FOURTH SECTION
DECISION
Applications nos. 27514/15 and 13876/16
Györgyi Gabriella BÁRDI and László VIDOVICS
against Hungary
The European Court of Human Rights (Fourth Section), sitting on 19 December 2017 as a Chamber composed of:
Ganna Yudkivska, President,
Vincent A. De Gaetano,
Faris Vehabović,
Egidijus Kūris,
Iulia Motoc,
Georges Ravarani,
Marko Bošnjak, judges,
and Marialena Tsirli, Section Registrar,
Having regard to the above applications lodged on 22 May 2015 and 4 March 2016 respectively,
Having deliberated, decides as follows:
THE FACTS
1. The applicant in the first case, Ms Györgyi Gabriella Bárdi (the first applicant), is a Hungarian national who was born in 1951 and lives in Budapest. She was represented before the Court by Mr D. Lázár, a lawyer practising in Budapest.
2. The applicant in the second case, Mr László Vidovics (the second applicant), is a Hungarian national who was born in 1978 and lives in Budapest. He was represented before the Court also by Mr D. Lázár, acting in that case on behalf PITEE, a consumer protection association.
A. The circumstances of the case
3. The facts of the cases, as submitted by the applicants, may be summarised as follows.
4. In 2006 both applicants took out mortgages from Hungarian commercial/mortgage banks. Their loan agreements were denominated in Swiss francs. According to the terms of the agreements, the applicants were to bear the risk of any exchange rate fluctuations between the Hungarian forint and the Swiss franc.
1. The first applicant
5. The first applicant submitted that her loan agreement had not contained all the information required by law, to be exact, that provisions on a particular cost element, namely that of “currency spreads” (the practice of applying the “sell rate” when granting the loan and the “buy rate” for repayment) were not indicated. Furthermore, no proper reasons had been given in the agreement to justify any unilateral modifications of the costs collected by the banks. She contended that her loan agreement had been invalid because, owing to the above-mentioned defects, it conflicted with mandatory provisions of Hungarian law that had been in force at the time of signing.
6. In 2011 the first applicant initiated civil proceedings against the banks, urging the court to declare her loan agreements invalid for the reasons stated above. According to the information provided by the applicant, the proceedings are suspended.
7. Simultaneously, several debtors of foreign-currency-based consumer loan agreements lodged similar actions in Hungary. Due to the large number of those court cases, the Kúria decided to deliver a uniformity decision in respect of the issues concerning such agreements. In its Civil Law Uniformity Decision no. 2/2014 of 16 June 2014, it adopted a position on the unfairness of certain clauses of such consumer loan contracts. It held that the fact that, in such situations, the debtor bore the risk of currency fluctuations (in exchange for the favourable interest rates obtained) did not, in itself, make the agreements invalid. The unfairness of such contractual terms could be assessed and established only if the information provided by the bank on the nature of that risk was unintelligible for the average consumer. It also held that currency spreads, as provided for in the contracts, were invalid. Moreover, clauses enabling the unilateral amendment of the contracts were also invalid unless those clauses complied with certain principles laid down in the earlier no. 2/2012 (XII.10) Uniformity Decision of the Kúria.
8. In order to ensure that the principles laid down in the Kúria’s Uniformity Decision could be enforced directly, not only in pending litigations but also in connection with potential, non-litigated claims concerning consumer loan contracts, Parliament then adopted three pieces of legislation. Those statutes were enacted also to ensure that all foreign-currency-based loan agreements were converted into Hungarian forints and that settlements between the consumer and the financial institution – in respect of unlawfully collected sums from currency spreads and costs that arose from unilateral amendments – were implemented in accordance with the guidance of the Kúria and with pending court actions being meanwhile put on hold.
9. In particular, Act no. XXXVIII of 2014 on the resolution of questions relating to the uniformity decision of the Kúria regarding consumer loan agreements drawn up by financial institutions (“Act 1” – see paragraph 16 below), which entered into force on 19 June 2014, provided that currency spreads constituted invalid contractual provisions. Moreover, that there was a presumption – to be potentially refuted by the banks in separate proceedings – that clauses enabling the unilateral amendment of the contract were also invalid. This legislation prescribed that pending proceedings in respect of consumer loan agreements were to be suspended until the measures provided for in the other two relevant pieces of legislation had been taken.
10. Act no. XL of 2014 on the rules of settlement laid down in Act 1 (“Act 2” – see paragraph 18 below), which entered into force on 1 November 2014, provided, among other things, that if a claimant wished to pursue his or her claim against the financial institution in court, he or she needed to complete the claim by itemising and quantifying the consequences of the alleged invalidity of the contract, otherwise the case would be discontinued except for those claims that related to issues not covered by Act 1.
