CONSUMER LAW – The ECJ on excessive non-interest credit costs

Newsletter n. 91 – December 2023

CONSUMER LAW

The ECJ on excessive non-interest credit costs

On 23 November 2023, the European Court of Justice (ECJ) issued its judgment in case C‑321/22 (Provident Polska). The District Court of Warsaw asked the ECJ to interpret Articles 3, 6 and 7 of Council Directive No. 93/13/EEC of 5 April 1993 (on unfair terms in consumer contracts) in order to know whether the terms relating to non-interest credit costs may be held to be unfair on the sole ground that those costs are clearly excessive in relation to the service provided by the seller or supplier and whether the contract may continue in existence after a declaration of invalidity of the provisions requiring repayment in person at the home of the consumer. The former question was answered positively by the ECJ, which found that a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer, could occur if the non-interest costs charged to the consumer are clearly disproportionate in relation to the amount loaned and the services supplied in exchange, connected with the grant and management of a loan (to be ascertained by the national judge on a case-by-case basis). As for the second question, the ECJ stated that, where the national court – which is called upon to ascertain if a term is unfair – declares the term to be invalid, the contract may prove to be unenforceable and therefore null and void in its entirety, provided that the unfair element of that term is not separable from the rest of the contract (in which case, the contract may continue in existence and the consumer may choose any method of payment from among those which are permissible under national law).