JUDGMENT OF THE COURT (Eighth Chamber)

26 June 2019 ( *1 )

(Reference for a preliminary ruling — Unfair terms in consumer contracts — Directive 93/13/EEC — Proceedings for enforcement of a mortgage claim — Directly enforceable notarial instrument — Judicial review of unfair terms — Suspension of enforcement — Lack of competence of the court before which the application for enforcement has been brought — Consumer protection — Principle of effectiveness — Interpretation in conformity with EU law)

In Case C‑407/18,

REQUEST for a preliminary ruling under Article 267 TFEU from the Višje sodišče v Mariboru (Court of Appeal, Maribor, Slovenia), made by decision of 6 June 2018, received at the Court on 21 June 2018, in the proceedings

Aleš Kuhar,

Jožef Kuhar

v

Addiko Bank d.d.,

THE COURT (Eighth Chamber),

composed of F. Biltgen, President of the Chamber, C.G. Fernlund and L.S. Rossi (Rapporteur), Judges,

Advocate General: H. Saugmandsgaard Øe,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–

the Slovenian Government, by B. Jovin Hrastnik, acting as Agent,

–

the European Commission, by M. Kocjan and N. Ruiz García, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts ( OJ 1993 L 95, p. 29 ).

2The request has been made in proceedings between Mr Aleš Kuhar and Mr Jožef Kuhar and Addiko Bank d.d., a Slovenian banking establishment, concerning the enforcement of a claim under a mortgage contract concluded in the form of a directly enforceable notarial instrument.

Legal context

EU law

3Article 3 of Directive 93/13 provides:

‘1. 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.

2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.

…’

4Article 4 of that directive states:

‘1. Without prejudice to Article 7, the unfairness of a contractual term shall be assessed taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

2. Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplie[d] in exchange, on the other, in so far as these terms are in plain[,] intelligible language.’

5Article 5 of that directive is worded as follows:

‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. …’

6Article 6(1) of that directive provides:

‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’

7Under Article 7(1) of that directive:

‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’

Slovenian law

Law on consumer protection

8Article 23 of the Zakon o varstvu potrošnikov (Law on consumer protection, Uradni list RS, No 98/04) provides:

‘A business may not make provision for contractual terms which are unfair to the consumer.

The contractual terms referred to in the preceding paragraph shall be invalid.’

9The first paragraph of Article 24 of that law states:

‘Contractual terms shall be regarded as unfair if they cause, to the detriment of the consumer, a significant imbalance in the rights and obligations of the parties, if they render the performance of the contract unduly prejudicial to the consumer, or if they render the performance of the contract significantly different to what the consumer could legitimately expect, or if they breach the principle of good faith and fairness.’

Law on enforcement and protective measures

10Article 9 of the Zakon o izvršbi in zavarovanju (Law on enforcement and protective measures, Uradni list RS, No 3/07) states:

‘A decision at first instance shall be subject to appeal unless the law provides otherwise.

An action by a debtor against an enforcement order granting an application for enforcement shall constitute a complaint.

…

A decision concerning the complaint shall be subject to appeal.

…’

11Article 15 of that law provides:

‘The provisions of the Zakon o pravdnem postopku [(Code of Civil Procedure, Uradni list RS, No 73/07)] shall apply by analogy to enforcement proceedings and protective measures, except as otherwise provided for in this law or another law.’

12The first and second paragraphs of Article 17 of that law provide:

‘The court shall order enforcement on the basis of an enforceable instrument.

The following shall constitute enforceable instruments:

1.an enforceable judicial decision and an enforceable court settlement;

2.an enforceable notarial instrument;

…’

13Under the first paragraph of Article 55 of that law:

‘A complaint may be brought against an enforcement order on grounds which impede enforcement, including:

…

(2)

if the instrument on the basis of which enforcement was granted is not an enforceable instrument or an authentic instrument;

…’

14Article 71 of that law is worded as follows:

‘The court may wholly or partially suspend enforcement on application by the debtor where he presents a credible argument that immediate enforcement would cause him to suffer damage which would be irreparable or difficult to remedy and worse than the damage which the creditor may suffer if enforcement is deferred, in the following cases:

…

(5)

where an action is brought for a declaration of invalidity in respect of the transaction concluded in the directly enforceable notarial instrument on the basis of which enforcement was granted;

…

Without prejudice to the preceding paragraph, the court may, on application by the debtor, suspend enforcement in other cases too, on specific legitimate grounds, but for a maximum of 3 months and on one occasion only.

