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.

Education as consumption? Private schooling as a consumer service contract: CJEU in St. Kliment Ohridski (C‑429/24)

In St. Kliment Ohridski Primary Private School (C‑429/24), the CJEU examined the applicability of the Consumer Rights Directive (CRD) to enrolment contracts between a parent and a privately funded school for the compulsory education of her children. Questions arose as to whether the parent and/or the children qualify as a ‘consumer’ under the CRD and whether the contract qualifies as a ‘service contract’. Moreover, as Bulgarian law mandates the same educational standards, including compulsory subjects, for both public and private schools, the CJEU was also asked whether, under Art. 27 CRD – which exempts consumers from paying for the unsolicited services – the parent or pupil may deny payment for compulsory subjects they did not request or for unsatisfactory education.

Regarding qualification, the CJEU relied on its previous case law under the Unfair Contract Terms Directive (see our previous comment here) and extended the ‘broad interpretation’ of the notion of ‘consumer’ to the CRD (para 38). In this case, the parent concluded the enrolment contracts solely to ensure her children’s education at a private school and not for any professional purpose (para 40). The fact that such education is compulsory under national law – and the contracts were thus concluded to satisfy a legal obligation – does not alter the qualification. The CJEU reiterated that ‘consumer’ is ‘an objective concept’, independent of the contract’s subject matter, including the reasons leading to that contract (here, to fulfil a legal obligation). Plus, the parent remains free to choose which private school to entrust (para 41). Therefore, the consumer status of the parent is confirmed. However, as the enrolment contracts were concluded between the parent alone and the private school, the children/pupils themselves are not covered by the concept of ‘consumer’ (para 42).

In light of such qualification, and given that Art. 2(6) CRD gives a broad definition of a ‘service contract’ that covers ‘all contracts which do not fall within the term “sales contract”’, the enrolment contracts should be characterised as a ‘service contract’ (paras 45-46). While not specified by the CJEU, the point here is also that such qualification applies to the enrolment contracts in their entirety and is not limited to components ‘not falling within the scope of compulsory education, such as the provision of meals, transport or extracurricular activities’ (see para 26).

Finally, the CJEU observed that the parent has concluded a contract for ‘a single overall service’ of the provision of full-time education in line with national education standards, ‘without it being possible to choose the subjects taught or to adjust the number of teaching hours’ (para 53). The provision of mandatory education is thus part of that overall service and does not constitute unsolicited service under Art. 27 CRD. As to the dissatisfaction with the quality of education, it is not covered by the CRD as stipulated by Art. 3(5) CRD and is thus left to national contract law.

This case is an interesting addition to the ever-expanding scope of European consumer law, extending beyond the traditional consumer to encompass travellers, homeowners and tenants, energy users, debtors, patients and, now, the parents of a pupil. As public services increasingly become privatised, the broad reach of consumer law serves an important welfare function by ensuring (minimum) protection across various aspects of individuals’ lives. 

Interpretation favours air passengers - CJEU in Cymdek (C-20/24)

In Cymdek case (C-20/24) Polish court asked the CJEU to further interpret provisions of Regulation 261/2004 on air passenger rights regarding proof of travel (reservation) and the concept of traveling 'free of charge'. The case was decided on March 6 and the CJEU interpreted relevant provisions of the Regulation in a passenger-friendly manner. 

Facts and legal questions

In this case, a company CCC financed package tours for a group of passengers. CCC booked this package tour with a tour operator BBB. It included a flight between Spain and Poland, which was delayed by over 22 hours (operating carrier: AAA). Two questions raised in the dispute followed from passengers not being involved with making the reservation nor paying for it. Article 3 of the Regulation 261/2004 defines the scope of its application and requires that passengers 'have a confirmed reservation on the flight concerned'. This requires passengers to have a ticket or 'other proof' that the air carrier or tour operator accepted and registered the reservation, pursuant to Article 2(g). Further, Article 3(3) excludes from the scope of application such passengers who travel free of charge or at a reduced fare. As proof of their reservation passengers were presenting their boarding passes and the first question answered by the CJEU asked whether this was sufficient as 'other proof'. Second question addressed the issue of passengers traveling 'free of charge' if they did not pay for their flight, but the tour operator and the air carrier were remunerated nonetheless.

