Delayed bags, immediate compensation rights - CJEU in Iberia (C-292/24)

On June 5, the CJEU issued a new judgment interpreting the Montreal convention, which governs rules for international air carriage, in the case Iberia (C-292/24). 

The case arose when passengers traveling from Frankfurt am Main (Germany) to Panama City (Panama), with a layover in Madrid (Spain), discovered that their checked-in luggage had not arrived in Panama. They reported the baggage as lost to Iberia and informed the airline that, unless they received an update within three days, they would buy replacement items and continue with their travel plans - which they ultimately did. They also had to rebook their outgoing flights from Panama City due to the delay. The luggage was eventually delivered to Panama City five days after their scheduled arrival. The passengers subsequently sought reimbursement for the cost of replacement items, additional travel expenses, and the rebooked flights. 

The legal question concerned the interpretation of the reporting deadlines set out in Article 31(2) of the Montreal Convention in cases of delayed or lost baggage. Article 31(2) states that 

'the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of checked baggage and fourteen days from the date of receipt in the case of cargo. In the case of delay, the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his or her disposal.'

The key issue was whether this deadline prevents passengers from claiming compensation for damage caused by a baggage delay before the baggage is returned, or whether they may do so only after they receive the baggage as the full scope of their damage may only then materialise. 

The CJEU adopted an interpretation of Article 31(2) of the Montreal Convention that is favourable to passengers. It held that passengers may submit a claim for damages arising from delayed baggage before the baggage is returned. According to the Court, the 21-period specified in Article 31(2) marks the latest possible moment to file a complaint - but not the earliest (para 20). By applying a literal interpretation of the provision, the CJEU found that passengers are entitled to submit a claim for compensation at any time between the moment their baggage is delayed and the expiry of the 21-day period following its return (para 21). 

Interestingly, the CJEU also noted that this interpretation benefits air carriers, as well. Early notification allows airlines to investigate the situation promptly, potentially mitigating the damage, and collect evidence to demonstrate that they took all reasonable steps to prevent the harm (paras 29-30).

Consumers' access to interim relief - the CJEU in Myszak (C-324/23)

In case C-324/23 (Myszak) the Court of Justice of the European Union was asked again to deal with the consequences of mortgage loan agreements indexed in Swiss francs. 

The case concerns a mortgage loan contract indexed in Swiss francs whose voidance was claimed by three consumers against the Getin Noble Bank S.A. Consumers claimed the unfairness of the contractual term in question, according to Directive 93/13/EEC. Accordingly, sought interim relief in court, in order to suspend the execution of the contract containing unfair terms.

Meanwhile, however, the Bank went through a resolution procedure. Polish law bars the possibility to ask interim measures against bank dealing with special resolution procedures, according to the law implementing Directive 2014/59/EU (the Bank Recovery and Resolution Directive). 

The Polish court asked the CJEU about the compatibility with Articles 6(1) and 7(1) of UCTD and Article 70(1) and (4) of the Bank Recovery and Resolution Directive of the national law. Pursuant to relevant Polish law it is not possible to grant a consumer’s application for an interim measure to suspend, during the course of the court proceedings, the obligation to pay the loan instalments under a loan agreement which is likely to be declared invalid, on the sole ground that it was granted by a bank declared to be under special resolution.

The CJEU affirmed that a statutory provision barring consumers to obtain interim relief during resolution procedures impairs consumers to exercise their rights, and thus goes against EU law.

The Court invoked the principle of effectiveness, claiming that impeding consumers to exercise their rights because of a bank’s resolution would impact on the effective enforcement of the UCTD. The Court of Justice has, on a number of occasions, made general statements on the need for national courts to be able to adopt interim measures for the full effectiveness of court decisions concerning rights granted by EU law (see, among others, Case C-213/89, Factortame).

Although the Bank Recovery and Resolution Directive allows Member States’ laws to specify and define the procedural means of its implementation, national laws implementing it should not impede consumer protection. Accordingly, a provision barring the enforcement of UCTD, precluding adoption of interim measures, is contrary to EU law.

The decision reinforces a well-established pattern in the Court of Justice’s rulings: when in doubt, in favour of the consumer!

Deferred payment option as a ‘promotional offer’: CJEU in bonprix (C-100/24)

In bonprix (Case C-100/24), the CJEU was asked to clarify the meaning of ‘promotional offers’ under Art. 6(c) of the E-commerce Directive. According to this provision, any such offers must clearly outline the conditions for eligibility. The disputed practice was an advertising message that bonprix, an online trading company, put on its website: ‘Convenient purchase on invoice’. It was contested that this message is misleading as it leaves out the fact that such a payment arrangement is subject to a prior assessment of the consumer’s creditworthiness. It is thus necessary to establish whether the message on bonprix’ website is a ‘promotional offer’ in the first place – a concept that is not directly defined under the Directive.

First, according to a literal interpretation, ‘promotional offers’ can include ‘any form of communication by which a provider seeks to promote goods or services to the recipient by giving him or her an advantage’ (para 24), which is still rather broad.

Second, according to a contextual interpretation, since Art. 6(c) of the E-commerce Directive included some illustrative examples such as ‘discounts, premiums and gifts’, for ‘reasons of consistency’, ‘promotional offers’ must have ‘the characteristics common to’ these examples (para 25). The CJEU outlined three such characteristics: the conferral of an advantage that is

1. objective, i.e. not left to ‘the subjective assessment of that recipient’ (para 26),
2.  certain, i.e. ‘does not depend on chance or selection’ (para 27, per the distinction between ‘promotional offers’ under Art. 6(c) and ‘promotional competitions and games’ under Art. 6(d)), and that is
3. ‘capable of influencing that recipient’s consumption behaviour’ (para 28).

