The decision was issued on the grounds that in 2007 and 2008, Romanian banks concluded loan agreements in Swiss francs to acquire real estate, refinance other loans or meet personal needs.
Under the loan agreements, the borrowers were obliged to repay the monthly tranches of the loan in Swiss francs and accepted to take the risk of any fluctuations in the exchange rate of the Romanian leu against the Swiss franc.
Subsequently, the exchange rate changed significantly at the expense of the borrowers. The latter appealed to the Romanian courts asking them to take the view that the clause in which the loan had to be repaid in Swiss francs without taking into account the damage that borrowers might incur as a result of foreign exchange risk constitutes an unfair term that does not bind them, as provided for in an EU Directive.
The borrowers point out, inter alia, that when the contracts were concluded, the bank presented its product in a discriminatory manner, exaggerating the benefits borrowers could derive from it, without however highlighting the potential risks and the likelihood of going out their. According to the borrowers, the clause at issue must, in the light of the Bank's practice, be considered abusive.
In this context, the Court of Appeal of Oradea (Oradea Court of Appeal, Romania) has referred a question to the European Court of Justice on the extent of the obligation of banks to inform their clients of foreign exchange risk on foreign currency loans.
In today's judgment, the European Court finds that the clause at issue is part of the main provision of the loan agreement, so that its abusive nature can only be examined in the light of the directive if it has not been formulated in a clear and comprehensible manner.
According to the European Court of Justice, this issue must be examined by the Romanian court in the light of all the relevant factual elements, including advertising and information provided by the lender in the negotiation of a loan agreement.
In particular, the European Court of Justice states in its judgment today that "it is for the national court to investigate whether the consumer has been informed of all the facts which could affect the extent of the undertaking he has undertaken and which enable him to calculate the total cost of his loan. ".
In this context, the European Court of Justice clarifies that financial institutions must provide borrowers with sufficient information to enable them to make prudent and informed decisions.
This information should therefore relate not only to the possibility of a revaluation or depreciation of the currency at which the loan was concluded but also to the effect on the loan installments of the fluctuations in the exchange rates and the appreciation of the currency at which the loan was concluded.
Consequently, the European Court of Justice concludes that "on the one hand, the borrower must be clearly informed that, by concluding a loan agreement in a foreign currency, he is exposed to a certain foreign exchange risk which he may have financial difficulty in dealing with in the event of a devaluation of the currency in which he receives his income .
On the other hand, the bank should report potential exchange rate fluctuations and the risks involved in concluding a loan in foreign currency, especially if the borrower does not receive its income in that foreign currency. "
Finally, the European Court of Justice points out that if the bank has not fulfilled its obligations and therefore the unfairness of the clause at issue can be considered, it is for the national court to assess, on the one hand, the possible non-compliance with the requirement good faith and, on the other, the existence of a potential imbalance between the parties.
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