11. Act no. LXXVII of 2014 on change of the currency of consumer loan agreements denominated in foreign currency (“Act 3” – see paragraph 19 below), which entered into force on 6 December 2014, provided that all foreign-currency-based loan agreements were to be converted into Hungarian-forint-based loans, using a defined exchange rate.
12. The first applicant lodged complaints with the Constitutional Court, claiming that certain provisions of Act 1 and Act 2 had violated her right to a fair trial. She argued that Parliament had intervened in private-law matters by adopting the impugned legislation and that this contravened the democratic principle of separation of powers. On 23 February 2015 the Constitutional Court rejected the complaint, without an examination on the merits, holding that it lacked relevant reasoning and as such, was not eligible for a decision.
13. The first applicant’s pending action against the banks was suspended under section 16 of Act 1; and on 19 November 2015 she was invited by the court to supplement her statement of claim in accordance with section 37 of Act 2 (see paragraph 9 above). She lodged another constitutional complaint, arguing that the court’s decision and section 37 of Act 2 on which it was based were unconstitutional. On 7 March 2016 the Constitutional Court rejected the complaint, without an examination on the merits, holding that it concerned an interim decision rather than a final judgment and, as such, was not eligible for constitutional review.
2. The second applicant
14. The second applicant lodged a complaint with the Constitutional Court on 29 July 2015, claiming that certain provisions of Act 3 – those in respect of the conversion of foreign currency into Hungarian forints using a defined exchange rate – were unconstitutional. He argued that Parliament had intervened in private-law matters.
15. On 1 December 2015, after due examination of the merits of several hundreds of similar complaints, the Constitutional Court dismissed the second applicant’s complaint. It stated that the aims of Act 3 were to eliminate the continuous risk arising from exchange-rate fluctuations and to ensure that the loan agreements could remain in force between the parties. Those aims were in the interests of both debtors, such as the applicants, and creditors with stakes in the financial institutions. It held that when Parliament – in the light of the critically changed situation which had occurred after the execution of the relevant loan agreements (namely the unexpected and dramatic devaluation of the Hungarian forint vis-à-vis the Swiss franc) – had modified the contractual terms ordering the conversion of the agreements, it had acted in the common interest of society, taking into due consideration the interest of consumers as well. The interference was thus proportionate and necessary in a democratic society. Furthermore, the Constitutional Court held that there was no connection between the challenged provisions of Act 3 and the right to a fair trial, because the challenged provisions (namely the conversion of loans from foreign‑currency-based loans into Hungarian-forint loans at a defined exchange rate) had no impact on the pending actions regarding the alleged invalidity of the loan agreements.
B. Relevant domestic law
16. The relevant provisions of Act 1 read as follows:
Section 3
Resolution of currency spreads
“(1) With the exception of contract terms which have been individually negotiated, any term in a consumer loan agreement where the buying rate stipulated by the financial institution for the granting of the loan ... differs from the selling rate or from the rate ... for the purposes of repayment shall be deemed null and void.
(2) The annulled term referred to in subsection (1) shall be replaced ... by a provision for the application of the official exchange rate of the National Bank of Hungary ...
(5) The financial institution shall settle accounts with the consumer as provided for in another statute.”
Section 4
Resolution of contract terms allowing for the possibility to alter the terms of the contract unilaterally
“(1) As regards consumer loan agreements allowing for the possibility to alter the terms of the contract unilaterally, any term – with the exception of contract terms which have been individually negotiated – that creates a right to increase the interest rate and other costs and fees unilaterally is deemed to be unfair, given that it does not comply with:
a) the principle of clear and intelligible wording, where the term in question is neither plain nor understandable for the consumer;
b) the principle of detailed specification, where the conditions for amending the terms of the contract unilaterally are not specified in detail, that is to say the reasons are not listed, or the reasons supplied are merely indicative;
c) the principle of objectivity, where the conditions for amending the terms of the contract unilaterally lack objectivity, that is to say the party with whom the consumer is entering into a contract is able to cause such conditions to occur, and has the power to incite such conditions and to influence the extent of any change that may serve as grounds for substantiating the amendment;
d) the principle of effectiveness and proportionality, where the circumstances specified in the list of reasons do not effectively or proportionally influence the interest, costs and/or fees;
e) the principle of transparency, where the consumer was not in a position to foresee what additional burdens would be passed on to him, nor the extent and reasons for such changes;
f) the principle of withdrawability, where the consumer does not have the right to withdraw from the contract if it is amended; or
g) the principle of symmetry, where the contract does not allow any change in the conditions that may occur to the consumer’s benefit to take effect for the consumer’s benefit.
