Of unfair terms, novation agreements and other not so magical creatures - CJEU in C-19/20

Dear readers, 

as the spring advances (not really, for those of us in continental Europe, but we keep faith), we should catch up with some case-law developments from the past weeks. 

Hereby, thus, a quick overview of a somewhat convoluted case decided by the CJEU on 29 April - IW v Bank BPH SA. After Dziubak, it is no surprise that more cases would be pouring in from Poland on the subject of credit in Swiss francs. 

In the case under discussion, the referring court was of the opinion that the consumers had been sufficiently informed about the risks associated with the mortgage contract, so that the main indexation interest was not unfair; however, within this mechanism, the bank had included an indication that the final cost to the consumer would incorporate a resale margin for the bank which was not further elaborated upon in the contractual documents. This left the bank unconstrained in determining such margin and the consumer unaware of what factors may affect the bank's determination.

The blank resale margin clause was later amended by means of an agreement between the parties which, according to the Court, established a sufficiently clear mechanism - thus "fixing" the term. 

While the consumers did not agree with the referring court's assessment of the main indexation terms, ultimately the questions for the CJEU all concerned the situation with regard to the resale margin mechanisms. 

The first question concerned the effect of the agreement amending the resale margin clause on the unfairness assessment: must a court exert unfair terms control in spite of the agreement? According to the Court, in substance, the agreement prevails when the consumers have signed it in full awareness of the fact that they were waving their rights to unfair terms control. Otherwise, the Court is supposed to assess the term and, where it finds it unfair, establish that the consumers are entitled to be put in the same position where they would have been without the agreement. 

The second and third questions concerned the admissibility of a finding that only the resale margin term should be invalidated, while leaving the rest of the indexation mechanism in place. Would such approach go against the CJEU-sanctioned prohibition of court revision of unfair terms? The Court does not give a final answer to this question, but instructs the national court to establish whether the resale margin determination can be considered as a "contractual obligation distinguished from he other contractual terms, capable of being the subject of an individual examination of its unfairness" [para 71]. The removal should not, on the other hand, remove an unfair element within a term, altering "the substance" of such term [para 80]. This is an interesting question in fact: on the one hand, it is obvious that the combination of indexation and resale margin was, taken together, the mechanism through which the cost of credit was fixed. On the other hand, the clause determining the bank's resale margin could very well be separately set at zero, without - as the referring court observes, creating a gap. This sounds, at first appraisal, like a question that would be best addressed in legislation. While the referring court mentioned the existence of legislation dealing with the unfair term in the MS, this legislation, which was passed after the contract was entered into, is in essence irrelevant to the dispute according to the CJEU.

The fourth question is more straightforward and concerns the consequences of finding that the resale margin term was unfair: when should the contract be invalidated? According to established case-law by the CJEU, whether a contract should be held in place after a finding of unfairness depends on whether, under national law, it is capable of continuing to function - based on an objective assessment and thus not on the subjective position of one of the parties [90]. The referring court wondered whether the contract's invalidation had a sanctioning character and to what extent the consumer's preference played a role, to which the court replied by summarising its case-law to the effect that the judge must first determine the consequences of unfairness on the contract and then, when relevant, allow the consumer to decide whether they prefer invalidation of the contract or maintaining the unfair term.

The fifth and final question went into the referring court's role with respect to the consumer's choice between invalidation and preservation of the unfair term: should the court actively inform the consumer about their options and the implication of their choices, or could this function be entrusted to the consumer's legal representation when they have one? The CJEU's answer in this respect is very clear: since it is upon the court to make sure that the consumer's rights in the procedure are respected, and in particular that their decision in respect of the outcome of unfair terms control is the result of "free and informed consent", the court must also inform the consumer about their choices [95].

Nothing in this decision comes particularly as a surprise. The more difficult points, ultimately, go back to the referring court who needs to decide whether the consumer has in fact waived the term's invalidity via the novation agreement and, if not, must assess whether the resale margin mechanism can be severed from the overall indexation mechanism (and, if not, must decide on the future of the contract). Unlike in Dziubak, it is not obvious in this case that the consumers would gain from the contract's overall invalidation, which could or could not add to the case's complexity. Curious what the Polish colleagues in the blog team may have to say on this case!

