In its ruling in the case Aziz v. Catalunyacaixa (C-415/11, 14 March 2013), the Court of Justice of the European Union (”CJEU”) provided further guidance for national courts on the interpretation of unfairness regarding consumer contract terms in light of the Unfair Contract Terms Directive (93/13/EEC). The Court found, inter alia, that the concept of “significant imbalance” pursuant to Article 3(1) of the Directive should be assessed in comparison with provisions of national law that would be applicable in the absence of any agreement between the contracting parties.
The case concerned a typical situation in which a bank had provided Mr. Aziz, a consumer, with a mortgage loan. However, when Aziz defaulted on his monthly payments due to financial problems, the bank made use of the loan agreement’s so-called acceleration clause, which allowed it to terminate the contract upfront and claim back the total of the original loan amount. The loan agreement also imposed a fixed annual default interest of 18.75 percent for sums not paid when due, with no requirement of prior notice.
The CJEU considered that it is up to the national court to definitively determine whether a contact term is “unfair” in the meaning of the Unfair Contract Terms Directive. Thus, the CJEU could only provide guiding points for the national court to use in its assessment. It stated that when evaluating whether a “significant imbalance” to the detriment of the consumer exists, the national court should contrast the contract terms with such rules of national law that would apply in the absence of the said terms. With regard to whether an imbalance arises “contrary to the requirement of good faith”, as additionally set out in Article 3(1) of the Directive, the CJEU instructed the national court to consider whether the seller or supplier could reasonably assume that the consumer would, in individual contract negotiations, have agreed to the term in question. Finally, the legal position of the consumer and the national remedies at his disposal can be taken into account.