(CN) – A couple saddled with burdensome loan payments because of currency fluctuations curried favor Thursday with a magistrate for Europe’s top court.
Terez Ilyes and Emil Kiss obtained the loan a decade ago with a Hungarian bank. Although they were paid in Swiss francs, the couple agreed to make monthly repayment installments in Hungarian forints.
Those payments surged, however, because of considerable fluctuations in the exchange rate.
Though the terms of the loan agreement made Ilyes and Kiss responsible for these currency fluctuations, the couple claimed in a 2013 lawsuit against OTP Bank Nyrt that such contract terms were unfair.
One year later meanwhile Hungary adopted laws by which it removed certain unfair terms from foreign-currency loan contracts but continued to place the exchange-rate risk on the borrower.
With the stance of the Legislature in mind, the Budapest Regional Court invited Europe’s top court, the European Court of Justice to weigh in.
Advocate General Evgeni Tanchev recommended Thursday that the Hungarian court still examine the fairness of Ilyes and Kiss’ contract.
The ruling notes that Hungary’s new laws came into force because of a 2014 opinion from the Court of Justice that addressed the legality of foreign-currency-denominated consumer credit agreements in Hungary.
Indeed the EU directive 93/13 states: “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”
“To the extent that subsequent member state legislative intervention has failed to cure unfairness with respect to clarity and transparency of terms, as required by Directive 93/13, compliance of such terms with this obligation is to be determined from the date of the contract,” Tanchev wrote.
Tanchev’s opinion is not binding on the Luxembourg-based court, which will now begin its own deliberations in the case.