Contents
Judgment of the Court (Tenth Chamber)30 April 2025note(Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Unfair terms in consumer contracts — Leasing agreement denominated in a foreign currency — Articles 6 and 7 — Unfair term placing the exchange rate risk on the consumer — Effects of a finding that the term is unfair — Invalidity of the contract — Effects of the annulment of the contract in its entirety)In Case C‑630/23,REQUEST for a preliminary ruling under Article 267 TFEU from the Kúria (Supreme Court, Hungary), made by decision of 26 September 2023, received at the Court on 17 October 2023, in the proceedingsZH,KNvAxFina Hungary Zrt.,THE COURT (Tenth Chamber),composed of D. Gratsias, President of the Chamber, E. Regan and B. Smulders (Rapporteur), Judges,Advocate General: D. Spielmann,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– ZH and KN, by L. Marczingós, ügyvéd,– AxFina Hungary Zrt., by G. Stanka, ügyvéd,– the Hungarian Government, by M.Z. Fehér and K. Szíjjártó, acting as Agents,– the European Commission, by P. Kienapfel and Zs. Teleki, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following
Judgment
1This request for a preliminary ruling concerns the interpretation of Article 1(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).
2The request has been made in proceedings between ZH and KN (together, ‘the two consumers’) and AxFina Hungary Zrt. (‘AxFina’) concerning the legal consequences of the removal of a term relating to exchange rate risk in a leasing agreement denominated in a foreign currency made between AxFina and ZH (‘the term relating to exchange rate risk’).
Legal context
European Union law
3The twenty-first and twenty-fourth recitals of Directive 93/13 state:‘Whereas Member States should ensure that unfair terms are not used in contracts concluded with consumers by a seller or supplier and that if, nevertheless, such terms are so used, they will not bind the consumer, and the contract will continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair provisions;…Whereas the courts or administrative authorities of the Member States must have at their disposal adequate and effective means of preventing the continued application of unfair terms in consumer contracts’.
4As provided in Article 1(2) of that directive:‘The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the [European] Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive.’
5Article 6(1) of that directive provides:‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’
6Article 7(1) of that directive is worded as follows:‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’
Hungarian law
The previous Civil Code
7Paragraph 209/A of the Polgári Törvénykönyvről szóló 1959. évi IV. törvény (Law No IV of 1959 establishing the Civil Code), in the version applicable to the dispute in the main proceedings (‘the previous Civil Code’), provides that, in consumer contracts, unfair terms which are included as standard contract terms, or which the seller or supplier has pre-formulated unilaterally and without individual negotiation, are to be invalid. Under that Paragraph 209/A, invalidity may be invoked only in favour of the consumer.
8Under Paragraph 237(1) of the previous Civil Code, if the contract is invalid, the situation prevailing prior to the conclusion of that contract is to be restored.
9Under Paragraph 237(2) of that code:‘If it is impossible to restore the situation prevailing prior to the conclusion of the invalid contract, the court may declare the contract applicable until it has given a ruling. The contract may be declared valid if the cause of invalidity can be eliminated, in particular by eliminating the disproportionate advantage where there is a lack of proportionality between the performance required of each of the parties and in usurious contracts. In such cases, the restitution of any performance outstanding shall be ordered, if need be without consideration.’
10It is apparent from Paragraph 361(1) of that code that any person who obtains an economic advantage at the expense of another is to be obliged to restore that advantage.
11Under Paragraph 363 of that code, ‘the provisions on possession without title … shall apply to the restoration of economic advantages related to financial gains; the person obliged to restore the advantage shall be entitled to demand reimbursement of expenses necessarily incurred in relation thereto’.
The DH1 Law
12Paragraph 3(1) and (2) of the Kúriának a pénzügyi intézmények fogyasztói kölcsönszerződéseire vonatkozó jogegységi határozatával kapcsolatos egyes kérdések rendezéséről szóló 2014. évi XXXVIII. törvény (Law No XXXVIII of 2014 on specific matters relating to the decision of the Kúria (Supreme Court, Hungary) to ensure consistency in the interpretation of civil-law provisions concerning loan agreements concluded by credit institutions with consumers), in the version applicable to the dispute in the main proceedings (‘the DH1 Law’), provides:(1) In loan agreements concluded with consumers, terms – with the exception of contractual terms which have been individually negotiated – pursuant to which the credit institution stipulates that, for the purpose of paying out the amount of finance granted for the purchase of the subject of the loan or financial leasing, the buying rate is to apply, and that, for the purpose of repayment of the debt, the selling rate, or a different exchange rate from that set when the loan was paid out, is to apply, shall be void.(2) … instead of the void term referred to in subparagraph 1, the official exchange rate set by the Magyar Nemzeti Bank [(National Bank of Hungary)] for the foreign currency concerned shall apply in relation to the disbursement and repayment of the loan (including payment of the instalments and all the costs, fees and commissions expressed in foreign currency).’
The DH2 Law
13Paragraph 3(1) of the Kúriának a pénzügyi intézmények fogyasztói kölcsönszerződéseire vonatkozó jogegységi határozatával kapcsolatos egyes kérdések rendezéséről szóló 2014. évi XXXVIII. törvényben rögzített elszámolás szabályairól és egyes egyéb rendelkezésekről szóló 2014. évi XL. törvény (Law No XL of 2014 on the rules governing the settlement of accounts provided for in Law No XXXVIII of 2014 on specific matters relating to the decision of the Kúria (Supreme Court) to ensure consistency in the interpretation of civil-law provisions concerning loan agreements concluded by credit institutions with consumers and miscellaneous other provisions), in the version applicable to the dispute in the main proceedings (‘the DH2 Law’), provides:‘In the case of performance in respect of a term that is void under Paragraph 3(1) of [the DH1 Law], the difference between the amount of credit granted pursuant to that term and that resulting from a conversion in accordance with subparagraph 2, and between the sums reimbursed pursuant to that term and those resulting from a conversion in accordance with subparagraph 2, shall be counted in favour of the consumer as an overpayment attributable to an exchange rate difference.’
