Loans denominated in Swiss Francs (CHF) seem to be an ever-present matter in the Croatian dispute resolution arena. For years, the main protagonists have been the Croatian courts, the Court of Justice of the European Union (CJEU), banks and consumers. Yet still, we are far from reaching a clear legal outcome.
In this article, we will examine, as we have before in our publications, the everlasting legal saga in Croatia – the legal conflict between consumers and banks over CHF denominated loans. This intriguing dispute always seems to end with a clear lack of legal certainty for all parties involved.
SUPREME COURT'S TURNABOUT ON THE LIMITATION PERIODS FOR RESTITUTION CLAIMS
To start with, since the trial courts were flooded with individual consumers' claims to recuperate the monies they paid to the banks, the Supreme Court decided to resolve the issue of determining the relevant limitation period for such individual claims.
Surprisingly, in January the Supreme Court changed course dramatically and overturned its own previous determinations. The Supreme Court interpreted that limitation periods for restitution claims start to run only once nullity has been established by a final and binding ruling rendered by a court of law.
Naturally, such an interpretation provoked loud reactions on both sides, as both banks and consumers had to regroup and alter their action plans. The legal implications and the outcome of this rather unexpected turn of events are yet to be seen in practice.
MODEL PROCEEDINGS FAILED TO LEAD TO A RESOLUTION OF THE CONTROVERSY
As reported in the 15th edition of the DRInsider in December 2019, the "model proceedings" instrument was introduced in the Croatian judiciary system not long ago. The "model proceedings" mechanism was intended to allow trial courts that identify several cases resting on the same unresolved legal issue to obtain the Supreme Court's interpretative ruling, which is then binding on the lower courts in all individual disputes dealing with the same legal issue.
As it happened, the first legal issue in need of an interpretive ruling was a CHF related matter. The underlying issue was whether the entire CHF loan agreement should be deemed null and void because of the banks' alleged unfair behaviour, or if nullity should affect only the CHF currency clause and the floating interest rate clause contained in the agreement (which were the reasons for the court's prior ruling about the banks' alleged unfair practices).
However, the interpretative ruling, rendered in March 2020, did not resolve the issue. Instead, the Supreme Court ruled that the amendments to the existing loan agreements containing compulsory conversion of CHF to EUR loans – which the banks were obliged to offer to and contract with consumers under the 2015 legislative interventions brought by the Croatian State – were not null and void, despite the established, partial or full, nullity of the original CHF-denominated loan agreement.
THE SUPREME COURT FINALLY TURNS TO THE CJEU
It may seem like the Croatian courts have gone in the opposite direction of consumers' interests, which would have been, naturally, the full restitution of the monies paid under the loan agreements. However, recently in October 2020 the story moved forward, as the Supreme Court lodged a request for a preliminary ruling with the CJEU.
The CJEU was asked to resolve whether the 2015 CHF-to-EUR statutory-imposed loan conversion is lawful in light of the EU law.
THE CJEU CONTINUES TO PROVIDE GUIDANCE ON CONSUMER PROTECTION IN LOAN ARRANGEMENTS
Meanwhile, the CJEU has continued to provide further guidance on the implications of the EU consumer protection requirements. The CJEU has dealt with, on a more general level, the actual scope of application of EU consumer protection rules on loan contracts, as well as, on a more specific level, the issue of national limitation periods for bringing restitution claims, the legal implications of locally effected loan conversions and the legal consequences of establishing nullity.
Now, it remains to be seen how the Croatian judiciary will apply the CJEU's guidance.