In response to bonprix’ arguments, the CJEU added that ‘promotional offers’ are neither defined by ‘the existence of a substantial monetary advantage for its recipient’ nor by ‘its exceptional nature’ (paras 29-31). The form and extent of the advantage is ‘immaterial’ and may be ‘monetary, legal or mere convenience, such as to enable the recipient to gain time’ (para 32). In the context of the disputed practice, the CJEU highlighted some potential benefits of bonprix’ offer: the deferral of payment provides the consumer with ‘a cash advance’ and represents ‘a monetary advantage, albeit minimal’ (para 43); in the event of extinguishment of the contract due to withdrawal or termination, ‘the purchaser does not need to claim reimbursement of the price’ (para 44).

Third, according to a teleological interpretation, the CJEU confirmed that subjecting the disputed practice to Art. 6(c) of the E-commerce Directive can ‘contribute to a high level of consumer protection, without, however, entailing unreasonable economic burdens for service providers’ (para 34). By informing the consumer that the deferred payment option is subject to a creditworthiness test and thereby making the consumer realise that they may be refused the option, it ensures consumer protection ‘at all stages of contact between the provider and the recipient of a service’ (para 35). Finally, the CJEU also added that its interpretation of Art. 6(c) of the E-commerce Directive is fully compatible with the Unfair Commercial Practices Directive (particularly its Art. 3(4) and its general prohibition of misleading practices) and the Consumer Rights Directive (particularly its Art. 6(8)).

The Court’s broad interpretation of ‘promotional offers’ should be welcomed as a positive move to strengthen consumer protection through information. It represents a more inclusive understanding of the factors that drive consumers’ purchase decisions, in particular convenience. Of course, it should also be borne in mind that the disputed practice in this case is in any event a ‘commercial practice’ within the scope of EU law.

Comparison websites outside scope of comparative advertising: CJEU in HUK-Coburg (C‑697/23)

For those who are on the lookout for good value for money, price comparison websites are a go-to tool. While ‘comparative advertising’ is regulated by Directive 2006/114/EC, it is unclear whether comparison services offered by third-party websites fall within its scope. The CJEU clarified this point in Case C‑697/23.

The case concerned Check24, a website that compares various products, including insurance packages, by awarding scores based on criteria like price. The website also enables, as an intermediary, the conclusion of contracts between customers and insurance providers. HUK-Coburg, whose insurance products were listed on Check24, sued the platform for violating the objectivity requirement under Art. 4(c) of Directive 2006/114/EC. Though the question pertains to the interpretation of Art. 4(c), the CJEU instead focused on the scope of the Directive, namely its definition of ‘comparative advertising’ under Article 2(c).

The CJEU first recalled that the key element of ‘comparative advertising’ is the identification of ‘a competitor’ – either of the advertiser or of the advertised goods/services. Thus, Check24 must be a competitor of HUK-Coburg to fall under the scope of the Directive (para 28). To assess this, the CJEU proposed ‘an analysis of the possible substitutability of the services offered by the parties […] in order to determine whether they operate in the same market’ (para 34, emphasis added). Pending further verification by the referring court, the CJEU pointed out that Check24 itself does not provide insurance services but merely offers comparison and intermediary services, meaning that it offers non-substitutable services to those of HUK-Coburg and operates in a different service market (para 37). The concept of ‘comparative advertising’ under Article 2(c) thus does not include such an online comparison service or such a mere intermediary service.

While it makes sense that third-party comparison services are not regulated as comparative advertising between competitors, these services are still subject to other consumer protection instruments, such as the Consumer Rights Directive and Unfair Commercial Practices Directive, which, according to the Commission, remain under-enforced.

On the Transparency Requirements of Arrangement Fees – CJEU in Justa v Banco Bilbao Vizcaya Argentaria SA (Case C-39/24)

Consolidating Caixabank SA (C‑224/19) and CaixaBank SA (C‑565/21) in Case C-39/2024 of 30 April 2025, the Court of Justice (CJEU) ruled on the transparency of arrangement fees and further clarified the threshold for meeting its requirements. 

Facts of the case

In November 2005, Just and Banco Bilbao Vizcaya Argentaria concluded a loan agreement secured by a mortgage. According to the contract, upon signing the agreement, Justa had to pay an arrangement fee equal to 0.25% of the capital loan. Justa brought an action before the Court of First Instance of Ceuta against Banco Bilbao seeking a declaration that the term establishing the arrangement fee was unfair. 

Question referred

The Court of First Instance of Ceuta referred two questions, one of which is admissible. The second, regarding the application of Directive 2014/17/EU is inapplicable ratione temporis.

By the admissible question, the referring court is asking whether Article 4(2) of Directive 93/13/EEC on Unfair Terms in Consumer Contracts (hereinafter, UCTD) must be interpreted as precluding the case law of the Tribunal Supremo (Supreme Court) which considers the term imposing an arrangement fee to remunerate services ‘connected with the examination, granting or processing of the mortgage loan’, to be transparent without the term specifying the services supplied in exchange for the fee or the time needed to perform them (para 28). 

Ruling

First, the CJEU observes that a term establishing an arrangement fee cannot be considered as pertaining to the main subject matter of the contract. The essential obligations of a credit contract are in fact that the lender ‘undertakes (…) to make available to the borrower a certain sum of money and that the latter undertakes (…) to repay that sum’ (para 31). With this, the CJEU further consolidates its ruling in Caixabank and Banco Bilbao Vizcaya Argentaria (C-224/19 and C-259/19, EU:C:2020:578, para 64). 

Irrespective, Article 5 of the UCTD imposes the same requirement for transparency for contractual terms in writing, which, as per that provision, must ‘always’ be written in plain and intelligible language. As already noted in 2023 in Caixabank (Loan arrangement fees), C-565/21, the requirement for transparency of Article 4(2) has the same scope as the requirement laid down in Article 5. Therefore, the question of the referring court must be reformulated with reference to Article 5 instead of Article 4(2). 