Acting on a proposal by the creditor, the court shall make the suspension of enforcement subject to the debtor’s provision of a guarantee, except if that is detrimental to his own maintenance or to that of the members of his family. If the debtor fails to provide the guarantee within the time limit set by the court, which may not exceed 15 days, the application for suspension shall be treated as having been withdrawn.’

Code of Civil Procedure

15Point 1 of the third paragraph of Article 3 of the Code of Civil Procedure provides:

‘A court shall not recognise a provision agreed by the parties:

1.which is contrary to public policy.’

Law on notaries

16Article 4 of the Zakon o notariatu (Law on notaries, Uradni list RS, No 2/07) states:

‘A notarial instrument providing for an obligation to give, to do, not to do or to tolerate something, which may be the subject of an amicable agreement, shall constitute an enforceable instrument if the debtor expressly accepts that it is directly enforceable in the instrument itself or in a separate notarial instrument and if the debt is due.’

17Article 42 of that law provides:

‘Before drawing up a notarial instrument, the notary must describe to the parties in an intelligible manner the content and the legal consequences of the planned legal instrument or expression of intent, and he must draw the attention of the parties to the known and usual risks linked to such a legal instrument or such an expression of intent. The notary must also draw the attention of the parties to other possible circumstances concerning the planned legal instrument, if he is aware of them … He must also dissuade the parties from using unclear, unintelligible or ambiguous expressions and expressly draw their attention to the possible legal consequences of the use of such expressions. If the parties retain those expressions, he must include them in the notarial instrument, but also mention the warning concerning them given to the parties.’

Law on legal aid

18The fourth indent of Article 8 of the Zakon o brezplačni pravni pomoči (Law on legal aid) provides:

‘Free legal aid under this law shall not be granted:

…

–

to a debtor who is the subject of enforcement proceedings carried out on the basis of an enforceable instrument within the meaning of the Law on enforcement and protective measures, unless that debtor presents a credible argument that there are grounds for a complaint against the enforcement which impede that enforcement in accordance with the provisions of the Law on enforcement and protective measures.’

The dispute in the main proceedings and the question referred for a preliminary ruling

19Addiko Bank and Mr Aleš Kuhar and Mr Jožef Kuhar concluded a mortgage contract, in the form of a directly enforceable notarial instrument, to fund the purchase of a residential property (‘the notarial instrument at issue’). The loan was denominated in Swiss francs (CHF), but the Kuhars were required to make the monthly repayments in euros, at the reference rate of the European Central Bank (ECB) on the day of payment. The interest rate was linked to the six-month CHF LIBOR rate.

20As the Kuhars continued to be in default, Addiko Bank applied, on the basis of the notarial instrument at issue, to the Okrajno sodišče v Gornji Radgoni (District Court, Gornja Radgona, Slovenia) for an enforcement order in respect of that instrument.

21That court granted the application for enforcement for a total amount of EUR 128 765.66.

22In their complaint brought before that court against the order granting enforcement, the Kuhars, without assistance from a lawyer, maintained that Addiko Bank had failed duly to draw their attention to the exchange rate risk, which had induced them to conclude a contract in which certain of the terms were unfair and under which they would now be required to repay a significantly higher amount than that of the loan obtained.

23The Okrajno sodišče v Gornji Radgoni (District Court, Gornja Radgona) rejected the complaint on the grounds, in particular, in essence, that it was for the Kuhars to fulfil the obligation as it followed from the notarial instrument at issue and that it did not matter whether or not Addiko Bank had duly drawn their attention to the exchange rate risk.

24The Kuhars, still without assistance from a lawyer, then brought an action before the referring court, the Višje sodišče v Mariboru (Court of Appeal, Maribor, Slovenia), seeking the annulment of the order granting enforcement.

25It is apparent from the request for a preliminary ruling that the referring court has already held, on an interlocutory basis, that the term in the notarial instrument at issue stipulating that the loan is denominated in foreign currency but that it must be repaid in euros is unfair in that it does not provide for an appropriate limitation of the exchange rate risk. Although it relates to the main subject matter of the contract, that term was neither clear nor intelligible for the Kuhars. More generally, the referring court considers that, even though the fact that the exchange rate risk is not limited may affect both the consumer and the bank, there is nevertheless a significant imbalance in the rights and obligations of the parties to the contract, if only because of the significantly greater resources available to a bank to control such a risk, as a financial establishment of considerable size, which can rely to that end on specialist knowledge, significant data and experience in the field. In addition, that court is of the opinion that, in signing up to a loan to fund the acquisition of a residential property, a reasonable consumer would not expose himself to an unlimited exchange rate risk, which may have damaging and lasting economic consequences for him. On the contrary, if he were able to negotiate with the bank on an equal footing and if he were duly informed by it, such a consumer would commit himself only if the loan contract included a reasonable limitation of such a risk.

