By way of Judgment no. Gž 5061/2017 dated 17 December 2017, Belgrade’s Appellate Court made a significant ruling declaring the provision on the fee for administration of a loan (which is a very common provision in most loan agreements and is usually designated as a percentage of the amount of the loan), null and void. Namely, according to the court’s opinion, the null and void provision does not sufficiently specify why the fee is related to the amount of the loan and which real costs are reflected in such fee. The mechanism on determination of the fee is not transparent to the borrowers, so the bank can unilaterally determine it, especially having in mind that loan agreements are negotiable only to a limited extent.

This Judgment can have a huge impact on banks, as it does not rely on the Financial Services Users Protection Act (which applies to natural persons), but on the general civil law provisions – the Contracts and Torts Act. Namely, according to the Contracts and Torts Act, the remuneration for the loan is the agreed interest, so establishing of the fee contradicts the basic principles of civil law, i.e. principle of equal considerations (načelo jednake vrednosti davanja). As a consequence of the provision on the fee being null and void, the bank has to return the amount of fee to the borrower.

Having in mind the above, this decision could have an impact on commercial loans as well, in case the Commercial Courts accepts the opinion of Belgrade’s Appellate Court.