The CJEU holds that the requirement should not be understood as only demanding that the terms are formally and grammatically intelligible. The transparency of the terms must be understood broadly, in light of the provision’s rationale that is to protect consumers’ weaker position vis-à-vis businesses (see also Caixabank (Loan arrangement fees), C-565/21, EU:C:2023:212, para 30). The consumer must be able to understand what ‘economic consequences’ derive for her or him from the term (para 38, emphasis added) and the ‘nature of the services’ she or he receives (para 39, emphasis added). 

The national court will be in charge of determining whether the financial institution has provided sufficient information for her or him to understand the content and functioning of the term (para 40). The court will thus assess the transparency of the terms, taking into consideration ‘all the relevant factual elements’, which include also the advertising that the bank makes of the particular agreement (para 41; see also Caixabank (Loan arrangement fees), C-565/21, EU:C:2023:212, para 40). 

To summarise, the transparency requirement is intended to ensure that the consumer can assess the financial consequences of the term. Crucially, the requirement does not entail that the bank must detail the nature of the services supplied or the number of hours devoted to offering those services (para 44). 

The Court concludes that, like in the case at hand, where the legislation defines the term imposing the arrangement fee as remuneration for services connected with the examination, granting or processing of the mortgage loan, it is not necessary that the term includes ‘a detailed description of the nature of those services or an indication of the time devoted to their performance’ (para 47). 

It is however necessary that ‘the consumer has indeed been placed in a position to assess the economic consequence for him or her, to understand the nature of the services (…) and to ascertain that there is no overlap between the various costs provided for in the contract or between the services for which those costs are paid’ (para 47).

The national case law of the Supreme Court is thus not precluded by Article 5 of the UCTD. 

A milestone for Polish consumers claiming unfairness of Swiss francs mortgage loans - CJEU in Lubreczlik (C-396/24)

Yesterday, the CJEU issued a new judgment in the Swiss franc mortgage loans and their unfair contract terms saga, following a referral from a Polish court, in the case known as Lubreczlik (C-396/24). The referral was based on two cases, in which consumers concluded mortgage loans indexed to the Swiss franc rate. In both cases consumers claimed repayment of sums they had paid to the bank on the basis of their mortgage contracts being void due to unfair contract terms they contained. The bank counterclaimed seeking that consumers paid the full loan amount back to the bank. 

Previously, the Polish Supreme Court issued a judgment with a so-called 'two claims' theory (see declaration III CZP 11/20 from 16 February 2021 - in Polish here). This theory acknowledged that after a loan agreement is declared invalid, both parties (consumer and lender) have a right, "distinct and independent of each other, to repayment of monetary payments made in performance of that agreement. Each of the parties could therefore claim full repayment of the sums paid, whether or not it is still a debtor of the other party and regardless of the amount of its own debt" (para 26).

Imagine now situations (very common in practice), in which consumers have already paid the whole amount of their loan to the bank, or even paid to the bank sums exceeding the total loan value, on the basis of high interest rates. While waiting for their claims of unfairness to be adjudicated by Polish courts or the judgments to become final and the bank to return their money to them, they receive a lawsuit from the bank for the repayment of the full amount of the loan. Often, such a (de facto, repeated) repayment would either be financially impossible or significantly detrimental to consumers (even if made in the expectation of the eventual repayment by the bank of the same or higher sum of money) (para 27). Further procedural rules make it also feasible that any repayment by a consumer of the money to the bank will be immediately enforceable, while the bank's obligation to repay the consumer may take a long time to reach that stage (para 32). Consumers could theoretically argue for a set-off of reciprocal claims, but Polish procedural rules make such a declaration complex and not necessarily favouring consumer interests (para 28).

Repayment of the loan amount by a consumer

The CJEU leaves no doubt that Polish (case) law may not allow banks to claim repayment of the full loan amount, regardless of the value of repayments already made by consumers in performance of the loan agreement and "irrespective of the amount remaining due" (para 44). The CJEU recalls the need for the Member States to ensure that the national protection against unfair contract terms is a deterrent for sellers and suppliers against embedding such terms in their contracts (para 38). Further, national law needs to protect consumers against the detriment of having their contract's annulled as a result of them containing unfair contract terms (para 39). These obligations may result in Polish courts being required to "change established case-law", if following such national case law would lead to undermining EU consumer protection's objectives (para 43).

Polish courts should then disregard the Polish Supreme Court's theory of "two claims" in assessing the banks' claims for repayment of the full amount of loan by consumers, if consumers already had paid back at least part of the mortgage loan to the bank. This should mean in practice that banks claims filed against consumers should be scaled down in consideration of the actual repayments that consumers have already made. Strategic litigation by banks against consumers for the repayment of full loan amounts becomes much more risky as a result of this judgment.

Immediate enforceability of consumer repayments

The CJEU also addressed the matter of Polish courts being required to award of their own motion immediate enforceability to repayment claims made by banks against consumers, if consumers accepted such claims (and they may have good reasons to accept them - see para 51 of the judgment for more information). The Court considers also this practice contrary to EU consumer protection objectives, as long as Polish courts are not allowed to consider in their decision-making detriment to the consumer that such an immediate enforceability order would have (para 58). 

This part of the CJEU's judgment protects consumers against the immediate need to repay the money to the bank, which could have dissuaded them from progressing with their unfairness claims.

Overall, this judgment raises financial risks for these banks that were not keen so far to settle consumer cases and which have used various intimidation tactics to dissuade consumers from pursuing their claims. It may also lead to banks proposing more beneficial settlements to consumers and encourage consumers to negotiate settlement terms.

CfP: Collective Redress and Digital Fairness, deadline 1 June 2025

Dear readers, 

a quick note to highlight a great conference opportunity at the University of Amsterdam. 

