JUDGMENT OF THE COURT (First Chamber)

28 July 2016 ( *1 ) ( 1 )

‛Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Unfair terms in consumer contracts — Credit agreement containing an unfair term — Enforcement of an arbitration award in accordance with that term — Member State liability for damage caused to individuals by breaches of EU law attributable to a national court — Conditions of engagement — Existence of a sufficiently serious breach of EU law’

In Case C‑168/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Okresný súd Prešov (Prešov District Court, Slovakia), made by decision of 12 March 2015, received at the Court on 14 April 2015, in the proceedings

Milena Tomášová

v

Slovenská republika – Ministerstvo spravodlivosti SR,

Pohotovosť s. r. o.,

intervening party:

Združenie na ochranu občana spotrebiteľa HOOS,

THE COURT (First Chamber),

composed of R. Silva de Lapuerta (Rapporteur), President of the Chamber, J.‑C. Bonichot, C.G. Fernlund, S. Rodin, and E. Regan, Judges,

Advocate General: N. Wahl,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

—

the Slovak Government, by B. Ricziová, acting as Agent,

—

the Czech Government, by M. Smolek and J. Vláčil and by S. Šindelková, acting as Agents,

—

the European Commission, by A. Tokár, D. Roussanov and M. Konstantinidis, acting as Agents,

after hearing the Opinion of the Advocate General at the hearing on 14 April 2016,

gives the following

Judgment

1This request for a preliminary ruling concerns the conditions for Member State liability for damage caused to individuals by a breach of EU law attributable to a national court.

2The reference has been made in proceedings between Mrs Tomášová and the Slovenská republika – Ministertsvo spravodlivosti SR (Slovak Republic – Ministry of Justice, Slovak Republic) (‘the Slovak Republic’) and Pohotovosť s. r. o. concerning the enforcement of an arbitration award ordering Mrs Tomášová to pay sums relating to a consumer credit contract.

Legal context

3Article 3 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts ( OJ 1993 L 95, p. 29 ) 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.

The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract.

Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.

(3) The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair.’

4Article 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.’

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

5Mrs Tomášová is a pensioner whose only income is a pension amounting to EUR 347. In 2007, she concluded a consumer credit contract with Pohotovosť, with which she took out a credit of EUR 232.

6That contract took the form of a pre-formulated standard contract including an arbitration clause granting an arbitral tribunal, which is located more than 400 kilometres from Mrs Tomášová’s home, exclusive competence to resolve disputes relating to that contract. Moreover, under that contract, the rate of penalty interest was fixed at 91.25% per year. In addition, that contract did not state the applicable annual percentage rate.

7Since she was late with her repayment of the loan and was unable to pay the outstanding penalty interest, Mrs Tomášová took out another credit of EUR 232.36 with Pohotovosť.

8By decisions of 9 April and 15 May 2008 of the Stálý rozhodcovský súd (Permanent Court of Arbitration, Slovakia), Mrs Tomášová was ordered to pay to Pohotovosť several sums in respect of failure to repay the credits at issue, penalty interest and procedural costs.

9After those decisions became final and enforceable, on 13 and 27 October 2008, Pohotovosť brought applications for enforcement before the Okresný súd Prešov (Prešov District Court, Slovakia), which upheld those applications by decisions of 15 and 16 December 2008.

10According to the order for reference, the enforcement proceedings at issue were still ongoing on the date when the present request for a preliminary ruling was lodged.

11On 9 July 2010, Mrs Tomášová brought against the Slovak Republic an application for an order that it pay a sum of EUR 2000 as reparation for damage resulting, according to her, from a breach of EU law by the Okresný súd Prešov (Prešov District Court), on the ground that, in the context of those proceedings, that court upheld the applications for enforcement of judgments delivered on the basis of an unfair contractual term and which seek collection of a debt determined in accordance with an unfair term.

12By judgment of 22 October 2010, the Okresný súd Prešov (Prešov District Court) dismissed Mrs Tomášová’s application as unfounded on the ground that she had failed to take advantage of all of the remedies available to her, that the enforcement proceedings at issue had not yet been definitively concluded and that, consequently, the damage invoked had not yet occurred, so that that application was brought prematurely.

