EU Justice Scoreboard 2021

Today, 8^th of July, the EU Commission released the 2021 EU Justice Scoreboard (here). The Scoreboard is a comparative information tool, and it presents an annual overview of indicators measuring the efficiency, quality, and independence of justice systems in the EU.

According to the Scoreboard, ‘[a]n efficient justice system manages its caseload and backlog of cases, and delivers its decisions without undue delay’. The report presents data on the efficiency of consumer law litigation. In particular, the report shows data on the average length of judicial review cases against decisions of consumer protection authorities applying EU law (regarding the enforcement of the Unfair Terms Directive, the Consumer Sales Directive, the Unfair Commercial Practices Directive, and the Consumer Rights Directive). The data allows for a comparison between 2013, 2016, 2018, and 2019. The most recent data (2019) shows that the Member States where consumer litigation takes the longest are Cyprus (around 1800 days, approximately 5 years), Greece (around 1700 days, approximately 4,5 years); and Poland (around 900 days, approximately 2,5 years). On the other hand, the Member States where consumer litigation is the fastest are Hungary (around 100 days, or 3,3 months), Lithuania (around 150 days, or 5 months), and Romania (around 160 days, or 5,3 months). Even though these results are not representative of all EU Member States (for example, Germany, Luxembourg, and Austria were not included in the study because consumer authorities do not have the power to decide on consumer law infringements), one of the conclusions to take is the stark difference in the length of enforcement of consumer rights within the EU. Nevertheless, several represented Member States achieved faster procedures than when compared to 2016 (with the exceptions of, for example, Slovenia and Poland).

Additionally, the report presents data on the length of proceedings by consumer authorities, including decisions declaring infringements of substantive rules, interim measures, and cease and desist orders (regarding the same Directives). The data presented also covers 2013, 2016, 2018, and 2019. In 2019, among the Member States where consumer authorities take the longest to decide, there is Poland (around 600 days, or approximately 1,6 years), Greece (around 350 days, or 1 year), and Slovakia (around 200 days, or approximately 6,6 months). It is interesting to note the parallel with the length of court procedures presented above. On the other hand, among the Member States where consumer authorities are fastest to decide, there is Romania (around 20 days), Estonia (around 20 days), and Slovenia (around 20 days).

It is also noteworthy that, when measuring the quality of justice systems, the Scoreboard shows data on legal aid in consumer claims of 6 000 euros. It is worrying that, in 2020, several Member States (including France, Slovakia, and Romania) may not consider people with an income below the poverty threshold as eligible for any type of legal aid (partial or total). The Scoreboard includes many more interesting insights, and it is definitely worth a read.

Default judgments not without ex officio unfairness test - CJEU in Kancelaria Medius (C-495/19)

Last Thursday the CJEU issued another judgment confirming the need for national procedural laws to facilitate effective judicial review of unfair contract terms - Kancelaria Medius (C-495/19). Polish procedural law was closely examined in this judgment, as it mandates national courts to issue default judgments also in cases brought by traders against consumers (in the given case, the claim was for debt collection based on a concluded by the consumer credit agreement). This means that if the defendant-consumer fails to appear at court and defend their rights, after they have been duly notified of the claim, default judgments for traders should be issued based solely on the documents disclosed by traders. The court may not contest the validity of the presented documents of its own motion, unless there are 'reasonable doubts' or a risk of 'circumventing the law', which normally will not occur if the presented information is succinct (para. 16). This would prevent national court to ex officio examine unfairness of contract terms.

The referring court raised this issue following the previous case law of the CJEU in Profi Credit Polska (see our analysis here) and Aqua Med (see our analysis here). The CJEU adheres to its previous judgments in these two cases and again emphasises the need for national procedural rules not to stand in the way of ex officio assessment of unfairness of contract terms in consumer contracts (by 'adopting the measures of inquiry needed to ascertain whether a term in the contract is unfair'), where the court has doubts as to whether the terms are unfair. Only then the Member States may claim that they comply with the obligation of Article 7 UCTD to provide effective consumer protection against unfairness, by ensuring that both the principle of equivalence and of effectiveness are observed (para 32). It falls within the ambit of the dispute, and thus is not prevented by the delimitation by parties of the subject matter of an action and the principle of ne ultra petita, for the national court to require the trader to present the content of the contract, on which the application for the claim is based (in the given case - the credit agreement signed by the consumer, instead of an unsigned pr forma contract) (paras 44-45). 

The CJEU suggests to Polish courts specifically to use the principle of harmonious interpretation in interpreting Polish procedural rules on default judgments, namely to broadly interpret the exceptions of 'reasonable doubts' and 'circumventing the law' to accommodate ex officio assessment of unfairness. As long as such a broad interpretation would not be contra legem, it would allow Polish law to be perceived in conformity with the UCTD (paras 48-49). If that is impossible, Polish procedural rules standing in the way of ex officio unfairness test should be disapplied (para. 51).

CJEU judgment in Salvoni: no extra consumer protection in cross-border enforcement

In May we reported on this blog on AG Bobek's Opinion in C-347/18 Salvoni v Fiermonte. The referring Italian court that was requested to issue a Certificate for the cross-border enforcement of an order for payment against a consumer in Germany under the Brussels I Regulation (Recast). The order appeared to be in breach of the Regulation's jurisdiction rules; the consumer was domiciled in Germany, not in Italy. Should the court review and rectify the order, or inform the consumer of the possibility to challenge its enforcement? In this respect, the court referred to the CJEU's case law on Article 47 EUCFR and the Unfair Contract Terms Directive. According to AG Bobek, however, such an "extra layer of protection for consumers" could not be read into the provisions of the Regulation.

The CJEU confirms this in its judgment of 4 September. First, it found that the Certificate-procedure under the Brussels I Regulation can be qualified as judicial in the sense of Article 267 TFEU. Therefore, the preliminary reference was admissible. Secondly, it held that the court that issues the Certificate does not have to (re-)examine (ex officio) the jurisdiction of the court that has given the underlying judgment, even if it involves a consumer. The CJEU made a distinction between jurisdiction (see e.g. Article 17(1) of the Regulation for specific rules on consumer contracts) and recognition and enforcement. In the latter phase, it is the party against whom enforcement is sought who must oppose it. Because jurisdiction is one of the opposition grounds, there is no violation of Article 47 EUCFR. The CJEU's case law on the Unfair Contract Terms Directive does not apply in the context of the Brussels I regulation, which contains rules of a procedural nature. 

As we pointed out earlier, this outcome is understandable in light of the Regulation's framework, which aims to enhance the free movement and rapid enforcement of judgments within the EU, in the light of mutual trust based on legal certainty. From a consumer protection perspective, it possibly leads to a gap in the effective judicial protection of consumers. Not only is a court that has failed to apply mandatory jurisdiction rules (ex officio) in violation of the Regulation not allowed to rectify this; it is not allowed to subsequently inform the consumer of her defence possibilities either.  