Boarding pass as proof of a reservation

The CJEU considers a boarding pass as proof of a reservation, as it includes ticket or reservation number and confers on passengers 'entitlement to transport', authorising them to take the flight (paras 23-24). It also relies on the fact that as the operating air carrier admitted these passengers on board via check-in and allowed them to take the flight, they had to have had a confirmed reservation for that flight (para 29). The boarding pass can then prove the existence of a reservation, even if it does not contain all information normally expected from it, e.g. arrival time (para 25). 

Free of charge air travel only if made free by the operating air carrier

The most common interpretation of the exclusion from Article 3(3) Regulation 261/2004 involved air carriers offering free (or at a reduced fare not available to the public) flights to passengers, outside the frequent flyer programme benefits (paras 40-41). The CJEU confirms in this judgment that it is only the operating air carrier's decision to facilitate free (or at a reduced fare) travel to passengers that would prevent passengers from claiming protection from Regulation 261/2004 (para 44). The fact that the tour operator in this case remunerated the operating air carrier according to market conditions further signifies that the flight was not 'free of charge' (para 48). It is also irrelevant whether passengers paid themselves to the tour operator, or whether, as in this case, the package tour was paid by a third party (para 49). The burden of proof that a passenger travelled free of charge rests on the air carrier, as they will need to prove their case is excluded from the applicability of Regulation 261/2004 (para 51).

The importance of this judgment is twofold. First, it clarifies the language of the previous case Azurair and Others (C-146/20, C-188/20, C-196/20 and C-270/20), which implied that a proof of a reservation is only perceived as such if it contains a lot of flight-related information. This specific interpretation would have made it relatively easy for the airlines to avoid providing passengers with a 'confirmed reservation' by not providing some of this information in written form to passengers, or providing it in various documents. It is also good to have a confirmation of the notion 'free of charge' and its narrow applicability. We may have expected that it was irrelevant whether passengers paid for their flight themselves, as they also did not require a contractual relationship with the operating air carrier. However, it is good to read that passengers will not lose their protection if they travel on a discounted rate basis due to arrangements e.g. between their employers and tour operators, provided it is not the operating air carrier that offers this (not publicly available) deal.

Third party litigation funding and consumer redress

The EU Commission has recenetly published a comprehensive Study on Mapping Third Party Litigation Funding in the European Union incliuding all EU member states. Although the study covers all aspects of third party litigation funding, it is a potentially powerful tool for enforcing consumer rights, especially complex and costly collective redress actions, and can therefore be of interest to practicioners and academics alike interested in better enforcement of consumer rights. See also BEUC's view on third party litigation funding for collective redress.

Do you really need my title? The CJEU says no – a win for consumer privacy in case C‑394/23

(Source: Freepik)

Have you ever been asked about your title while purchasing something online? It’s a common practice, but most of us (consumers) don’t realise that it raises concerns from a data protection perspective, especially when the seller requires us to provide this information and does not allow us to skip the form field and place the order without disclosing our gender. This practice was challenged by the French association Mousse in proceedings against the French Data Protection Authority (Commission nationale de l’informatique et des libertés, CNIL) and the French railway operator SNCF Connect, eventually resulting in a preliminary ruling by the Court of Justice of the EU (Case C‑394/23).

The facts

SNCF Connect sells rail travel documents such as train tickets and discount cards via its website and mobile applications. When purchasing these products, customers are required to indicate their title by selecting either Monsieur (Mr) or Madame (Ms). This requirement raised Mousse’s concerns about its compliance with the General Data Protection Regulation (GDPR).

