OPINION OF ADVOCATE GENERAL
HOGAN
delivered on 15 May 2019 (1)
Case C‑621/17
Gyula Kiss,
CIB Bank Zrt.
v
Emil Kiss,
Gyuláné Kiss
(Request for a preliminary ruling from the Kúria (Supreme Court, Hungary)
(Reference for a preliminary ruling — Consumer protection — Unfair terms — Council Directive 93/13/EEC — Article 4(2) — Requirement for terms related to the definition of the main subject‐matter of the contract to be drafted in plain and intelligible language — Article 5 — Requirement for contract to be drafted in plain and intelligible language)
1. The reference for a preliminary ruling concerns the interpretation of Articles 3(1), 4(2) and 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29) (‘the 1993 Directive’). With this reference the Court is once again obliged to consider the operation of the 1993 Directive in the context of loan agreements supplied by credit institutions.
2. This particular request was made in the context of a dispute between Mr Gyula Kiss, Mr Emil Kiss, Ms Gyuláné Kiss and CIB Bank Zrt. (‘the Bank’) concerning a request to establish the alleged unfairness of certain terms contained in a foreign currency loan agreement. It is against this background that the referring court asks in particular if the requirements laid down in Articles 4(2) and 5 of the 1993 Directive for certain terms to be drafted in plain and intelligible language should be interpreted as meaning that each price clause needs to mention the specific services provided in return. Before considering these issues it is, however, first necessary to set out the relevant legal provisions.
I. Legal context
A. EU law
1. The 1993 Directive
3. The 12th, 13th, 16th, 19th and 20th recitals of the 1993 Directive stipulate:
‘Whereas, however, as they now stand, national laws allow only partial harmonisation to be envisaged; whereas, in particular, only contractual terms which have not been individually negotiated are covered by this Directive; whereas Member States should have the option, with due regard for the Treaty, to afford consumers a higher level of protection through national provisions that are more stringent than those of this Directive;
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 and the principles or provisions of international conventions to which the Member States or the Community are party; 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;
…
Whereas the assessment, according to the general criteria chosen, of the unfair character of terms, in particular in sale or supply activities of a public nature providing collective services which take account of solidarity among users, must be supplemented by a means of making an overall evaluation of the different interests involved; whereas this constitutes the requirement of good faith; whereas, in making an assessment of good faith, particular regard shall be had to the strength of the bargaining positions of the parties, whether the consumer had an inducement to agree to the term and whether the goods or services were sold or supplied to the special order of the consumer; whereas the requirement of good faith may be satisfied by the seller or supplier where he deals fairly and equitably with the other party whose legitimate interests he has to take into account;
…
Whereas, for the purposes of this Directive, assessment of unfair character shall not be made of terms which describe the main subject matter of the contract nor the quality/price ratio of the goods or services supplied; whereas the main subject matter of the contract and the price/quality ratio may nevertheless be taken into account in assessing the fairness of other terms; whereas it follows, inter alia, that in insurance contracts, the terms which clearly define or circumscribe the insured risk and the insurer’s liability shall not be subject to such assessment since these restrictions are taken into account in calculating the premium paid by the consumer;
Whereas contracts should be drafted in plain, intelligible language, the consumer should actually be given an opportunity to examine all the terms and, if in doubt, the interpretation most favourable to the consumer should prevail’.
4. Article 3(1) and (2) of the 1993 Directive states:
‘1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.
2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.
The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract.
Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.’
5. Article 4(2) of the 1993 Directive reads as follows:
‘Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplie[d] in exchange, on the other, in so far as these terms are in plain intelligible language.’
6. Article 5 of the 1993 Directive provides:
‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. This rule on interpretation shall not apply in the context of the procedures laid down in Article 7 (2).’
7. In the words of Article 8 of the 1993 Directive:
‘Member States may adopt or retain the most stringent provisions compatible with the Treaty in the area covered by this Directive, to ensure a maximum degree of protection for the consumer.’
2. Directive 2003/55
8. Article 3(3) of Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC (OJ 2003 L 176, p. 57) reads as follows:
‘… Member States … shall ensure high levels of consumer protection, particularly with respect to transparency regarding general contractual terms and conditions, general information and dispute settlement mechanisms.’
