Last Thursday the Court of Justice delivered its judgment in C-331/18 Pohotovost’. The case forms part of the series of Slovak references concerning the interpretation of EU consumer law in the context of credit agreements. It is not to be mistaken with previous disputes involving the same creditor and focusing on Directive 93/13/EEC on unfair terms (especially C-470/12 Pohotovost' and C-168/15 Tomášová - see the relevant posts here and here). Rather, it revolves around disclosure duties laid down in Directive 2008/48/EC on consumer credit, and as such, presents a direct follow-up to the ruling in C-42/15 Home Credit Slovakia.
Facts of the case
The case involved a consumer who questioned his obligations under a credit contract, arguing that the creditor failed to comply with several disclosure duties set out in national rules implementing Directive 2008/48/EC. As we have learnt from Home Credit Slovakia, non-compliance with key disclosure duties may result in the credit being deemed as free of interests and charges - a sanction established among others by Slovak law, which the Court of Justice found to be compatible with EU law.
Home Credit Slovakia, however, also addressed another important matter - the scope of disclosure duties which Member States can impose on the creditors in the first place. This part of Court's reasoning was not really surprising: the CJEU held that, due to the principle of full harmonisation, to which Directive 2008/48/EC is subject, Member States may not adopt information obligations which are not established in that act. In response to this ruling, the Slovak legislator decided to adjust the national act on consumer credit, among others by removing the duty to break down the payment of the credit in terms of the capital, interest and other charges. The consumer in the present case nevertheless sought to rely on precisely on that duty, arguing that, firstly, the legislative changes undertaken in response to Home Credit Slovakia were too far-reaching and, secondly, they could not be applied to him as the disputed agreement predated the legislative amendment. This faced the referring court with questions about the scope of disclosure duties in Consumer Credit Directive and the limits of its obligation to interpret national rules in conformity with EU law.
Judgment of the Court
The Court of Justice did not consider the dispute to be all that complicated and, in any case, did not find arguments to support the pro-consumer approach considered by the referring court. Firstly, no obligation to break down credit payment was found in Directive 2008/48/EC. As noted by the Court, Article 10(2)(h) refers merely to frequency of payments, Article 10(2)(i) to the right to receive an amortisation table, and Article 10(2)(j) to a statement showing the periods and conditions for the payment of the interest and associated charges, if charges and interest are to be paid without capital amortisation. As a result, the duty relied upon by the consumer in the main proceedings was precluded by the principle of full harmonisation.
Secondly, the Court recalled that interpretation of EU rules provided in its judgments clarifies and defines the meaning and scope of these rules as they ought to be understood and applied from the time of their entry into force. It follows that a rule must be interpreted according to the CJEU judgment also when the legal relationship, to which it is applied, was established before that judgment. The referring court should, therefore, apply the law applicable at the time when disputed agreement was concluded in conformity with EU law, as interpreted in Home Credit Slovakia. While it is true that the requirement to interpret national rules in conformity with EU law cannot serve as the basis for an interpretation of national law contra legem, a national court cannot consider this to be the case merely because it would have to change the established, national case-law.
Concluding thought
The analysed case is not groundbreaking but it helps to systematise several important pieces of CJEU case law, notably on the principle of full harmonisation and interpretation of national rules in conformity with EU law. As regards the more specific context of consumer credit, the ruling should be read together with the previous judgments in C-76/10 Pohotovosť and C-42/15 Home Credit Slovakia. Some of the parties intervening in the proceedings observed that the consumer could also have relied on inaccurate definition of annual percentage rate - a matter which the previous case law clarified to his advantage. This shows that - regardless of the analysed judgment - Consumer Credit Directive leaves room for important safeguards of consumer interests.