14Paragraph 37(1) of the DH2 Law provides:‘In relation to contracts falling within the scope of this Law, the parties may apply to the court for a declaration of invalidity of the contract or of certain contractual terms … – irrespective of the grounds for such invalidity – only if they also apply for a determination of the legal consequences of invalidity (namely, a declaration of validity or effectiveness of the contract up to the time of adoption of the [invalidity] decision). …’
The DH7 Law
15Paragraph 3 of the egyes fogyasztói kölcsönszerződésekből eredő követelések forintra átváltásával kapcsolatos kérdések rendezéséről szóló 2015. évi CXLV. törvény (Law No CXLV of 2015 on matters relating to the conversion into forint of certain debts resulting from consumer loan agreements), in the version applicable to the dispute in the main proceedings (‘the DH7 Law’), provides:‘The credit institution shall be required(a) to convert debts owed to it under loan agreements denominated in foreign currencies and falling within the scope of this Law into debts denominated in forint (“conversion into forint”) in accordance with Chapter 4,(b) to convert debts owed to it under loan agreements denominated in foreign currencies and falling within the scope of this Law that have been concluded with consumers, and that have already been dissolved, into debts denominated in forint in accordance with Chapter 5.’
16Paragraph 9(1) of the DH7 Law provides:‘A loan agreement denominated in a foreign currency in accordance with this Chapter may not be altered to the detriment of the consumer concerned as regards the level of interest, fees and costs related to the transaction.’
17Under Paragraph 12(1) of that law:‘The exchange rate to be applied for the conversion into forint shall be the exchange rate officially set by the National Bank of Hungary on 19 August 2015 for the foreign currency concerned.’
18Paragraph 15(1) of that law provides:‘Debts resulting from foreign currency denominated loan agreements that have already been dissolved shall be converted by the credit institution into debts denominated in forint in accordance with the arrangements laid down in this Chapter and at the exchange rate provided for in Paragraph 12(1).’
The dispute in the main proceedings and the questions referred for a preliminary ruling
19On 21 June 2007, ZH concluded a leasing agreement denominated in a foreign currency (Swiss francs (CHF)) with AxFina for the purchase of a motor vehicle; KN acted as joint and several guarantor of the performance by ZH of the latter’s contractual obligations. The parties agreed that the credit at issue in the main proceedings was to be repaid in 120 fixed monthly instalments denominated in Hungarian forint (HUF). The agreement also included the term relating to exchange rate risk, according to which settlement with regard to fluctuations in the exchange rate of that foreign currency would take place at the end of the term of that agreement, the effect of which was that the risk associated with an appreciation of that foreign currency against the Hungarian forint was placed entirely on the two consumers.
20On 7 May 2013, AxFina dissolved the leasing agreement at issue in the main proceedings with immediate effect due to the two consumers being in arrears, as a result of which the whole of the debt calculated in Hungarian forint and resulting from the contract became due and payable in a single payment. From that debt, AxFina deducted in particular the amount resulting from settlement as provided for in Paragraph 3(1) of the DH2 Law, as an overpayment attributable to an exchange rate difference in accordance with Paragraph 3(1) of the DH1 Law, and the proceeds of sale of the vehicle concerned.
21AxFina brought an action by which it claimed that, should the term relating to exchange rate risk be found to be unfair and, consequently, that agreement be declared invalid, the agreement should be declared valid with retroactive effect from the date on which it was concluded and the two consumers ordered jointly and severally to pay the sum of the principal claimed in the amount of HUF 1637682 (approximately EUR 4000) and default interest. That amount included HUF 972960 (approximately EUR 2250) owed in respect of the exchange rate risk.
22In its judgment, the court ruling at first instance found the leasing agreement at issue in the main proceedings to be invalid due to the unfair nature of the term relating to exchange rate risk, but held that the two consumers were nevertheless obliged to bear that risk up to a certain limit. Accordingly, it reduced the amount owed to AxFina, based on that agreement, which it declared valid, by the amount which ZH had lost as compared with the situation that would have obtained if that agreement had been denominated in Hungarian forint.
23The court ruling on the appeal brought by the two consumers upheld that judgment. According to the appeal court, the solution adopted in that judgment ensured that the harm to those consumers’ interests caused by the term relating to exchange rate risk could be eliminated. Furthermore, the irreversible nature of performance under that agreement precluded restoration of the situation which those consumers would have been in if the term relating to exchange rate risk had not existed.
24The two consumers brought a further appeal before the Kúria (Supreme Court), which is the referring court, against the decision on their appeal. In that context, they seek in particular a decision dismissing AxFina’s original action, arguing in that respect that ruling out a solution that restores the situation which they would have been in if the term relating to exchange rate risk had not existed is contrary to EU law and that the national court is, moreover, not authorised to alter the content of that unfair term.
25The referring court states that it is thus called upon to determine what should happen to a leasing agreement denominated in a foreign currency when a term of that agreement, under which the exchange rate risk is to be borne entirely by the consumer concerned, is held to be unfair because that consumer was insufficiently informed of the nature of that risk, and the removal of that term, which defines the main subject matter of that agreement, would result in the invalidity of the entire agreement.