(2) The contract term referred to in subsection (1) hereof shall be deemed null and void if the financial institution has failed to lodge a civil action ... or if the court dismisses the action or terminates the proceedings ...”
Section 16
Pending lawsuits
“(1) ... The court shall ex officio suspend, until the measure provided for in other specific legislation has been taken, at the latest until 31 December 2014, proceedings in respect of lawsuits having as their object, in part or in whole, the contract terms referred to in [this Act], or proceedings instituted by a financial institution against a consumer for the enforcement of a claim based, inter alia, on such contract term. The court may decide on the suspension of proceedings without a formal hearing. As regards the suspension of proceedings, the provisions of the Code of Civil Proceedings shall apply mutatis mutandis, with the proviso that the court ruling ordering the suspension of proceedings shall not be amenable to appeal.
(2) ... The court shall also ex officio suspend, until the measure provided for in other specific legislation has been taken, at the latest until 31 December 2015, proceedings in respect of lawsuits having as their object, in part or in whole, the contract terms referred to in [this Act], or proceedings instituted by a financial institution against a consumer for the enforcement of a claim based, inter alia, on such contract term, if the ... contract term ... figures in a ... consumer loan contract ...”
17. The explanatory memorandum attached to Act 1 contains the following passage:
“In order to ensure that those principles are enforced directly, the present Act codifies the principles laid down in the Kúria’s Uniformity Decision. The Act makes the Kúria’s interpretation applicable to everyone. It does not create any new substantive laws or new principles in respect of consumer loan and leasing agreements, but purely codifies the interpretation of the Kúria. This is to ensure that a high number of consumers avoid lengthy and costly litigation that would, in any event, overburden the judicial system.”
18. The relevant provisions of Act 2 read as follows:
Section 37
Exclusion of the rule applying to lawsuits seeking the full or partial annulment of contracts
“(1) In respects of contracts to which the present legislation applies, a party may apply to the court – irrespective of the reason for the alleged invalidity – seeking annulment of the contract or of certain terms of the contract (partial annulment) only if the application also includes details of the claims in respect of the consequences of annulment, such as treating the contracts as if they were valid until the date of the court’s judgment. In the absence thereof or if a request for supplementing the statement of claim is unsuccessful, the claim shall not be decided on the merits. If the party requests the court to establish the consequences of full or partial annulment, he shall also indicate the type of legal consequence to be applied. In respect of the consequences, the party shall apply to the court with a defined request, indicating the requested sums and the settlement between the parties.
(2) Under subsection (1) above ... if the conditions set out in this Act are met, in proceedings instituted for the establishment of the full or partial annulment of a contract that are still pending, the statement of claim shall be rejected without examination on the merits or the proceedings shall be terminated. The court shall not dismiss the statement of claim without examination on the merits or terminate the proceedings if the party has further claims pending, apart from the one seeking full or partial annulment of the contract. In this case, the proceedings shall be continued only in respect of this further claim.”
19. The relevant provisions of Act 3 read as follows:
Section 3
“(1) Consumer loan agreements shall be amended in accordance with this Act.”
Section 10
“The financial institution that is the creditor of the foreign-currency-based consumer loan agreement shall convert ... the full debt arising out of the foreign-currency-based loan agreement – including the interest, fees and costs accrued in foreign currency – into Hungarian forints using the exchange rate that is more favourable to the debtor between
a) the average exchange rate applied by the National Bank of Hungary between 16 June 2014 and 7 November 2014, or
b) the exchange rate applied by the National Bank of Hungary on 7 November 2014.”
COMPLAINTS
20. The first applicant complained under Article 6 § 1 of the Convention that her right to have her claim brought before a court had been violated because Parliament had interfered with the matters of the dispute and had determined how the dispute must be solved. She further claimed that section 37 of Act 2, which required her to amend her statement of claim before the court, had interfered with the legal framework of court proceedings and thereby breached the “established by law” requirement. She also complained that her constitutional complaint had been rejected without an examination on the merits.
21. The second applicant complained under Article 6 § 1 of the Convention that his right to bring his claim before a court had been violated. He argued that Parliament had interfered with his civil rights and obligations by introducing legislation providing that currency fluctuations that had occurred during the period between the conclusion of the loan agreement and the date of the statutory conversion of the loan was to be borne by him, whereas this matter should have been decided by an independent and impartial tribunal.