3. Directive 2005/29
9. Article 6(1)(d) of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) (OJ 2005 L 149, p. 22), mentions:
‘1. A commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise:
…
(d) the price or the manner in which the price is calculated, or the existence of a specific price advantage;
…’
4. Directive 2014/17
10. Recitals 4 and 30 of Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (OJ 2014 L 60, p. 34) provides:
‘(4) A series of problems have been identified in mortgage markets within the Union relating to irresponsible lending and borrowing and the potential scope for irresponsible behaviour by market participants including credit intermediaries and non-credit institutions. Some problems concerned credits denominated in a foreign currency which consumers had taken out in that currency in order to take advantage of the borrowing rate offered but without having adequate information about or understanding of the exchange rate risk involved. Those problems are driven by market and regulatory failures as well as other factors such as the general economic climate and low levels of financial literacy. Other problems include ineffective, inconsistent, or non-existent regimes for credit intermediaries and non-credit institutions providing credit for residential immovable property. The problems identified have potentially significant macroeconomic spill-over effects, can lead to consumer detriment, act as economic or legal barriers to cross-border activity and create an unlevel playing field between actors.
…
(30) Due to the significant risks attached to borrowing in a foreign currency, it is necessary to provide for measures to ensure that consumers are aware of the risk they are taking on and that the consumer has the possibility to limit their exposure to exchange rate risk during the lifetime of the credit. The risk could be limited either through giving the consumer the right to convert the currency of the credit, or through other arrangements such as caps or, where they are sufficient to limit the exchange rate risk, warnings.’
11. According to Article 23 of Directive 2014/17, headed ‘Foreign currency loans’:
‘1. Member States shall ensure that, where a credit agreement relates to a foreign currency loan, an appropriate regulatory framework is in place at the time the credit agreement is concluded to at least ensure that:
(a) the consumer has a right to convert the credit agreement into an alternative currency under specified conditions; or
(b) there are other arrangements in place to limit the exchange rate risk to which the consumer is exposed under the credit agreement.
2. The alternative currency referred to in point (a) of paragraph 1 shall be either:
(a) the currency in which the consumer primarily receives income or holds assets from which the credit is to be repaid, as indicated at the time the most recent creditworthiness assessment in relation to the credit agreement was made; or
(b) the currency of the Member State in which the consumer either was resident at the time the credit agreement was concluded or is currently resident.
Member States may specify whether both of the choices referred to in points (a) and (b) of the first subparagraph are available to the consumer or only one of them or may allow creditors to specify whether both of the choices referred to in points (a) and (b) of the first subparagraph are available to the consumer or only one of them.
3. Where a consumer has a right to convert the credit agreement into an alternative currency in accordance with point (a) of paragraph 1, the Member States shall ensure that the exchange rate at which the conversion is carried out is the market exchange rate applicable on the day of application for conversion unless otherwise specified in the credit agreement.
4. Member States shall ensure that where a consumer has a foreign currency loan, the creditor warns the consumer on a regular basis on paper or on another durable medium at least where the value of the total amount payable by the consumer which remains outstanding or of the regular instalments varies by more than 20% from what it would be if the exchange rate between the currency of the credit agreement and the currency of the Member State applicable at the time of the conclusion of the credit agreement were applied. The warning shall inform the consumer of a rise in the total amount payable by the consumer, set out where applicable the right to convert to an alternative currency and the conditions for doing so and explain any other applicable mechanism for limiting the exchange rate risk to which the consumer is exposed.
5. Member States may further regulate foreign currency loans provided that such regulation is not applied with retrospective effect.
6. The arrangements applicable under this Article shall be disclosed to the consumer in the ESIS and in the credit agreement. Where there is no provision in the credit agreement to limit the exchange rate risk to which the consumer is exposed to a fluctuation in the exchange rate of less than 20%, the ESIS shall include an illustrative example of the impact of a 20% fluctuation in the exchange rate.’
B. The national legislation
12. Article 209/B of a Polgári Törvénykönyvről szóló 1959. évi IV. Törvény (Act No IV of 1959 establishing the Civil Code) (the ‘Hungarian Civil Code’), in the version in force at the time of the facts of the case in the main proceedings, stated:
‘(1) A general contractual condition or a clause in a contract concluded with a consumer is unfair where, in breach of the requirements of good faith, it unilaterally and without reason determines, to the detriment of one of the parties, the rights and obligations of the parties arising from the contract;
(2) Adverse rights and obligations shall be deemed to be determined unilaterally and without cause:
(a) if they deviate significantly from an essential provision applicable to the contract; or
(b) if they are incompatible with the object or purpose of the contract.
(3) In order to assess the unfair nature of the term, account shall be taken of all the circumstances surrounding the conclusion of the contract which led to it, as well as the nature of the services provided for and the relationship between the term concerned, on the one hand, and the other provisions of the contract or other contracts, on the other hand.