Crossing Paths: AG Bobek on jurisdiction in consumer cases under Regulation 1215/2012 and Directive 93/13

Yesterday, Advocate-General Bobek published his Opinion in a case where the Brussels I Regulation (Recast) and the Unfair Contract Terms Directive cross paths (C-347/18 Salvoni v Fiermonte). The case concerns the question what happens if a national court fails to check - ex officio - whether the rules on jurisdiction over consumer contracts have been observed in a cross-border dispute and the court issues an order for payment, even if there are indications that the consumer involved lives abroad? Once the order becomes final, can judicial review still take place in the country of origin before the order is enforced in another Member State?

When the defendant is a consumer, only the courts in the Member State where the consumer is domiciled have jurisdiction under the Brussels I Regulation (Article 18). In the case at hand, the consumer involved - Ms Fiermonte - appeared to live in Hamburg, Germany, which would mean that the Italian court where the order-for-payment procedure was brought did not have jurisdiction. In so far as Ms Fiermonte did not enter an appearance, the court should have declared of its own motion that it had no jurisdiction (Article 28). And if she did appear in court, she should have been informed of her right to contest jurisdiction (Article 26(2) of the Regulation).

Source: e-justice.europa.eu

The court in Milan nevertheless issued an order for payment against Ms Fiermonte, who did not oppose it. The court was subsequently requested to issue a so-called 'Article 53 Certificate'. Under the Regulation such a Certificate is necessary for cross-border enforcement (i.e. in Germany) to demonstrate that the order is enforceable in the country of origin (i.e. in Italy). The court then concluded that it should have verified its jurisdiction.
It found - ex officio - that the order in question was based on a legal relationship between a consumer and a professional. Thus, the order was issued in breach of the jurisdiction rules in the Regulation. The court asked the CJEU whether it should rectify this in the course of the Certificate-procedure. In this respect, it referred to the CJEU's case law on effective consumer protection under the UCTD and pointed out that the automatic issue of the Certificate might deprive Ms Fiermonte of an effective remedy as guaranteed by Article 47 of the EU Charter of Fundamental Rights.

Before we discuss AG Bobek's Opinion, let us briefly recall that in the context of the UCTD, the CJEU has repeatedly held - e.g. in Océano, Pénzügyi Lízing, and most recently Aqua Med - that costs or distance may deter consumers from taking legal action or exercising their rights of the defence. This would be the case where proceedings are brought before a court which is very far away from the consumer's place of residence (see Aqua Med, para 54). If this is already the case in domestic disputes, it applies all the more strongly in cross-border disputes. Moreover, the CJEU has held that rules conferring final and binding effect (res judicata force) on a decision must still meet the requirements of equivalence and effectiveness; see e.g. Finanmadrid. For instance, short time-periods to oppose an order for payment or to challenge its enforcement are problematic, also from the perspective of Article 47 Charter; see e.g. Profi Credit Polska.

Against this background, the referring court's question whether it should review the order and/or inform the consumer of the possibility to challenge its enforcement in Germany is not so strange. In addition, it was unclear whether the documents were properly served and thus, whether Ms Fiermonte had had an actual opportunity to oppose the order for payment. In a domestic situation, it would therefore be questionable whether the requirements of effectiveness and Article 47 Charter are complied with. The court responsible for the enforcement may operate as a last resort.

However, AG Bobek makes a strict separation between the CJEU's case law on the UCTD and the system of the Regulation. In his view, judicial review (ex officio) in the course of the Certificate-procedure is neither permitted nor required by EU law. It would run against the logic and spirit of the Regulation, which is aimed at the rapid and efficient enforcement of judgements abroad. The court must issue the Certificate automatically when the formal conditions are satisfied. It cannot re-evaluate the underlying judgment on points of substance and jurisdiction. This would compromise the Regulation's effectiveness.

Whereas AG Bobek's view is understandable in light of the Regulation's framework, his explanation of the distinction between the Regulation and the UCTD seems a bit artificial. On the one hand, he states that the Regulation lays down rules of a procedural nature, which are not as result-oriented and far-reaching as the (substantive) provisions of the UCTD. Yet, the rationale of the CJEU's case law on the UCTD is that consumers must be enabled to exercise their rights and that, because of their weaker (procedural) position in terms of knowledge and financial means, courts fulfil a compensatory role.
On the other hand, Bobek submits that the Regulation recognises that consumers are worthy of specific protection as defendants and that it contains additional procedural guarantees for that reason. Doesn't this mean that courts should play a role in enabling consumers to exercise their rights under the Regulation as well? It might be true that Ms Fiermonte can make an application for refusal of enforcement of the order in Germany on the grounds of lack of jurisdiction or the absence of due service of documents, but this depends on her initiative (Articles 45 and 46 of the Regulation). To what extent will it be taken into account that Ms Fiermonte is a consumer who might not be aware of her rights or not be able to pay lawyer's fees? (Ironically, the case was about unpaid lawyer's fees.) Shouldn't she at least be informed of her defence possibilities?
Bobek observes that it would be strange for the court to issue a Certificate for enforcement of the order while simultaneously pointing out its allegedly erroneous nature. This would be contrary to the principle of legal certainty. It would also undermine the principle of fair trial if the court would take on the role of the defendant's legal counsel.

Still, one cannot help but wonder why "an extra layer of protection for consumers" as proposed by the referring court could not "be ‘read into’ the provisions of Regulation No 1215/2012". That would be a true crossing of paths.

National rules on jurisdiction and the right to an effective remedy - case C-266/18 Aqua Med

Case C-681/17 slewo was not the only dispute concerning mattresses on which the Court of Justice ruled in recent time (see Sealed without a reason...). Earlier this week it also passed a judgment in case C-266/18 Aqua Med - this time not on the right of withdrawal, but on fairness control of a choice-of-court clause under Directive 93/13/EEC on unfair terms (UCTD).

Facts of the case

The case concerned a dispute between a Polish trader - Aqua Med - and a consumer to whom the trader sold a mattress (for some partially related mattress trivia see * below). The contract included a pre-formulated clause, according to which '[t]he court which has jurisdiction to hear disputes between the parties shall be the court which has jurisdiction under the relevant provisions'. After the consumer failed to pay the price for the mattress, Aqua Med sued her before the court of its registered office. This choice of court appeared to find support in the national rules of civil procedure, according to which actions relating to contractual performance can be brought either before the court within whose area of jurisdiction the defendant is domiciled, or before the court for the place where contract is to be performed (e.g. trader's registered office).

