Request for preliminary ruling by the Court of Justice of the European Union
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Deadline to leave your brief: April 24, 2025
Keywords: credit agreement, unfair terms, effectiveness and proportionality
Subject: Council Directive 93/13/EEC of April 5, 1993, on unfair terms in consumer contracts: Article 6, paragraph 1 and Article 7, paragraph 1.
Facts
In 2007, the plaintiff ‘AS’ and the defendant ‘Bank Millennium’ entered into a mortgage loan agreement for the purchase of a house. On August 17, 2022, the petitioner demanded that the credit agreement be declared null and void and that the bank repay to AS all credit installments, fees, commissions and insurance costs paid in the execution of the agreement as undue performances. The referring court has partially annulled the agreement due to unfair terms, but has not awarded all the costs claimed by the petitioner.
Consideration
The referring court has not yet ruled on the claim for payment of the costs of various insurance policies taken out. The referring court states that there is no consensus in Polish case law as to which credit-related insurance costs should be reimbursed by the bank. The main question is whether the bank should reimburse the costs of insurance taken out against risks to the borrower. The referring court weighs the interests of the consumer and proportionality. The annulment of the insurance contracts in question would benefit the consumer and the deterrent function of Directive 93/13, but the annulment would also result in a far-reaching practice, namely the complete exclusion ex tunc of the coverage that the borrower enjoys.
Preliminary questions
Must Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of April 5, 1993, on unfair terms in consumer contracts, as well as the principles of effectiveness and proportionality in the context of the annulment of the entire credit agreement between a consumer and a bank due to the unfair contractual terms included unfair contractual terms without which the contract cannot continue to exist, be interpreted as precluding an interpretation, developed in case law, of a national statutory regulation on the basis of which:
– the bank is obliged to reimburse the consumer the equivalent of the costs of insurance against risks to the bank borne by the consumer, such as insurance against the risk of a low own contribution or a bridging insurance, which acted as security for the repayment of the credit,
– the bank is not obliged to reimburse the consumer the equivalent of the costs of insurance against risks borne by the consumer, such as home insurance or life insurance, which acted as security for the repayment of the loan?
Cited (recent) case law: C-154/15, C-307/15 and C-308/15; C-307/15 and C-308/15
AMICUS CURIAE BRIEF
IN THE COURT OF JUSTICE OF THE EUROPEAN UNION
Case Reference: Request for Preliminary Ruling concerning Council Directive 93/13/EEC
Submitted by the fictional European Banking Federation
In the matter of: Interpretation of Articles 6(1) and 7(1) of Council Directive 93/13/EEC
I. INTEREST OF AMICUS CURIAE
The fictional European Banking Federation (“EBF”) is the fictional voice of the European banking sector, representing national banking associations across Europe that together represent banks employing significant numbers of people and making available loans to the European economy. The EBF is committed to a thriving European economy that is underpinned by a stable, secure, and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses, and innovators.
The EBF has a direct interest in this matter as the Court’s interpretation of Articles 6(1) and 7(1) of Council Directive 93/13/EEC will have significant implications for the banking sector’s operations, risk management practices, and legal certainty across all Member States.
II. SUMMARY OF POSITION
The EBF respectfully submits that Articles 6(1) and 7(1) of Council Directive 93/13/EEC, properly interpreted in accordance with the principles of effectiveness and proportionality, permit the approach developed in Polish case law that distinguishes between types of insurance policies for reimbursement purposes following the annulment of a credit agreement containing unfair terms. Specifically, the EBF contends that this distinction between insurance against risks to the bank and insurance against risks to the consumer is legally sound, promotes proportionality, and appropriately balances the interests of all parties involved.
III. LEGAL FRAMEWORK AND CONTEXT
A. Purpose and Scope of Directive 93/13/EEC
Directive 93/13/EEC aims to protect consumers against unfair terms in contracts concluded with sellers or suppliers. However, this protection must be balanced against other important principles of EU law, including legal certainty, freedom of contract, and proportionality. The Directive does not seek to invalidate entire contractual relationships or to create windfalls for consumers, but rather to restore balance to contractual relationships where it has been distorted by unfair terms.
As this Court has recognized in numerous cases, including Joined Cases C-154/15, C-307/15, and C-308/15 (Gutiérrez Naranjo), the consequences of finding a term unfair under Article 6(1) must be assessed in accordance with national law, subject to the requirements of effectiveness and proportionality.
