Wednesday, 10 September 2014

Unfair terms, mortgage enforcement and a consumer's fundamental right to accomodation - CJEU in Kušionová (C-34/13)

10 September 2014: CJEU judgment in Kušionová (C-34/13)

Today the CJEU handed down another important judgment in the field of mortgage enforcement (for previous case law have a look at Aziz and Sánchez Morcillo). This time it was not the Spanish, but the Slovak law of mortgage enforcement that was looked at by the CJEU. Contrary to the previous judgments, the national legislation was deemed to be in line with EU law.

In 2009, Mrs Kušionová took up 10.000 Euros. The loan was secured with the family home. The terms of Mrs Kušionová's bank (SMART Capital A.S.) contained a clause relating to extrajudicial enforcement of the charge on immovable property. This specific term stated that the creditor is able to enforce the charge without a court having the opportunity to review the clause. 

Under Slovak law, the sale by auction may be contested within 30 days of the notice of enforcement of the charge. After a public auction, the contesting person has a period of three months to take steps against the conditions under which the sale took place. According to Slovak civil procedure law, national courts may furthermore adopt any interim measure to prevent an auction from going ahead during an extrajudicial enforcement of a charge (like the one in the proceeding).      

The CJEU suggests that interim measures stopping the auction of a family home are adequate and effective means to prevent the continued use of unfair terms and are thus in line with the Unfair Terms Directive. Interim measures in general constitute an effective and dissuasive penalty for businesses infringing EU law. They are furthermore a proportional penalty if the national court deciding over the measures takes into account the fact that the property subject to the charge is immovable property forming the consumer's family home, the right to accomodation being a fundamental right guaranteed under the Charter of Fundamental Rights of the EU.

Although the Slovak legislation has already been changed (see nr 31 and 32 of the judgment), the CJEU's decision is interesting on a theoretical level as it  puts a strong emphasis on consumers' fundamental rights under EU law.


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  2. Mortgage lending in June also showed a small increase. But, it remains far below pre 2007 levels. This indicates a house price recovery is based on the very low interest rates and continued shortage of housing, rather than a renewed enthusiasm of banks to lend mortgages.