No 169/2023 : 9 November 2023
Unfair term in a consumer credit contract secured by the family home: the court must assess the proportionality between the seller or supplier’s power to demand the whole of the loan and the seriousness of the consumer’s non-compliance
In Slovakia, the bank Všeobecná úverová banka granted two customers consumer credit repayable over a period of
20 years. The customers pledged their family home as security. Due to a delay in payment of three months in the
amount of approximately € 1,000, which occurred in the first year of the contract, the bank invoked an acceleration
clause. That clause allows it to claim early repayment of the outstanding balance in full and to initiate the
extrajudicial auction of the family home. The customers asked a Slovak court to suspend that auction, which, in their
view, infringes their rights as consumers.
Slovak law allows for the triggering of such an acceleration clause if the borrower has a delay in payment of three
months and the lender has complied with an additional notice period of 15 days. The courts are not obliged to
review whether that clause is proportional to the seriousness of the breach of the consumer’s obligations in the light
of the amount and term of the credit. The Slovak court asks the Court of Justice whether such judicial review is
compatible with EU law.
The Court replies that judicial review of the possible unfairness of the clause must include a review of its
proportionality. It states that the acceleration clause in question falls within the scope of the Unfair Terms
Directive 1
.
That review includes an examination of the extent of the consumer’s failure to fulfil his or her contractual
obligations, such as the amount of the instalments that have not been paid in relation to the total amount of the
credit and the duration of the agreement. Moreover, the court must take account of the consequences of the
eviction of the borrower and his or her family from the dwelling constituting their principal residence, the
right to accommodation being a fundamental right. If the court concludes that the clause is unfair, it must
exclude its application
20 years. The customers pledged their family home as security. Due to a delay in payment of three months in the
amount of approximately € 1,000, which occurred in the first year of the contract, the bank invoked an acceleration
clause. That clause allows it to claim early repayment of the outstanding balance in full and to initiate the
extrajudicial auction of the family home. The customers asked a Slovak court to suspend that auction, which, in their
view, infringes their rights as consumers.
Slovak law allows for the triggering of such an acceleration clause if the borrower has a delay in payment of three
months and the lender has complied with an additional notice period of 15 days. The courts are not obliged to
review whether that clause is proportional to the seriousness of the breach of the consumer’s obligations in the light
of the amount and term of the credit. The Slovak court asks the Court of Justice whether such judicial review is
compatible with EU law.
The Court replies that judicial review of the possible unfairness of the clause must include a review of its
proportionality. It states that the acceleration clause in question falls within the scope of the Unfair Terms
Directive 1
.
That review includes an examination of the extent of the consumer’s failure to fulfil his or her contractual
obligations, such as the amount of the instalments that have not been paid in relation to the total amount of the
credit and the duration of the agreement. Moreover, the court must take account of the consequences of the
eviction of the borrower and his or her family from the dwelling constituting their principal residence, the
right to accommodation being a fundamental right. If the court concludes that the clause is unfair, it must
exclude its application