Knowledge is key: judgment in Joined Cases C-698/18 and C-699/18 Raiffeisen Bank and Société Générale

Earlier this month, the Court of Justice of the European Union gave judgment in Raffeisen Bank and Société Générale, two joined cases from Romania on limitation periods and Directive 93/13/EEC. This is not the first time we write about this topic; see e.g. our blog on Cofidis II, where it was observed that limitation periods as such are not necessarily incompatible with the principles of equivalence and effectiveness in EU law.[1] But they can be, as the CJEU's judgment of 9 July 2020 demonstrates, where they prevent consumers from claiming reimbursement of amounts paid on the basis of unfair terms in a credit agreement.

Source: wikipedia.org

Earlier case law of the CJEU reveals that knowledge or awareness on the part of consumers of their rights plays a crucial role in the assessment of cases on limitation periods.[2] Raiffeisen Bank confirms this.The CJEU reiterates that reasonable time limits for bringing proceedings, laid down in the interests of legal certainty, do not make it practically impossible or excessively difficult as such for consumers to exercise their rights conferred by EU law, if such time limits are sufficient in practical terms to enable them to prepare and bring an effective action. Under the rules at issue in Raiffeisen, however, a three-year limitation period started to run from the time when the contract - here: a credit agreement - had been performed in full. That is when the consumer was presumed to have known of the unfair nature of one or more unfair terms of that agreement. According to the CJEU, it is nevertheless possible that the consumers involved are not aware of this, which means the limitation period is likely to have expired before they can take action. This runs counter to the principle of effectiveness. Moreover, performance of the contract does not retroactively alter the fact that the consumer was in a weak position at the time it was concluded. The protection of Directive 93/13 is therefore not limited solely to the duration of the performance of the contract in question.

Under Romanian law, the unenforceability of unfair terms is equated with absolute nullity, the effect of which is restitutio in integrum. The limitation period normally begins to run when the court establishes the cause of action, not on the date of full performance of the contract. The CJEU holds that such a difference in treatment of consumers cannot be justified on grounds of legal certainty. Thus, the rules appear to run counter to the principle of equivalence as well.

In Case C-698/18, the action for reimbursement was brought within three years after the agreement had expired. The CJEU's judgment suggests that this does not matter; it is inconceivable that a limitation period would expire when the consumers involved are not even aware of the unfair nature of the terms of the agreement.
In Case C-698/18, the action was brought 11 years after the agreement had expired. But the agreement was concluded in 2003, i.e. before Romania's accession toe the EU in 2007. Thus, the CJEU did not have jurisdiction.

An important difference between Raiffeisen and Cofidis II is that in Cofidis, the consumer was the defendant, not the claimant. In that case, consumers should not lose their rights merely because a claim against them is brought after expiration of a limitation period. Again, what is decisive here is the risk that they have never been aware of their rights before they were able to invoke them. Knowledge is key.


[1] See also our blog on OPR-Finance. 
[2] See further this contribution by Daniël Stein, available only in Dutch. 

Cofidis II: on ex officio and limitation periods - Opinion AG Kokott

Seventeen years ago, the CJEU gave judgment in Cofidis, one of the first and well-known cases on the ex officio application of EU consumer law. In short, the CJEU held that a limitation period of 2 years under French law, which prevented the court from examining (at its own motion or at the request of the consumer) the unfair nature of terms in a credit contract, was contrary to the principle of effectiveness. According to the CJEU, traders would merely have to way until the expiry of the time-limit before seeking enforcement of the (unfair) terms they would continue to use in consumer contracts.

Unsplash.com

AG Kokott recently delivered an Opinion in Cofidis II, a French case as well, on a very similar issue. In an action for the enforcement of a credit contract against two consumers, Cofidis had argued that the court could not address of its own motion a possible infringement of the requirements of the Consumer Credit Directive, because it had been raised by the court more than 5 years after the conclusion of the contract and thus, was time-barred. Kokott's Opinion also covers another case, from the Czech Republic, on the question whether the court could be prevented from imposing a 'penalty' - nullity of the credit contract - only if the consumer brought an objection within 3 years. Both cases therefore give rise to the question to what extent national courts must establish and penalise the trader's failure to comply with its obligations under the Consumer Credit Directive ex officio, irrespective of national rules on limitation periods. 

