Last month the CJEU delivered another judgment on the interpretation of payment services rules. Case C-337/20 DM, LR v Casisse régionale de Crédit agricole mutuel (CRCAM)- Alpes-Provence tackles an interesting and highly important question of concurrent liability based on special and general legal rules.
Facts
CRCAM bank granted the company Groupe centrale automobile a current account credit facility guaranteed by joint and several security undertaken by LR. After terminating this credit facility, the bank ordered the guarantor to pay. The guarantor contended that by making transfers to third parties without authorization, the bank had breached its duties and the amount of those transfers should be deducted from its claim.
The Cour d’appel considered the objection inadmissible. It held that in accordance with the Franch law implementing Directive 2007/64/EC (PSD1), the company had a 13-month period within which to contest the disputed transactions and since it failed to do so, the objection was precluded.
LR appealed and argued that not respecting the law that implemented PSD1 did not prevent the court to hold CRCAM liable for breaching their general duty of care provided for in the Civil Code.
Legal questions and rulings
The referring national court in the first place asked the CJEU whether the special provisions in Articles 58 and 60(1) of PSD1 as implemented into national law prevent courts to hold contracting parties accountable on the basis of other rules than those when some of the special rules had been breached?
The court ruled that special rules, in this case, those of PSD1 and its implementing legislation, get primacy over general rules of the Civil Code. The court first looked at the wording of the relevant provisions and concluded that they are clear; if the user failed to report to the payment service provider the unauthorized transaction within 13 months from the date of the transaction, liability of the payment service provider or compensation for the authorized transaction is no longer possible, neither based on special rules nor based on general rules. Secondly, the court looked at the context of the provision and highlighted its full harmonization nature, which means, that Member States cannot go beyond the said provisions of PSD1. This prohibition includes the utilization of more generally applicable rules of the Civil Code. Third, the court relied on teleological interpretation to support its ruling and concluded that alternative liability regimes should not contradict the harmonized liability regime established by PSD1. This would be contrary to legal certainty. Finally, the CJEU considered the background of PSD1 that also supported its conclusion.
Within the second question, the CJEU tackled the special situation that arose from a three-party relationship and the position of the guarantor. The CJEU held that the special, national provisions implementing PSD1 do not prevent the guarantor to rely on general civil law contractual liability of the payment service provider to challenge the amount of the guaranteed debt. In its reasoning, the court first emphasized that the special liability regime established via PSD1 only applies between the payment service user and the payment service provider (Art. 1(2) PSD1), or between 'payer' and 'payee' (Article 4.7 and 4.8 PSD1) without any reference to the guarantor. The contract of guarantee is thus not governed by PSD1 or indeed by any other EU law instrument. The court concluded that such contract continues to be subject to the rights and duties established under the applicable national law. Finally, the court noted that the liability regime provided by PSD1 is based on the balance between the two parties. The obligation to provide information (borne by the payment service provider) and the obligation to notify any authorized transaction within the period of 13 months (conferred on the payment service user). Thus, in order to trigger the liability of the payment service provider for any unauthorized transaction, the guarantor cannot benefit from the regime established by PSD1, it thus follows that the guarantor must have recourse to the possibilities provided for him/her under the applicable national law.
Our evaluation
Although this is not a typical consumer case, given that the main transaction was between two legal persons and the guarantor seems to have been the only consumer in the three-party relationship; the case nevertheless raises very interesting questions highly relevant for any contractual transaction, including consumer contracts.
The first interesting aspect of the judgment is that it points to the unharmonized nature of guarantee contracts, contracts that are very relevant for modern financial services, and that are frequently sought for by banks when they provide loans.
The second relevant aspect of the judgment is that it contributes to craving out the relationship between lex generalis and lex specialis (in this case implemented EU legislation) confirming the supremacy or primacy of EU law over national law. If we connect this case to C-303/20 Ultimo Portfolio Investment (see our report here) and C-686/19 Soho Group (access our report here) we can draw important conclusions. The message of the CJEU on the relationship between lex specialis and lex generalis seems to be that if the relevant EU law provision is one of a full harmonization, it gets primacy over national law and cannot be contradicted by traditional rules of eg. the civil code. However, as long as the provision is not of a full harmonization nature and the particular EU legal instrument is a directive, Member States can go beyond the directive and the relevant provision under scrutiny as long as the national law achieves the intended result pursued by the given directive.