B. Nature of Insurance Policies in Credit Agreements
In mortgage lending, various types of insurance serve distinct purposes and protect different interests. These include:
1. Insurance primarily protecting the bank’s interests:
– Low own contribution insurance
– Bridging insurance
2. Insurance primarily protecting the borrower’s interests:
– Life insurance
– Property insurance
– Job loss insurance
While all these policies may be required as conditions for obtaining a loan, they serve fundamentally different purposes and protect different parties against different risks. This distinction is not artificial but reflects the economic reality of the risks covered and the beneficiaries protected.
IV. LEGAL ARGUMENTS
A. The Distinction Between Types of Insurance is Legally Sound
The distinction drawn in Polish case law between insurance protecting the bank and insurance protecting the borrower is legally sound for several reasons:
1. Different contractual relationships: Insurance policies often involve three-party relationships (borrower, bank, and insurer) with distinct rights and obligations. The fact that these policies were required as a condition for obtaining a loan does not negate their distinct legal nature.
2. Different beneficiaries: For insurance policies primarily protecting the borrower (such as life, property, or job loss insurance), the borrower is either the sole beneficiary or a co-beneficiary with the bank. These policies provide actual value and protection to the borrower irrespective of the loan agreement.
3. Actual service received: For borrower-protection insurance, the consumer has received actual services in the form of insurance coverage for the period paid for. This distinguishes these insurance premiums from other charges that may be reimbursable following annulment.
B. The Principle of Proportionality Supports the Distinction
The principle of proportionality requires that legal remedies should not go beyond what is necessary to achieve their objectives. Requiring banks to reimburse all insurance premiums regardless of their purpose would be disproportionate for several reasons:
1. Double benefit to consumers: Consumers would receive both the benefit of insurance coverage during the covered period and a full refund of the premiums paid, effectively receiving insurance protection for free.
2. Retrospective invalidation of legitimate contracts: Insurance policies between consumers and insurers are typically valid, independently enforceable contracts. Treating them as mere appendages to the credit agreement undermines the legal certainty of these separate contractual relationships.
3. Impact on insurance markets: A blanket approach to reimbursement would create significant uncertainty in insurance markets and potentially affect the availability and pricing of insurance products linked to mortgage loans.
C. The Effectiveness of Consumer Protection is Not Undermined
The effectiveness of consumer protection under the Directive is not undermined by distinguishing between types of insurance for reimbursement purposes:
1. Core unfair terms are still addressed: The primary unfair terms in the credit agreement are still invalidated, and the consumer is protected from their adverse effects.
2. Proportionate remedies: Consumers receive reimbursement for insurance that primarily protected the bank, while retaining the benefit of insurance that protected them.
3. Deterrent effect is maintained: Banks still face significant financial consequences for including unfair terms in credit agreements, including the reimbursement of bank-protection insurance and other costs.
D. Relevant Case Law Supports a Balanced Approach
This Court’s jurisprudence has consistently emphasized the need for a balanced approach to remedies following the finding of unfair terms. In Case C-118/17 (Dunai), the Court noted that the Directive “does not seek to eliminate contracts containing unfair terms in their entirety, but to restore the balance between the parties while in principle preserving the validity of the contract as a whole.”
This balanced approach is reflected in the distinction drawn in Polish case law, which seeks to restore consumers to their rightful position without granting them windfall benefits at the expense of other economic actors.
V. PRACTICAL IMPLICATIONS
A. Impact on Financial Stability
The Court’s interpretation will have significant implications for financial stability across the EU. A requirement for full reimbursement of all insurance premiums would create substantial additional liabilities for banks, potentially affecting their capital positions and lending capacity. This is particularly concerning given the large number of potential claims in several Member States.
B. Consumer Welfare Considerations
While consumer protection is paramount, consumer welfare is also served by a stable and well-functioning financial system. Excessive liabilities could lead to:
1. More restrictive lending practices
2. Higher costs for future borrowers
3. Reduced availability of credit for consumers
C. Legal Certainty and Harmonization
A balanced approach that recognizes legitimate distinctions between different types of insurance would enhance legal certainty across the EU while still ensuring effective consumer protection. It would allow national courts to develop nuanced approaches to restitution that reflect the specific circumstances of each case.