The national court run into doubts as to whether such state of affairs was in line with the requirement of effective consumer protection under UCTD. Specifically, the question arose whether national court could review the choice-of-court clause of its own motion, set it aside and apply a rule of civil procedure, which was more favourable to the consumer. 

Judgment of the Court

The judgment passed earlier this week consisted of two parts, each focused on a different provision.

In the first part Article 1(2) was examined, pursuant to which 'contractual terms which reflect mandatory statutory or regulatory provisions ... shall not be subject to the provisions of this Directive'. The Court acknowledged the existence of this exclusion as well as rationale behind it (a presumption that the national legislature has struck a balance between respective rights and obligations). It recalled, however, that - as an exception from a high level of consumer protection - such an exception had to be interpreted strictly. Against this backdrop the Court concluded that the contractual term in the case at hand was worded so generally that it did not, strictly speaking, reflect a specific national provision. The clause rather referred to a set of rules on jurisdiction, from which the seller or supplier could choose whichever rule he found most favourable. Consequently, the standard term in question fell within the scope of the UCTD.

Having established that, the Court moved on to the second part of the judgement, one devoted to the interpretation of national procedural rules in the light of Article 7 UCTD. To do so it first needed to reformulate the question asked by the national court, as the original submission made no references to Article 7. Thus, instead of analysing the unfairness of the term at hand (a tasks the Court has long avoided), the Court rather chose to analyse the underlying procedural rules.

This part of judgment consequently built upon the Court's earlier case law (see e.g. our previous posts Effectiveness of the UCTD revisited..., The ‘proceduralization’ of Directive 93/13...). It began by stressing that, in principle, procedures for assessing unfairness of a term are covered by the Member States' procedural autonomy. Directive 93/13/EEC does not include any provisions about jurisdiction over relevant claims and Regulation 1215/2012 does not apply to cases without a cross-border element. National procedural rules should, nevertheless, comply with the following two principles: equivalence (should not be less favourable than those governing similar situations subject to domestic law) and effectiveness (should provide for a right to an effective remedy, as required by Article 47 of the Charter of Fundamental Rights). Since compliance with the first principle did not raise any concerns, the judgment focused on the latter.

According to the Court, while a national rule which, as an alternative, allows territorial jurisdiction to be established according to the place of contractual performance does not, in itself, excessively restrict consumer’s right to an effective remedy, the exercise of consumer rights may be subject to such restrictions if procedure as a whole, its conduct and special features are taken into consideration. Specifically, the Court went on, "procedural arrangements which give rise to overly high costs for the consumer could have the effect of deterring him from properly defending his rights before the court before which proceedings have been brought by the seller or supplier. That would be the case where proceedings brought before a court which is very far away from the consumer’s place of residence give rise to overly high travel costs for the latter, such as to deter him from entering an appearance in the proceedings brought against him" (para. 54). The relevant assessment is, of course, for the national court to make.

Concluding thought

The judgment in Aqua Med further establishes Court's case law regarding the effectiveness of national procedural rules in light of Article 7 UCTD. The Court reiterates the criteria which it summerised in Profi Credit (with references to previous judgments) and provides some context-specific guidelines. While Profi Credit was strictly concerned with time limits, Aqua Med related to costs and distance. The judgment mentions both of these elements, but particularly underlines the former. If costs are the main concern, then procedural rules which allow consumers to be reimbursed for their travel costs could potentially mitigate against it. However, the need to travel to a court which is far away from the consumer’s place of residence involves not only monetary costs, but also takes consumers' (working) time. If national courts are to critically assess the impact of procedural rules on consumers' access to justice, then this element too should be considered.


* Aqua Med was not only the claimant in the present case, but also addressee of an earlier decision by the Polish consumer protection authority (see press release). Just over a year ago, the President of the Office of Competition and Consumer Protection (UOKiK) found that Aqua Med provided consumers with deceptive product information, among others by claiming that the thermal mat, which it sold on an off-premise basis, was used by... John Paul II. According to the consumer protection authority "this could not be true, as the production of this mat began after the Pope's death". For the violation of national rules implementing the Unfair Commercial Practices Directive the company had to pay a fine of 20 548 PLN (approx. 4 800 EUR). It is unclear whether Ten Commandments can also be binding on the legal persons. 

National supreme courts and their binding (but not really) decisions - CJEU in Dunai (C-118/17)

The CJEU has published its judgment in the Dunai case (C-118/17) last Thursday, in which it continues to specify the terms of declaring unfair foreign currency-denominated loans, following on the Kásler case. We have previously commented on the complexity of the arguments raised in the opinion of AG Wahl in the Dunai case (Consumer protection and rule of law...), evaluating the compliance of Hungarian law with the Unfair Contract Terms Directive. The most interesting part of the judgment is actually the last one - on the competence of national supreme courts in setting binding guidelines for lower courts how to assess unfairness.

To briefly remind the facts of the case: Mrs Dunai concluded a credit agreement denominated in Swiss francs in 2007, even though the loan was advanced to her in Hungarian florints. Just like in the Kásler case, various exchange rates (buying and selling ones) applied to different calculations between the Swiss francs and Hungarian florints - i.e. between the conversion of the loan and its repayments. After the Kásler judgment, Hungarian legislator adopted new laws in 2014 trying to protect Hungarian credit consumers from the harsh effects of having taken out a loan denominated in Swiss francs, but it did not protect them against unfair terms placing the whole of the exchange-rate risk on the borrowers. One such clause was found in Mrs Dunai's contracts.

Terms on exchange difference

The CJEU considers Hungarian 2014 laws, which allow to replace banks' own buying and selling rates of Swiss francs to be replaced by the official exchange rates set by the National Bank of Hungary, effectively altering terms and conditions of the contract, as compliant with the purpose that the UCTD attempts to achieve. This purpose being restoring contractual balance between the parties. However, the CJEU places a condition on this assessment: to the extent that such an assessment prevents the contract terms on exchange difference from being found unfair (as they will be amended to be fair), this may not place the consumer in a worse position than if the unfairness were found. This means that the consumer has to be restored to the legal and factual situation that he would have been in the absence of that term (para. 40-43). Therefore, the national court will need to ascertain "whether the national legislation, which declared terms of that nature to be unfair, allowed the legal and factual situation in which Mrs Dunai would have been in the absence of such an unfair term to be restored, in particular by giving rise to a right to restitution of advantages wrongly obtained, to her detriment, by the seller or supplier on the basis of that unfair term" (para. 44).