26In that regard, the referring court explains, in the first place, that, in Hungarian law, the legal consequences of the invalidity of a contract in its entirety are governed by Paragraph 237(1) and (2) of the previous Civil Code. Under that provision, the main legal consequences – which ‘are ranked equally’ – of that invalidity are the restoration of the original situation or, if the cause of the invalidity can be eliminated, a declaration that the contract concerned is valid ex tunc. The contract may be declared valid, inter alia, where restoration of the situation prevailing prior to the conclusion of that contract is not possible. If such a declaration of validity is also not possible, the court seised will declare that contract applicable until delivery of its decision and will order monetary compensation to be paid for the value of any performance for which no consideration has been received.
27As regards, in particular, contracts falling within the scope of the DH1 and DH2 Laws, such as the leasing agreement at issue in the main proceedings, Paragraph 37(1) of the DH2 Law calls for a finding that the consequences of the invalidity of such a contract consist in the contract being declared valid or being declared effective up to the time of adoption of the invalidity decision, thus ruling out restoration of the original situation. Similarly, in Hungarian academic writings and case-law the view is taken that, given the nature of credit agreements and leasing agreements, it is not possible, where such agreements are invalid, to conceive of any restoration of the original situation.
28In that context, the referring court considers that while the Court of Justice has repeatedly, and notably in the judgments of 27 April 2023, AxFina Hungary (C‑705/21, EU:C:2023:352), and of 15 June 2023, Bank M. (Consequences of the annulment of the contract) (C‑520/21, EU:C:2023:478), ruled on the legal consequences, in the light of Directive 93/13, of the unfair nature of a term the removal of which leads to the invalidity of the contract concerned, the case-law resulting from those judgments does not cover all relevant questions of interpretation with regard to Hungarian legislation and practice and cannot always be reconciled therewith.
29In the present case, applying the DH1 and DH2 Laws means that the value of performance under the leasing agreement at issue in the main proceedings can still be calculated either in Swiss francs or in Hungarian forint, even if the term relating to exchange rate risk is ‘ineffective’, so that that agreement can continue to produce its effects. More generally, in Hungarian law, the invalidity of a contract does not necessarily mean that it is a nullity, and so to consider restitutio in integrum to be the only possible legal consequence of such a nullity would be to draw a conclusion that is logically incorrect.
30The referring court states in that regard that it does not appear that Directive 93/13, which has achieved only a minimal degree of harmonisation in this area, governs the question as to the legal consequences that arise in the event of the invalidity of a contract. Consequently, the determination of those consequences falls within the procedural autonomy of the Member States, save that the national judicature is obliged to ensure that the consumer concerned is ultimately placed in the situation which that consumer would have been in if the term deemed to be unfair had never existed.
31Thus, the referring court queries whether it would not be appropriate to find that a contract ‘is capable of continuing in existence’ without the unfair terms, within the meaning of Article 6(1) of Directive 93/13, if, where the contract is invalid in its entirety following the removal of one of its terms which has been held to be unfair, a national court can, under its domestic legislation, declare that contract valid, with retroactive effect from the date on which that contract was concluded, in such a way that the unfair term which it contains does not confer any obligation on the consumer concerned, whereas the other terms of that contract, which are not unfair, continue to bind the parties in the same way.
32Such a solution would not involve a contractual alteration that is prohibited according to the case-law, since the term relating to exchange rate risk would be removed and the leasing agreement at issue in the main proceedings would be capable of continuing in existence without that term. Nor would the nature of that agreement be altered, as the settlement of accounts based on the foreign currency in which the loan is denominated would be retained, as it would then be the credit institution that would bear the exchange rate risk.
33Furthermore, the deterrent effect associated with the simple removal of the unfair term would be safeguarded, in accordance with the principle that penalties should be proportionate; that is to say, the loan in question would be maintained at an interest rate that has been adapted to the foreign currency stipulated and is favourable to the consumer concerned, but without this being offset by ‘compensation’ related to the exchange rate risk borne by that consumer, since the credit institution is then obliged to repay to that consumer the amounts received on the basis of the term relating to exchange rate risk.
34Should the interpretation proposed by the referring court not be compatible with EU law, the referring court requests that the Court of Justice provide guidance as to the legal consequences that might be gleaned directly from EU law in a situation where a contract is invalid, since it may, in its view, find it necessary in that situation to interpret its domestic law contra legem.
35In the second place, the referring court indicates that the leasing agreement at issue in the main proceedings also falls within the scope of the DH7 Law. Under that law, debts resulting from that agreement should, in future, be converted into debts denominated in Hungarian forint at the exchange rate fixed by the National Bank of Hungary on 19 August 2015 for the foreign currency stipulated. In that regard, it is not apparent from the rules of the DH7 Law or the explanatory statement relating to it that that law is intended to remedy any invalidity; on the contrary, the legislature wished to ensure that the consumers concerned were, generally, relieved of the obligation to bear the exchange rate risk in future in relation to a large number of valid contracts.
36The referring court is minded, however, to conclude that although contractual terms which reflect mandatory statutory provisions, such as those laid down by the DH7 Law, are not subject to the provisions of Directive 93/13, the DH7 Law is nevertheless at odds with that directive in that it has the effect of subjecting the consumer concerned to a certain level of exchange rate risk when that consumer should be entirely free of that risk, with the result that that law ought to be disapplied.