The organisers of the conference "Collective Redress and Digital Fairness", which will be held at the University of Amsterdam on 10 and 11 December 2025,  have issued a call for papers open to scholars and practitioners who are interested in engaging with the conference's broad theme, namely "the intersection of collective redress and digital fairness, understood as the equitable treatment of individuals and society in the digital space" and who will bring an own insight with emphasis on (but not limited to) a number of central questions:

• 

  CfP flyer

  What are the theoretical and normative foundations of collective redress?
• How effective is collective redress in the digital legal sphere at international, European, and national levels?
• How do digital rights intersect with other branches of law (e.g., consumer and competition law), and what does this mean for collective actions?
• What impact does litigation have on the compliance and governance of digital corporations?
• How do private and public enforcement interact, and what role do collective actions play within this regulatory framework?
• What is the role of private law and private law remedies in shaping digital fairness, and how does it constrain or contribute to collective redress mechanisms?

Contributions may focus on procedural and substantive law aspects, as well as theoretical, doctrinal, and empirical studies from national, European, and transnational perspectives. 

Thanks to sponsoring by the Dutch foundation for Collective Actions research, selected speakers will be provided one night of accommodation in Amsterdam and a reasonable travel budget. How to apply? You find the submission requirements on ACT's website and in the flyer! Deadline for application is 1 June 20225.

Consolidating Bank M – CJEU in AxFina on the Legal Consequences of Unfair Contractual Terms (Case C-630/23)

In Case C-630/23 of 30 April 2025, the Court of Justice of the European Union (CJEU) ruled on the consequences of the removal of a term relating to exchange rate risk in a leasing agreement denominated in a foreign currency. 

Facts of the case

In June 2007, ZH and KN concluded a leasing agreement denominated in Swiss francs (CHF) with AxFina for the purchase of a vehicle. The credit was to be repaid in 120 monthly instalments denominated in Hungarian forint (HUF). The term relating to the exchange risk placed the risk associated with the appreciation of the CHF against the HUF entirely on the consumers. In May 2013, AxFina dissolved the agreement with immediate effect due to the consumers being in arrears. The entire debt in HUF thus became due and payable in one payment. In compliance with Hungarian law (Paragraph 3(1) of the DH2 Law), AxFina deducted ‘the amount resulting from the settlement (…) as an overpayment attributable to an exchange rate difference (…) and the proceeds of sale of the vehicle’ (para 20). It then brought an action claiming that, should the term be found unfair and the agreement be found invalid, the contract should be declared retroactively valid from the date of the conclusion. The consumers should thus be ordered jointly and severally to pay the debt, in the amount of HUF 1 637 682, of which HUF 972 960 were owed in respect of the exchange rate risk. 

The court of first instance found the agreement invalid due to the unfairness of the term in question, but found that the consumers had to bear the risk up to a certain extent. It reduced the amount owed on the basis of the contract – which it declared valid –by the amount the consumers had lost ‘as compared with the situation that would have obtained if that agreement had been denominated in Hungarian forint’ (para 22). The court of appeal upheld the judgment, stating that the harm, depending on the unfair term, could be eliminated and that restoration of the situation which the consumers would have been in had the agreement not included that term was not possible, due to the irreversible nature of the performance. 

ZH and KN brought an action before the referring Supreme Court, Kúria, seeking a ruling dismissing AxFina’s original action. They argued that ruling out restoration was contrary to EU law and that the national court cannot alter the content of the unfair term. 

The Supreme Court observes that under Hungarian law, the consequences of the invalidity of leasing agreements consist in either declaring it valid or declaring it effective until the decision of invalidity, thus excluding restoration of the original situation (para 27). It is thus possible that, where the contract is found invalid following the removal of an unfair term, a Hungarian court can declare the contract valid retroactively ‘in a such a way that the unfair term (…) does not confer any obligation on the consumer concerned, whereas the other terms (…) which are not unfair, continue to bind the parties’ (para 31). This way, the unfair term placing the risk entirely on the consumers would be removed, and the leasing would continue to exist (para 32). 

Question referred

The Hungarian Supreme Court thus referred one relevant question. 

It asked whether Article 6(1) of the Unfair Contract Terms Directive (UCTD) can be interpreted as meaning that the contract in question can continue to exist without the unfair term (which pertains to the main obligation), where the law of the Member State regulates the currency conversion mechanism by means of mandatory statutory provisions. 

Further, it asked whether it is compatible with the UCTD a Member State’s legal practice, according to which, in view of the principle of unjust enrichment, the creditor must reimburse the consumer ‘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’ (para 37). Instead, the order is made to restore ‘the balance of the contract between the contracting parties (…) by applying the main legal consequence’ in case of invalidity, of the law of the Member State, 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 interests and other costs) continue to bind the parties on the same terms’ (para 37). 

Alternatively, it asked whether it is compatible with the UCTD a practice according to which, where a declaration of validity is not possible, ‘the legal consequences of invalidity are determined by declaring the contract applicable until judgment’ and ‘the settlement of accounts (…) is carried out by applying the principle of unjust enrichment’ (para 37)

Ruling of the Court: consolidating Bank M. (Consequences of the annulment of the contract), C‑520/21

The CJEU first ruled that a term held to be unfair must, in principle, be regarded as never having existed, so that it will be ineffective towards the consumers. Thus ‘the determination by a court that such a term is unfair must (…) 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’ (para 45). A ‘corresponding restitutory effect’ ought to follow the unfairness of a term, the dissuasive effect of Article 6(1) otherwise being called into question (para 46). By implication, while national laws must define the legal effects of finding a contractual term unfair, ‘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 (…) by the seller or supplier’ (para 48). 

Can the contract continue to exist? 