Terms on exchange rate risk

Terms on exchange risk rate differ from terms on exchange difference, as the first ones fall within the concept of core contract terms, excluded from the unfairness test provided they are transparent, pursuant to Art. 4(2) UCTD (para. 48). If such terms are non-transparent and found unfair, the national court should generally declare the whole contract annulled as a result of finding a core term, without which the contract cannot survive, unfair and thus non-binding (para. 52). Here, Hungarian 2014 laws seem to be in breach of the UCTD as they imply that national courts will keep the contract valid instead (para. 53). The national court may also not substitute the core term by supplementary provisions of domestic law, as this is only possible when the cancellation of the contract would have been to the detriment of the consumer, which was not the case in Mrs. Dunai's situation (para. 54-55).

Competence of national supreme courts to adopt 'binding decisions' on how to examine unfairness

The last part of the judgment considers the scope that national supreme courts have in adopting binding decisions on how to interpret national provisions implementing EU law, so as to guarantee uniformity of this interpretation by lower courts. This is a tricky question, as issuing such binding decisions might lead to national supreme courts deciding on de facto interpretation of EU law provisions rather than just of national law, which competence belongs to the CJEU. Still, the CJEU seemingly recognises the benefit of leaving the scope for national supreme courts to adopt such binding decisions, clarifying certain criteria in which light national lower courts must examine unfairness of standard terms, to ensure consistency in the interpretation of law and legal certainty (para. 63). Why is this recognition illusory though? Because this competence left to the national supreme courts may not take away the lower court's rights to apply for a preliminary reference from the CJEU in these matters or to ensure full effectiveness of EU law and provide consumers with effective protection (para. 64). Consequently, I would not really see it as the CJEU providing the scope for national supreme courts to adopt 'binding' decisions, but rather to issue certain guidelines, which lower courts may still disagree with and not follow.

Consumer protection and rule of law - AG Wahl's opinion in Dunai (C-118/17)

Much like the Spanish Aziz saga, the CJEU's 2014 decision in Kásler keeps generating new litigation - in Hungary and in Luxembourg alike. 

In Kásler, the Court decided on the applicability of unfair terms control to certain terms in foreign currency denominated loans. These terms had the effect of maximising the lender's profit by exploiting the difference between currency selling and buying rates. The ECJ held that such terms are not exempted from control, as they do not establish the main content of the contract - represented by the notion of foreign currency-denominated loan -  but rather are ancillary to that determination. While it is a core component of these loans that, in return for lower interest rates, consumers accept to take up the risk of currency fluctuation, the bifurcation between selling and buying rates is a further sophistication which alters the original model (in favour of the lender). 

As a consequence of Kásler, the Hungarian Supreme Court (Kuria) decided that those terms were unfair. This triggered a further reaction: the Hungarian legislator issued new rules with the aim of providing "replacement" terms. Under these rules, in foreign currency denomination loans the exchange rate is set at the level determined by the Hungarian Central Bank. 

This mechanism preserves the validity of the foreign currency denomination loans by making sure that there is always a way of determining the value of the debt. The laws in question also established some limitations on the possibility for consumers to claim the relevant remedies, which were the object of a different preliminary reference (OTP Bank and OTP Factoring).

In Dunai, the Court will have to decide whether the rules are compatible with the Directive. In particular, the referring court wonders how the replacement with the Central Bank exchange rate, which leaves the risk of currency fluctuation with the consumers, fares with the test set out in Kásler. A part of that judgment, indeed, concerned the replacement of terms with default rules when the contract could otherwise not continue into existence after unfair terms control. This is how the reasoning (para 83-84) went:

 [...] if, in a situation such as that at issue in the main proceedings, it was not permissible to replace an unfair term with a supplementary provision, requiring the court to annul the contract in its entirety, the consumer might be exposed to particularly unfavourable consequences, so that the dissuasive effect resulting from the annulment of the contract could well be jeopardised.

   In general, the consequence of an annulment is that the outstanding balance of the loan becomes due forthwith, which is likely to be in excess of the consumer’s financial capacities and, as a result, tends to penalise the consumer rather than the lender who, as a consequence, might not be dissuaded from inserting such terms in its contracts.

This reasoning, and in particularly the second part thereof, raised the possibility that the consumer's interest may play a role in assessing whether replacement & preservation would have to be preferred to sheer invalidation. 

The referring court thus asked, in essence, whether a law that forces them to recognise that the unfair term had been replaced by mandatory legislation determining the applicable interest rate, making it impossible for them to instead invalidate the contract for being incapable of continuing into existence, was compatible with the Directive. It also asked two related questions which we will discuss in turn.

Last Thursday, AG Wahl published his opinion in this case (here the French version, the English text is not yet available).

On the first question, the AG gives a very puzzling reply. After explaining that the goal of the Directive's article 6 is to establish an effective balance between the parties and not to invalidate all contracts containing unfair terms (para 75), the AG considers that the possibility of maintaining the contract must be assessed objectively, without letting the consideration of the party's interest play a determinant role (76-77). 

In this context, the judge's ability to replace the unfair terms must be interpreted as only applying in exceptional circumstances.   

From the above, the AG infers that a provision of national law which, in cases of partial invalidity arising from a declaration of unfairness, aims to preserve the contract's validity without the unfair term is consistent with the directive. This because the competent judge cannot remedy the term's unfairness just because invalidating the contract would be more advantageous to the consumer. 

If the AG assumes that in some way his reasoning has demonstrated that invalidating the contract would be the same as "remedying" an unfair term, this blogger has to admit to not being able to see how.

The rest of the opinion is (yes, it's possible!) even more technical to the extent that the AG delves into the distinction between the core and ancillary elements in the contract. The argument goes as follows: the original unfair terms were non-core terms, but the term that replaces them - fixing the exchange rate - is a core term. Therefore, whereas the referring court sees the Hungarian legislation as limiting their possibility to adjudicate on unfair terms, it is the Directive itself that imposes that limitation by excluding core terms from control. 

This reasoning allows the AG to answer that, contrary to the suspicions raised by the referring court in its second question, the Hungarian legislation does not hamper the effectiveness of Directive 93/13, which itself does not aim to reach into the domain of core terms. 

The third and last question by the referring court concerned the role of certain guidelines issued by the Hungarian Supreme Court - which the referring judge, again, perceived to be unduly limiting their ability to secure consumer protection. Here the AG again takes a somewhat surprising route: over four short paragraphs (109-112), the AG suggests that since national courts are always in a position to disapply national legislation incompatible with union law and/or raise a preliminary ruling request, there is no risk that the Kuria guidelines will prevent the application, by the national courts, of relevant EU law provisions. 