Kokott's Opinion is interesting for three reasons. Firstly, she discusses the rationale of ex officio. Secondly, she looks at the (a)symmetry between consumers and traders in their possibilities to bring an action on the basis of long-term contracts, which impacts the (in)compatibility of limitation periods with the principle of effectiveness. And thirdly, she argues that a 'penalty' can be imposed ex officio as a means of defence in an action brought against consumers, which would still be within the subject-matter of the dispute - as long as the right to be heard is observed. 

Rationale of ex officio

Kokott starts by referring to the difference between Radlinger and Bankia, also noticed and analysed by Candida Leone in a recent paper on the New Deal for Consumers. Bankia shows that not every obligation arising from EU directives in the field of consumer protection must be examined by national courts ex officio. While the Unfair Contract Terms Directive stipulates the legal consequence of the use of unfair terms - i.e., they are not binding - the Unfair Commercial Practices Directive leaves it to the Member States to establish the necessary means to combat such practices (point 38). The CJEU's case law on the UCTD cannot be automatically extended to the Brussels I regulation either; see Salvoni. 

Kokott then continues with listing relevant factors that determine the need for ex officio examination. Firstly, both Czech and French law attach legal consequences to infringement of (the provisions transposing) the Consumer Credit Directive for the benefit of consumers (point 46). This suggests it does not matter that the Directive leaves it to the Member States to lay down penalties (points 44-45). Secondly, it follows from Radlinger that compliance with the Directive must be examined ex officio where necessary (point 48). In this respect, Kokott draws attention to the weak position of consumers in terms of knowledge and bargaining power, and the risk that they will not invoke protective norms due to a lack of awareness. Furthermore, the Directive aims to make creditors accountable and to prevent them from granting loans to consumers who are not creditworthy (point 51). In addition, "a systematic judicial review of compliance (...) contributes to ensuring a level playing field" (point 52; emphasis added). 

Asymmetry between consumers and traders

Limitation periods as such are not necessarily incompatible with the principle of effectiveness. However, this is different where they lead to an asymmetry of the possibilities to bring an action, i.e. the trader/creditor can assert its payment claims for longer than the consumer-debtor can assert the invalidity of the contract (point 63). Again, like in the first Cofidis case, the trader may circumvent consumer protection by simply waiting for the time-limit to expire before bringing an action. Credit contracts for consumers typically entail long-term obligations, so limitation periods that begin to run when a contract is entered into are questionable (point 65) - especially when there is generally only cause to carry out an examination of compliance with the Directive in the event of default, likely after expiry of the limitation period of 3 or 5 years. Therefore, consumers are at risk of losing their rights without ever having been aware of them.

In Kokott's view, legal certainty does not require limitation periods that begin to run when a contract is entered into. The creditor itself has caused the risk that consumers claim their rights over relatively long periods of time by breaching its obligations under EU law (point 68). 

Penalties 

Lastly, Kokott considers the 'penalty' for the creditor's breach of its obligations, which must be effective, proportionate and dissuasive (point 74). Kokott distinguishes supervisory penalties from 'sanctions' as an effective means to enforce the Directive's requirements, which also serves to protect the individual (point 82). Individual consumers are not specifically aided by general supervisory measures, but they are by e.g. the creditor's loss of entitlement to interest; see Home Credit Slovakia and LCL Le Crédit Lyonnais. 

Kokott submits that, whereas national courts cannot apply of their own motion a penalty which amounts to a counterclaim, it can impose such a penalty ex officio "if this merely averts a form of order sought by the applicant" (points 83-84). This does not run counter to 'the principle of party disposition'. We might add that ex officio examination of an infringement clearly falls within the subject-matter of the proceedings if the action is based on (enforcement of) the contract. The step to ex officio imposition of a 'penalty' is not so big, in the light of the Directive's aim to protect consumers. Of course, the right to be heard as guaranteed by Article 47 EUCFR must be observed in this context. 

Taking ex officio a couple of steps further: CJEU in Radlinger v Finway (C‑377/14)

Yesterday, the ECJ issued its decision in Radlinger v Finway. This decision contributes in several meaningful- albeit not revolutionary- ways to the development of EU consumer law. It also by and large follows the approach suggested by AG Sharpston, whose opinion we had reported on here.