The referring court assumes that the application of Hungarian law meets the requirements of the UCTD in that, from such application, it follows that the consumers no longer bear the financial consequences of the unfair terms, while continuing ‘to enjoy the favourable interest rate linked to the foreign currency stipulated in that contract’ (para 50). However, the CJEU observes that there exist limits to the discretionary power of the Member States to establish the criteria governing the possibility of a contract to continue existing without its unfair terms (para 55). To conclude that a contract is ‘capable of continuing in existence without the unfair terms’, as established by Article 6(1), it is necessary to establish that the continued existence ‘does not involve any amendment of the contract other than that resulting from the deletion of those terms’ (para 62). Where, like in the case at hand, the referring court has found that the unfair term defines the main subject matter of the contract, it does not seem legally possible for the contract to continue in existence (para 63, see Dunai, C‑118/17, para 52). A national court cannot remedy the invalidity of the contract resulting from the unfairness of a term by declaring, at once, the validity of the contract and changing its currency (para 64, see AxFina Hungary, C‑705/21, para 41). This would de facto alter the content of the term. 

Further, while the Court has ruled that Article 6(1) does not preclude a national court from replacing a term with a provision of national law where the consumer would be otherwise disfavoured by the annulment of the contract in its entirety (see Abanca Corporación Bancaria and Bankia, C-70/17 and C-179/17), it is important to remember that the wishes of the consumer are decisive in assessing the consequences of the annulment of the contract (see D.B.P. and Others (Mortgage loans denominated in foreign currency), C-80/21 to C-82/21). In the case at hand, the consumers have clearly expressed their wish that the leasing be annulled in its entirety (para 70). 

Does the Hungarian legal practice have a deterrent effect? 

The compatibility with EU law of the Hungarian legal practice detailed above depends on two things: first, it should make it possible to restore both in law and fact the situation which the consumer would have been in had the contract not existed; second, it should not undermine the deterrent effect of the UCTD (para 76; see Bank M.). In cases like the one at stake, the consumer must at least be entitled to reimbursement of the monthly instalments and fees paid (para 77). A payment only of the sums obtained by AxFina on the basis of the term relating to the exchange rate risk is not at all sufficient (para 78). They must be reimbursed for all monthly instalments. Further, granting AxFina the right to seek compensation beyond restitution of the goods made available in performance of the agreement (i.e., the vehicle) or the reimbursement of the corresponding value would eliminate the deterrent effect of the UCTD, de facto allowing the credit institution to be remunerated for the use of those goods by the consumers (para 79; see Bank M). Further, contrary to what the Hungarian Supreme Court argued, this interpretation is not questioned by the need to ensure that ‘the penalty imposed is …proportionate’. In Deutsche Bank Polska, C-325/23, the Court, in fact, ruled that invalidating a contract due to the unfairness of a term is not at all a penalty (para 80). 

Conclusion

With this ruling, the Court of Justice intervenes, consolidating Bank M, and thus adding an extra piece to a complex process of clarification on the compatibility of legal consequences of finding a contractual term unfair with EU law. As recently noted by the scholarship, national courts reach significantly differing outcomes with regard to the consequences of the unfairness of a contract term (E Mišćenić, P Tereszkiewicz and M Infantino, ‘The Interplay Between the CJEU and National Courts in the Case Law on Unfair Contract Terms in Foreign Currency Loans: A Comparative Overview’ (2023) 19(4) European Review of Contract Law 346). While Member States are in charge of determining what the consequences of the invalidity of the whole contract are, the Court can and is providing guidance on the alignment of national rules with the objectives of the Unfair Contract Terms Directive. 

Reaffirming Established Case Law, Withholding Guidance? – CJEU in APS Beta Bulgaria (Case C-337/23)

Foto von Linus Nilsson auf Unsplash

The recent ruling in APS Beta Bulgaria (C-337/23) provides another example of the Court of Justice reaffirming its established case law on consumer credit. However, it also illustrates a more subtle tendency: interpretative restraint. 

This post argues that, while the Court preserves the continuity of its case law, its reluctance to provide detailed interpretative guidance risks undermining the aim of achieving a high level of consumer protection.

Facts of the Case

In the case at hand, consumer-borrowers concluded credit agreements with Easy Asset Management AD and Credissimo AD, with an annual percentage rate of charge (APRC) of approximately 40–50% and repayment terms between three and eighteen months.  Under each agreement, consumers were required to provide security, including a guarantee, for which specific fees - exceeding 75% of the total amount repayable under the credit agreement - were charged. The guarantee was to be provided either by two natural persons meeting certain criteria, or by a bank or company selected or approved by the creditor. In each instance, the consumers tendered a guarantee from a company nominated by the creditor, including in one case a subsidiary of the creditor itself. Under Art. 147 ZZD (Bulgarian Law of Obligations and Contracts), a guarantor remains liable only if the creditor brings proceedings against the debtor within six months of the principal obligation becoming due. In the present case, guarantors satisfied the debt - except in one instance - after this period had expired, and subsequently assigned their claims to APS Beta Bulgaria EOD or Agentsia za kontrol na prosrocheni zadalzhenia AD, which then sought repayment from the consumers through order for payment proceedings. In these circumstances, the referring court (Sofia District Court) submitted questions for a preliminary ruling.

Reasserting jurisprudence constante

Some of the questions addressed in APS Beta Bulgaria have already been the subject of established case law in recent years. For example, in response to the fifth question, the Court of Justice reaffirmed that the classification of a commercial practice as unfair, following Pereničová and Perenič, constitutes just one aspect of the broader context within which standard terms are to be assessed for unfairness, under Art. 4(1) and Art. 3(1) UCTD (paras 75-77).

Similarly, the Court reaffirmed that national courts are under a duty to examine the unfairness of standard terms ex officio. However, a mere doubt as to their unfairness is not sufficient to support a finding to that effect. In this regard, the Court confirmed that where national courts are empowered to take investigative measures of their own motion to supplement the case file - provided that the audi alteram partem principle is respected - this power extends to order-for-payment proceedings. This position is consistent with case law beginning with Banco Español de Crédito, in which the ex officio obligations of national courts were recognised in the context of such proceedings. By confirming the relevance of the audi alteram partem principle, the Court also underscored that the parties to the proceedings are expected to assume an active role. In this respect, the Court reaffirmed its jurisprudence constante (e.g., ERSTE Bank Hungary, para 62; Sziber, paras 46-47; Lintner, paras 38–39, 44).