The institutional background of this case deserves separate mention. While asking about Directive 93/13, the referring court relates to a much broader panorama: take in particular the second part of the third question, whereby the court asks: is it in conformity with the EU's competence to secure a high level of consumer protection as well as fundamental EU law principles of effective judicial protection and fair trial for all questions of civil law that the the "harmonisation council" of a MS highest jurisdiction can guide adjudication through [guidelines], where the appointment of judges to this council does not happen in a transparent manner, according to pre-established rules, when the procedure before said council is not public, and it is not possible to know afterwards the procedure followed, the expertise and publications used and the vote of the different council manners?

The AG is very conscious that the struggle highlighted by this question goes far beyond the - already quite relevant - question of the fate of foreign currency denominated loans affected by unfair terms. His response is to carefully try to unload all questions of this background - an exercise that works better at certain turns than at others. 

Finding out whether the Court will take the very same path or take some deviations into rule of law discussions is one more reason to await the decision with great interest.   

Conference and call for papers on New Deal for Consumers

On 11-12 April 2019, the conference A New Deal for Civil Justice? The New Deal for Consumers and the Justiciability of EU Consumer Rights will take place in Amsterdam. It is organised by the Centre for the Study of European Contract Law (CSECL) and revolves around the New Deal for Consumers that was proposed by the European Commission on 11 April 2018. The conference focuses on issues of civil justice that the New Deal aims to address – as well as, crucially, the questions it appears to raise. It will bring together researchers interested in (the future of) European private law, civil procedure, consumer law and, possibly, others with an interest in the enforcement of EU law and EU constitutional law.

For more information and the call for papers, click here. 

CSECL particularly welcomes papers that expressly address the interaction and tension between different functions of (consumer law) adjudication and enforcement mechanisms, as well as the converging or diverging (public and private) interests involved at the different relevant levels. Who or what is the New Deal for?

Effectiveness of the UCTD revisited (once again): CJEU rules on Profi Credit Polska

Earlier this year we reported on the opinion of the Advocate-General Kokott in case C-176/17 Profi Credit Polska. Today the Court of Justice delivered its judgment on the case, largely relying on the AG's submission. By describing which elements of the Polish "fast track" procedure for the enforcement of promissory notes were not compatible with Directive 93/13/EEC, the Court further develops its case law on the effectiveness of the unfair terms framework.

Facts of the case

The case involved a Polish consumer who entered into a credit agreement with Profi Credit, a financial institution. The loan was secured by a promissory note in an unspecified amount, which the debtor signed in advance.

Following the debtor's failure to repay the loan on time, Profi Credit moved towards enforcing the promissory note. Polish procedural law provides for a specific type of proceeding which creditors can use for this purpose, namely the order for payment procedure.

The order for payment procedure is designed as a speedier way of enforcing well-documented (mainly) monetary claims. Several solutions have been put it place to make that possible. Firstly, as a general rule, the case is examined in chambers. Secondly, if the evidentiary requirements are fulfilled, the court issues an order for payment, by which it instructs the defendant to settle the claim in full, plus costs, within two weeks, or to lodge an objection (within the same period). With regard to claims arising from promissory notes, formal validity of the note is the only factor to be considered by the court before issuing an order for payment. Only if the debtor objects to the order for payment, arguments related to the underlying contractual relationship (e.g. consumer credit agreement) can be considered.

Fortunately for the debtor, the national court confronted with the creditor's request run into doubts as to the compliance of the described procedure with Directive 93/13/EEC. Consequently, it decided to stay the proceedings and ask the Court of Justice whether its lack of power to examine fairness of the underlying consumer credit agreement already at the first stage of the order for payment procedure is in line with Article 7(1) of the UCTD. Pursuant to that provision, Member States shall ensure that "adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers".

Judgment of the Court

The Court began by recalling its earlier case law related, in particular, to the importance (and  the boundaries) of ex officio control. In short:

• Effective protection of consumer rights under the UCTD can be guaranteed only if the national procedural system allows the court to check of its own motion whether terms of the contract concerned are unfair.
• Such an assessment can only be undertaken if the national court has access to the legal and factual elements required for that task.
• Establishing procedures for examining the unfair nature of a term is principally a task of national authorities. However, such procedures should not be less favourable than those governing similar situations subject to domestic law (principle of equivalence) and should provide for a right to an effective remedy, as required by Article 47 of the Charter.

Since nothing in the case at hand indicated any concerns related to equivalence, the entire focus of the judgment remained on the principle of effectiveness. The Court observed in this regard that the analysed Polish procedure provided national courts with an access to the legal and factual elements  necessary for assessing the fairness of the underlying standard terms only after a consumer had lodged an objection. The key question was therefore whether such a baseline requirement imposed on the consumer (to lodge an objection in order to allow for the ex officio control) impinged upon his right to an effective remedy.

Similarly to AG Kokott, the Court - while generally remaining on the consumer's side - did not reply with a plain "yes". Instead, it emphasised the importance of establishing whether the detailed rules of the national opposition procedure gave rise to a significant risk that the consumers concerned would not lodge the objection required (para. 61).

More specifically, for a right to an effective remedy to be respected, consumers must be able to lodge an objection "under reasonable procedural conditions", in particular as regards time limits or costs. 

According to the Court, the analysed Polish procedure fell short of these requirements on several accounts:

• [Time] the objection needed to be lodged within a time limit of two weeks;
• [Content] the defendant was required to indicate in the objection whether the order was disputed in whole or in part, set out the complaints on pain of inadmissibility and adduce facts and evidence;
• [Costs] the defendant was required to pay 3/4 of the court fee, while the seller or supplier was only required to pay the remaining 1/4.

All these factors taken together resulted, in view of the Court, is a significant risk that consumers concerned would not lodge the objection required, making the analysed national legislation incompatible with Article 7(1) of the UCTD.

Post scriptum

This is not the first time when Profi Credit found itself in the centre of public attention for the way it runs its business. Over the last decade the company has become an addressee of at least four decisions of the Polish consumer protection agency - the President of the Office of Competition and Consumer Protection (UOKiK). The relevant decisions concerned different types of alleged infringements: from misleading advertisements to the violations of information duties. In June this year the President of UOKiK drew his attention to the practices of the company once again and launched explanatory proceedings related, among others, to excessively high insurance fees linked to the credit agreements. Further information about these recent actions can be consulted here. 

Are 'effectiveness' and 'effective judicial protection' synonyms? Judgment of the CJEU in Case C-483/16

Today the EU Court of Justice issued its judgment in Case C-483/16 Sziber v ERSTE Bank Hungary. We have reported earlier on the Opinion of Advocate General Wahl in this case, which touches on the relation between the principles of equivalence and effectiveness on the one hand and the right to effective judicial protection, as guaranteed by Article 47 of the EU Charter of Fundamental Rights, on the other.

