CONSUMER PROTECTION | The ECJ on the right of withdrawal in leasing and credit agreements

On 21 December 2023, the European Court of Justice (ECJ) issued its judgment in Joined Cases C-38/21, C-47/21 and C-232/21 (BMW Bank and Others) concerning several disputes between consumers and financial institutions linked to motor vehicle manufacturers, including BMW Bank, Volkswagen Bank and Audi Bank. In particular, the Regional Court of Ravensburg requested a preliminary ruling from the ECJ on the validity of the exercise of the consumer’s right of withdrawal concerning, respectively, a leasing agreement for a motor vehicle without an obligation to purchase (Case C‑38/21) and a number of credit agreements intended to finance the purchase of second-hand motor vehicles (Cases C‑47/21 and C‑232/21). On the one hand, the ECJ ruled that a consumer who concludes a leasing agreement for a car ordered in accordance with his/her specifications does not have a right of withdrawal if the agreement stipulates that he/she is under no obligation to purchase the car at the end of the leasing period, regardless of whether the agreement was concluded at a distance or away from commercial premises. On the other hand, in the case of credit agreements, the ECJ found that a consumer may exercise his/her right of withdrawal at any point, without committing an abuse of right, provided that (i) he/she did not receive complete and correct information on his/her rights and obligations from the trader, thus affecting his/her decision to conclude the agreement, and (ii) the agreement is still being performed, i.e. generally before the final repayment.

Newsletter n. 93 – February 2024