The case concerned a consumer credit secured by a mortgage. The contract foresaw a high interest rate- with all likelihood miscalculated, so that in reality it would be even higher-, several penalties for delay or default and an acceleration clause.

At some point the debtors could no longer pay and filed for personal bankrupcy. When this was declared, they sought to challenge certain terms in the contract as contrary to public morality, which was not allowed under the court's rule of procedure. 

The insolvency court posed a series of interesting questions to the Court. Not all of them received an (interesting) answer, but some did. 

First, the referring court asked whether its rules of procedure, barring ex officio assessment and restricting the grounds on which the parties could invoke review of the amounts contested, were in line with directive 93/13. The ECJ, extending one more bit its precedents on procedures and unfair terms, established that the rules did not comply with the Directive.

Second, the referring court asked whether ex officio assessment should also extend to whether the obligation to inform provided for by the consumer credit directive has been complied with. The ECJ said ex officio assessment should also cover the respect of this obligation, as well as drawing all the necessary consequences from a finding that the obligation has not been fulfilled. The penalties should be "dissuasive, effective and proportional". 

Third, concerning the mandate content of the information to be disclosed, the APR cannot be kept low by incorporating costs to be incurred by the consumer in order to obtain the credit in the "total amount of credit". That these costs exist if the reason why this notion (or the similar notion of "drawdown") is distinguished from the concept of "total cost of credit" in the first place. 

Finally, when considering whether certain penalties are unfair under the directive, it is necessary to look at all the potentially applicable fines, irrespective of whether the creditor relies on them. If they are found, as a combination, unfair, all the terms found unfair should be excluded from the contract. 

None of these answers come as particularly surprising, as they are all more or less in line with the Court's precedents- of which they sometimes represent a confirmation, in other cases a minor expansion. Even the expansion of ex officio beyond the Unfair Terms directive had already been undertaken (see the ECJ's references to its own precedents at para 62)

Maybe the most interesting thing to be observed is that the referring court had also asked whether something should be said concerning the direct effect of the secondary EU law provisions involved in the controversy, since the final effects of ex officio review would affect a relationship between private parties. The ECJ stressed that ex officio imposes obligations on the courts and not on individuals, thus there is no need to discuss direct effect. That the discovery of ex officio has helped the ECJ bypass the issue of direct effect of Directives between private parties, however, seems hard to deny. 

Dutch Supreme Court on effective remedies for consumers

A recent development in the area of European consumer law we have not yet reported on this blog is a recent judgment of the Supreme Court of the Netherlands (available here in Dutch; Lindorff/X or telefoonabonnement-arrest II) in a case about a contract for a mobile phone subscription including a 'free' phone. The Supreme Court held that the national court must examine of its own motion if the price of the phone has been stipulated separately and if not, annul the contract. This may have far-reaching consequences for providers of mobile services offering subscriptions and phones for an 'all-in' price, to be paid (monthly) by the consumer.

According to the Supreme Court, the national court has to apply of its own motion national provisions implementing the Consumer Credit Directive (87/102/EEC). At issue was a contract between a consumer and a large Dutch telecommunications company for a mobile phone subscription and a 'free' phone, for a monthly 'all-in' price. In the Supreme Court's view, this is a purchase-in-instalments ("koop op afbetaling") and a credit contract in the sense of the Consumer Credit Directive. The Dutch provisions on purchase-in-instalments are not of European origin, but the Supreme Court puts them on an equal footing for the sake of 'manageability'. The national court must take, if necessary of its own motion, adequate measures to ensure the effective legal protection of consumers. Sanctions for the infringement of consumer rights under the Directive must be effective, proportionate and dissuasive. This means, among other things, that if the price of the mobile phone is not stipulated separately, the contract can be annulled. The Supreme Court considers that such a stipulation will generally indicate the essence of the performance, so that it is excluded from the scope of the Unfair Contract Terms Directive (93/13/EEC). 

In this case, the Supreme Court seems to go beyond the consistent interpretation of national law by 'gap-filling': the remedy was not specified in the Dutch Civil Code, but follows from the general principle of effectiveness and the right to effective judicial protection in EU law. Although the Supreme Court does not explicitly refer to Article 38 or Article 47 of the EU Charter of Fundamental Rights, it does mention relevant case law of the CJEU (inter alia, Pohotovost' and Duarte Hueros, reported by us here and here).