In answering the first question, the Court also reaffirmed its case law established in Kásler (paras 37-38), Matei (para 50) and Andriciuc (para 34), holding that the concept of the main subject matter of the contract under Art. 4(2) UCTD constitutes an autonomous concept of EU law (paras 49–52). The Court once again defined the main subject matter as the essential obligations of the contract, which do not appear to correspond directly to the concept of essentialia negotii under national law, particularly as there is no express reference to the law of the Member States (para 51). The issue arose as to whether the contract of guarantee might be excluded from unfairness control on the basis that it constitutes a separate agreement, whereas a guarantee would merely qualify as an ancillary term under the credit agreement. The Court held that the credit and guarantee agreements should be regarded as forming a single contractual relationship, especially where the costs of the guarantee are payable within the credit instalments. Accordingly, the assessment of whether a contract term constitutes a core term must be undertaken with reference to the essential nature of the obligation within the overall contractual relationship, rather than by isolating the contract of guarantee (paras 55–59). In so doing, the Court opened the way for the assessment of unfairness of the contract of guarantee, without classing it as falling under the scope of the exclusion under Art. 4(2) UCTD (paras 53–54).

A similar observation may be made regarding the Court’s answer to the eighth question. It confirmed that the concept of the total cost of credit to the consumer is defined broadly to include all costs which the consumer is required to pay in connection with the credit agreement. In this regard, it follows that the costs linked to a contract of guarantee - where the conclusion of such a contract is imposed on the consumer by a term in the credit agreement and contributes to the overall consumer’s debt - fall within both the concept of total cost and that of the APRC (paras 86-93). Notably, the Court did not engage with the concept of ‘total cost of the credit’ as an autonomous concept of EU law, although it might have done so, particularly given its approach in Soho Group (paras 39, 51). 

In a similar vein, the Court reasserted its case law on the proportionality of sanctions as developed in Profi Credit Bulgaria, namely that a failure to provide a correct APRC, accurately reflecting the extent of the consumer’s liability, may under national law (that is, it is proportional) result in the creditor being deprived of entitlement to interest and charges connected to the credit agreement. This raises the further question whether any failure to indicate the APRC - irrespective of its seriousness - may justify the same sanction, or whether certain inaccuracies, such as minor discrepancies (as under French law, see Art. R313-1 II Al. 4 C. con.) or errors in favour of the consumer (e.g., where the APRC indicated in the contract is higher than the actual one), could still be regarded as proportionate grounds for forfeiture of interests and charges linked to the credit agreement.

Some Doubts Regarding Interpretative Restraint

Although the Court has reaffirmed its jurisprudence constante, certain aspects of the judgment may nevertheless be viewed critically - particularly in relation to the Court’s interpretative restraint. 

For instance, in addressing the second and third referred questions, the Court focused on three types of contract terms that may be considered unfair under the Annex to the UCTD. These include terms (Point 1, (i), (j), (m) of the Annex I UCTD), which: first, irrevocably bind the consumer to provisions of which they had no real opportunity to become aware before the conclusion of the contract; secondly, allow the seller or supplier unilaterally to alter the terms of the contract without a valid reason specified therein; and thirdly, grant the seller or supplier the exclusive right to determine whether the goods or services supplied conform with the contract, or to interpret the terms of the contract unilaterally. As the Court observed, a contract term by which the consumer undertakes to conclude a contract of guarantee with a guarantor chosen by the lender - without being aware, at the time of concluding the credit agreement, of the guarantor’s identity or the terms of the guarantee - does not correspond to any of the contract terms listed in the Annex to the UCTD (paras 62–63). Nonetheless, this does not preclude its classification as unfair. Such a term must instead be assessed under the general unfairness criteria laid down in Art. 3(1) UCTD (para 63). What remains unclear, however, is why the Court refrained from offering more specific guidance on how such terms might be assessed for unfairness, or under what circumstances they could justifiably be found unfair under the criteria of Art. 3(1) UCTD. While it is true that this assessment ultimately falls to national courts, the Court has previously provided tailored guidance on the application of Art. 3(1) UCTD to specific types of terms - such as accelerated repayment clauses in Banco Primus (paras 65–67) or, more recently, in Všeobecná úverová banka (para 86). Its failure to do so in this case may be understood as a form of interpretative restraint, even though such guidance would have been of practical value to other Bulgarian courts in assessing similar clauses in related proceedings, including those not subject to the current reference in the preliminary ruling procedure. It remains to be seen whether more detailed guidance will be offered in the still pending analogous case Financial Bulgaria (C-426/23). 

A comparable concern arises from the Court’s answer to the fourth question on unfair commercial practices. Although the referring court sought only a classification of the practice as aggressive under Annex I to the UCPD (paras 66–71), the Court might have offered broader guidance on whether such a practice could also fall within the general concept of unfairness under this directive. Although such clarification - comparable to the guidance the Court has been providing under the UCTD - would have been of practical relevance for Bulgarian courts, this approach remains arguable, since the Court was bound by the narrowly framed question referred by the national court concerning Annex I of the UCPD. 

A further issue arises from the Court’s response to the sixth and seventh referred questions. The Court held that it could not assess the compatibility of national case law with, inter alia, Art. 5 and 7 UCTD, as both provisions concern contract terms rather than the legal effects that arise from the judicial application of national legislation (para 79). Although this distinction is formally correct, the Court could have engaged with the broader context or, at least, acknowledged that the UCPD framework may be relevant in such circumstances - particularly concerning time limitations. Where guarantors - potentially subsidiaries of the lender and within one overreaching contractual framework - satisfy the debt after the applicable national limitation period has expired, such conduct may effectively circumvent debtor-protective rules. This raises serious concerns whether such commercial practices could not be viewed as unfair commercial practices under the UCPD framework.