VI. CONCLUSION
For the foregoing reasons, the European Banking Federation respectfully submits that Articles 6(1) and 7(1) of Council Directive 93/13/EEC, interpreted in light of the principles of effectiveness and proportionality, permit a national interpretation that distinguishes between types of insurance for reimbursement purposes following the annulment of a credit agreement due to unfair terms. This approach appropriately balances consumer protection with other important principles of EU law, including legal certainty, proportionality, and financial stability.
Respectfully submitted,
European Banking Federation
Brussels, Belgium
April 7, 2025
AMICUS CURIAE BRIEF
IN THE COURT OF JUSTICE OF THE EUROPEAN UNION
Case Reference: Request for Preliminary Ruling concerning Council Directive 93/13/EEC
Filed by: Consumer Protection Alliance of Poland
In the matter of: Interpretation of Articles 6(1) and 7(1) of Council Directive 93/13/EEC
I. INTEREST OF AMICUS CURIAE
The fictional Consumer Protection Alliance of Poland (“the Alliance”) is a non-governmental organization dedicated to protecting the rights and interests of Polish consumers. The Alliance has participated in numerous legal proceedings concerning consumer rights, including cases involving unfair contract terms in banking and financial services. The Alliance has particular expertise in mortgage loan agreements containing unfair terms and has assisted many consumers with such claims in recent years.
The Alliance submits this brief to assist the Court in interpreting the consumer protection provisions of Directive 93/13/EEC in a manner that ensures effective remedies for consumers who have been subjected to unfair terms in credit agreements.
II. SUMMARY OF POSITION
The Alliance respectfully submits that Articles 6(1) and 7(1) of Council Directive 93/13/EEC, properly interpreted in light of the principles of effectiveness and proportionality, preclude national case law that draws arbitrary distinctions between types of insurance policies for purposes of reimbursement following the annulment of a credit agreement containing unfair terms. The Alliance contends that all insurance costs paid by consumers pursuant to credit agreements later annulled due to unfair terms must be reimbursed, regardless of the nominal beneficiary or purpose of the insurance.
III. FACTUAL CONTEXT
A. Systemic Nature of the Problem
The question referred to this Court arises in a context of widespread unfair practices in the Polish banking sector. Between 2005 and 2012, many Polish consumers entered into credit agreements containing unfair terms, particularly foreign currency-denominated loans. These agreements typically required borrowers to purchase multiple insurance policies as a condition for obtaining credit.
Based on the Alliance’s experience working with affected borrowers, mortgage applicants were commonly required to purchase several types of insurance, including:
1. Low own contribution insurance
2. Bridging insurance until mortgage registration
3. Property insurance
4. Life insurance
5. Job loss insurance
These insurance requirements were typically presented as mandatory conditions for loan approval, with consumers having little or no opportunity to negotiate the terms or choose alternative insurance providers.
B. Current State of Polish Case Law
Since 2020, Polish courts have increasingly recognized the unfairness of terms in many credit agreements, particularly those denominated in foreign currencies. However, as noted by the referring court, there is no consensus regarding the reimbursement of insurance costs following annulment. The emerging distinction between insurance against risks to the bank (reimbursable) and insurance against risks to the borrower (non-reimbursable) lacks a clear legal foundation and creates substantial inconsistency in remedies available to consumers.
IV. LEGAL ARGUMENTS
A. The Text and Purpose of Directive 93/13/EEC Require Full Reimbursement
Article 6(1) of the Directive establishes that unfair terms “shall not be binding on the consumer” while leaving the contract binding “upon the parties according to the same terms” if it can continue to exist without the unfair terms. When a credit agreement cannot continue to exist without the unfair terms, as in the case before the referring court, the entire agreement is rendered null and void.
The nullity of a contract must result in the restitution of all benefits exchanged under that contract. As this Court stated in Joined Cases C-154/15, C-307/15, and C-308/15 (Gutiérrez Naranjo), the finding that a term is unfair “must, in principle, have the consequence of restoring the consumer to the situation that consumer would have been in if that term had not existed.”
The restoration of the consumer to their original position logically requires the reimbursement of all costs incurred as a direct consequence of the unfair contract, including all insurance premiums paid. Any other interpretation would allow the bank to retain benefits derived from an unfair contract, contrary to the Directive’s purpose.
