted in ‘plain intelligible language’ — Level of information to be procured by the bank)

Summary — Judgment of the Court (Second Chamber), 20 September 2017

1. Consumer protection—Unfair terms in consumer contracts—Directive 93/13—Scope—Exclusion of terms which reflect mandatory statutory or regulatory provisions—Verification a matter for the national court

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

2. Consumer protection—Unfair terms in consumer contracts—Directive 93/13—Scope—Terms defining the main subject-matter of the contract or concerning the price or the remuneration and the services or goods supplied as consideration—Concept—Contractual term incorporated into loan agreement denominated in a foreign currency which was not individually negotiated and requiring the consumer to repay the loan in the same currency—Included—Conditions—Obligation to satisfy the requirements of intelligibility and transparency

   (Council Directive 93/13, Art. 4(2))

3. Consumer protection—Unfair terms in consumer contracts—Directive 93/13—Scope—Terms defining the main subject-matter of the contract or concerning the price or the remuneration and the services or goods supplied as consideration—Contractual term incorporated into loan agreement denominated in a foreign currency which was not individually negotiated and requiring the consumer to repay the loan in the same currency—Included—Conditions—Obligation to satisfy the requirements of intelligibility and transparency—Level of information required—Scope—Verification a matter for the national court

   (Council Directive 93/13, Art. 4(2))

4. Consumer protection—Unfair terms in consumer contracts—Directive 93/13—Unfair term within the meaning of Article 3—Significant imbalance in the parties’ rights and obligations arising under the contract—Assessment by the national court of the existence of a possible imbalance at the time the contract was concluded—Obligation to take account of all of the circumstances which could have been known to the seller or supplier at that time

   (Council Directive 93/13, Art. 3(1))

1.  See the text of the decision.

   (see paras 27-31)

2.  Article 4(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must interpreted as meaning that the concept of ‘main subject matter of the contract’ within the meaning of that provision, covers a contractual term, such as that at issue in the main proceedings, incorporated into a loan agreement denominated in a foreign currency which was not individually negotiated and according to which the loan must be repaid in the same foreign currency as that in which it was contracted, as that terms lays down an essential obligation characterising that contract. Therefore, that clause cannot be regarded as being unfair, so long as it is drafted in plain intelligible language.

   In that connection, it must be observed that, under a loan agreement, the lender undertakes, in particular, to make available to the borrower a certain sum of money and the latter undertakes, in particular, to repay that sum, usually with interest, on the scheduled payment dates. Therefore, the essential obligations of such a contract relate to a sum of money which must be determined by the stipulated currency in which it is paid and repaid. Thus, as the Advocate General observed in point 46 et seq. of his Opinion, the fact that a loan must be repaid in a certain currency relates, in principle, not to an ancillary repayment arrangement, but to very nature of the debtor’s obligation, thereby constituting an essential element of a loan agreement.

   (see paras 38, 41, operative part 1)

3.  Article 4(2) of Directive 93/13 must be interpreted as meaning that the requirement that a contractual term must be drafted in plain intelligible language requires that, in the case of loan agreements, financial institutions must provide borrowers with sufficient information to enable them to take prudent and well-informed decisions. In that connection, that requirement means that a term under which the loan must be repaid in the same foreign currency as that in which it was contracted must be understood by the consumer both at the formal and grammatical level, and also in terms of its actual effects, so that the average consumer, who is reasonably well informed and reasonably observant and circumspect, would be aware both of the possibility of a rise or fall in the value of the foreign currency in which the loan was taken out, and would also be able to assess the potentially significant economic consequences of such a term with regard to his financial obligations. It is for the national court to carry out the necessary checks in that regard.

   Thus, as the Advocate General observed in points 66 and 67 of his Opinion, first, the borrower must be clearly informed of the fact that, in entering into a loan agreement denominated in a foreign currency, he is exposing himself to a certain foreign exchange risk which will, potentially, be difficult to bear in the event of a fall in the value of the currency in which he receives his income. Second, the seller or supplier, in this case the bank, must be required to set out the possible variations in the exchange rate and the risks inherent in taking out a loan in a foreign currency, particularly where the consumer borrower does not receive his income in that currency. Therefore, it is for the national court to check that the seller or supplier has communicated to the consumers concerned all the relevant information enabling them to assess the economic consequences of a term, such as that at issue in the main proceedings, on their financial obligations.

   (see paras 50, 51, operative part 2)

4.  Article 3(1) of Directive 93/13 must be interpreted as meaning that the assessment of the unfairness of a contractual term must be made by reference to the time of conclusion of the contract at issue, taking account all of the circumstances which could have been known to the seller or supplier at that time, and which were such as to affect the future performance of that contract. It is for the referring court to assess, having regard to all of the circumstances of the case in the main proceedings, and taking account, in particular of the expertise and knowledge of the seller or supplier, in the present case the bank, with regard to the possible variations in the exchange rate and the risks inherent in taking out a loan in a foreign currency, of the existence of a possible imbalance within the meaning of that provision.

   (see para. 58, operative part 3)