26The referring court questions whether it is for the court before which an application has been brought for an order to enforce a mortgage contract, where it finds that that contract contains an unfair term, to prohibit, where necessary of its own motion, the implementation of such a term at that procedural stage or whether such a decision is to be taken by the court ruling on the substance, before which the consumer has potentially brought separate proceedings.

27In that regard, the referring court points out first of all that, in accordance with the principle of effectiveness of EU law as interpreted by the case-law of the Court, national procedural rules relating to the finality of a judicial decision may not make it excessively difficult for the court before which an application for enforcement has been brought to refuse to apply unfair terms. However, under Slovenian law, in enforcement proceedings brought on the basis of a directly enforceable notarial instrument, the competent court is nevertheless faced with procedural provisions of that nature. More specifically, they are provisions of national law relating to the implementation of the principle of formal legality and the legal conditions for the suspension of enforcement, as laid down by the Law on enforcement and protective measures.

28With regard to the principle of formal legality, the referring court states that, according to the traditional interpretation accepted in Slovenian law, the court may not refuse enforcement, since, under that principle, its review is limited to verifying that the authentic instrument constituting the loan contract of which enforcement is sought was drawn up in accordance with the formal requirements laid down by the applicable legislation. The position of the court before which an application has been brought for enforcement based on a notarial instrument, such as the notarial instrument at issue, is consequently, from the point of view of breach of the principle of effectiveness, the same in essence as that in the case which gave rise to the order of 14 November 2013, Banco Popular Español and Banco de Valencia ( C‑537/12 and C‑116/13 , EU:C:2013:759 ).

29The referring court observes that Slovenian law does not provide for the suspension of enforcement proceedings in the event of the consumer’s bringing an action for a declaration of invalidity based on there being an unfair term in the contract which he concluded with a seller or supplier. The suspension of enforcement provided for in the first and second paragraphs of Article 71 of the Law on enforcement and protective measures is possible only on an exceptional basis, upon reasoned application by the debtor, on very strict conditions relating to the existence of damage which would be irreparable or difficult to remedy which, according to the settled case-law of the Slovenian courts, may not consist in the damage resulting from carrying out the enforcement itself.

30The referring court then points out that, as a general rule, a debtor who is the subject of enforcement proceedings is not entitled to receive free legal aid and does not have the means to obtain representation either, which leads in the majority of cases to his not being assisted by a lawyer in such proceedings. There is thus a not insignificant risk that, through lack of knowledge, the debtor fails even to submit an application for suspension of enforcement or that such an application is so flawed that it is bound to fail. The already very limited opportunities available to the debtor to assert his rights are all the more limited due to the creditor’s right to require the debtor to provide a guarantee. The third paragraph of Article 71 of the Law on enforcement and protective measures provides that, if the debtor fails to provide such a guarantee, the application for suspension of enforcement is to be regarded as withdrawn.

31Finally, the referring court takes the view that, in order to comply with the principle of effectiveness of EU law, it would be possible for the Slovenian courts to adopt a less strict interpretation of the principle of legal formality referred to in paragraph 28 above, by allowing a court before which an application for enforcement has been brought to determine of its own motion whether a term is unfair at that procedural stage. During that stage, the court is required to make a complete finding in respect of all the legally determining facts, including those on which the parties do not agree. In addition, the notarial instrument is better suited to determining the substance of the case than classic enforceable instruments issued by courts. In addition, Article 4 of the Law on notaries provides that the debtor must expressly accept that the instrument is directly enforceable, which precludes the possibility that public policy provisions such as consumer protection provisions relating to unfair terms could be circumvented by obtaining the debtor’s agreement. On the basis of such an interpretation, a court before which an application for enforcement had been brought would therefore be able to refuse of its own motion enforcement of a notarial instrument, such as the notarial instrument at issue, which was accepted by the debtor in breach of public policy provisions.