According to the referring court, the problem in this case was that the consumer - Mr. Sziber - had not amended his application as requested; under the new Hungarian legislation (also discussed on this blog here) he should have specified which legal consequences he wished to obtain if the contract were to be found invalid and, in particular, to which repayments he would be entitled to exactly. Because he did not do so, the referring court could not examine the case on the merits. Therefore, it asked the CJEU whether it was compatible with the Charter as well as with Article 7 of Directive 93/13/EEC to require the consumer to provide additional information in civil proceedings.

The CJEU refers to its judgments in Unicaja, Pereničová and Gutiérrez Naranjo to reiterate that consumers have, in principle, the right to restitution of amounts that have been unduly paid on the basis of unfair terms. As regards the procedural rules governing claims falling within the scope of Directive 93/13/EEC, the EU Member States have procedural autonomy, subject to the principle of equivalence and - here it gets interesting - Article 47 of the Charter (Sziber, para 35). The CJEU does not (separately) mention the principle of effectiveness, even though it still did so in Sales Sinués, the judgment it refers to in this respect. Has the 'effectiveness' of the Directive been replaced with 'effective judicial protection', or are they synonyms?

The answer seems to be: not necessarily. In paras 49-53, the CJEU focuses on the question whether there is an infringement of the (individual) right to effective judicial protection and if so, if this can be justified because it is legitimate and proportionate (paras 51-52). This is very similar to the test of Article 52(1) Charter. In principle, the existence of special procedural requirements for consumers does not mean that they do not enjoy effective judicial protection; they can be requested to provide the court with additional information. The purpose of those requirements is to relief the burden on the judicial system due to the great number of cases, which serves the general interest of a proper administration of justice. This may prevail over individual interests. It appears that the procedural rules at issue are not so complicated or severe that they disproportionally affect the consumer's right to effective judicial protection, but it is up to the referring court to determine this.

Moreover, ERSTE Bank and the Hungarian government have emphasised that consumers have the possibility to claim repayment and compensation under the new legislation. The CJEU holds that, if this indeed turns out to be the case, or if consumers have other effective procedural means at their disposal, the effectiveness of the protection intended by the Directive does not preclude the procedural rules at issue (para 54). Here, the focus is on the availability of "adequate and effective means" (Article 7 of the Directive) rather than on justification(s) for a possible infringement of Article 47 of the Charter.

Today's judgment suggests that that 'effectiveness' and 'effective judicial protection' call for different tests, in the context of Directive 93/13/EEC. This could be seen as a confirmation that they entail different perspectives. In the case of Sziber this may not lead to a different outcome, but there are cases where it would arguably have made a difference [*].

Lastly, it should be noted that the CJEU leaves it up to the referring court to decide whether the principle of equivalence has been met (paras 37-48). It also concludes - unsurprisingly - that Directive 93/13/EEC applies in domestic consumer disputes as well, where there is no cross-border element.


[*] See e.g. Anna van Duin, 'Article 47 EUCFR and Civil Courts: The Case of Arbitration Clauses in Consumer Contracts (the Netherlands vs Spain)', Working Paper 5/2018, Jean Monnet Chair of European Private Law, available at https://ssrn.com/abstract=3186531. 

Arbitration and effective consumer protection: a field of tension

The judgment of the EU Court of Justice (Grand Chamber) of 6 March 2018 in Slovak Republic v Achmea (C-284/16), a case concerning investor-state arbitration under a bilateral investment treaty (BIT), has raised a dust. The CJEU found that arbitration clauses common to almost 200 BITs between EU Member State violate EU law. The judgment is likely to have far-reaching consequences for intra-EU investment arbitration; it has even been called a "death sentence" for autonomous arbitral tribunals.

For consumer lawyers, the CJEU's findings as regards the relation between arbitral tribunals and State courts will be of special interest. A recurring issue in the context of unfair terms control is whether and to what extent judicial review of arbitral awards - in particular the arbitration clause on which they are based - is still required. Mostaza Claro and Asturcom are two well-known cases in this respect. They both pertain to the scope of the national court's power / obligation to assess of its own motion (i.e. ex officio) the unfairness of the arbitration clause, either in annulment proceedings or at the enforcement stage. Judicial review and ex officio control play a key role in the effective protection of consumers under Directive 93/13.

Source: 24x7newscast.com

In the Netherlands, the discussion about arbitration in consumer cases has recently resurfaced. The modus operandi of e-Court, an online platform offering digital dispute resolution, appeared to be contrary to EU (consumer) law.[*] First, the independence of e-Court was questionable: its main clients were health insurance companies who brought claims against consumer-debtors on a large scale. Secondly, consumers were not given a realistic choice between arbitration or litigation before a State court. Thirdly, the procedure was so short that consumers hardly had any time to defend themselves. Fourthly, undefended claims were automatically awarded by an algorithm (a 'robo-judge'). This 'robo-judge' did not seem to exercise unfair terms control. Fifthly, judicial review of e-Court's awards turned out to be limited, which could be problematic in light of the case law of the CJEU.

The example of e-Court shows tension between the 'efficiency' of alternative (out-of-court) dispute settlement and the effective (judicial) protection of consumers. In Achmea, the CJEU emphasised the importance of State courts in ensuring the full application of EU law and the judicial protection of the EU rights (and freedoms) of individuals. Insofar as an arbitral tribunal may be called on to interpret or to apply EU law, while it is not a court or tribunal of a Member State and thus not part of the judicial system, its awards must be subject to judicial review in order to ensure that questions of EU law which the tribunal may have to address can be submitted to the CJEU for a preliminary ruling. The CJEU also recalled that requirements of efficient arbitration proceedings may justify the judicial review of arbitral awards being limited in scope, provided that the fundamental provisions of EU law can be examined in the course of that review. The right to an effective remedy before a court of law (Article 47 of the EU Charter of Fundamental Rights), which includes the right of access to court, is such a provision.

Achmea may not be a "death sentence" for commercial arbitration in general, but as far as the application of EU law is concerned State courts - and, through preliminary references, the CJEU - have the final say. This could have implications for the assessment of arbitration clauses in consumer contracts as well.


[*] For our Dutch readers, click here for more background information. A debate about the 'robo-judge' of e-Court is organised at the University of Amsterdam on 22 March 2018 (programme in Dutch). 

Report on the procedural protection of consumers

The European Commission has published a long-awaited report (see our previous blog posts here, here and here) on the impact of national civil procedure on the protection of consumers under EU law; click here for the press release and the full report. The report has been prepared by a consortium of European universities led by the MPI Luxembourg for Procedural Law. The study, which is based on national reports from the EU Member States as well as an online questionnaire and interviews, evaluates whether and to what extent national procedural laws and practices ensure the effective procedural protection of European consumers. The report clearly illustrates that "procedural law matters" [scroll down for more].