37In those circumstances, the Kúria (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Is it correct to interpret the phrase “[the contract] is capable of continuing in existence without the unfair terms”, which appears in Article 6(1) of [Directive 93/13], as meaning that a contract concluded with consumers and denominated in foreign currency is capable of continuing in existence without a contractual term which pertains to the main obligation to be performed under the contract and which places the exchange rate risk, on an unlimited basis, on the consumer, taking into account that the law of the Member State regulates the currency conversion mechanism by means of mandatory [statutory] provisions?Is a legal practice of a Member State compatible with Article 1(2), Article 6(1) and Article 7(1) of Directive 93/13, where, according to that practice (which is based on an interpretation of the law of the Member State given in the light of that directive and in compliance with the principles of interpretation established by the Court of Justice of the European Union), in view of the principle of unjust enrichment,(a) the creditor is ordered to reimburse the consumer (or pay the consumer as part of a settlement) the amounts charged by the creditor under the term declared unfair, but that order is not made in the context of a restitutio in integrum, because a special provision of national law excludes that possible legal consequence of invalidity, and nor are the rules relating to unjust enrichment applied independently, because the national law does not [provide] for such a legal consequence of the invalidity of the contract, but rather the consumer is freed from the consequences that are particularly detrimental to him or her and, at the same time, the balance of the contract between the contracting parties is restored by applying the main legal consequence which the law of the Member State provides for in the case of invalidity, namely, a declaration of validity in respect of the contract, such that the unfair terms do not impose any obligation on the consumer, but the remaining (fair) elements of the contract (including the contractual interest and other costs) continue to bind the parties on the same terms[;](b) in the event that a declaration of validity is not possible, in order to effect a settlement of accounts, the legal consequences of invalidity are determined by declaring the contract applicable until judgment is given and the settlement of accounts between the parties is carried out by applying the principle of unjust enrichment?(2) When it comes to determining the legal consequences of a contract that is invalid for the reason stated, may a legislative provision of the Member State, which entered into force subsequently and which introduced, from then on, mandatory conversion into [Hungarian forint], be disapplied, because that provision, as a result of the fixing of the exchange rate, places a certain part of the exchange rate risk on the consumer, who – on account of the unfair contractual term – should be freed entirely from that risk?(3) In the event that, in accordance with EU law, it is not possible to determine the legal consequences of invalidity, either by means of a declaration of validity or by means of a declaration of applicability, what are the legal consequences, along with the relevant basis in case-law, which should therefore be determined contra legem, irrespective of the legislation of the Member State relating to the legal consequences and based exclusively on EU law, taking into account that Directive 93/13 does not regulate the legal consequences of invalidity?’
Consideration of the questions referred
The first and third questions
38The first and third questions concern the framing, in Article 1(2), Article 6(1) and Article 7(1) of Directive 93/13, of the detailed rules governing the assessment as to whether a leasing agreement denominated in a foreign currency may continue to exist, where that agreement is one from which the term placing the exchange rate risk associated with that currency entirely on the consumer concerned has, being a term that is unfair, been removed.
39It must be stated, as a preliminary point, that since those questions relate to an agreement containing a term that has been held to be unfair on the basis of Article 6(1) of Directive 93/13, they necessarily presuppose that that term falls within the scope of that directive and, therefore, does not fall outside it pursuant to Article 1(2) of the directive, which excludes in particular contractual terms which reflect mandatory statutory or regulatory provisions.
40In that regard, while the referring court refers, in the context of its first question, to a ‘currency conversion mechanism [laid down in] mandatory [statutory] provisions’, there is nothing in the documents before the Court of Justice to indicate that that term, which concerns the exchange rate risk as such rather than detailed rules on currency conversion, reflects the content of such provisions; nor, moreover, does the referring court set out the reasons why it may nevertheless be necessary for the Court of Justice to provide an interpretation of Article 1(2) of Directive 93/13.
41In those circumstances, it must be stated that, by its first and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 6(1) of Directive 93/13, read in conjunction with Article 7(1) of that directive, must be interpreted as permitting the inference that a leasing agreement that is denominated in a foreign currency, and that has been rendered invalid following the removal from it of a term considered unfair that places the exchange rate risk associated with that foreign currency on the consumer concerned, is capable of ‘continuing in existence without the unfair terms’, within the meaning of the first of those provisions, where that agreement is covered by national legislation that requires, as a legal consequence of the invalidity of such agreements, that the consumer be freed entirely from the detrimental effects of the unfair term only, while the other elements of the agreement concerned remain valid and binding. Should the reply be in the negative, the referring court also seeks clarification as to the inferences it may be required to draw from the invalidity of that agreement, given that it may, in its view, find it necessary in that situation to interpret its domestic law contra legem.
As to whether a contract may continue in existence without the unfair terms
42It is apparent from settled case-law that, in view of a consumer’s weaker position vis-à-vis a seller or supplier, the first part of Article 6(1) of Directive 93/13 provides that unfair terms are not binding on the consumer. That provision is a mandatory provision which aims to replace the formal balance which the contract establishes between the rights and obligations of the parties with an effective balance which re-establishes equality between them (judgment of 9 April 2024, Profi Credit Polska (Reopening of proceedings concluded with a final judicial decision), C‑582/21, EU:C:2024:282, paragraph 72 and the case-law cited).
43Moreover, given the nature and significance of the public interest constituted by the protection of consumers, Directive 93/13, as is apparent from Article 7(1) thereof, read in conjunction with its twenty-fourth recital, obliges the Member States to provide for adequate and effective means ‘to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers’ (judgment of 9 April 2024, Profi Credit Polska (Reopening of proceedings concluded with a final judicial decision), C‑582/21, EU:C:2024:282, paragraph 73 and the case-law cited).