32Since, however, it is the strict and restrictive interpretation of the principle of legal formality which currently prevails in the majority of Slovenian courts, the referring court questions whether such an interpretation is compatible with the principle of effectiveness of EU law, applied to Directive 93/13.

33In those circumstances, the Višje sodišče v Mariboru (Court of Appeal, Maribor) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘In the light of the principle of effectiveness of EU law, should [Directive 93/13] be interpreted as meaning that, in enforcement proceedings, the court before which an application for enforcement has been brought is required of its own motion to refuse that application on the ground that a directly enforceable notarial instrument (enforceable instrument) contains an unfair term, in a case such as the present one in which the procedural rules of the Member State do not give the court before which an application for enforcement has been brought an effective possibility of suspending or postponing enforcement (on application by the debtor or of its own motion) until a final substantive decision on whether the term is unfair is given in civil proceedings brought by the debtor as a consumer?’

Admissibility of the request for a preliminary ruling

34The Slovenian Government, by way of a preliminary point, questions the admissibility of the request for a preliminary ruling. It points out that the referring court is of the opinion that it must oppose of its own motion the implementation of unlawful terms contained in a notarial instrument, such as the notarial instrument at issue, since Slovenian procedural law does not allow the temporary suspension of enforcement. However, up until the date of the reference for a preliminary ruling, the Kuhars themselves had not met the procedural conditions to obtain such a suspension in accordance with national legislation, in the absence of their having brought a substantive action for a finding of invalidity of contractual terms, and for that reason the question of the suspension of enforcement does not even arise.

38In the present case, it should be observed that the argument put forward by the Slovenian Government to establish the hypothetical nature of the request for a preliminary ruling submitted by the referring court, ruling on the enforcement of a mortgage claim, is based on considerations linked to compliance with procedural rules of national law, and more specifically on the fact that the debtors in the main proceedings had not brought, under Slovenian law and up until the date of the reference for a preliminary ruling, a substantive action seeking a finding of invalidity in respect of the contractual terms in the notarial instrument at issue, terms which they consider to be unfair.

40It follows that the request for a preliminary ruling is admissible.

Consideration of the question referred

41By its question, the referring court seeks, in essence, to ascertain whether Directive 93/13 must be interpreted, in the light of the principle of effectiveness, as precluding national legislation, such as that at issue in the main proceedings, under which the national court before which an application has been brought for enforcement of a mortgage contract, concluded between a seller or supplier and a consumer in the form of a directly enforceable notarial instrument, does not have the option, either on application by the consumer or of its own motion, to examine whether the terms in such an instrument are unfair within the meaning of that directive, and on that basis to suspend the enforcement sought.

42As a preliminary point, it should be pointed out that the referring court is not asking the Court about the interpretation of Articles 3 to 5 of Directive 93/13, allowing it to examine whether the terms of the loan contract which is the subject of the notarial instrument at issue and of which enforcement is sought may be unfair. As stated in paragraph 25 above, the referring court has already ruled, on an interlocutory basis, on the unfairness of the terms of that contract, which it is not for the Court to call into question in the context of the procedure provided for in Article 267 TFEU.

43Having set out that premiss, it should be emphasised that, under Article 6(1) of Directive 93/13, Member States shall lay down that, as provided for under their national law, unfair terms used in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.

47With regard, first, to the principle of equivalence, which is not the subject of the request for a preliminary ruling, it should be pointed out, as the European Commission did in its written observations, that there is no evidence before the Court which is capable of giving rise to any doubt as to the compliance of the national legislation at issue in the main proceedings with that principle.

49It is in the light of that case-law that it is necessary to determine whether a national procedural regime such as that at issue in the main proceedings undermines the effectiveness of the protection offered to consumers by Directive 93/13.

50In that regard, in the present case, it follows from the referring court’s description of it that in Slovenian law the enforcement regime displays the following features:

–

the court responsible for enforcement of a mortgage contract, concluded in the form of a directly enforceable notarial instrument, may not refuse that enforcement because of the presence of an unfair term in the contract in question, as that court must abide unconditionally by the content of an enforceable instrument, and may not assess the lawfulness of its content;

–

suspension of enforcement is, in principle, not possible, even on a provisional basis, except in the event that substantive proceedings are brought, by the debtor as a consumer, seeking a finding of invalidity in respect of an unfair contractual term;

–

that suspension of enforcement until a final decision is given on the substance of the case is authorised only exceptionally and is subject to strict legal conditions relating to the demonstration of damage which would be irreparable or difficult to remedy, within the meaning of the first paragraph of Article 71 of the Law on enforcement and protective measures, which excludes damage linked to the enforcement itself, which in practice makes that suspension almost impossible;

–

the creditor has the right to require the debtor to provide a guarantee where the debtor applies for the suspension of enforcement; and

–

a debtor who is the subject of enforcement proceedings cannot obtain free legal aid, so that he must bear the significant costs of legal representation himself.