The association filed a complaint with CNIL, arguing that the collection of titles lacked a valid legal basis under Article 6(1) GDPR, violated the data minimisation principle under Article 5(1c), and failed to meet the transparency and information obligations set out in Article 13 GDPR. The CNIL rejected the complaint, concluding that collecting titles was justified as necessary for the performance of a contract under Article 6(1b) and aligned with accepted norms of personalised communication (paras. 13–15). Mousse appealed the decision to the French Conseil d’État, which referred several preliminary questions to the CJ.

The ruling

The Court of Justice essentially said “no” to this kind of data processing. It did not declare that the processing of title-related personal data is categorically prohibited under the GDPR, but stressed that in the specific context of this case, it “does not appear to be either objectively indispensable or essential to enable the proper performance of the contract” concluded with the consumer (para. 39).

Here are the key takeaways from the judgment:

1. The Court focused its analysis on Articles 6(1b) and 6(1f) GDPR, which establish when data processing is lawful. Article 6(1b) allows processing when it is “necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract”, while Article 6(1f) permits it if it serves a legitimate interest of a controller or a third party, provided that interest is not overridden by the data subject’s fundamental rights and freedoms.

The Court made it clear that when relying on contractual necessity under Article 6(1b), the controller must show that the processing is “objectively indispensable for a purpose that is integral to the contractual obligation intended for the data subject” (para. 33). In other words, the controller must demonstrate that the processing “must be essential for the proper performance of the contract concluded between the controller and the data subject and, therefore, that there are no workable, less intrusive alternatives” (para. 34). Applying this to the case at hand, the Court rejected the CNIL’s and SNCF’s claim that collecting customers’ titles is necessary for personalised commercial communication, and that such communication is an essential part of the contract. According to the Court:

“Commercial communication may constitute a purpose forming an integral part of the contractual service concerned, since the provision of such a rail transport service involves, in principle, communicating with the customer in order, inter alia, to send him or her a travel document by electronic means, to inform him or her of any changes affecting the corresponding journey, and to allow exchanges with the after-sales service. That communication may require adherence to accepted practices and may include, in particular, forms of addressing a customer, in order to show that the undertaking concerned respects its customer and thereby to safeguard that undertaking’s brand image. However, it appears that such communication does not necessarily have to be personalised based on the gender identity of the customer concerned” (paras. 37–38).

In short, personalising content is not necessary if the same service can be provided in a standard, non-personalised way. The controller could instead use more privacy-friendly alternatives, such as generic and inclusive forms of address that do not rely on the consumer’s assumed gender identity (para. 40).

2. Furthermore, the systematic and generalized processing of consumers’ titles cannot be justified by the mere fact that some of them use the services of night trains, even if it is necessary to adapt transport services for night trains, which have carriages reserved for persons with the same gender identity, and to assist passengers with disabilities. In the Court's view, it does not justify the collection of titles of all customers, including those who travel during the daytime or who do not have disabilities. Such a practice is disproportionate and contrary to the principle of data minimization (para. 42).

3. As it regards the ‘legitimate purposes’ prerequisite, the Court found that personalised commercial communication can be achieved by using customers’ first and last names alone, since requiring their title or gender identity is not strictly necessary, particularly in light of the data minimisation principle (para. 55). Moreover, it’s important to note that Article 6(1f) GDPR does not allow “common practices or social conventions” to justify the necessity of processing personal data (para. 56).

4. Finally, the fact that data subjects may object to the processing under Article 21 GDPR is irrelevant in this context. According to the Court, this opt-out mechanism should not be taken into the account while assessing whether the original data collection was lawful (para. 70). To put it simply, controllers cannot justify collecting unnecessary personal data by simply allowing individuals to object afterward. While the right to object is an important safeguard, it does not give controllers a free pass to collect data first and handle objections later.

Our comment

The judgment has a direct impact on the practices of certain data controllers who, without a valid legal basis, collect excessive data concerning consumers’ titles and gender identity, where such information is not necessary for the purposes of processing. The CJ ruling serves as a clear reminder that personal data must be processed in accordance with the principle of data minimisation, meaning that only data strictly necessary to achieve the intended purpose should be collected and used.