Of particular interest is that the Court did not classify the credit agreement and the contract of guarantee as a linked credit agreement within the meaning of Art. 3(n) CCD (2008), thereby excluding the application of Art. 15 of that directive (paras 80–85). While this narrow conclusion is justified on the basis of a literal interpretation of the referral, the Court could have addressed Art. 17 CCD, a provision invoked by the Commission during the proceedings (AG, para 25). A more thorough engagement with this provision would have offered clearer guidance to national courts in cases involving analogous contractual arrangements where one agreement, such as a guarantee, is intrinsically linked to another, such as a credit agreement.

Where Now?

The underlying doubts surrounding the Court’s interpretative restraint in this case may be understood through the lens of judicial dialogue. As AG Collins observed in his Opinion (AG, paras 24–25), it is the responsibility of national courts to formulate the questions referred to the Court of Justice, and the Court limits itself to answering the questions so posed. Nonetheless, the Court’s reliance on a strictly literal reading of both the referred questions and the applicable legal provisions - without situating them in their broader factual and regulatory context - reflects a form of interpretative restraint or even escapism. This approach appears designed to preserve the formal boundaries of judicial dialogue, but it comes at the expense of substantive guidance for national courts. In other words, such interpretative restraint appears to balance judicial dialogue over the need to provide legal certainty for consumers - and, by extension, over the achievement of a high level of consumer protection. This is particularly problematic when it comes to clarifying general clauses or engaging with provisions such as Art. 17 CCD (2008). The issue is especially pressing considering growing concerns about informal debt collection practices, which have recently been the subject of detailed academic analysis (see Stănescu 2025, in OA). What emerges from this case is a broader and more pressing question: does APS Beta Bulgaria reflect an isolated instance of an overemphasis on judicial dialogue, or does it signal a broader shift toward interpretative restraint - or even escapism - in the Court’s ever-evolving case law?

Hague court upholds a municipal ban on fossil fuel ads: implications for EU (consumer) law

The climate malaise has invited many new regulatory measures in recent years to fight against greenwashing, with advertising bans being particularly noteworthy. In September 2024, The Hague passed a municipal law banning fossil fuel-related advertising in public spaces like billboards and bus shelters (Art. 2:97(7) City Ordinance). The ban outlaws ‘advertising for products and services related to fossil fuels, including air travel, plane tickets, grey energy contracts, gas contracts, cruise holidays or cars with fossil fuel or hybrid engines’ (Art. 1:1(x)). The ANVR – the Dutch trade association for travel agencies – and the travel company TUI filed summary proceedings against the ban. On 25 April 2025, the District Court of The Hague upheld the ban. It thoroughly assessed the measure’s compatibility with the Unfair Commercial Practices Directive (UCPD), EU free movements and fundamental rights (freedom of expression and the freedom to conduct a business).

This ruling is the first time a court reviewed and upheld a municipal ban of this nature, making it a noteworthy legal development for EU (consumer) lawyers in light of the burgeoning regulatory initiatives. Besides the Hague ban, Amsterdam has similarly banned fossil advertising since 2021, while France has introduced a national ban in 2022. The UN Secretary-General, António Guterres, has even called for a global ban on all fossil fuel advertising. Apart from fossil advertising, several Dutch cities, including Haarlem as the world’s first, have banned meat advertising, and France has outlawed advertising for ultra-fast fashion. Building on the Hague decision, this post summarises the legal arguments in favour of the legality of similar advertising bans under EU law.

 

The Court’s Ruling

Compatibility with UCPD (paras 5.11-5.12): According to ANVR and TUI, the UCPD, as a maximum harmonisation instrument, prohibits Dutch law from providing a higher level of protection and thus renders the fossil ads ban incompatible. Referring to the Commission’s UCPD Guidelines, the Hague Court clarified that the UCPD ‘does not cover national rules intended to protect interests which are not of an economic nature’ and thus ‘does not affect the possibility of Member States to set rules regulating commercial practices for reasons of health, safety or environmental protection’. According to the municipality of The Hague, the ban is not intended to protect the economic interests of consumers but aims to prevent the negative effects of climate change and to protect the health of residents and visitors of the city. Therefore, the ban is not contrary to the UCPD.

Compatibility with the free movement of goods (Art. 34 TFEU, paras 5.13-5.15): Following the CJEU’s Keck jurisprudence, national advertising restrictions are only assessed under Art. 34 TFEU, which prohibits discriminatory measures on imported goods. According to the Hague Court, the ban applies indistinctly to Dutch and international market participants, and ANVR and TUI did not demonstrate otherwise. Even if the ban constitutes a restriction under Art. 34, such a restriction can still be justified under Art. 36 TFEU for the protection of health and the environment. The municipality has sufficiently substantiated that the ban is suitable and necessary for achieving said objectives by encouraging residents and visitors to make more sustainable choices and reducing the use of fossil fuels. The measure also remains proportionate, as advertising through other media, such as television and newspapers, is still possible.

Compatibility with the freedom of expression (Art. 10 ECHR and Art. 11 of the Charter, paras 5.16-5.19): Art. 10 ECHR codifies the freedom of expression but allows for restrictions that ‘are prescribed by law and are necessary in a democratic society’. Following the ECtHR case law, the Hague Court referred to the existence of ‘a pressing social need’ to assess whether the ban’s restriction on freedom of speech can be justified. The Court invoked some similar arguments to those under Art. 36 and concluded that the ban complies with Art. 10 ECHR: The advertising ban is relevant for the protection of health and the environment, and advertising for the plaintiffs’ other products or through other media remains possible. In addition, Art. 11 of the Charter does not provide more extensive protection. The municipality also contended that the Charter does not apply as the dispute measure does not concern the implementation of EU law, which the Court agreed. (In a separate section (paras 5.8-5.10), the Court also discussed the freedom of expression under Art. 7 of the Dutch Constitution, but the national provision does not protect ‘commercial advertising’.)