51In its written observations, the Slovenian Government challenged the referring court’s interpretation of national law. More specifically, the Slovenian Government argued that, in view of the recent case-law of the Ustavno sodišče (Constitutional Court, Slovenia), as also applied by several other national courts, it was now necessary both to interpret the criterion of damage which would be irreparable or difficult to remedy within the meaning of the first paragraph of Article 71 of the Law on enforcement and protective measures, and to weigh up the situation of the debtor and that of the creditor by also taking account of damage which would result from carrying out the enforcement.

53With regard to the procedural regime for enforcement at issue in the main proceedings, in view of the features of that regime highlighted by the referring court and summarised in paragraph 50 above, it must be found that such a regime is liable to undermine the effectiveness of the protection which Directive 93/13 seeks to provide.

54It has already been established that effective protection of the rights conferred on the consumer by that directive can be guaranteed only provided that the national system allows the court, during the order for payment proceedings or the enforcement proceedings concerning an order for payment, to check of its own motion whether the terms of the contract concerned are unfair (see, in particular, judgments of 18 February 2016, Finanmadrid EFC, C‑49/14 , EU:C:2016:98 , paragraph 46 , and of 13 September 2018, Profi Credit Polska, C‑176/17 , EU:C:2018:711 , paragraph 44 ).

55As the Slovenian Government argued, it is indeed possible, subject to verification to be carried out by the referring court, that, in view in particular of the Law on notaries, notaries are obliged to advise and inform consumers, in particular in connection with a mortgage contract concluded in the form of an authentic instrument, which ensures that a preventive check is carried out with respect to unfair terms in such a contract and therefore contributes to compliance with the requirements set out in Article 6(1) and Article 7(1) of Directive 93/13 (see, by analogy, judgment of 1 October 2015, ERSTE Bank Hungary, C‑32/14 , EU:C:2015:637 , paragraphs 55 , 57 and 58 ).

56However, even if it exists, a preventive check of that nature is not sufficient to ensure the effectiveness of the protection guaranteed by Directive 93/13.

58More specifically, in the case which gave rise to that judgment, the Court had specified, in paragraphs 60 and 61 of that judgment, that under the national law at issue in that case the consumer could bring an action challenging the validity of the contract at issue and also initiate proceedings to exclude or limit enforcement, which, in that context, included the right for the consumer to request the suspension of the enforcement of that contract. Moreover, the Court had deduced from the information in the documents submitted to it in that case that, in the context of those procedures, the national courts could and should raise of their own motion cases involving manifest grounds for invalidity, on the basis of the available evidence. Those procedural rules governing actions under domestic law thus appeared, subject to verification by the national court, to guarantee the consumer effective judicial protection.

59In contrast, with regard to the case in the main proceedings, it is apparent from the documents submitted to the Court that Slovenian law does not offer the consumer any guarantees comparable to those referred to in paragraphs 54, 57 and 58 above.

64Admittedly, in the present case, the referring court indicates that the Slovenian legislation could be interpreted in a manner which is compliant with EU law, and which, in particular, allows the court before which an application for enforcement has been brought to assess of its own motion whether a term of a mortgage contract, concluded in the form of a notarial instrument, is unfair, and on that basis to suspend such enforcement.

67In view of the circumstance referred to in paragraph 64 above, it is for the referring court to examine whether the national legislation at issue in the main proceedings can indeed be interpreted in conformity with Directive 93/13 and, if so, to draw the legal conclusions from that.

Costs

69Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Eighth Chamber) hereby rules:

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted, in the light of the principle of effectiveness, as precluding national legislation, such as that at issue in the main proceedings, under which the national court before which an application has been brought for enforcement of a mortgage contract, concluded between a seller or supplier and a consumer in the form of a directly enforceable notarial instrument, does not have the option, either on application by the consumer or of its own motion, to examine whether the terms in such an instrument are unfair within the meaning of that directive, and on that basis to suspend the enforcement sought.

[Signatures]

( *1 ) Language of the case: Slovenian.