13Mrs Tomášová has appealed against that judgment.

14By decision of 31 January 2012, the Krajský súd v Prešov (Regional Court, Prešov, Slovakia) annulled that judgment and referred the case back to the Okresný súd Prešov (Prešov District Court).

15In those circumstances, the Okresný súd Prešov (Prešov District Court) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Is there a serious breach of EU law if, in an enforcement procedure carried out on the basis of an arbitration award, performance of an unfair term is enforced, contrary to the case-law of the Court of Justice of the European Union?

(2)

May liability of a Member State for a breach of [European Union] law arise before a party to proceedings has used all legal remedies available in the legal order of the Member State in proceedings for enforcement of an award? In the light of the facts of the case, may that liability of a Member State arise in the present case before the actual conclusion of the proceedings for enforcement of the award and before exhaustion of the applicant’s possibility of requiring an account for unjust enrichment?

(3)

If so, is the conduct of an authority as described by the applicant, in the light of the particular facts and in particular of the absolute inactivity of the applicant and the non-exhaustion of all legal remedies made available by the law of the Member State, a sufficiently clear and serious breach of [European Union] law?

(4)

If there is a sufficiently serious breach of [European Union] law in the present case, does the sum claimed by the applicant represent damage for which the Member State is liable? Is it possible for the damage as so understood to be equated with the debt collected which constitutes unjust enrichment?

(5)

Does accounting for unjust enrichment, as a legal remedy, have priority over reparation for damage?’

Consideration of the questions referred

The first to third questions

16By its first to third questions, which should be examined together, the referring court asks, in essence, whether and under which conditions a breach of EU law as a result of a court ruling, delivered in the context of proceedings for enforcement of an arbitration award upholding a claim for payment of debts in accordance with a contractual term which must be regarded as unlawful, constitutes a ‘sufficiently serious’ breach of a rule of EU law, capable of incurring non-contractual liability on the part of the Member State concerned.

17In that context, that court raises the question of whether the fact that those proceedings for enforcement are not concluded, that the person subject to those proceedings was completely inactive and that she did not exhaust all the legal remedies available to her in the legal system concerned, such as a claim for the recovery of unjustified enrichment, is relevant in that regard.

24Concerning, in particular, the second of the conditions referred to in paragraph 22 of the present judgment, that liability can be incurred only in the exceptional case where the court has manifestly infringed the applicable law (see judgments of 30 September 2003 in Köbler, C‑224/01 , EU:C:2003:513 , paragraph 53 , and of 13 June 2006 in Traghetti del Mediterraneo, C‑173/03 , EU:C:2006:391 , paragraphs 32 and 42 ).

27As regards the main proceedings, assuming that, in its decisions of 15 and 16 December 2008, the Okresný súd Prešov (Prešov District Court) adjudicated at last instance, it is therefore necessary, in addition, that, by those decisions, that court committed a sufficiently serious breach of EU law by manifestly disregarding the provisions of Directive 93/13 or the Court’s case-law relating thereto.

32In particular, the Court has held that, provided the national court hearing an action for enforcement of a final arbitration award has available to it the necessary legal and factual elements, that court is required to assess of its own motion the unfair nature of the contractual terms which give rise to the debt determined in that arbitration award in the light of the provisions of Directive 93/13, when, under national rules of procedure, it must, in similar enforcement proceedings, assess of its own motion whether such terms are in conflict with national rules of public policy (see, to that effect, judgment of 6 October 2009 in Asturcom Telecomunicaciones, C‑40/08 , EU:C:2009:615 , paragraph 53 ; order of 16 November 2010 in Pohotovosť, C‑76/10 , EU:C:2010:685 , paragraphs 51 , 53 and 54 , and the judgment of 27 February 2014 in Pohotovosť, C‑470/12 , EU:C:2014:101 , paragraph 42 ).

33Consequently, it cannot be concluded that a national court, which, before the judgment of 4 June 2009 in Pannon GSM ( C‑243/08 , EU:C:2009:350 ), failed to assess of its own motion whether a contractual term within the scope of Directive 93/13 is unfair, although had available to it the legal and factual elements necessary for that purpose, manifestly disregarded the Court’s case-law on the matter and, therefore, that it committed a sufficiently serious breach of EU law.