44To do this, it is for the national courts to exclude the application of the unfair terms so that they do not produce binding effects with regard to the consumer, unless the consumer objects (judgment of 9 July 2020, Raiffeisen Bank and BRD Groupe Société Générale, C‑698/18 and C‑699/18, EU:C:2020:537, paragraph 53 and the case-law cited).
45It follows that a contractual term held to be unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer. Therefore, the determination by a court that such a term is unfair must, in principle, have the consequence of restoring the consumer to the legal and factual situation that he or she would have been in if that term had not existed (judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraph 57 and the case-law cited).
46The obligation for the national court to exclude an unfair contract term imposing the payment of amounts that prove not to be due entails, in principle, a corresponding restitutory effect in respect of those amounts, in so far as the absence of such restitutory effect would be liable to call into question the dissuasive effect that Article 6(1) of Directive 93/13, read in conjunction with Article 7(1) of that directive, is designed to attach to a finding of unfairness in respect of terms in contracts concluded between consumers and sellers or suppliers (judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraph 58 and the case-law cited).
47In addition, while the first part of Article 6(1) of that directive provides that Member States are to lay down that unfair terms are not to be binding on the consumer, ‘as provided for under their national law’, the regulation by national law of the protection guaranteed to consumers by that directive may not alter the scope and, therefore, the substance of that protection (judgment of 12 December 2024, Kutxabank, C‑300/23, EU:C:2024:1026, paragraph 160 and the case-law cited).
48Consequently, while it is for the Member States, by means of their national legislation, to define the detailed rules under which the unfairness of a contractual term is established and the actual legal effects of that finding are produced, the fact remains that such a finding must allow the restoration of the legal and factual situation that the consumer would have been in if that unfair term had not existed, by, inter alia, creating a right to restitution of advantages wrongly obtained, to the consumer’s detriment, by the seller or supplier on the basis of that unfair term (judgment of 25 April 2024, Caixabank (Limitation period), C‑484/21, EU:C:2024:360, paragraph 20 and the case-law cited).
49In the present case, it follows from the explanations given by the referring court that, in the case of leasing agreements denominated in a foreign currency that contain an unfair term relating to exchange rate risk and have been rendered invalid following the removal of that term, such as that at issue in the main proceedings, Hungarian law provides for a solution consisting in a ‘declaration of validity’ or a ‘declaration of effectiveness of the contract up to the time of adoption of the [invalidity] decision’, according to the wording used in Paragraph 37(1) of the DH2 Law. In that context, according to the referring court, Paragraph 3 of the DH1 Law provides for a currency conversion mechanism that will ensure that the value of performance under the agreement concerned can still be calculated after removal of the unfair term relating to exchange rate risk.
50As that court explains, it assumes that that solution meets the requirements of the first part of Article 6(1) of Directive 93/13, as interpreted in the case-law recalled in paragraphs 42 to 48 of the present judgment, in that that solution enables the consumers concerned to be relieved entirely of the unfair term relating to exchange rate risk in the contract which they have concluded, while maintaining in effect all the other terms of that contract and, at the same time, ensuring that the deterrent effect of removal of that unfair term is maintained. When that solution is implemented, it is no longer those consumers but the credit institution concerned that bears the financial consequences of that unfair term, while those consumers continue to enjoy the favourable interest rate linked to the foreign currency stipulated in that contract, without any need for that term to be altered.
51There is nothing in the documents available to the Court of Justice that would cast doubt on the fact that such an outcome is, in principle, capable of ensuring that sums unduly acquired by that credit institution on the basis of that unfair term are repaid to those consumers, in accordance with that provision.
52However, the second part of Article 6(1) of Directive 93/13 provides that, once its unfair terms have been removed, the contract concerned ‘shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms’.
53In that regard, it is true that the second part of Article 6(1) of Directive 93/13 does not itself set out the criteria governing the possibility of a contract ‘continuing in existence without the unfair terms’, within the meaning of that provision, but rather leaves it to the national legal order to determine those criteria in a manner consistent with EU law. It is thus in principle in the light of the criteria laid down in national law that it is necessary to examine, in a specific situation, the possibility of upholding a contract some terms of which have been declared invalid (judgment of 3 October 2019, Dziubak, C‑260/18, EU:C:2019:819, paragraph 40).
54Moreover, the objective of Article 6(1) of Directive 93/13 consists in restoring the balance between the parties while in principle preserving the validity of the contract as a whole, not in cancelling all contracts containing unfair terms (judgment of 14 March 2019, Dunai, C‑118/17, EU:C:2019:207, paragraph 40 and the case-law cited).
55The fact remains that there are limits to the discretion which the Member States have in establishing criteria governing the possibility of a contract continuing in existence without its unfair terms.
56Thus, first, it follows from the wording of the second part of Article 6(1) of Directive 93/13 that the contract concerned must continue in existence, in principle, without any amendment other than that resulting from the deletion of the unfair terms, in so far as, in accordance with the rules of domestic law, such continuity of the contract is legally possible, the national courts being therefore required only to exclude the application of an unfair contractual term in order that it does not produce binding effects with regard to the consumer concerned, without being authorised to revise its content (see, to that effect, judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 65).