Importantly, the Court did not declare that the collection of such data is absolutely prohibited under the GDPR. Rather, it emphasised that lawfulness depends on the specific context. For example – although not stated explicitly, this can be inferred from the reasoning – a controller may process such data on the basis of the data subject’s consent. In that case, a form used by the consumer to conclude a contract could include an optional field allowing the individual to indicate a preferred form of address. Crucially, this field would not be mandatory: if the consumer wished to provide that information, they could do so; if not, they could simply skip it without consequence. 

PS. In the context of this judgment, it is also worth drawing attention to another recent CJEU decision (case C‑247/23) which likewise concerned the processing of gender identity data. In that case, the Court reaffirmed that one of the fundamental duties of a data controller is to ensure the accuracy of the personal data processed. If a data subject exercises its right to rectification, the controller should not impose disproportionate administrative burdens that unjustifiably hinder the exercise of that right. The case involved a request to update the gender information in a public register maintained by a Hungarian authority. The individual, registered as female, sought to have the record amended to reflect his male gender, submitting medical documentation to support the request. The authority, however, demanded proof of surgical gender reassignment – a requirement the CJ found excessive and incompatible with the essence of fundamental rights, including the rights to personal integrity and respect for private life.

"Young promise" or just a consumer? CJEU in C-365/23 [Arce]

Today the Court of Justice has delivered a truly remarkable judgment that I am eager to share with readers of this blog (available here, even though for now only in French and Latvian). The decision concerned a contract concluded between "A", a professional in the business of offering career development services for sports talents, and "C", then 17 and represented by his parents to the ends of concluding the contract. 

According to the contract, concluded on 14 January 2009 for a period of fifteen (15) years, A would offer a wide range of services in support of C's development as - hopefully, professional - basketball player. In return, C would pay A 10% of all the net revenue he was to earn for the duration of the contract, plus VAT, as long as such income would pass the threshold of 1500 euros per month. 

A bit over a decade into the contract, A sued C for failing to fulfil their obligations under the contract, with a claim amounting to over 1,6 million euro - 10% of what the player had earned from sport clubs until that point in time. [We are not sure how this was calculated, but A would likely know since accounting services were included in the contract]

Latvian tribunals, which were competent to adjudicate on the dispute, were not keen to grant A's claim: the demand was rejected in first and second instance on ground that the term was unfair under Latvian consumer law; A took the case to the Latvian Supreme Court, which in turn raised *twelve* preliminary questions for the CJEU. Luckily, not all questions have to be answered and not were equally challenging, so the analysis here will be limited to the most salient points. All have to be seen to pertain to the Unfair Terms Directive - from the definition of consumer under that directive to the scope of minimum harmonisation. 

Consumer contract?

First: was the "career development services" contract a consumer contract? The referring court noticed (see para 31) that across different jurisdictions different stances were noticeable concerning similar cases, with a court in France having concluded that a young talent concluding a comparable contract had to be considered a consumer, while an earlier German case has excluded the applicability of consumer law to the type of services at hand. 

The Court of Justice answered that, to the extent that the minor at hand was not a professional player at the time of concluding the contract, they should be considered consumers - and hence enjoy consumer protection. The fact that the player later engaged in professional sports does not change this conclusion as the party's quality as consumer must be, for the purposes of unfair terms rules, ascertained only with reference to the moment that the contract was concluded. The fact that the contract concerned the player's "eventual professional career" doesn't change this conclusion either. 

While the Court recalls its previous decision in Costea, other decisions concerning the notion of consumer when "bordering" professional activities, such as Gruber, were not discussed. This means, however, that it is difficult to immediately assess the reach of the judgment: will this "generous" take also cover adults who engage comparable services in the hope to undertake a professional activity that they have not engaged in yet, or is this interpretation limited to the case of minors who have not engaged yet in the relevant professional activity? AG Rantos' reasoning in his opinion, as reported on in Joasia Luzak's overview of last month, seems to suggest a broad applicability (which may go against the common assumptions in several member states!).

