Economy
Hungary's Supreme Court not to rule on FX mortgages before autumn - paper
The paper claims the Curia will not supplement its ruling of 16 December 2013 before the autumn.
Hungary’s Kúria (Curia or Supreme Court) lodged a request for a preliminary ruling on 21 January 2013 (Case C/26/13, Kásler Árpád, Káslerné Rábai Hajnalka v OTP Jelzálogbank Zrt.), and the ECJ is to make this ruing public on 30 April on the applied exchange rates and exchange rate gap (the difference between the buying rate of exchange and the selling rate of exchange). Based on this the Curia can make a decision ensuring uniformity ruling on an even more important issue, the one-sided increase of interests.
Hungary’s government may grant tax benefits to banks if they lower the burdens on borrowers, Antal Rogán, head of the parliamentary group of the ruling Fidesz party, said today.
Although a number of legal issues have been cleared up already, e.g. based on a March ruling by the Constitutional Court that in exceptional cases the government may modify existing FX loan contracts by legislative means, but only on conditions that take previous court practices into consideration and only if these amendments respect both parties’ interests, the Curia apparently needs several months more to rule on the other outstanding issues. These decisions ensuring the uniformity of law will be the basis of a government decision to assist FX borrowers by restructuring the exchange rate cap scheme or by “cancelling" the interest hikes and the exchange rate gap.
Hungary’s national courts are entitled to change unfair clauses in foreign-currency denominated loans, an adviser to the European Union’s top court said in mid-February in a case that may affect about USD 15 billion in household debt.
Note that the opinion of Advocate General Niels Wahl of the ECJ is not binding on the court. The main message is favourable for Hungary’s FX mortgage holders, rather than for the crediting banks.
Hungary’s Kúria (Curia or Supreme Court) lodged a request for a preliminary ruling on 21 January 2013 (Case C/26/13, Kásler Árpád, Káslerné Rábai Hajnalka v OTP Jelzálogbank Zrt.), and the ECJ is to make this ruing public on 30 April on the applied exchange rates and exchange rate gap (the difference between the buying rate of exchange and the selling rate of exchange). Based on this the Curia can make a decision ensuring uniformity ruling on an even more important issue, the one-sided increase of interests.
Hungary’s government may grant tax benefits to banks if they lower the burdens on borrowers, Antal Rogán, head of the parliamentary group of the ruling Fidesz party, said today.
Although a number of legal issues have been cleared up already, e.g. based on a March ruling by the Constitutional Court that in exceptional cases the government may modify existing FX loan contracts by legislative means, but only on conditions that take previous court practices into consideration and only if these amendments respect both parties’ interests, the Curia apparently needs several months more to rule on the other outstanding issues. These decisions ensuring the uniformity of law will be the basis of a government decision to assist FX borrowers by restructuring the exchange rate cap scheme or by “cancelling" the interest hikes and the exchange rate gap.
Hungary’s national courts are entitled to change unfair clauses in foreign-currency denominated loans, an adviser to the European Union’s top court said in mid-February in a case that may affect about USD 15 billion in household debt.
Note that the opinion of Advocate General Niels Wahl of the ECJ is not binding on the court. The main message is favourable for Hungary’s FX mortgage holders, rather than for the crediting banks.
Curia ruling on foreign currency mortgages (December 2013)
1. Loan contracts denominated in foreign currencies are agreements that enabled borrowers to take advantage of more favourable interest rates compared with forint loans, therefore all risks associated with currency rate fluctuations are to be borne by the borrower.
2. The risks associated with exchange rate fluctuation alone do not constitute sufficient grounds for invalidating such contracts as being illegitimate, unethical, usurious, false. The risks alone do not render the service as non-viable. The unforeseeable shift in the financial burden in itself does not render the agreement null and void.
3. Financial institutions were required to inform clients on the possibility of currency rate changes, and its impact on the monthly payments due.
4. In the event that a court verdict finds a contract null and void, courts must seek a way to amend the contract and restore its validty, if it is possible to eliminate the factor that rendered the contract null and void.
5. Should one of the terms and conditions of a contract be found null and void, the contract remains binding in all other respects.
6. As concerns one-sided amendments to the contracts by the lender, the Curia defers its decision until the European Court of Justice reaches a preliminary ruling on the issue.
7. Court verdicts are intended by the law as a means of rectifying individual cases in which the change of circumstances resulted in substantial disadvantage to one of the parties. They are not suitable to rectify contracts on a massive scale. If legislation is made to amend the disadvantageous consequences, such legislation leaves no room for individual judiciary deliberation.
2. The risks associated with exchange rate fluctuation alone do not constitute sufficient grounds for invalidating such contracts as being illegitimate, unethical, usurious, false. The risks alone do not render the service as non-viable. The unforeseeable shift in the financial burden in itself does not render the agreement null and void.
3. Financial institutions were required to inform clients on the possibility of currency rate changes, and its impact on the monthly payments due.
4. In the event that a court verdict finds a contract null and void, courts must seek a way to amend the contract and restore its validty, if it is possible to eliminate the factor that rendered the contract null and void.
5. Should one of the terms and conditions of a contract be found null and void, the contract remains binding in all other respects.
6. As concerns one-sided amendments to the contracts by the lender, the Curia defers its decision until the European Court of Justice reaches a preliminary ruling on the issue.
7. Court verdicts are intended by the law as a means of rectifying individual cases in which the change of circumstances resulted in substantial disadvantage to one of the parties. They are not suitable to rectify contracts on a massive scale. If legislation is made to amend the disadvantageous consequences, such legislation leaves no room for individual judiciary deliberation.