THE LAW
22. In view of the similarity between the cases in terms of the facts and the substantive issues raised by the applicants, the Court decides to order their joinder (Rule 42 § 1 of the Rules of Court).
23. Both applicants complained that the legislature had interfered with their civil rights and obligations because it had enacted legislation determining how their disputes were to be resolved. They argued that Parliament did not qualify as a tribunal because it did not have a judicial function, was not independent of the legislative and executive authorities, certain procedural safeguards, such as public hearings, were not guaranteed in its proceedings, and its legislative actions were not amenable to appeal.
24. The applicants relied on Article 6 § 1 of the Convention, which, in so far as relevant, reads as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by an independent and impartial tribunal established by law. ...”
25. The Court notes that the impugned legislation, that is to say, Acts 1, 2 and 3, entered into force on 19 June 2014, 1 November 2014 and 6 December 2014, respectively. However, the first applicant’s complaint which concerned Acts 1 and 2 was introduced only on 22 May 2015 and supplemented on 4 August 2016 – that is, more than six months after the entries into force of those pieces of legislation. It is true that the first applicant’s constitutional complaints were declared inadmissible by the Constitutional Court on later dates, a fact potentially influencing the running of the six-month time-limit were those complaints to qualify as effective remedies. However, the Court considers that this issue does not need to be examined in the circumstances, because the application is in any event inadmissible for the following reasons.
26. The Court has already had occasion to rule on allegations of intervention by the State, through the legislature, in order to influence the outcome of a court case. This was the situation that obtained, among others, in Stran Greek Refineries and Stratis Andreadis v. Greece (9 December 1994, Series A no. 301-B) and in Zielinski and Pradal and Gonzalez and Others v. France ([GC] nos. 24846/94 and 34165/96 to 34173/96, ECHR 1999-VII). On this subject, the Court reaffirms that, while in principle the legislature is not precluded from adopting new retrospective provisions to regulate rights arising under existing laws, the principle of the rule of law and the notion of fair trial enshrined in Article 6 preclude any interference by the legislature with the administration of justice designed to influence the judicial determination of a dispute, save on compelling grounds of the general interest (see Stran Greek Refineries and Stratis Andreadis, cited above, § 49, and Zielinski and Pradal and Gonzalez and Others, cited above, § 57). Any reasons adduced to justify such measures should be treated with the greatest possible degree of circumspection. Financial considerations cannot by themselves warrant the legislature substituting itself for the courts in order to settle disputes (see Azienda Agricola Silverfunghi S.a.s. and Others v. Italy, nos. 48357/07 and 3 others, § 76, 24 June 2014 and the authorities cited therein).
27. In Stran Greek Refineries and Stratis Andreadis, two essential features led the Court to conclude that there had been an infringement of the right to a fair hearing: firstly, the Greek legislature’s intervention in the case had taken place at a time when judicial proceedings in which the State was a party were pending; secondly, the fact that, after the parties had received the opinion of the judge-rapporteur recommending the dismissal of the State’s appeal, the Court of Cassation had decided to adjourn the hearing on the ground that a draft law concerning the case was before Parliament (ibid., § 47). In Zielinski and Pradal and Gonzalez and Others, where also a violation of Article 6 § 1 of the Convention was found, the Court emphasised that the passing of legislation with retrospective effect had had the effect of endorsing the State’s position in the proceedings that had been brought against it and which were still pending in the ordinary courts (ibid., § 58; see also, more recently and in the same vein, Azienda Agricola Silverfunghi S.a.s. and Others, cited above, §§ 77-88, where the legislative intervention had the effect of definitely modifying the outcome of a pending litigation, endorsing the State position to the applicant companies’ detriment, and where the Court emphasised that even assuming that the new law was interpretative in nature and had reinforced the original intention of the legislator, that fact, in itself could not justify an intervention with retroactive effect).