57In that context, the Court has held that, if it were open to the national court to revise the content of unfair terms used in such a contract, such a power would be liable to compromise attainment of the long-term objective of Article 7 of Directive 93/13. That power would contribute to eliminating the dissuasive effect on sellers or suppliers of the straightforward non-application with regard to the consumer of those unfair terms, in so far as those sellers or suppliers would still be tempted to use those terms in the knowledge that, even if they were declared invalid, the contract could nevertheless be modified, to the extent necessary, by the national court in such a way as to safeguard the interest of those sellers or suppliers (judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑179/17, EU:C:2019:250, paragraph 54 and the case-law cited).
58Second, provided that the condition referred to in paragraph 56 of the present judgment is satisfied, the possibility that the contract at issue may, in accordance with the rules of domestic law, be continued without the unfair terms must be determined objectively (judgment of 23 November 2023, Provident Polska, C‑321/22, EU:C:2023:911, paragraph 81 and the case-law cited). Accordingly, the situation of one of the parties to that contract cannot be regarded as the decisive criterion determining the fate of the contract (judgment of 15 March 2012, Pereničová and Perenič, C‑453/10, EU:C:2012:144, paragraph 32).
59The question thus arises whether the solution referred to in paragraphs 49 and 50 of the present judgment is consistent with the second part of Article 6(1) of Directive 93/13, as interpreted in the case-law recalled in paragraphs 53 to 58 above.
60The referring court is minded to consider that to be the case since, in this instance, the unfair term relating to exchange rate risk is, in its view, quite simply excised from the leasing agreement at issue in the main proceedings, so that that term no longer confers any obligation on the two consumers. That agreement could therefore be capable of ‘continuing in existence without the unfair terms’, within the meaning of the second part of Article 6(1) of Directive 93/13 as a result of the conversion mechanism provided for in the DH1 and DH2 Laws and could therefore ‘continue to bind the parties upon those terms’, within the meaning of that provision.
61However, such an arrangement under national law cannot, in itself, suffice for it to be concluded that a contract is capable of ‘continuing in existence without the unfair terms’, within the meaning of the second part of Article 6(1) of Directive 93/13.
62To that end, it is necessary to establish that the continued existence of the contract concerned is legally possible and that it does not involve any amendment of the contract other than that resulting from the deletion of those terms, as is apparent from the case-law referred to in paragraphs 56 and 58 of the present judgment, failing which the continuation of that contract would be contrary to that provision.
63As it is, where, as in this case, the referring court has already found that a term relating to exchange rate risk defines the main subject matter of the contract at issue in the main proceedings and that its removal would result in the invalidity of that contract, the continuation of the contract does not appear to be legally possible, which is however for that court to determine (see, to that effect, judgments of 5 June 2019, GT, C‑38/17, EU:C:2019:461, paragraph 43, and of 14 March 2019, Dunai, C‑118/17, EU:C:2019:207, paragraph 52).
64In addition, the Court has held that the national court cannot remedy the invalidity of a contract resulting from the unfairness of a term contained therein, by declaring that contract to be valid and, at the same time, changing its currency. Such intervention by the court would ultimately amount to revising the content of that term (judgment of 27 April 2023, AxFina Hungary, C‑705/21, EU:C:2023:352, paragraph 41).
65However, contrary to what is suggested by the referring court, that finding is not called into question by the additional information it provided – summarised in paragraphs 49 and 50 of the present judgment – with regard to a ‘declaration of validity’ such as that which it is minded to make and for which it may, if appropriate, substitute a ‘declaration of effectiveness of the contract up to the time of adoption of the [invalidity] decision’.
66Given that such a solution ultimately has the effect, according to the additional information provided, that the exchange rate risk and its financial consequences, which originally lay with the consumers concerned under the term relating to exchange rate risk, are now to be borne by the credit institution, it must be held that these necessarily involve an amendment of that term.
67It follows that it cannot be held that the agreement in question is capable of ‘continuing in existence without the unfair terms’, within the meaning of the second part of Article 6(1) of Directive 93/13.
68It is true that the Court has ruled that Article 6(1) of Directive 93/13 does not, in such a situation, preclude the national court from removing, in accordance with the principles of contract law, the unfair term used in a contract and replacing it with a supplementary provision of national law, or one that is applicable where the parties to that contract so agree, in cases where the invalidity of that unfair term would require the court to annul the contract in its entirety, thereby exposing the consumer to particularly unfavourable consequences, so that the consumer would thus be penalised (see, to that effect, judgment of 26 March 2019, Abanca Corporación Bancaria and Bankia, C‑70/17 and C‑179/17, EU:C:2019:250, paragraphs 56, 59 and 64 and the case-law cited).
69In that regard, it should be pointed out that, for the purposes of assessing the consequences for the consumer’s situation caused by the annulment of a contract as a whole, as referred to in that case-law, the wishes expressed by that consumer in that regard are decisive (judgment of 8 September 2022, D.B.P. and Others (Mortgage loans denominated in foreign currency), C‑80/21 to C‑82/21, EU:C:2022:646, paragraph 74 and the case-law cited).
70As it is, in the present case, and irrespective of whether or not there is in fact a supplementary provision of Hungarian law or one that is applicable where the parties to the contract concerned so agree, within the meaning of that case-law, the two consumers clearly expressed, both before the referring court and in their written observations to the Court of Justice, their wish that the leasing agreement at issue in the main proceedings be annulled in its entirety. In those circumstances, the condition that the annulment of the contract in its entirety should expose the consumers concerned to particularly unfavourable consequences, if the national court is to be authorised to replace the unfair term which has been annulled with a supplementary provision of its domestic law or one that is applicable where the parties to that contract so agree, does not appear to be satisfied in the present case (see, to that effect, judgment of 8 September 2022, D.B.P. and Others (Mortgage loans denominated in foreign currency), C‑80/21 to C‑82/21, EU:C:2022:646, paragraph 78).