Source: www.mpi.lu

As the report points out (p. 28), the application and enforcement of (substantive) EU consumer law largely takes places at the national level. However, there is no equal or level playing field across the EU, and national courts are facing difficulties in understanding and implementing the case law of the CJEU concerning procedural consumer protection. The main uncertainties and divergences pertain to the concept of a 'consumer' (e.g. how to recognise a 'consumer dispute', especially in case of default), the approach to judicial activism and ex officio control (in 'ordinary' proceedings, appeal, payment order and enforcement proceedings), jurisdiction and arbitration issues (cf. the Brussel Ibis Regulation) and the interfaces between individual and collective actions. 

The report consists of an executive summary, followed by five Chapters: (1) the general structure of procedural consumer protection (different systems and mechanisms for enforcement), (2) access to justice (costs, legal aid and knowledge), (3) consumer actions before national courts ('party disposition' vs. an active court, ex officio application of EU consumer law, different types of procedures), (4) actions for collective redress (injunctive vs. compensatory relief, staying of claims, binding effect), and (5) alternative dispute resolution (scope, voluntary or mandatory nature, judicial review). Each chapter provides a summary of the status quo, identified problems and, finally, proposals, improvements and recommendations. In addition, the Annex contains selected data from the national reports. 

The report finds that (p. 29) it "might be advisable to consider providing for minimum standards of consumer protection in civil proceedings in order to improve consumers’ access to justice and increase legal certainty and transparency in these proceedings" [emphasis added]. It also "appears advisable to clarify and strengthen the role of consumer protection associations when filing individual or collective claims". See in this respect the report on collective redress mechanisms, published simultaneously. 

The Commission has already announced a 'New Deal for Consumers', to further strengthen ways of enforcement and redress for consumers. 

Procedural autonomy and effectiveness - a delicate balance; Opinion of AG Wahl in C-483/16 Sziber

For those who are interested in consumer credit agreements in a foreign currency, the legal consequences of unfair terms and the 'proceduralization' of Directive 93/13, we will discuss the Opinion of Advocate General Wahl in Sziber (Case C-483/16) that came out last week. This case is a successor to the much-discussed Kásler judgment (C-26/13). In short, the questions asked to the EU Court of Justice by the referring court from Hungary pertain to national legislation adopted after Kásler and follow-up case law of the Kúria, the Hungarian Supreme Court.[*]

Source: ERSTE Bank Hungary

Mr. Zsolt Sziber - a consumer - had brought an action against ERSTE Bank Hungary, claiming that the agreement he concluded with the bank was invalid in its entirety, inter alia because the bank had not carried out a credit assessment, because the contract contained a foreign currency conversion without clearly stipulating the exchange rate , and because he could not evaluate the extent of the risk on the basis of unintelligible information. Alternatively, he sought a declaration that some of the contractual terms were unfair and thus invalid. During the proceedings, the applicable national laws were amended and additional requirements were introduced. The new legislation applies to consumer credit agreements concluded between 2004 and 2014. It declares standard terms void that set, for the purpose of repayment of the debt, a different exchange rate from the one set when the loan was paid out. Those terms are replaced by the official exchange rate for the foreign currency concerned. Standard terms that permit the unilateral increase of the interest rate, costs and commissions are also deemed to be unfair (and void). The sums paid in excess have to be refunded, and the credit institution must carry out a 'settlement of accounts' with the customer. 

In addition, to harmonise the case law, transitional procedural rules provide that the contracting parties may make an application to the court for a declaration of (partial) invalidity, but only if they also request determination of the legal consequences of invalidity, including the settlement of accounts between them. Otherwise, the application is inadmissible and the court may not examine the case on the merits. 

The referring court found that Mr. Sziber was entitled to a refund and invited him to amend his application in line with the new legislation, but he failed to do so. Therefore, the referring court considered itself unable to rule on the merits of the case, which meant that Mr. Sziber would be left empty-handed. Subsequently, the referring court raised doubts as to whether the national laws involved were compatible with EU law, in particular Articles 38 and 47 of the EU Charter of Fundamental Rights, Directive 93/13 and Directive 2008/48 (which, according to AG Wahl, does not apply to the present case; see para 29). In the referring court's view, the additional requirements were prejudicial to consumers, whether applicant or defendant. Moreover, these additional requirements did not apply to consumers who had not entered into a credit agreement between 2004 and 2014 or who entered into a different kind of agreement. Then, it suffices to merely seek a declaration of invalidity, without having to specify the legal consequences. 

AG Wahl's Opinion is divided in two parts: (i) admissibility, and (ii) substance, i.e. the 'equivalence and effectiveness' test. 

First, AG Wahl remarks that the national legislation at issue already seems to have the effect of rendering the contractual terms that Mr. Sziber regarded as unfair null and void (para 32). In Kásler, the CJEU held that Directive 93/13 does not preclude provisions of national law "enabling the national court to cure the invalidity of that term by substituting for it a supplementary provision of national law". So far, so good: new legislation has indeed been adopted in Hungary. The problem in this case, however, is that the referring court was prevented from 'curing the invalidity', due to the applicable procedural rules. In this respect, the case appears to be a classic example of national procedural law that could make the exercise of consumer rights under e.g. Directive 93/13 "impossible or excessively difficult". Although the Member States have procedural autonomy, they must still observe the principles of equivalence and effectiveness. Furthermore, according to established case law of the CJEU, the full effectiveness (effet utile) of Directive 93/13 requires that national courts offer consumers ex officio protection against unfair contract terms. 

Yet AG Wahl's Opinion shows how delicate the balance is between procedural autonomy and effectiveness. He even concludes that the case is inadmissible, because Mr. Sziber's claims regarding unfair terms have already been addressed by the national legislation at issue. The remaining claims are unrelated to EU law, says Wahl (para 32). At the same time, Wahl acknowledges that, as a consequence of Mr. Sziber's inaction, the referring court had to dismiss the claims before it could substitute the terms and/or order a refund (cf. para 64 of the Opinion). Why, then, the case would be inadmissible is a bit of a mystery.

AG Sharpston states in a recent Opinion - referring to Asturcom (C-40/08) - that, while the national court does not have to make up fully for 'total inertia' on the part of a consumer, the Directive must be applied irrespective of the parties' procedural actions or submissions, except (of course) if none of them has brought proceedings. Indeed, the CJEU has held in Asturcom that the national court must assess the potential unfairness of contractual terms of its own motion, "in so far as, under national rules of procedure, it can carry out such an assessment in similar actions of a domestic nature. If that is the case, it is for that court or tribunal to establish all the consequences thereby arising under national law, in order to ensure that the consumer is not bound by that clause". This appears to seamlessly apply to the present case.

