FML Timeline: Home Credit Slovakia a.s v Klára Bíróová
ECJ provides clarification on issues arising from the Consumer Credit Directive.
| Parties |
Request for a preliminary ruling from European Court of Justice re: Home Credit Slovakia a.s. (HSC) -v- Klára Bíróová |
| Date | 09 November 2016 |
| Citation number | Case C-42/15 |
| Court | European Court of Justice (ECJ) |
| Category | Contractual debt claim |
HCS is a bank in Slovakia. In June 2011, HCS granted Ms Bíróovà a loan for €700. The loan agreement provided that HCS’ general terms and conditions were incorporated into the agreement. The loan agreement also provided that by signing the agreement, Ms Bíróovà confirmed that she had read and understood HCS’ general terms and conditions and agreed to be bound by them. HCS’ general terms and conditions were contained in a separate document and Ms Bíróovà had not signed them.
Ms Bíróovà made two loan repayments and then stopped repaying the loan. HCS brought an action against her in the Slovakian courts. The Slovakian court asked the ECJ for clarification on certain questions arising from the Consumer Credit Directive (the Directive).
Decision
Does the CCD require credit agreements to be drawn up as a single document?
The ECJ ruled that there is nothing in the Directive requiring a credit agreement to be a single document. However, where a credit agreement refers to another document which it states is an integral part of the agreement, that document must be on a “durable medium” and must be given to the customer prior to the customer signing the agreement.
Could a member state legislate that both the credit agreement and any documents incorporated by the credit agreement must be signed in order to create a binding agreement?
The ECJ ruled that a member state could.
If a credit agreement does not include all the information that must be included in accordance with the Directive, can a member state impose a penalty on the lender?
The ECJ ruled that a member state could penalise a lender in this scenario. The choice of penalties is at the member state’s discretion, but the penalty must be proportionate to the seriousness of the omission. Removing the lender’s ability to recover interest and charges would be considered proportionate.
Noteworthy/ Novel points
The ECJ’s decision that a credit agreement need not be contained in a single document is in line with the principles under English law.
Under English law however, a credit agreement is unenforceable if it does not contain the information it is required to by law, on the basis that it is not a validly executed contract. The lender must seek the permission of the court to enforce the contract. When considering the application, the court will consider the degree of prejudice caused by the omission and the degree of culpability for it.