The Supreme Court addresses the consequences of an annulment of the contract at length: the consumer may return the phone, without having to pay any costs for using the phone or decrease in value. Damages would only be due if the consumer does not behave as a 'careful debtor' or fails to return the phone. The mobile service provider has to pay back the part of the price (and costs) the consumer has already paid for the phone. The mobile service provider cannot institute a counterclaim on the basis of unjust enrichment, says the Supreme Court, as this would be contrary to the effective protection of consumers. One could wonder whether effective protection really means that no compensation is due, since consumer protection is about eliminating disadvantages between consumers and traders rather than putting consumers in the best position.

The case has not only drawn the attention of legal academics, but also of claims organisations. A class action is being prepared against at least 8 Dutch mobile service providers (see here and here). For our Dutch readers, a more extensive description of the Supreme Court's findings can be found here.

Matei (C-143/13), or Kásler explained: what's the core of a (mortgage) credit contract?

Last Thursday, the ECJ published its decision in Matei (C-143/13), a Romanian case on unfair terms concerning two different credit contracts in foreign currency.

The case builds on and clarifies the Court's view on one fundamental question concerning the interpretation of the Unfair Terms Directive, namely what terms have to be considered as exempted from unfair terms control under the Directive's "subject matter and price" exception?

The Court had a chance to reaffirm and clarify a series of points that had been already touched upon in previous decisions, and it made quite good use of such chance.

The case concerned two allegedly unfair terms:

- a so-called "risk charge", calculated as percentage of the outstanding loan and payable every month;

- a term allowing the lender to change the otherwise fixed interest rate in case of "significant changes in the money market". 

The question referred to the Court (para 44) was whether such terms should be exempted from control under the Directive as forming part of the contract's "main subject matter" and/or "price" within the meaning of article 4(2) of the Directive. 

In short, the Court answered that the final decision is for the national judges, but in principle the two terms should not be exempted from control.

Here is a more detailed account.

The question concerned the interpretation of the scope of the exemption as set out in the Directive, with the caveat that it is the national court who finally has to apply the principles articulated by the CJEU to the particular contract at hand "in accordance with the particular circumstances of the case" (para 53). 

According to the ECJ (para 54), the notion of "main subject matter" has to be interpreted distinguishing the terms that lay down the essential obligations in the contract and and clauses "ancillary" to the essential obligations. 

As to the second category (para 55), "the exclusion concerns only the adequacy of the price or remuneration as against the services or good supplied"- thus is excludes a reviewing standard rather then exempting certain terms en bloc. 

As to the terms allowing to change the interest rate (ie the price of credit), the Court had already established their suitability for control in Invitel. Here however the Court articulates its evaluation also with reference to the Directive's annex (para 59 and ff), their nature, and the nature of the challenge to which they are subject. 

As to the "risk charge", the Court observes that several elements point to its ancillary nature- first of all, the fact that its function is to secure the repayment of the debt, or the main obligation (para 67). 

Interestingly, the Court states that, taking into account the Directive's objective if protecting consumers, the mere fact that the "risk charge" materially represents an important part of the profit the lender derives from the contract is not in itself a reason to consider it as "main subject matter" of the contract from a legal point of view (para 68). 

Finally, the Court considers that the fact of the case do not suggest that the dispute concerns the adequacy of that commission vis à vis the services provided to the lender, since what is submitted is that the commission is not justified by any consideration. The court had already held in Kásler that the "price" exception can only apply when a service is being offered in return for the (alleged) price (para 70).

The main difference with Kásler is that here the Court is much more "activist" in suggesting that the information in its hands suggests that the terms should be considered as neither making part of the main subject matter, nor being exempted due to the "adequacy of the price" carve-out (see paras 64 and 70).

In any case, should the terms fall within the exception provided by article 4(2), the referring court would still need to test them if it considered them to be intransparent. The Court then recaps the requirements concerning transparency that it has itself articulated in previous decision- the "novelty", here, is that this is the first time that these requirements are related to transparency as a preliminary step possibly opening  to control instead of being used as a standard of assessment as to the term's fairness (see para 72 and ff).

