Monday, 14 November 2016

ECJ in Home Credit Slovakia (C-42/15): MS can impose written form for the conclusion of credit contracts

Last week, the Court of Justice issued its decision in Home Credit Slovakia, C-42/15. We have already covered the AG's opinion on this case, which was largely followed by the Court. For this reason, the comment here is limited to the two most complex questions discussed and decided by the Court.

Background: the Consumer Credit Directive (art 10.1) provides that “credit agreements shall be drawn up on paper or other durable medium”.  It then makes a list of 22 elements of information which should be included in said agreements.
Slovakian law requires credit contracts to be concluded “in writing”, which means that offer and acceptance have to be signed. This contract to be concluded in writing has to include all the elements mentioned by the consumer credit directive.
The facts of the case are largely unremarkable, except for the fact that  we know a few of the elements which the Directive and Slovakian law require to be included in the contract were not specified in the document signed by the parties, but only in the lender’s terms and conditions .
The main questions before the court of justice were:
  •     whether the directive requires all the information to be contained in a single document, ot whether it allows part of that information to be provided in a different document, aka the provider’s standard terms of business;
  •            whether a requirement under national law that all the information be included in one document- or that if part of the information is contained in a separate, unsigned agreement, the contract cannot have full legal effect - is precluded by the directive.

The AG had discussed at length the Slovak translation of the Directive’s text, and had ended up  discussing separately the compatibility of national legislation possibly imposing as well as not imposing the requirement that the information be all included in a single document.
When discussing expressly the possibility that national legislation allows for the information to be split among different documents, the AG went on to explain (para 52 of her Opinion) what conditions would make this acceptable in line of the Directive’s requirements.
The Court does not discuss much whether allowing the information to be split among different documents is in line with the Directive, since “there is nothing in the Directive to indicate that the credit agreements referred to in that provision must be drawn up in a single document” (para 30).

The Advocate General found this potentially more problematic, and included the requirements in her conclusions- there is no trace of the same nuance in the Court’s decision. On the other hand, the Court is more explicit on the fact that the formal requirements for the conclusion of a credit contract are left for the Member States to determine (para 39 ff), and avoids entirely the “single document” issue- which allows them not to make any reference again to the relationship between the standard terms and the text of the agreement. While the Advocate General assumed that the “in writing” obligation and the single document would go hand in hand, the Court is suggesting a different interpretation- namely that national laws could be seen to require that both the main text and the standard terms should be signed by the consumer. 

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