71Second, the Court has ruled that Article 7(1) of Directive 93/13 does not preclude the Member States from using legislation to put an end to the use of unfair terms in contracts concluded with consumers by sellers or suppliers, while thereby safeguarding the validity of those contracts, subject to the national legislature respecting, in that context, the requirements deriving from Article 6(1) of that directive (see, to that effect, judgments of 14 March 2019, Dunai, C‑118/17, EU:C:2019:207, paragraphs 40 and 42, and of 29 April 2021, Bank BPH, C‑19/20, EU:C:2021:341, paragraph 77 and the case-law cited).
72However, it does not appear from the documents available to the Court that there is such legislation in the present case with regard to the term relating to exchange rate risk, the referring court having referred in that context only to national legislation concerning terms relating to the exchange rate difference that is intended to ensure that ‘consumers are relieved of the obligation to bear the exchange rate risk in future in relation to a large number of valid contracts’.
73In that regard, the Court has held that the existence of legislation to remedy the problems connected with terms relating to the exchange rate difference is without prejudice to the review that must be carried out, in the light of Directive 93/13, of other terms of the contracts concerned, such as those relating to the exchange rate risk (see, to that effect, judgments of 14 March 2019, Dunai, C‑118/17, EU:C:2019:207, paragraph 46, and of 2 September 2021, OTP Jelzálogbank and Others, C‑932/19, EU:C:2021:673, paragraph 45).
As to the inferences to be drawn from the impossibility of a contract’s continuing in existence without the unfair terms
74With regard to the inferences that should be drawn from the finding that a contract incorporating an unfair term is not capable of continuing in existence without that term, within the meaning of the second part of Article 6(1) of Directive 93/13, it must be recalled that Directive 93/13 does not in fact expressly govern the consequences of the invalidity of a contract concluded between a seller or supplier and a consumer after the excision of the unfair terms in that contract. Accordingly, it is for the Member States to determine the consequences of such a finding, it being understood that the rules which they lay down in that regard must be compatible with EU law and, in particular, with the objectives pursued by that directive (judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraph 64).
75However, in that context, the Court has also noted the deterrent effect of the straightforward non-application with regard to the consumer of unfair terms; such non-application must entail the right of that consumer to restitution of advantages wrongly obtained by the seller or supplier concerned on the basis of such terms. It thus ruled that, in so far as the absence of such a restitutory effect would be liable to undermine that deterrent effect, a similar restitutory effect must be recognised where the unfairness of terms of a contract concluded between a consumer and a seller or supplier results not only in the invalidity of those terms, but also in the invalidity of that contract in its entirety (judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraphs 65 and 66).
76It follows that the compatibility with EU law of national rules governing the practical consequences of the invalidity of a mortgage loan agreement on account of the presence of unfair terms depends on whether those rules, first, make it possible to restore, in law and in fact, the situation which the consumer would have been in had that contract not existed and, second, do not undermine the deterrent effect sought by Directive 93/13 (judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraph 68).
77For the purposes of the implementation of such restoration in law and in fact in the case of a leasing agreement such as that at issue in the main proceedings, first, consumers must have the right, at the very least, to reimbursement of the monthly instalments and fees paid in respect of the performance of that agreement together with the payment of default interest at the statutory rate from the date on which notice is served (see, to that effect, with regard to a mortgage loan agreement, judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraph 74).
78Thus, it cannot be sufficient, in the present case, for the two consumers to be repaid only the sums obtained by the credit institution concerned on the basis of the term relating to exchange rate risk, as suggested by the referring court; on the contrary, those consumers must be reimbursed for all monthly instalments and fees paid under the leasing agreement at issue in the main proceedings.
79As regards, second, the seller or supplier concerned – in this instance, a credit institution – it cannot be granted the right to seek compensation from the consumers beyond restitution of the goods made available to them in performance of the leasing agreement or reimbursement of the corresponding value of those goods and, as the case may be, the payment of default interest. To grant that credit institution such a right and, therefore, the right to receive remuneration for the use of those goods by those consumers would contribute to eliminating the deterrent effect on sellers or suppliers of the annulment of that agreement (see, to that effect, with regard to a mortgage loan agreement, judgment of 15 June 2023, Bank M. (Consequences of the annulment of the contract), C‑520/21, EU:C:2023:478, paragraphs 76 and 78).
80That interpretation is not called into question by the need, mentioned by the referring court, to ensure that the ‘penalty imposed is … proportionate’. The Court has ruled that the invalidation of a contract one of the terms of which has been found to be unfair does not constitute a penalty provided for by Directive 93/13 (order of 30 May 2024, Deutsche Bank Polska, C‑325/23, EU:C:2024:453, paragraph 74 and the case-law cited).
81Moreover, while the objective of restoring the consumer’s legal and factual situation as it would have been in the absence of the unfair term used in the contract concluded by that consumer must be pursued in a manner that complies with the principle of proportionality, that principle can preclude a finding that that contract is null and void in its entirety only if the objective determination of the inferences to be drawn, in accordance with national law, from a finding that a term is unfair as regards the continuation or otherwise of the contract of which it forms part leaves some discretion or room for interpretation to the national court (see, to that effect, judgment of 23 November 2023, Provident Polska, C‑321/22, EU:C:2023:911, paragraphs 85 and 86).