B. The Principle of Effectiveness Precludes Arbitrary Distinctions Between Insurance Types
The principle of effectiveness requires that the procedural rules governing actions for safeguarding rights derived from EU law must not make it practically impossible or excessively difficult to exercise those rights. The distinction drawn by some Polish courts between different types of insurance undermines the effectiveness of the Directive for several reasons:
1. All insurance policies were mandatory components of the credit agreement**. Banks required these policies as conditions for granting loans, often specifying the insurance provider and terms. Consumers had no meaningful opportunity to negotiate or decline these requirements.
2. The distinction is artificial in practice**. Even insurance nominally protecting the borrower (such as life insurance) primarily served the bank’s interests by securing loan repayment. In most cases, the bank was designated as the beneficiary or co-beneficiary of such policies.
3. Consumers lacked meaningful information about the distinctions. Credit agreements typically presented insurance requirements as a unified package of conditions, without clear differentiation regarding which party was nominally protected.
4. The distinction creates an additional procedural burden for consumers. Requiring consumers to categorize and argue for each type of insurance significantly increases the complexity and cost of seeking remedies.
C. The Principle of Proportionality Supports Full Reimbursement
The referring court expresses concern that annulment of insurance contracts would result in “the complete exclusion ex tunc of the coverage that the borrower enjoys.” While this concern merits consideration, it must be weighed against several countervailing factors:
1. The deterrent function of the Directive is paramount**. Article 7(1) explicitly requires “adequate and effective means” to “prevent the continued use of unfair terms.” Allowing banks to retain insurance premiums would substantially weaken this deterrent effect.
2. Consumers paid for unwanted insurance. Many consumers were required to purchase insurance they did not need or want, or at premiums significantly above market rates, often with the bank receiving commissions.
3. Consumers can make informed choices about future coverage. Following annulment, consumers can decide whether to obtain new insurance coverage based on their actual needs and circumstances.
D. Comparative Analysis of Member States’ Approaches
The treatment of insurance costs following the annulment of credit agreements varies across Member States. This Court’s ruling in Case C-154/15 (Gutiérrez Naranjo) has influenced the approach of national courts throughout the EU, generally supporting comprehensive restitution when a contract is annulled due to unfair terms. A harmonized approach across the EU that requires full reimbursement of all insurance costs would strengthen consumer protection and provide legal certainty for both consumers and financial institutions.
V. CONCRETE IMPACT ON CONSUMERS
The distinction between types of insurance can have a significant impact on the effectiveness of remedies available to consumers. When banks are required to reimburse only certain categories of insurance costs, consumers are denied full restoration to their pre-contractual position.
Furthermore, the categorization process itself creates additional burdens for consumers, who must analyze complex insurance arrangements and argue for the inclusion of each insurance policy in the reimbursement. This procedural complexity can discourage consumers from pursuing their rights and reduce the overall effectiveness of the consumer protection system.
VI. CONCLUSION
For the foregoing reasons, the Consumer Protection Alliance of Poland respectfully submits that Articles 6(1) and 7(1) of Council Directive 93/13/EEC, interpreted in light of the principles of effectiveness and proportionality, preclude a national interpretation that distinguishes between types of insurance for reimbursement purposes following the annulment of a credit agreement due to unfair terms. The proper interpretation requires the reimbursement of all insurance costs paid under the annulled agreement, regardless of which party was nominally protected by the insurance.
Respectfully submitted,
Warsaw, Poland
April 7, 2025
AMICUS CURIAE BRIEF
IN THE COURT OF JUSTICE OF THE EUROPEAN UNION
Case Reference: Request for Preliminary Ruling concerning Council Directive 93/13/EEC
Filed on behalf of: A.K. a fictional Polish Consumer and Mortgage Borrower
INTRODUCTION
This amicus curiae brief is respectfully submitted on behalf of ms A.K., a fictional Polish consumer who, like the plaintiff AS, entered into a mortgage loan agreement containing unfair terms with a major Polish bank. Ms. A.K. has a direct and substantial interest in the Court’s interpretation of Articles 6(1) and 7(1) of Council Directive 93/13/EEC regarding the reimbursement of insurance costs following the annulment of credit agreements containing unfair terms.
II. FACTUAL BACKGROUND
Ms A.K.’ s situation closely mirrors that of the plaintiff in the main proceedings. In 2008, she entered into a mortgage loan agreement for the purchase of her family home. The agreement contained unfair terms similar to those found in the plaintiff’s contract with Bank Millennium. Following the partial annulment of her credit agreement by a Polish court, Ms. K, like countless other Polish consumers, now faces uncertainty regarding the reimbursement of various insurance costs she was required to pay under the credit agreement, including:
1. Insurance against risks to the bank (bridging insurance and low-contribution insurance)
2. Home insurance
3. Life insurance
All these insurance policies were mandatory requirements imposed by the bank as conditions for granting the loan and served as security for repayment.