(4) Special provisions may designate terms considered unfair in a contract concluded with a consumer or to be considered unfair until proven otherwise.
(5) The provisions relating to unfair contract terms shall not apply to the provisions defining the service and its counterpart, provided that their wording is drafted in a clear and comprehensible manner for both parties.
(6) A contractual term may not be considered unfair if it is imposed by or under a legislative or regulatory provision.’
13. Article 523 of the Hungarian Civil Code provides:
‘(1) Under a loan agreement, the credit institution or any other lender is required to make available to the borrower the agreed amount; the borrower is required to repay the amount in accordance with the agreement.
In the absence of provisions to the contrary, if the lender is a credit institution, the debtor is required to pay interest (bank loan).’
II. Facts
14. On 16 September 2005, Mr Gyula Kiss and two other persons concluded a loan contract of EUR 16 516 for an unspecified purpose with the legal predecessor of the Bank at an annual interest rate of 5.4% over a period of 20 years. In addition to this interest rate, the debtors were required to pay management charges of 2.4% per annum and the sum of HUF 40 000 (approximately EUR 125) as a disbursement commission. The Annual Percentage Rate of Charge (APRC) stipulated in the contract was 8.47%.
15. Mr Gyula Kiss has brought an action for a declaration that the clauses laying down the amount of the management charges and the disbursement commission are unfair on the grounds that the services offered in return were not specified by the Bank.
16. The Bank did not dispute the fact that the services provided in return for those costs were not specifically mentioned. It claimed, however, that the disbursement commission corresponded to the cost of the formalities that it had to carry out before the contract was concluded, whereas the management charges covered the formalities that needed to be fulfilled after the contract was concluded.
17. The court of first instance gave judgment declaring that the clause laying down the amount of the disbursement commission is unfair and dismissing the claim seeking a declaration of invalidity of the clause related to the management charges.
18. The court of second instance, which was seised of the case following appeals by Mr Gyula Kiss and the Bank, confirmed the judgment at first instance. It stated that the clauses relating to management charges were drafted in a clear and understandable manner, since the amount to be paid by the borrower in this respect was defined and the nature of the counterpart well known. These would include services such as processing, managing, recording and collecting the loan. As regards the disbursement commission, the court of second instance held that it could not be determined which service was covered by that commission. In the light of those considerations that charge was held to be unfair.
19. Both Mr Gyula Kiss and the Bank lodged appeals in cassation with the Kúria (Supreme Court, Hungary). Mr Gyula Kiss argues that the contract did not clearly stipulate the service for which he must pay those management charges. He claims that the Bank failed to establish that the processing and management of the loan gave rise to such costs, which were not already covered by the interest on the borrowed capital.
20. In its appeal in cassation, the Bank requests that judgment be given dismissing the action in relation to the disbursement commission. The Bank argues, inter alia, that at the time the contract was concluded, no legal provision obliged it to stipulate the specific services carried out in return for that commission.
III. The request for a preliminary ruling and the procedure before the court
21. The national court considers that the Court’s existing case-law does not allow it to determine whether the two clauses are drafted in a clear and comprehensible manner and, if so, to assess whether they are unfair, and states that the case-law of the Hungarian courts is not uniform on this issue. In a majority of cases, those national courts have held that the conclusion of a loan contract only requires the total cost of the loan to be clear, without needing to specify all the services in return and, furthermore, that this condition is fulfilled if the APRC is mentioned, as the latter is calculated on the basis of both interest and fees due, making it possible for the borrower to compare the different loan offers. However, a minority of those courts considered that services provided in return for each charge should be detailed and specified. Indeed, it would be useful for the consumer not only to be able to compare the applicable APRC, but also the services offered in return. Moreover, the artificial unbundling of interests into two components would not be legitimate and, according to those courts, the basis for management charges is different from that used for interest rate calculation.
22. According to the referring court, Article 3(1) of the 1993 Directive could be interpreted as meaning that the absence of details of the services provided in return for a fee or a commission constitutes a breach of the requirement of good faith referred to in that article. The question, however, remains if it is still necessary to assess whether there is an imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. If this assessment is still necessary, the Kúria (Supreme Court) indicates that it has doubts as to whether it is appropriate to examine only the services and their counterparts relating to the said clauses, or whether all the clauses of the contract should be taken into account to assess all the advantages and disadvantages resulting from the contract.