Thus, again from this decision we can infer little as to the destiny of the terms attacked when the issue will be back in the hands of Romanian courts- but we are a step closer to giving shape to the many open concepts employed in Directive 93/13. To be continued!

 Edit 01.07.2015

I was listening to Kirstin Nemeth's presentation at the 15th IACL conference here in Amsterdam, when, thanks to her, I realised that this post did not address one important issue raised by Matei: what is the relationship between the "main object" exemption in directive 93/13 and the notion of "total cost of credit" contained in Directive 2008/48, so-called consumer credit Directive?

In other words, does the fact that such notion obviously implies that there is more to a credit exchange than loan and basic interests mean that additional fees should be shielded from control?

The ECJ answered this question rather swiftly in Matei on the basis of the two directives' different rationales:

      [The notion of total cost of credit] is in fact defined particularly broadly so that the total amount of all the costs or expenses to the consumer and relating to payments made by the latter both to the lender and to third parties must be clearly stated in consumer credit agreements, such a procedural obligation contributing to the main objective of transparency pursued by that directive.
However, Article 4(2) of Directive 93/13 laying down an exception to the mechanism for reviewing the substance of unfair terms, such as that provided for in the system of consumer protection put in place by that directive, that provision must be strictly interpreted

Thanks Kirstin for bringing the point up in your presentation! 

"Core" and "price" terms, and their transparency: CJEU in Kásler (C-26/13)

Some time ago, we had reported on AG Wahl's opinion in  Árpád Kásler and Hajnalka Káslerné Rábai v OTP Jelzálogbank Zrt (C-26/13), concerning a Hungarian credit contract in which the outstanding amounts are calculated in Swiss Francs in order to diminish inflation-related volatility.

Yesterday, the Court of Justice delivered its decision in the case. The decision is mostly important - and very interesting!- for (consumer) lawyers, since it touches several interesting legal issues but leaves the substantive points essentially undecided.  The main "practical" consequence arising from it is that, in certain cases, it opens the door for the possibility to replace unfair terms by the legal provisions which would have been applicable had the terms never been introduced in the contract. 

But there's much more to be said. As a consequence, we will first provide a brief recap of the facts and then analyse the questions raised by the remitting court and the answers given by the CJEU.

The facts (in short)

The controversy had arisen because what might seem a detail: while the outstanding amount was calculated considering the buying rate of Swiss Francs (at the day when the contract was concluded), the installments were based on the currency's selling rate, which is usually higher.  

The lenders challenged the term establishing the installment calculation mechanism under Directive 93/13, and had the term declared unfair by two successive judgments. The last instance court had to decide over the bank's appeal, claiming that the clause was exempted from control since, considered that it provides the bank a remuneration for the provision of credit in foreign currency, it falls under the exception for testing core terms established by Hungarian law in accordance with article 4(2) of the directive. It consequently asked the CJEU two questions on the standard of control to be applied and one on the consequences to be drawn were the term to be found unfair. 

The first question: was the term exempted from substantive scrutiny?

Article 4(2) of the Directive, which according to the Court has to be given autonomous interpretation, exempts terms defining the contract's main subject matter and the "remuneration" for the good or service exchanged. 

The Court excluded under circumstances of this case that the contested term can be considered as establishing an autonomous "remuneration", since the bank did not provide any additional service in relation to the credit agreement (in particular, it did not provide the lenders currency exchange services).

Still, it could be perceived as a core term, falling under exemption of Article 4(2), if the national Court found, all the relevant elements taken into account, that the term "constitutes an essential element of the debtor's obligation" (para 51). In interpreting the notion, the guidelines given by the CJEU articulate in particular that:

- "main subject matter" of the contract are the terms which "lay down the essential obligations of the contract and, as such, characterise it" (para 49);

- on the other hand, "terms ancillary to" the essential ones, cannot fall within the exemption's scope (para 50).

In short, the term is not exempted as "remuneration"; it could, however, be exempted as "essential element of the obligation", which is for the national Court to decide.

The second question: (I) if it is a core term falling under exemption of article 4(2), can a transparency test be applied - although the applicable law did not contemplate this possibility?