In light of the CJEU's case law, AG Wahl's Opinion is all the more curious. Not only does he seem to defend a rather 'passive' role for national courts (cf. para 54), he also argues that placing a heavier burden on the consumer is justified. In his view, the new procedural rules are "more favourable" than the ordinary rules: they would make the enforcement of consumer rights more simple, quicker and cheaper (paras 51-52). It may be true that specific, possibly more effective procedures have been introduced for consumers, but in Mr. Sziber's case they are not of any help. For Mr. Sziber, the new requirements do have "unfavourable consequences" (para 64). Thus, the question should not be whether the new system "taken as a whole" (para 50) is compatible with EU law, but whether Mr. Sziber and other consumers in a similar position are afforded sufficient protection of the rights they derive from Directive 93/13. Wahl does not substantiate why it would be legitimate and necessary to request that claimants like Mr. Sziber make an extra effort by submitting an 'express' and 'quantitatively defined' claim (cf. paras 54-55 and 59-62). He does not explain either why the adoption of such additional steps would not prejudice the effective judicial protection of Mr. Sziber's rights, in particular his right of access to court, guaranteed by Article 47 of the Charter (cf. para 65). Unfortunately, the referring court does not seem to have provided much more information. For instance, why could the desired outcome - a settlement of accounts - not be achieved by requiring the bank to provide the necessary documents? We hope that the CJEU's judgment will clarify which test is to be applied here, as well as how procedural autonomy, effectiveness and, finally, effective judicial protection are (inter)related.

[*] For more details, see: Judith Fazekas, 'The consumer credit crisis and unfair contract terms regulation - Before and after Kásler', Journal of European Consumer and Market Law 3/2017, pp. 99-106.

The ‘proceduralization’ of Directive 93/13 and its limits

The CJEU's judgment in Banco Santander (C-598/15) that came out this week is the latest addition to a growing body of case law on procedural obstacles to consumer protection under Directive 93/13. The focus on procedures and the role of national (civil) courts in ensuring the effectiveness of the Directive, i.e. its 'proceduralization', has been the subject of debate between judges, legal practitioners and academics for a while now. It receives attention from the European Commission as well (see, e.g., the REFIT report of the European Commission, the RE-Jus project aimed at providing judicial training, and a much-anticipated study of the Max Planck Institute Luxembourg). However, Banco Santander reveals the limits of 'proceduralization' driven by preliminary references to the CJEU.

In this case, the referring Spanish court was confronted with a fait accompli, which made the judicial review of unfair contract terms impossible. It all started with a mortgage loan agreement between Banco Santander and Ms. Sánchez Lopez. The contract contained a clause - Clause 11 - by which Ms. Sánchez not only expressly agreed to enforcement through extrajudicial proceedings, but also authorised the bank to execute the sale of the mortgaged property on her behalf. Thus, the bank could represent Ms. Sánchez before the notary drawing up the sale instrument without her attendance. The bank had initiated (compulsary) mortgage enforcement proceedings, the property was acquired by the bank for 59.7% of the value, and the sale instrument had been entered into the land register, while Ms. Sánchez continued to owe the residual debt. At first, the bank had allowed her to stay on the premises as a tenant. Later, it brought a claim seeking an order for the eviction of Ms. Sánchez from the property. 

The referring court questioned the compatibility of the applicable procedural framework with Directive 93/13. The problem was that it was 'too late' for ex officio control of the unfairness of the terms - in particular Clause 11 - of the underlying mortgage contract: the transfer of ownership had already taken place. The court was merely required to enforce and protect the bank's property right. One the one hand, it could be said that Ms. Sánchez should have challenged the mortgage enforcement in time. On the other hand, the question could be raised (a) if she had any incentive to do so, because the bank initially allowed her to stay, and (b) whether she was actually aware of her rights, given the fact that the extrajudicial proceedings and the sale had taken place entirely without her involvement. 

Last June we reported on this blog that Advocate General Wahl's answer to the referred questions in this case was, in short: "we can't help you". Directive 93/13 simply does not apply to proceedings concerning property rights. The CJEU basically gives the same answer, but with two important nuances: (i) the proceedings are independent of the legal relationship between the creditor (the bank) and the consumer; and (ii) the consumer has not availed herself of the legal remedies provided. We will discuss these nuances below.

I. No link between the present proceedings and the mortgage

The scope of application of the Directive and the CJEU's competence are limited to proceedings concerning contractual relationships, whereas the present proceedings concerned property rights. Here, the party who had lawfully acquired the property happened to be the bank, but any (other) interested third party could have become the owner. Against such a third party, the consumer-debtor cannot invoke a defence based on the mortgage contract between her and the bank. 

Yet, the CJEU does not stop here. It recalls that "it has been held, in particular as regards enforcement proceedings for mortgages, that, failing effective review of the potential unfairness of contractual terms in the instrument on the basis of which the property is seized, observance of the rights conferred under Directive 93/13 cannot be guaranteed" (para 46; emphasis added). The CJEU refers to, in particular, Finanmadrid and Aziz. As the CJEU explains, the difference between this case and Aziz is that here, the action is brought on the basis of an ownership instrument as entered in the land register. This suggests that the CJEU is sensitive to the doubts of the referring court as to the course of events in the present case. It almost seems to regret that no question was asked about the unfairness of the terms in the mortgage contract, within the meaning of Article 3 of the Directive (cf. the obiter dictum in para 48). In this respect, it is a pity that the question regarding the role of the notary was inadmissible (para 31). 

II. Availability of legal remedies

The CJEU also reiterates the importance of guaranteeing effective judicial protection to consumers (cf. Article 47 of the EU Charter of Fundamental Rights), by enabling them to contest the contract at hand in legal proceedings, including in the enforcement phase, and under reasonable procedural conditions (para 38). The CJEU considers that "it appears" that legal remedies were available to Ms. Sánchez, "subject to verification by the referring court" (para 49). The choice of words - the CJEU uses "opportunity" - is interesting. What if such an opportunity existed from a strictly legal perspective, but Ms. Sánchez was, in fact, deterred from using it as a consequence of Clause 11 and the bank's conduct, reinforced by the procedural rules at issue? The effective judicial protection of consumers under Directive 93/13 is based on the presumption that a case comes before a court, as was observed in an Opinion by AG Sharpston last week. Here, we run into the limits of 'proceduralization'. Perhaps it is time to recognise that the mere existence of a legal remedy is not enough; perhaps, there is a need for a shift in focus to the more fundamental question whether a certain procedural regime is justified in light of the interests it aims to protect [*].

[*] See for a first exploration: Anna van Duin, 'Metamorphosis? The Role of Article 47 of the EU Charter of Fundamental Rights in Cases Concerning National Remedies and Procedures Under Directive 93/13/EEC', available on SSRN.