23. In those circumstances, the Kúria (Supreme Court), has decided to stay the proceedings and refer the following questions for a preliminary ruling:
‘(1) Must the requirement that contracts be drafted in plain, intelligible language, laid down in Articles 4(2) and 5 of [the 1993 Directive], be interpreted as meaning that, in a loan contract concluded with a consumer, that requirement is satisfied by a contractual term not individually negotiated that specifies the exact amount of the charges, commissions and other costs (collectively “charges”) to be borne by the consumer, their method of calculation and the time when they have to be paid but does not, however, stipulate in return what specific services are covered by those charges, or must that requirement instead be interpreted as meaning that the contract also has to indicate what those specific services are? In the latter case, is it sufficient that the content of the service provided may be inferred from the description of the charge?
(2) Must Article 3(1) of the [1993 Directive] be interpreted as meaning that the contractual term used in the instant case in relation to charges, when it cannot be unequivocally determined, on the basis of the contract, what specific services are provided in return for those charges, causes, contrary to the requirement of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer?’
IV. Analysis
24. Perhaps the first thing to observe is that the purpose of the 1993 Directive is not to harmonise contract law in general or even the issue of consent in particular. Rather, the purpose of the directive is instead principally to prohibit clauses which bring about, contrary to the requirements of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. It is important to be clear about this, because significant in the field of consumer protection as the 1993 Directive certainly is, it does not seek to address every possible type of commercial or consumer malpractice.
25. In particular, insofar as there are other directives covering consumer law, it is important for the sake of consistency to ensure that the Court maintains a rigorous approach concerning the delimitation of the scope of application of each of these legislative provisions.
A. On the first question
26. By its first question, the referring court asks in essence whether Articles 4(2) and 5 of the 1993 Directive must be interpreted as meaning that, in a loan contract concluded with a consumer, the requirement that terms should be drafted in plain and intelligible language is satisfied by a clause not individually negotiated that specifies the exact amount of the charges to be borne by the consumer, their method of calculation and the time when they have to be paid, but does not specify in return the actual services covered by those charges.
27. Although both Article 4(2) and Article 5 of the 1993 Directive stipulate that certain terms must be drafted in plain and intelligible language, the context in which reference is made to this requirement is nonetheless quite different. Article 4(2) provides, in essence, that the fairness of the terms that define the essence of the contract — such as price — cannot be examined, unless such terms are not drafted in clear and intelligible language. Article 5 on the other hand provides that all contractual terms should meet this requirement of intelligibility and that, when they do not, namely, ‘where there is doubt about the meaning of a term, [that] the interpretation most favourable to the consumer shall prevail’. (2) I propose, therefore, to examine the first question raised from the perspective successively of Article 4(2) and of Article 5 of the 1993 Directive.
1. Article 4(2)
28. According to Article 4(2) of the 1993 Directive, the ‘assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, against the services or goods supplie[d] in exchange, on the other hand, in so far as these terms are in plain intelligible language’. Since Article 4(2) establishes two exceptions to the mechanism for reviewing the substance of unfair terms put in place by that directive, this exception must be strictly interpreted. (3) In effect, therefore, Article 4(2) states that price clauses fall outside the scope of the directive, provided, however, that these terms are expressed in plain and intelligible language. As I hope to demonstrate, clauses providing for management charges such as the one at issue in the main proceeding fall squarely within the scope of the exception provided for in Article 4(2), so that the fairness of such charges cannot be considered unless this clause is not expressed in plain and intelligible language.
29. The first exception laid down in Article 4(2) refers to terms related to the ‘main subject matter of the contract’. According to the Court’s case-law, contractual terms falling within the notion of the ‘main subject matter of the contract’, within the meaning of Article 4(2) of the 1993 Directive, must be understood as being those that lay down the essential obligations of the contract and, as such, characterise it. (4) By contrast, terms ancillary to those that define the very essence of the contractual relationship cannot fall within the notion of the ‘main subject matter of the contract’.
30. The second exception relates to ‘the adequacy of the price and remuneration, on the one hand, against the services or goods supplied, on the other hand’, or, in accordance with the 19th recital of that directive, the terms ‘which describe … the quality/price ratio of the goods or services supplied’. (5) These two situations referred to in Article 4(2) are therefore not equivalent; the first one excludes certain clauses because of their object, while the second exception precludes a court declaring a price clause to be unfair simply because the price mentioned is inappropriate or excessive.