"Price" term exempted from control?

Having established that the Directive was applicable to the contract under consideration, the CJEU had to consider whether the term was actually subject to the unfairness test. This was contentious since article 4(2) of the Directive famously dictates that the test shall not concern "the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration". A claimed that the term should then not be subject to judicial control. The CJEU agreed as to the applicability of the exception - in line with the second part of article 4(2) then, the national courts would only be able to assess the term's unfairness if the term did not comply with the requirement of transparency - being "in clear and intelligible language". 

In this respect, the CJEU seemed to suggest that the term may not comply with the transparency requirement: it is however for the national court to ascertain whether the term was sufficiently clear that the consumer could understand its impact on their legal and economic position. In this respect, the Court considers that both the information provided to the consumer (and their representatives!) at the time of concluding the contract and, interestingly, the term spelling out what services A would provide against the agreed remuneration should be seen as relevant to the assessment. Furthermore, since Latvia had not yet explicitly implemented the exemption of article 4(2) by January 2009, it is possible that on the basis of minimum harmonisation the term would still be open to scrutiny even if transparent. The Court then proceeds to answer questions that would be relevant in case the term can be subject to control. 

Is the term unfair? 

As we know, it is for national courts to decide whether a specific term is unfair; the CJEU, however, can provide parameters to support the national courts, which they have done in a number of cases. In this specific case, the Court adopts a reasoning which is in some way new - at least to the extent that it seems to establish a hierarchy or order of reasoning between the two prongs of the unfairness test - that the term causes a significant imbalance contrary to good faith. While these two elements (good faith and significant imbalance) are often considered as hardly distinguishable, the Court here suggests that one should "at first" consider the possible violation of the principle of good faith, and "second" ascertain the eventual existence of a significant imbalance. This is not unheard of, as the references in the decisions show, but it is usually not regarded as more than a style clause. 

In assessing whether the term is unfair, thus, the CJEU asserts, the national court should consider on the one hand whether the professional, dealing in honest and reasonable way, could expect the consumer to accept the term in individual negotiations, while on the other hand considering national default rules to ascertain whether the clause created a significant imbalance in the rights and obligations of the parties (compared to their rights in case nothing had been agreed). In doing so, and this is genuinely new, it can consider "fair market practices" around the pricing of similar services at the time of the contract's conclusion, or "the obligations that a reasonably informed consumer could expect to incur" (see para 84). The Court takes these additional criteria from the AG's opinion and it will be interesting so see whether this reference to market practices will prove to be incidental (it is after all a rather niche subject!) or take hold. 

Fundamental rights?

Finally, the Latvian Supreme Court wanted to know whether fundamental rights should be considered in assessing the term - in particular the right to property (art 17 EUCFR) and the requirement for public authorities and private entities to pay the highest attention to the "best interest of the child" when taking decisions concerning minors (art 24 EUCFR). In this sense, the CJEU first observes that the Charter is applicable (see para 99) to the questions at issue since they fall within the MS's implementation of EU law (on this, the Court has been holding that this applicability is in no way affected by minimum harmonisation, which we won't be again questioning now). Setting aside with no further ado the relevance of article 17, the Court focusses on article 24: indeed, national courts should take it into account when making decisions concerning the unfairness of terms included in contracts concluded by (at the time of conclusion) minors. This is in line with fairly established idea on the indirect horizontal application of fundamental rights. At the same time, the CJEU seems cautious to avoid over-protective applications: consideration of the best interest of the child, the Court explain, does not exclude that the national court could consider the fact that the parents, concluding the contract on the child's behalf, were familiar with the environment of professional sports, or the fact that C was already 17 at the moment of concluding the contract (see para 103). 