This point is a complex one. The Directive's exemption only applies to terms which are drafted in "plain, intelligible language". Hungarian law has only implemented this limitation in 2009, with the result that the law applicable to the contract at hand - signed in 2008 - did not make the exemption conditional on transparent drafting. The AG had claimed that the Directive's harmonious interpretation requires that condition to be read in the implementing provision in spite of its textual absence. We had had the chance to rise some doubts on the obviousness of a similar proceeding. What did the court decide?

Well, the CJEU did not decide on this point. It started off by saying that "in order to safeguard in practice the objectives of consumer protection pursued by the Directive, any transposition of Article 4(2) must be complete [...]" (para 62). However, this was clearly not the case of the relevant Hungarian provision (para 63). In principle, the principle of consistent interpretation of national law requires the national court to 

"consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive." (para 64).

But that principle is not unconstrained, and in particular 

"it is limited by general principles of law and cannot serve as the basis for an interpretation contra legem" (par. 65). So what?

The CJEU basically leaves the hot potato with the Hungarian court, which will have to consider whether "the national provision [...] may be understood as meaning that it includes the requirement that contractual terms are to be drafted in plain intelligible language" (para 66).

If this were the case, however, a further question would arise.

The second question: (II) what should then transparency entail?

In analogy to what the Court had already affirmed with reference to the general requirement of the Directive's article 5, the requirement "cannot be reduced merely to [the term's] being formally and grammatically intelligible" (para 71).

In short, with reference to a term such as the one considered in this case should "set out transparently the reasons for and the particularities of the mechanism for converting the foreign currency and the relationship between that mechanism and the mechanism laid down by other terms relating to the advance of the loan, so that the consumer can foresee, on the basis of clear, intelligible criteria, the economic consequences for him which derive from it" (para 72).

How this extensive information obligation should be fulfilled by the contract is not completely clear, since the CJEU goes on to explain that the referring court should determine whether 

"having regard to all the relevant information, including the promotional material and information provided by the lender in the negotiation of the loan agreement, the average consumer, who is reasonably well informed and circumspect, would not only be aware of the existence of the difference [...] between the selling rate of exchange and the buying rate of exchange of a foreign currency, but also be able to assess the potentially significant economic consequences for him resulting from the application of the selling rate of exchange for the calculation of the repayments for which he would ultimately be liable and, therefore, the total cost of the sum borrowed." (para 74)

So even though from the answer's summary one could infer that the contract alone should be a sufficient source of reference for the consumer, it is not excluded that the transparency assessment articulated by the Court also encompasses a contextual evaluation (based on the circumstances of the specific case, but also mediated by the "average consumer" notion, which is used here for  the first time in the context of unfair terms control). 

It isn't easy, I know, but we are almost there. Only one (easier) question is left.

Third question: in case the term is found unfair, could the national court replace it by applying default legal rules?  

The answer to the question is yes. Previous decisions of the CJEU had legitimated the doubt by stating that in principle lacunae ensuing from a finding of unfairness should not be filled, in order to preserve the Directive's dissuasive function. However, in cases such as the one at issue, leaving the fallen clause unreplaced would entail the contracts nullity, with unpleasant consequences for the lenders in the first place (since they would have been required to immediately return the outstanding amount). Thus, the Directive allows the term to be replaced by a supplementary provision of national law.

In conclusion

This in both an interesting and strangely drafted decision. The answer to the first question is relatively straightforward (especially as far as "remuneration" is concerned), but seems to undermine the very concept of "autonomous interpretation" in applying a sort of "Freiburger-doctrine" to the interpretation of "core terms". The answer to question two, part I, which is hardly a real answer indeed, is not even mentioned in the decision's summary. The standard applied for the term's transparency is taken "by analogy" from a decision concerning a very specific group of terms, without much ado or reflection. It is not clear by what means exactly the standard is to be met. Also, the issue of transparency is getting increasingly mingled, in the case-law of the CJEU, with that of unfairness; this is partially a matter of chance, since Hungarian law (now) provides that lack of transparency constitutes an autonomous (vis à vis the "unfair imbalance" general clause) ground of unfairness.The answer to the third question might have a certain value for practice, in that the replacement of fallen terms by default legal provisions is commonly accepted, for instance, in Germany.