31. I propose to examine the second situation first. Indeed, although Mr Gyula Kiss argued both in the course of his pleadings and at the hearing that the management charges and the disbursement commission are disproportionate to the amount of the loan, it flows from the reference for a preliminary ruling that the issue raised before the referring court is not about the adequacy of the remuneration in respect of the loan supplied or the calculation method used. It rather concerns the particular question of whether the loan agreement should have indicated the ‘specific’ services provided in return for the management charges and the disbursement commission. Therefore, the second exception provided for in Article 4(2) of the 1993 Directive does not appear to be relevant.
32. As regards the first exception, according to the Court’s case-law, the expression ‘main subject matter of the contract’ must be understood as referring to the obligation which, as such, characterises the contract. In the case of a loan, the lender’s principal obligation is to make a certain amount of money available to the borrower. (6)
33. It should be noted, however, that in Matei, the Court did not rule out the possibility that price clauses could fall under the first circumstance mentioned in Article 4(2), but rather decided that this would depend on whether or not the goods or services provided in return were the main subject matter of the contract. (7) Accordingly, clauses, such as the one at issue in the main proceedings, which provide for charges or commission payments are, in my view, in respect only of the price expressed by those clauses, part of the main subject matter of the contract if they are the counterpart of the goods or services primarily provided. These, however, are matters which are ultimately for the national courts to ascertain and verify. (8)
34. In the main proceedings, the parties disagree as to whether, in particular, the management charge has a counterpart.
35. In my view, however, there can be little doubt about it. In so far as this charge aims at covering the administrative cost incurred by the loan granted which, from the information provided by the referring court, appears to be the only service provided for in the contract, such charges must be considered as a part of the price paid in return for that loan.
36. In expressing this view, I have not overlooked the argument advanced by Mr Gyula Kiss, to the effect that such a clause will mean that the bank passes on its operating costs to consumers, including those related to its legal obligations. The fact, however, that consumers are those who pay, directly or indirectly, for the costs borne by a business simply represents economic reality, since it is difficult to see who else could pay for them. In effect, therefore, in advancing this argument Mr Gyula Kiss is seeking to question the proportionality of the bank’s remuneration, which is an issue which, according to Article 4(2), falls outside the scope of application of the test of unfairness laid down in Article 3(1), provided of course that this clause is expressed in clear and intelligible language.
37. It is true that the price specified in that clause is expressed in the form of an interest rate. Yet this cannot alter the conclusion that this clause states one element of the price to be paid in return for the loan which has been granted. Indeed, banks’ remuneration can take the form of a variable or a fixed amount or both. As the Bank pointed out at the hearing, in most cases, the part of the price paid to cover the administrative costs borne by the credit institution is simply included in a unique interest rate. Although, in the present case, the price to be paid has been split into three clauses, this does not take from the fact that each part of the overall price is due in return for the loan.
38. Accordingly, if the reasoning adopted in Matei is followed by this Court, a clause providing for management charges should be considered as being, in principle, excluded from the scope of the 1993 Directive. However, as I will explain at the end of this Opinion, other provisions of EU law could apply in a situation such as that in issue in the main proceedings.
39. In any case, Article 4(2) specifies that, for one of the two exceptions laid down in that provision to apply, the term at issue must be drafted in plain and intelligible language. The question thus arises as to whether the clauses at issue in the present case satisfy this condition.
40. According to the Court’s case-law, this condition reflects the idea that ‘information, before concluding a contract, on the terms of the contract and the consequences of concluding it is of fundamental importance for a consumer. It is on the basis of that information in particular that he decides whether he wishes to be bound by the terms previously drawn up by the seller or supplier’. Therefore, the condition laid down in Article 4(2) cannot be reduced merely to the requirement for the terms at issue to be formally and grammatically intelligible. (9) The question is rather whether the consumer is in a position to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from the contract. (10)
41. In the light of this case-law, I consider that where the contract is relatively long and the price to be paid in return for the different services provided has been split into several clauses with each having a different method of calculation ‐ as the contract at issue in the main proceedings seems to be — then these different clauses need to be grouped together in one place in the contract or, at least, their combined effect needs to be specified. Indeed, the consumer cannot be considered as being in a position to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from the contract if the price to be paid is stated, for example, partly at the beginning of a very long contract, partly, in the middle and, partly at the end of it.
42. Similarly, in cases, as in the main proceedings, where the price to be paid could vary as the latter is indexed to the foreign currency rate of exchange, I consider that the requirement for terms to be drafted in plain, intelligible language can only be regarded as satisfied if the method used to calculate the price is set out clearly and precisely so as to enable the consumer to understand the nature of the risk to which he is exposed.
