In a judgment handed down on Thursday 3 July (Case C-582/23), the Court of Justice of the European Union ruled that Polish legislation, which did not allow the bankruptcy court to assess of its own motion the potentially unfair nature of terms contained in a contract signed by a consumer, was contrary to EU law.
In Poland, the bankruptcy court is asked to draw up a repayment plan for the debts owed by an individual that has been declared bankrupt. However, the majority of the latter’s debts stem from a mortgage credit contract indexed to the Swiss franc that he had signed twelve years earlier. The court found that the credit agreement contained unfair terms that could render it null and void, an offence that it was not legally authorised to investigate. In fact, it is only empowered to refer the matter to a supervisory judge for him to examine the mortgage contract and amend the list of claims.
In its ruling, the Court of Justice finds that Polish legislation is contrary to Directive 93/13 on unfair terms in consumer contracts.
In the absence of a prior assessment of the unfairness of the clauses in question, EU law requires the bankruptcy court to make such an assessment of its own motion and to draw the necessary conclusions, noted the European court. The need to refer the matter to the supervisory judge could prolong the bankruptcy proceedings and, consequently, the precarious financial situation of the bankrupt consumer.
According to the Court, the bankruptcy court must also be able to apply interim measures to ensure the full effectiveness of consumer protection within the EU. Given the circumstances of the case in question, it will be for the Court to decide whether a measure reducing the withholdings made from the bankrupt consumer’s wages is necessary, pending a decision on whether the terms of the contract in question are unfair.
See the judgment of the Court of Justice: https://aeur.eu/f/hoz (Original version in French by Mathieu Bion)