82However, in circumstances such as those at issue in the main proceedings, the existence of such a discretion must be ruled out, as follows from paragraph 67 of the present judgment.
83To the extent that the referring court considers that it is impossible, under its domestic law, for it to bring about the restoration of the legal and factual situation which the consumers concerned would have been in if the contract had not been concluded, without interpreting domestic law contra legem, it must be recalled that, where the Court’s case-law has provided a clear answer to a question concerning the interpretation of EU law, the national court is required to do everything necessary to ensure that that interpretation is applied (judgment of 10 March 2022, Grossmania, C‑177/20, EU:C:2022:175, paragraph 42).
84As regards, in the present case, provisions of a directive, it is true that these cannot of themselves impose obligations on an individual and cannot therefore be relied on as such against that individual before a national court (judgment of 18 January 2022, Thelen Technopark Berlin, C‑261/20, EU:C:2022:33, paragraph 32 and the case-law cited).
85However, the principle of interpreting national law in conformity with EU law is inherent in the system of the Treaties, since it permits national courts, for the matters within their jurisdiction, to ensure the full effectiveness of EU law when they determine the disputes before them (judgment of 9 April 2024, Profi Credit Polska (Reopening of proceedings concluded with a final judicial decision), C‑582/21, EU:C:2024:282, paragraph 61).
86In that regard, the Court has repeatedly held that, when hearing a dispute which is exclusively between private individuals, a national court is required, when applying the provisions of its domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by that directive (judgment of 18 January 2022, Thelen Technopark Berlin, C‑261/20, EU:C:2022:33, paragraph 27 and the case-law cited).
87Admittedly, the principle that national law must be interpreted in conformity with EU law has certain limits. Thus, the obligation for a national court to refer to the content of a directive when interpreting and applying the relevant rules of its domestic law is limited by general principles of law and cannot serve as the basis for an interpretation of national law contra legem (judgment of 30 April 2014, Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 65 and the case-law cited).
88However, the Court has also held that the obligation to interpret domestic law in conformity with EU law requires national courts to change established case-law, where necessary, if it is based on an interpretation of their domestic law that is incompatible with the objectives of a directive and to disapply, on their own authority, the interpretation adopted by a higher court which it must follow in accordance with that law, if that interpretation is not compatible with that directive (see, to that effect, judgment of 24 June 2019, Popławski, C‑573/17, EU:C:2019:530, paragraph 78 and the case-law cited).
89Consequently, a national court cannot validly claim that it is impossible for it to interpret a provision of national law in a manner that is consistent with EU law merely because that provision has consistently been interpreted in a manner that is incompatible with EU law (judgment of 24 June 2019, Popławski, C‑573/17, EU:C:2019:530, paragraph 79 and the case-law cited).
90However, on the assumption that it is established that that is indeed impossible, the two consumers will, as parties who have been harmed as a result of national law not being in conformity with EU law, have to be able to rely on the case-law derived from the judgment of 19 November 1991, Francovich and Others (C‑6/90 and C‑9/90, EU:C:1991:428), in order to obtain, if appropriate, compensation for the loss or damage sustained (see, to that effect, judgment of 18 January 2022, Thelen Technopark Berlin, C‑261/20, EU:C:2022:33, paragraph 41 and the case-law cited).
91In the light of all of the above, the answer to the first and third questions is that Article 6(1) of Directive 93/13, read in conjunction with Article 7(1) of that directive, must be interpreted as not permitting the inference that a leasing agreement that is denominated in a foreign currency, and that has been rendered invalid following the removal from it of a term considered unfair that places the exchange rate risk associated with that foreign currency on the consumer concerned, is capable of ‘continuing in existence without the unfair terms’, within the meaning of the first of those provisions, where that agreement is covered by national legislation that requires, as a legal consequence of the invalidity of such an agreement, that the consumer be freed entirely from the detrimental effects of the unfair term only, while the other elements of that agreement remain valid and binding. In such a situation, since the agreement is not capable of continuing in existence without that term, those provisions require the restoration of the legal and factual situation which the consumer would have been in if that agreement had not existed.
The second question
92By its second question, the referring court wishes to know, in essence, whether Directive 93/13 permits a national court to disapply national legislation which provides, in relation to leasing agreements denominated in a foreign currency that fall within the scope of that directive, for the amount of credit concerned to be converted into the national currency from a date fixed by that legislation, with the objective of freeing, from then on, consumers who have concluded such agreements from the financial consequences linked to the term relating to exchange rate risk that is included in those agreements, whether or not those agreements are valid, if such legislation effectively places a certain part of the exchange rate risk on those consumers.
93In that regard, it is sufficient to note that, in the light of the answer given to the first and third questions, there is no need to reply to the second question.
Costs
94Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
Operative part
On those grounds, the Court (Tenth Chamber) hereby rules: Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, read in conjunction with Article 7(1) thereof,must be interpreted as not permitting the inference that a leasing agreement that is denominated in a foreign currency, and that has been rendered invalid following the removal from it of a term considered unfair that places the exchange rate risk associated with that foreign currency on the consumer concerned, is capable of ‘continuing in existence without the unfair terms’, within the meaning of the first of those provisions, where that agreement is covered by national legislation that requires, as a legal consequence of the invalidity of such an agreement, that the consumer be freed entirely from the detrimental effects of the unfair term only, while the other elements of that agreement remain valid and binding. In such a situation, since the agreement is not capable of continuing in existence without that term, those provisions require the restoration of the legal and factual situation which the consumer would have been in if that agreement had not existed.
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