28. However, there are significant differences between the present applications and those cases. A common feature of the cases previously examined by the Court lies in the fact that the State, which had been a party to the underlying court proceedings, was intervening through legislation in order to influence the outcome of pending judicial proceedings, to prevent proceedings being opened, or to render void final and enforceable decisions which recognised personal rights to receive payment. In the instant case, however, the State was not a party to the proceedings concerned. Moreover, as indicated in the explanatory memorandum attached to Act 1 (see paragraph 17 above), the sole purpose of the impugned legislation was to ensure that the principles laid down in the Kúria’s Civil Law Uniformity Decision no. 2/2014 (see paragraph 7 above) were enforced directly, in respect of not only pending litigations but also non-litigated claims. The Court notes that the Uniformity Decision gave guidance on resolving the issues of foreign-currency-based consumer loan agreements. Therefore, it can be said that in the circumstances of the present cases the applicants could have foreseen a reaction by Parliament (see, mutatis mutandis, National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, 23 October 1997, § 112, Reports of Judgments and Decisions 1997-VII, and OGIS‑Institut Stanislas, OGEC Saint-Pie X and Blanche de Castille and Others v. France, nos. 42219/98 and 54563/00, § 72, 27 May 2004; see also, a contrario, Azienda Agricola Silverfunghi S.a.s. and Others, cited above, § 84). In any event, there is no reason for the Court to assume that such guidance would not have had to be followed by the domestic courts in any case, even without the enactment of the new legislation.
29. Consequently, the first applicant’s action would, in all likelihood, have had the same outcome, if only after much more time-consuming court proceedings. The rationale of the impugned legislation was to ensure that all claims relating to the same subject matter could be resolved in a prompt and comprehensive manner, avoiding any inconsistency in case-law and also the overburdening of the judicial system (compare Gorraiz Lizarraga and Others v. Spain, no. 62543/00, §§ 62-75, ECHR 2004-III).
30. Furthermore, the Court is of the opinion that the impugned provision of Act 2, namely that if the claimant wished his or her lawsuit to be continued before the court, he or she needed to amend the statement of claim by providing details of the consequences of annulling the contract, does not have any bearing on the “tribunal established by law” requirement. The Court reiterates that the right of effective access to court supposes that there is a “coherent system” governing recourse to the courts that is sufficiently certain in its requirements for litigants to have “a clear, practical and effective opportunity” to go to court (see De Geouffre de la Pradelle v. France, 16 December 1992, § 34, Series A no. 253-B). The obligation for a claimant to complete the claim with itemised and quantified elements cannot be considered excessively burdensome, nor did it eliminate the “coherent system” governing recourse to the courts or prevent claimants from exercising their right to access to a court. The Court is satisfied that the first applicant had, notwithstanding the new law, “a clear, practical and effective opportunity” to have the examination of her lawsuit continued after submission of the requested information. Lastly, no appearance of undue influence on the judicial determination of the dispute can be discerned in the impugned provision of Act 2.
31. As regards the second applicant’s complaint pertaining to Act 3, the Court notes that, by ordering the conversion of foreign-currency-based consumer loans to Hungarian forints, this piece of legislation went beyond what the Kúria’s uniformity decision prescribed, the latter being concerned primarily with eliminating unfair clauses from the consumer loan agreements in question. For its part, Act 3 was designed to exclude the currency exchange risk from running contracts. Given the context as outlined above, the Court is satisfied that its enactment was not unreasonable and therefore not unforeseeable. The Court notes that the Kúria examined the validity of the contractual provision which makes the risk of currency fluctuations incumbent on the debtor in exchange for the favourable interest rates obtained and declared it valid, unless the financial institution had failed to provide full information about such risk (see paragraph 7 above). The question whether the provided information had been full and comprehensive or, to the contrary, lacked the crucial elements, thereby causing the invalidity of the contract, could have been examined in a separate set of proceedings, had the second applicant instituted them. For the Court, there is no indication that the second applicant’s right to a court has been impaired or that the handling of the disputes by the domestic judiciary was otherwise unfair.
32. Having regard to all the circumstances, as well as to the fact that the interference caused by Acts 1, 2 and 3 was of a much less drastic nature than the interference which led it to find breaches of Article 6 § 1 in the cases of Stran Greek Refineries and Stratis Andreadis, Zielinski and Pradal and Gonzalez and Others and Azienda Agricola Silverfunghi S.a.s. and Others, all cited above (see, mutatis mutandis, National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society, cited above, § 112, and OGIS-Institut Stanislas, OGEC Saint-Pie X and Blanche de Castille and Others, cited above, § 71), the Court finds that the impugned legislation and its effect on the applicants’ civil rights and obligations do not disclose any appearance of violation of Article 6 § 1 of the Convention.
33. It follows that the applications are manifestly ill-founded within the meaning of Article 35 § 3 (a) and must be rejected, pursuant to Article 35 § 4 of the Convention.
For these reasons, the Court, unanimously
Decides to join the applications;
Declares the applications inadmissible.
Done in English and notified in writing on 25 January 2018.
Marialena TsirliGanna Yudkivska
RegistrarPresident
Full & Egal Universal Law Academy