34In this case, it should be noted that the decisions of 15 and 16 December 2008, at issue in the main proceedings, precede that judgment.

35Therefore, it does not seem necessary to assess whether the fact that the enforcement procedure at issue in the main proceedings has not been concluded, that the person subject to that procedure was completely inactive or that she did not exhaust all the legal remedies available to her in the legal system concerned, such as a claim for the recovery of the proceeds of unjustified enrichment, has an effect on the incurrence by the Member State concerned of liability for damage caused to individuals as a result of breaches of EU law by court rulings, such as those of 15 and 16 December 2008, at issue in the main proceedings.

—

Member State liability for damage caused to individuals as a result of a breach of EU law by a decision of a national court may be incurred only where that decision is made by a court of that Member State adjudicating at last instance, which it is for the referring court to determine in respect of the main proceedings. If that is the case, a decision by that national court adjudicating at last instance may constitute a sufficiently serious breach of EU law, capable of giving rise to that liability, only where, by that decision, that court manifestly infringed the applicable law or where that infringement takes place despite the existence of well-established Court case-law on the matter.

—

It cannot be concluded that a national court which, prior to the judgment of 4 June 2009 in Pannon GSM ( C‑243/08 , EU:C:2009:350 ), failed, in the context of proceedings for enforcement of an arbitration award upholding a claim for payment of debts under a contractual term which must be regarded as unfair within the meaning of Directive 93/13, to assess of its own motion whether that term is unfair, although it has available to it the legal and factual elements necessary for that purpose, manifestly disregarded the Court’s case-law on the matter and, therefore, committed a sufficiently serious breach of EU law.

The fourth and fifth questions

37By its fourth and fifth questions, the referring court asks, in essence, whether the amount of the damage caused by the possible breach of EU law at issue in the main proceedings corresponds to that of the reparation claimed by Mrs Tomášová, whether it can be equated with the amount of the debt actually collected, namely that of the unjust enrichment of the beneficiary of the arbitration award, and whether an action for reparation for that damage is subsidiary to an action for the recovery of the proceeds of unjust enrichment.

40The same applies to the relationship between a claim for reparation for such damage and other remedies which could be provided for in the legal order of the Member State concerned, such as an action for the recovery of undue payments.

41In those circumstances, the answer to the fourth and fifth questions is that the rules regarding reparation for damage caused by a breach of EU law, such as those concerning the assessment of such damage or the relationship between a claim for that reparation and other remedies which could be available, are determined by the national law of each Member State, in conformity with the principles of equivalence and effectiveness.

Costs

42Since 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 (First Chamber) hereby rules:

1.Member State liability for damage caused to individuals as a result of a breach of EU law by a decision of a national court may be incurred only where that decision is made by a court of that Member State adjudicating at last instance, which it is for the referring court to determine in respect of the main proceedings. If that is the case, a decision by that national court adjudicating at last instance may constitute a sufficiently serious breach of EU law, capable of giving rise to that liability, only where, by that decision, that court manifestly infringed the applicable law or where that infringement takes place despite the existence of well-established Court case-law on the matter.

It cannot be concluded that a national court which, prior to the judgment of 4 June 2009 in Pannon GSM ( C‑243/08 , EU:C:2009:350 ), failed, in the context of proceedings for enforcement of an arbitral award upholding a claim for payment of debts under a contractual term which must be regarded as unfair within the meaning of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, to assess of its own motion whether that term is unfair, although it has available to it the legal and factual elements necessary for that purpose, manifestly disregarded the Court’s case-law on the matter and, therefore, committed a sufficiently serious breach of EU law.

2.The rules regarding reparation for damage caused by a breach of EU law, such as those concerning the assessment of such damage or the relationship between a claim for that reparation and other remedies which could be available, are determined by the national law of each Member State, in conformity with the principles of equivalence and effectiveness.

[Signatures]

( *1 ) Language of the case: Slovak.

( 1 ) The wording of paragraph 20 of this document has been modified after it was first put online.