Compatibility with the freedom to conduct a business (Art. 16 of the Charter, paras 5.20-5.21): While the Hague Court stated that the Charter does not apply, for the sake of argument, Art. 16 of the Charter still would not invalidate the advertising ban. The violation of Art. 16 should only be assessed in light of the analysis under Art. 34 TFEU, and a separate assessment is unnecessary.

This analysis should be read in light of the Hague Court’s assessment on the municipality’s competence (paras 5.6-5.7). The Court confirms that the municipality of The Hague is competent to act against climate change and promote public health by setting rules within its boundaries. It is deemed untenable to argue that flying less does not have a direct positive impact on air quality within The Hague. The Court pointed out that reducing flying, ‘in combination with other environmental measures taken by the municipality’, can decrease CO2 emissions. This is not altered by the fact that the contribution of the municipality may be small on a national or global scale. ‘Every little bit helps, and the municipality wants to do its bit’.

The Hague Court also assessed the compatibility of the ban with the general principles of good administration (paras 5.22-5.34), including the principles of lex certa, proportionality, equality and the obligation to state reasons. However, none of these principles are violated.

 

Comments

While scholars have presented convincing arguments that bans on advertising for carbon-intensive products do not violate EU law (see Kaupa; Venzke and Ankersmit; Van de Berg and Eckes), the Hague Court’s decision sets a positive precedent for similar action, especially at the local and municipal levels. The fact that the Hague Court did not even feel the need to ask for a preliminary ruling from the EU Court also indicates the ban’s clear legality under the EU legal framework.

Here are some main lessons from this case. From the perspective of EU secondary law, the UCPD does not pose a legal obstacle insofar as the ban is framed as exclusively for health and the environment, and not for consumer protection. The reference to consumer protection, even as a co-objective for a mixed-purpose measure, will invoke the fully harmonised UCPD, which, despite the recent amendment to upscale its relevance for combating greenwashing, does not square with a comprehensive ban. While this construction nonetheless allows national and local authorities to introduce an advertising ban, it is regrettable that the UCPD views consumer protection of economic interest in such a narrow sense. A more enduring solution would simply be to amend the UCPD (either its harmonisation scope or its objectives) or to interpret its objectives in a more long-term, environmentally friendlier way (for example, in conjunction with Art. 11 TFEU).

Moreover, the Hague Court did not discuss the Audiovisual Media Services Directive (AMSD), which was previously invoked in another case heard by the Dutch Advertising Code Committee. Art. 9(1)(c)(IV) AMSD prohibits advertisements encouraging ‘behaviour grossly prejudicial to the protection of the environment’. The Dutch Advertising Code Committee rejected the reading that this provision justifies bans on fossil advertising, which was based on an artificial distinction between advertisements and the (environmentally harmful) products being advertised. But it has been argued that the AMSD provision not only allows but also demands bans like that of The Hague. Moreover, the fact that the EU legislature has already undertaken a balancing exercise when enacting secondary law, ie weighing the tension between an advertising ban and free speech, provides more concrete guidance for the judicial assessment.

From the perspective of EU primary law, the Hague Court informed us of a twofold legal strategy. First, regarding provisions like Art. 34 TFEU and Art. 16 of the Charter, a comprehensive and non-discriminatory ban simply invokes no violation. While not discussed by the Hague Court, neither is an advertising ban liable for infringing upon property rights (Art. 1 of Protocol 1 ECHR, Art. 17 of the Charter): a contractual right to use advertising spaces can hardly be qualified as a proprietary interest, and its decrease in economic value hardly amounts to an infringement.

Second, even if a restriction of fundamental rights or freedoms is found, such as the freedom of expression, there are almost always exceptions available for such a restriction to be justified for the legitimate aim of public or general interest. This should include the protection of health and the environment (as well as broadly defined consumer protection), given the urgency of climate change (as we trail behind the Paris Agreement goals) and that the ECtHR has interpreted Art. 8 ECHR as encompassing the protection against climate change.

Next, the justification usually concerns a three-step assessment of suitability, necessity and proportionality. We can draw some general lines of argument from the Hague decision. (A lot can also be learnt from the advertising restrictions on alcohol and tobacco.)

• First, an advertising ban is suitable for pursuing the aims of health and environmental protection. In light of the significant carbon impact of private consumption, the IPCC Report has highlighted the urgent need for changes in consumption patterns to achieve climate neutrality. To this end, advertising and other commercial communications play a crucial part in shaping consumer choices and normalising undesirable consumption behaviour. As such, as the Hague Court correctly pointed out, advertising bans can encourage consumers to make more sustainable choices and reduce carbon emissions.
• Second, an advertising ban is also necessary. Here, it is more difficult to generalise the analysis as it usually pertains to the scope and essence of each restricted right or freedom. But the Hague Court helpfully reminded us that the fact that banning fossil advertising within a municipality’s boundaries is insufficient for curbing climate change does not render the measure unsuitable or unnecessary. The necessity of the advertising ban must thus be viewed as part of a broader policy mix in the climate transition.
• Third, regarding proportionality in a strict sense, it is again related to the specific restricted right. This case concerns a ban at a municipal level on advertising in public spaces. Its restrictive scope means that the proportionality test is not hard to fulfil. For bans at the national or EU level, the proportionality test may be more challenging. One approach is through comparison with feasible alternatives. For example, the proposed Green Claims Directive requires ex-ante verification for all explicit environmental claims prior to market access. By comparison, a ban targeting advertising for fossil fuel and other carbon-intensive products should be considered less restrictive and thus proportionate.

 

Overall, the Hague Court’s decision is a positive message for the legal battlefield against climate change. It brings legal clarity and paves the way for further – necessary but insufficient – action against greenwashing and unsustainable market practices.