43. It is true that, in accordance with Directive 2014/17 and Directive 2008/48/EC, (11) a loan agreement must mention the applicable APRC, which is calculated on the basis not only of the applicable interest rates but also of the applicable fees (12) and that this obligation has precisely the objective of ensuring that lenders provide borrowers with clear and comprehensible general information about a credit agreement. (13)
44. I consider, however, that, in view of the intelligibility requirement laid down in Article 4(2), the mention of the APRC cannot take from the fact that, when the price has been split into different clauses, each based on a different method of calculating the said price and all set out in different parts of the contract, the contract terms related to the price cannot be considered to have been drafted in a clear and comprehensible manner. Indeed, I note that the APRC is only illustrative. As mentioned in Article 17(4) of Directive 2014/17, ‘in the case of credit agreements containing clauses allowing variations in the borrowing rate and, where applicable, in the charges contained in the APRC but unquantifiable at the time of calculation, the APRC shall be calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set at the conclusion of the contract’. Furthermore, the APRC does not provide any indication as to how the price is to be paid. On the contrary, it may suggest that the price must be paid in the form of instalments, whereas this may not necessarily be the case.
45. Nevertheless I do not believe that Article 4(2) should be interpreted as requiring that each price clause has to mention specific services or goods provided in return.
46. It is true that in its judgment of 21 March 2013, RWE Vertrieb (C‑92/11, EU:C:2013:180, paragraph 45), the Court mentioned the existence of a requirement of transparency. As, however, in that case the Court used this expression to designate the obligation, in the event of an insufficiently precise term related to the main subject matter of the contract, to provide consumers with the information necessary for them to assess the economic consequences arising from the contract, the use of this expression had no wider consequence. (14) In Matei, however, the Court went one step further and declared that this condition should be interpreted as requiring not only that the consumer should be able to understand what he is facing, but also that he should know the reasons justifying the term at issue. (15)
47. This statement must, I think, nevertheless be understood by reference to the particular circumstances of that case. Indeed, in paragraph 77 of its judgment, the Court noted that ‘the lender proposed to the borrowers to replace the heading of [the] terms with “credit management charge”, without at the same time changing their content’, which raised some legitimate doubts about the existence of a service actually provided in return for this charge.
48. Neither am I persuaded by this pre-existing case-lawthat Article 4(2) should be interpreted as meaning that the suppliers should mention for each price clause the specific services or goods provided in return. I reach that conclusion for the following reasons.
49. First , the 1993 Directive contain s no reference to such a requirement. As I have just explained, the existence of a transparency requirement was usedfor the first time in RWE Vertrieb. In that case, however, the question concerned the interpretation of both the 1993 Directive and Directive 2003/5 5 where Article 3(3) of the latter directive expressly provides for such a requirement.
50. Second , contrary to what is suggested in the wording of the first question referred, there could be no specific services provided in return for each clause. (16) Indeed, a single service may give rise to several price clauses. (17) If the supplier of a loan asks to be paid half in the form of percentage interest and half in the form of a fixed fee, I believe that in principle he should be entitled to do so. (18) To my way of thinking what really matters in such situations is that the consumer has been informed of the existence of the different methods of remuneration chosen and, therefore, that he is able to evaluate the effects produced by the term related to the main subject matter of the contract, not their cause or their raison d’être.
51. Third, I believe that Article 4(2) needs to be read in the light of Article 3(1) of the 1993 Directive. In accordance with that article, only terms that have not been individually negotiated are subject to the test of unfairness laid down in Article 3(1). (19) Accordingly, I believe that the raison d’être of this requirement could be that, in so far as terms concern the main subject matter of the contract, consumers are expected to make enquiries about their content and consent to the contract in consideration of these elements. Even if the consumer did not participate in the elaboration of these terms, and unlike the other terms of an adhesion contract that consumers do not usually read, these terms would not be likely to catch him unawares. The 1993 Directive nevertheless pre-supposes the necessity that the main subject matter of the contract has been clearly stated in plain and intelligible language. Accordingly, as the 20th recital of the 1993 Directive provides, consumers should at least be given an opportunity to examine all the terms of the contract. This is why Article 4(2) requires that the term be drafted in plain and intelligible language. (20) This, however, does not mean that the consumer must understand the specific reason for each clause: it is sufficient that the effects of entering into the contract can reasonably be understood by the average reasonable consumer. (21)
52. Fourth, if Article 4(2) were to be interpreted in such a way that it meant that, in respect of each price clause, sellers were required to indicate the services provided in return, this might mean that suppliers would be dissuaded from detailing the price to be paid for the services provided in order not to have to justify each price clause. Such an interpretation of Article 4(2) would also be overly prescriptive and burdensome. It would also tend to run counter to one of the key objectives of EU consumer law, (22) namely, to ensure that the consumer is in a position to make an informed economic choice before entering into the contract in question.