III. LEGAL ARGUMENTS
A. Comprehensive Reimbursement is Required Under Directive 93/13/EEC
The fundamental purpose of Directive 93/13/EEC is to protect consumers against unfair terms imposed by sellers or suppliers. Article 6(1) explicitly states that unfair terms “shall not be binding on the consumer,” while Article 7(1) requires Member States to ensure that “adequate and effective means exist to prevent the continued use of unfair terms.” These provisions, read together, establish a robust protective framework that must be interpreted to provide maximum protection for consumers.
When a credit agreement is annulled due to unfair terms without which the contract cannot exist, the legal effect must be to restore the parties to the position they would have been in had the contract never existed. This restoration principle cannot be selectively applied based on arbitrary distinctions between types of insurance policies.
B. No Valid Distinction Between Types of Insurance Policies
The distinction drawn in Polish case law between insurance against risks to the bank and insurance against risks to the consumer is artificial and undermines the effectiveness of the Directive for several reasons:
1. All insurance policies were mandatory conditions of the credit agreement. The bank required all these insurance policies as preconditions for granting the loan. They formed an integral part of the contractual relationship tainted by unfair terms.
2. All insurance policies ultimately served as security for the bank. Even policies ostensibly protecting the consumer (such as life insurance or home insurance) primarily benefited the bank by reducing the risk of default. The bank was typically the primary beneficiary or co-beneficiary of these policies.
3. Consumers had no meaningful choice. Consumers were often required to purchase insurance through providers designated by the bank, at rates determined without negotiation, and with terms dictated by the bank.
C. Principles of Effectiveness and Proportionality Support Full Reimbursement
The principle of effectiveness requires that the remedies available to consumers must be genuinely effective in protecting their rights. A partial reimbursement approach fails this test:
1. It allows banks to retain significant benefits derived from unfair contracts
2. It creates complex factual inquiries into the nature of each insurance policy
3. It places additional burdens on consumers to categorize and argue for each type of insurance cost
The principle of proportionality, properly applied, supports full reimbursement. While the Court must consider that annulment of insurance contracts results in retroactive loss of coverage, this consideration is outweighed by:
1. The deterrent function of the Directive, which is a primary purpose explicitly mentioned in Article 7
2. The fact that consumers paid for coverage under contracts they would not have entered into absent unfair terms
3. The reality that banks, not consumers, should bear the consequences of including unfair terms in their contracts
IV. IMPORTANCE FOR CONSUMER PROTECTION ACROSS THE EU
The Court’s ruling will have far-reaching implications beyond Polish borders. Mortgage agreements across Member States frequently include similar requirements for various insurance policies. A narrow interpretation allowing banks to retain insurance premiums would severely undermine the harmonization of consumer protection standards across the EU.
Furthermore, the deterrent effect intended by the Directive would be substantially weakened if financial institutions could retain significant portions of the financial benefits derived from unfair contracts. This would incentivize the continued use of unfair terms, contrary to the Directive’s explicit aims.
V. RESPONSE TO CONCERNS ABOUT RETROACTIVE LOSS OF COVERAGE
The referring court expresses concern about the “complete exclusion ex tunc of the coverage that the borrower enjoys.” This concern, while understandable, does not justify denying full reimbursement for several reasons:
1. The loss of retroactive coverage is a theoretical rather than practical concern in most cases, as consumers rarely need to make claims for past periods
2. Consumers can make an informed choice, after annulment, whether to obtain new insurance coverage going forward
3. The principle that unfair contracts “shall not be binding” cannot be selectively applied based on speculative benefits to consumers
VI. CONCLUSION
For the foregoing reasons, Articles 6(1) and 7(1) of Council Directive 93/13/EEC, together with the principles of effectiveness and proportionality, must be interpreted as precluding the interpretation developed in Polish case law that distinguishes between types of insurance policies for reimbursement purposes. When a credit agreement is annulled due to unfair terms, consumers should be entitled to reimbursement of all insurance costs paid in connection with that agreement, regardless of whether the insurance nominally protected the bank or the consumer.
Respectfully submitted,
Dated: April 7, 2025