Hence to conclude: C was a consumer; the clause is in principle exempted but may be open to control either because lacking transparency or because Latvian law did not incorporate the exemption at the time the contract was concluded; if the national court does assess the clause, they should consider national default rules, good market practices of the time as well as the best interest of the child, but also consider that supposedly competent parents acted as representatives. Also, not discussed here because not at all surprising, if the term would be found unfair the national court would not be able to proceed to mitigation of the due sum - which opens to the usual drama around consequences since the contract would then likely be invalid. 

What will happen once the case is back with the Latvian courts then? Readers who have access to Latvian sources - do reach out to let me know! This case has all the ingredients of an instant classic.

Information duties in consumer credit: the CJEU in C-677/23

At the end of January, the CJEU delivered another judgment interpreting Directive 2008/48 on Consumer Credit. In C-677/23 A. B., F. B. v Slovenská sporitel’ňa a.s. consumers alleged that the credit contract did not contain all the necessary elements provided by the Directive. The dispute thus involved the interpretation of Article 10 (2), which provided the mandatory content for the credit contract. Two subparagraphs came under scrutiny in this case.

Duration of the credit agreement

One problem was that the credit contract did not provide for its entire duration. However, it did lay out the number of instalments to be paid. Under Article 10(2)(c), the credit agreement shall specify clearly and concisely the duration of the credit agreement. The question for the CJEU, therefore, was whether it is sufficient to comply with this provision by indicating the number of instalments. 

 

The CJEU concluded that since the duration of a credit agreement is closely linked to the performance of the parties' contractual obligations “the indication of the duration of the credit agreement, in accordance with Article 10(2)(c) of Directive 2008/48, does not necessarily have to be made through a formal indication of the precise date on which that agreement begins and ends, provided that its terms enable the consumer to determine that duration without difficulty and with certainty” (para. 43).

Assumptions used in the calculation of the APRC

The second question considered by the CJEU was about interpretation of Article 10(2)(g) according to which the credit agreement shall specify in a clear and concise manner “the [APRC] and the total amount payable by the consumer, calculated at the time the credit agreement is concluded; all the assumptions used to calculate that rate shall be mentioned." The wording in the contract was the following: "The credit has been granted immediately, in full; the borrower shall fulfil his or her obligations under the terms and conditions and within the time limits set out in the credit agreement; the interest rate shall apply until the end of the credit relationship". Another part of the contract provided that “the agreement shall be concluded for a … fixed period until the full settlement of all relationships arising in connection with the credit granted". The consumers considered these unclear. 

 

The CJEU considered the purpose of the provision and asserted that it is aimed at making the consumers aware of their rights and duties (para. 58). Moreover, reference to the assumptions must enable consumers to verify whether the APRC has been calculated correctly and, if not, to assert their rights, particularly the right of withdrawal, the period of which is extended in case of breach of Article 10 (para 59). Reference to the assumptions should also enable consumers to exercise their other rights provided by national legislation, including sanctions for non-compliance, which in this case, under the applicable Slovakian law, meant that the credit is interest-free (para 59). 

 

The CJEU concluded that assumptions used for the calculation of APRC are "vitally important" for consumers (para. 61), which meant that the "the assumptions used to calculate the APRC must be expressly mentioned in the credit agreement and that it is not sufficient in that regard that the consumer may himself or herself identify them by examining the terms of that agreement" (para. 64).

Concluding thoughts 

 

This judgment reinforced the importance of consumer information for the enforcement of consumer rights. Whilst it is questionable to what extent assumptions in the calculation of APRC are understandable for individual average consumers with no legal and financial background even if they are expressed in clear and precise language, the CJEU rightly held that if information is scattered around the contract and not expressed clearly and straightforwardly it is even more difficult to consumers to comprehend the effect and consequence of the terms of their contract. This judgment is, therefore, a further push towards clearly structured and worded contracts that at least give consumers a chance to understand their rights and duties and enforce their rights accordingly.

The judgment continues to be relevant under the new Directive 2023/2225 on Consumer Credit, which contains the scrutinised provisions in Article 21(1)(d) and (g).