Plouvin v Electricité de France (EDF) C-590/17

Facts:

EDF granted a loan to Mr Pouvin (one of its employees) and his wife to help them buy a house. The loan agreement included a clause stating that, if Mr Pouvin left his employment, the loan would become repayable immediately. Mr Pouvin resigned and stopped making the loan repayments. EDF brought a claim against him and his wife for repayment of the outstanding sum plus interest. Mr Pouvin argued that the repayment clause was unenforceable under the Unfair Contract Terms Directive. EDF said the Directive did not apply since there was no supplier/consumer relationship in place.

Decision:

The European Court of Justice held that the Directive did apply. In granting a loan to an employee and his wife to buy a house, EDF was acting for purposes relating to its trade, business or profession and was therefore a seller or supplier for the purposes of the Directive. The employee was a consumer so the loan agreement was in scope for the Directive, and the French courts would have to decide if its terms were fair. The exclusion in the Directive for "contracts relating to employment" did not apply because the loan agreement did not regulate an employment relationship or employment conditions and could not be classed as an employment contract.

This decision is worrying for employers who provide loans to employees - such as car loans, mortgages and loans for training costs – as these arrangements may fall within the scope of the Directive. This means that their terms could be challenged as being unfair under the Directive.