53. In view of these considerations, I consider that the Court should maintain its traditional case-law whereby the requirement of being drafted in plain and intelligible language laid down in Article 4(2) is to be understood as only requiring that the consumer is in a position to evaluate the economic consequences for him which derive from the contract and not the raison d’être of each term.
54. This does not mean, however, that the service or services provided in consideration for the price clauses should not be capable of being identified. Indeed, national courts shall need to determine what those services are, not because of the requirement of being drafted in plain and intelligible language, but rather due to the scope of application of Article 4(2). Indeed, in accordance with the Court’s judgment in Matei, if more than one service is provided, some primary and others ancillary, the national court will have to ascertain which service(s) or good(s) is or are provided in return for each price clause to determine if it belongs to the ‘main subject matter’ of the contract. (23)
55. The fact, however, that the national courts must carry out such an examination does not mean that the supplier is required to mention which service(s) or good(s) are provided in exchange in respect of each price clause. Where several services are provided it is sufficient that the one offered in return for the price clause may reasonably be inferred from the contents of the contract.
56. It should, of course, be observed that, according to Article 8 of the 1993 Directive, Member States can adopt more stringent conditions than those provided for by the directive itself, on condition that they are designed to afford consumers a higher level of protection. (24) Even if, therefore, this directive does not require that, in order to benefit from the exception provided for in Article 4(2), price clauses must mention the services provided in return, Member States are in principle free to provide for such a requirement in their own national consumer legislation.
2. Article 5
57. Article 5 of the 1993 Directive provides that ‘in the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail’.
58. In this regard, it should first be stressed that the 1993 Directive does not aim to address the issue of the lack of consent as such, and even less does it seek to harmonise contract law: it rather seeks to remedy the imbalances between the rights and obligations of the parties that certain terms may cause.
59. Second, as I explained in my Opinion in Lovasné Tóth, (25) the wording of Article 5 does not expressly state that a clause which was not drafted in plain and intelligible language itself constitutes a separate ground by which to declare a term unfair. Article 5 rather simply provides instead that in the event that a contractual term is not drafted in ‘plain, intelligible language’, then ‘where there is doubt about the meaning of a term’, it is the interpretation which is the most favourable to the consumer that should prevail. It is clear from the 16th recital and from Article 3(1) of the 1993 Directive that there is only one test of what constitutes an unfair contract term, namely, the one provided for in Article 3(1) itself.
60. Accordingly, I believe that as I again pointed out in Lovasné Tóth, Article 5 does not constitute an alternative test of unfairness: it rather simply provides an interpretative rule in order to determine the legal effect produced by such terms. It is only when, even as interpreted by reference to the special interpretative rule contained in Article 5, the contractual term still creates an imbalance to the detriment of the consumer that it might be considered as unfair.
61. In this context, the requirement for a term to be drafted in plain, intelligible language has to be understood as a general statement aimed at introducing the interpretative rule laid down in Article 5. What matters, therefore, is not how the consumer understands a term, but rather whether the latter is objectively ambiguous. For all of these reasons, therefore, I consider that Article 5 should not be interpreted as requiring that, in a loan contract concluded with a consumer, each price clause needs to mention the services provided in return.
62. Even if the Court were to consider that Article 5 lays down a separate test of unfairness, in the light of the case-law referred to above, I believe that the requirement for terms to be drafted in plain, intelligible language must be understood essentially as requiring that the consumer must have been put in a position to understand the economic consequences for him deriving from the contract. Accordingly, I repeat again that the fact that a price clause does not set out what is the specific service provided in return, is not in itself sufficient to declare that term unfair. For this to occur it is necessary that the nature of the services actually provided cannot reasonably be understood or inferred from the entire contract.
63. In view of the above, I propose to answer the first question by saying that neither Article 4(2) nor Article 5 of the 1993 Directive should be interpreted as meaning that in a loan contract concluded with a consumer the requirement for terms to be drafted in plain and intelligible language requires that each price clause mentions the specific services provided in return, provided that the nature of the services actually provided can reasonably be understood or inferred from a consideration of the entire contract as a whole.
B. On the second question
64. By its second question, the referring court asks whether Article 3(1) of the 1993 Directive should be interpreted as meaning, in the case of contractual terms providing for charges and where it cannot be unequivocally determined on the basis of the express wording of the contract alone which specific services are provided in return for those charges, that this is contrary to the requirement of good faith in that they cause a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer.
