Even though Swiss franc denominated consumer loans caused disputes throughout most of the CEE, the situation seems to be developing more rapidly in Croatia. Banks have first been sued by consumers for the alleged unfair contractual provisions on the principal currency and interest rates, which was followed by the Government's legislative intervention into the existing contractual relationships between the banks and their customers.
The pending lawsuits have just seen a new development before the Constitutional Court.
A consumer association originally filed a collective lawsuit against the largest international banks operating in Croatia, claiming that contractual clauses dealing with currency and variable interest rates were unfair and should be deemed null and void. The Croatian courts initially concluded that due to a lack of clarity about the parameters used for setting the interest rates, banks have indeed illegally applied variable interest rate clauses. Nevertheless, the courts determined that the CHF currency clauses were valid.
Since neither side was satisfied with the ruling, both the consumers and the banks filed their constitutional complaints. In December 2016, the Constitutional Court rejected the complaint of the banks and upheld that of the consumers, repealing the part of the earlier ruling dealing with the currency clauses. However, the Constitutional Court's ruling is based predominantly on formal grounds.
Namely, the Supreme Court, being the final court to review the issue prior to the constitutional complaint, held that, unlike the variable interest rate clauses, currency clauses were not subject to the intelligibility and fairness test established under EU law because they had been widely used in practice and, as a consequence, the effect of the currency clauses was well known to everyone involved. The Constitutional Court held that, even though the Supreme Court was entitled to apply this legal standard differently, it failed to adequately substantiate its reasoning why the intelligibility and fairness test should be applicable and relevant only in relation to the variable interest rate clauses, but not in relation to the currency clauses.
Moreover, the Constitutional Court also determined that the Supreme Court failed to justify why it rejected the requests for seeking a CJEU's preliminary ruling on the interpretation of the EU law on those points.
Consumers welcomed this decision as a victory against the banks. However, it should be emphasized that the Supreme Court's decision was repealed only due to the unsatisfactory elaboration of the court's reasoning.
Further developments in these lengthy and exhausting judicial proceedings are expected shortly, since the Supreme Court already announced that the repeal procedure will commence soon.