65. In this regard, it must be recalled that Article 3(1) provides that ‘a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’.
66. As I explained in my Opinion in Lovasné Tóth, I consider that the absence of good faith is not an autonomous condition that must be established in addition to the existence of a significant imbalance in the parties’ rights and obligations. Rather that the existence of such imbalance in itself illustrates the absence of good faith within the meaning of the 1993 Directive. It follows, therefore, that the requirement of good faith does not require the demonstration of intent or a wilful wrong.
67. Accordingly, since the test of unfairness provided for in that article is based on the legal effects produced by the term at issue, namely that the latter creates a significant imbalance in the parties’ rights and obligations, the fact that that contractual term does not mention the specific services provided in return does not appear, at first sight, as likely, in itself, to lead to a finding of unfairness within the meaning of Article 3(1).
68. If, however, the national courts cannot assess the relationship between the price paid and the service actually provided, they can nonetheless declare a clause to be unfair for the purposes of Article 3(1) for reasons other than the price that such clause provides. (26) An example here might be where the price at issue is a penalty provision, if such penalty does not also apply when it is the supplier which is in default. In addition the Court held that dispute about whether the lender does not provide any actual service in consideration for a charge does not concern the adequacy of the price paid and the service actually provided. (27) It may accordingly be necessary for national courts to determine in certain circumstances which service is provided in return for a particular clause. From this perspective, it is necessary, therefore, where several services are provided, that the content of the service or of the services provided in return for a price clause may be at least inferred from the contract.
69. With regard to the object of the second question asked, I propose, therefore, to answer it by saying that Article 3(1) of the 1993 Directive is to be interpreted as not meaning that the fact that a contractual term providing for charges does not mention the specific services provided in return creates, contrary to the requirement of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer. If, however, it is not possible to determine the services provided in return for the consideration supplied, then such a term may be declared to be unfair for the purposes of Article 3(1).
C. Final observations
70. Finally, I would like to make two observations about the contract at issue in the main proceedings.
71. First, in view of the presentation of the case made by Mr Gyula Kiss at the hearing, the facts of which are for the referring court to verify, it seems that the reason why the Bank divided the price to be paid into three separate price clauses, taking the form, respectively, of principal interest, management charges and a disbursement commission, is that it allowed the Bank to minimise the principal interest requested and, therefore, to present what ostensibly appeared to be a more appealing loan offer. Conduct of this kind may well fall to be considered by reference to Article 6(1)(d) of Directive 2005/29. This provides indeed that a commercial practice shall be regarded as misleading if it deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to the price or the manner in which the price is calculated, and causes or is likely to cause him to take a transactional decision that he would not otherwise have taken.
72. Secondly, the national court may wish to consider whether price clauses, such as those at issue in the main proceedings, should be declared to be unfair, not because of the absence of mention of the specific service provided in return or of the price asked but rather because of the transfer of currency risk from the Bank — which probably needs to refinance itself in Euro — to the consumer. Indeed, that transfer represents, in my view, an issue that, depending on the circumstances, could be considered as not being the main subject matter of the contract and, therefore, could be assessed separately from the adequacy of that price as against the service provided. (28)
73. It is true that, since Article 23 of Directive 2014/17 expressly provides for the possibility of offering to consumers loans relating to residential immovable property in foreign currency, such a clause cannot as such be declared unfair on this ground alone. Although that directive is not applicable, it nevertheless highlights the fact that terms causing an unlimited and irreversible transfer of foreign exchange risk, without any possibility for the consumer to limit his exposure to that risk, might be considered as creating a significant imbalance between the rights and obligations of the parties which operates to the detriment of the consumer.
V. Conclusion
74. In view of the above considerations, I propose that the Court should answer the two questions referred by the Kúria (Supreme Court, Hungary) as follows:
(1) Neither Article 4(2) nor Article 5 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts should be interpreted as meaning that, in a loan contract concluded with a consumer, the requirement that terms should be drafted in plain and intelligible language requires that each price clause mentions the specific services provided in return. In such circumstances, however, it is necessary that the nature of services so provided can be gleaned or inferred from the terms of the contract itself.
(2) Article 3(1) Directive 93/13 does not mean that the fact that a price clause does not mention the specific services provided in return creates, contrary to the requirement of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer. If, however, it is not possible to determine the services provided in return for the consideration supplied, then such a term may be declared to be unfair.