Judgment;Summary — ECLI:EU:C:2020:167
Date: 2020-03-05
Language of the case: Czech
Court formation: Second Chamber
Subject matter: Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Czechia

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Translation C-679/18 — 1 
Case C-679/18 
Request for a preliminary ruling 
Date lodged: 
5 November 2018 
Referring court:  
Okresní soud v Ostravě (Czech Republic) 
Date of the decision to refer: 
25 October 2018 
Applicant: 
OPR-Finance s.r.o. 
Defendant: 
GK 
  
ORDER 
The Okresní soud v Ostravě (Ostrava District Court, Czech Republic) ..., in the 
case 
of the applicant: OPR-Finance s.r.o., ... 
established in ... Nusle, Prague 4 ... 
v 
the defendant:  GK, born on 18 August 1994, 
residing in ... Vítkovice, Ostrava 
for payment of CZK 7 839 together with interest 
has decided: 
EN 
REQUEST FOR A PRELIMINARY RULING OF 25.10.2018 — CASE C-679/18 
 
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The Okresní soud v Ostravě (Ostrava District Court), on the basis of Article 267 
of the Treaty on the Functioning of the European Union, requests the Court of 
Justice of the European Union to give a preliminary ruling on the following 
questions: 
1)  Do the combined provisions of Article 8 and Article 23 of Directive 
2008/48/EC of the European Parliament and of the Council of 23 April 2008 
on credit agreements for consumers and repealing Council Directive 
87/102/EEC preclude national legislation which specifies that the penalty for 
failure to fulfil the creditor’s obligation to assess the consumer’s 
creditworthiness before the conclusion of the credit agreement shall be the 
nullity of the credit agreement linked with an obligation on the consumer to 
return the principal sum to the creditor at a time appropriate to the 
consumer’s financial capacity, where that penalty (the nullity of the credit 
agreement) is however applicable only in the event that the consumer invokes 
it (that is, raises an objection of nullity in relation to the agreement) within a 
three-year limitation period? 
2)  Do the combined provisions of Article 8 and Article 23 of Directive 
2008/48/EC of the European Parliament and of the Council of 23 April 2008 
on credit agreements for consumers and repealing Council Directive 
87/102/EEC require a national court to apply of its own motion the penalty 
laid down in national legislation for failure to fulfil the creditor’s obligation 
to assess the consumer’s creditworthiness (that is, even in the event that the 
consumer does not actively invoke the penalty)? 
Grounds: 
I. Facts of the dispute, proceedings so far and brief appraisal 
1 By application received by the present court on 7 June 2018, the applicant brought 
an action against the defendant for payment of the sum of CZK 7 839 plus 
statutory interest for the period from 1 October 2017 to the date of payment. In its 
application, the applicant stated that it had concluded a revolving credit agreement 
with the defendant (‘the Credit Agreement’) on 21 April 2017, on the basis of 
which it provided a total amount of CZK 4 900 to the defendant. The fee for 
provision of credit was 20% of the principal, being a total of CZK 980: under the 
Credit Agreement, this became part of the principal at the end of each calendar 
month. By the end of each calendar month, the defendant was obliged to pay at 
least 1/3 of the amount owed on the last day of the preceding calendar month (and 
no less than CZK 300). Furthermore, the parties had agreed a monthly interest rate 
of 20% for the period from the first day of the second month following the 
calendar month of provision of the funds to the date of their return. Under the 
terms of the Credit Agreement, if the defendant defaulted on her loan by more 
than two months, the debt [OR.2] would automatically become payable and 
would subsequently be subject to interest at an annual rate of 15%. The parties 
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had further agreed that the interest should become part of the principal at the end 
of each calendar month. The Credit Agreement also imposed an obligation on the 
defendant to pay the applicant a contractual penalty of CZK 121 for every 30-day 
period or part thereof that she was in default. The applicant accrued a right to 
payment of the principal of CZK 4 900, the fee of CZK 980 for provision of 
credit, total interest of CZK 3 696 and contractual penalties totalling CZK 363, of 
which the defendant paid only CZK 2 100. Furthermore, the defendant failed to 
pay the amount owed in response to a formal request made before proceedings 
were brought. 
2 On 17 October 2018, the applicant submitted written pleadings to the court, in 
which it excused itself from participation in the oral hearing ordered (while not 
requesting an adjournment) and, in the substance, primarily addressed the issue of 
contracts concluded using a means of distance communication (that is, including 
the credit agreement from which its own entitlement arises). 
3 In the course of the oral hearing, the defendant stated that the applicant’s factual 
claims were truthful. 
4 After taking evidence, the court concluded that the facts of the case correspond de 
facto to the statements made in the application, and therefore the court refers here 
to those details. However, on the facts of the case and going beyond the 
statements made in the application, the referring court also observes that the 
annual percentage rate of charge (APRC) under the Credit Agreement ranged 
from 368% to 637%, according to the day of drawdown of the loan. On the basis 
of the Credit Agreement, the defendant drew down CZK 4 000 in April 2017 and 
CZK 900 in June 2017. The applicant charged the contractual penalty of CZK 121 
to the defendant’s account three times, that is, in August, September and October 
2017. During the proceedings, the applicant did not state — and still less 
establish — that it had assessed the defendant’s creditworthiness before the 
conclusion of the Credit Agreement, and because the principle of concentration of 
proceedings has been applied for the sake of timeliness, the applicant cannot now 
supplement its factual statements or offer any evidence. On the other hand, the 
defendant has not raised an objection of nullity in relation to the Credit Agreement 
on the ground that the applicant did not assess her creditworthiness or, as the case 
may be, did not properly assess it. 
5 Before it decided to refer the questions set out below to the Court of Justice of the 
European Union for a preliminary ruling, the court made a preliminary appraisal 
of the case as a matter of law and came to the conclusion that the agreement 
between the parties had been concluded under the scheme of Zákon č. 257/2016 
Sb., o spotřebitelském úvěru (Law No 257/2016 on consumer credit). In the light 
of the applicant’s arguments as recalled above, the court also states its belief that 
the fact that a contract has been concluded using a means of distance 
communication, as the Credit Agreement was, does not in itself render a credit 
agreement null and void. 
REQUEST FOR A PRELIMINARY RULING OF 25.10.2018 — CASE C-679/18 
 
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6 The defendant has agreed to the referral of questions to the Court of Justice of the 
European Union for a preliminary ruling; the applicant has not made any 
observation on this referral, since it did not exercise its right to appear before the 
court and did not take part in the oral hearing. 
II. Relevant EU legislation 
7 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 
2008 on credit agreements for consumers and repealing Council Directive 
87/102/EEC 
Article 8 
1. Member States shall ensure that, before the conclusion of the credit agreement, 
the creditor assesses the consumer’s creditworthiness on the basis of sufficient 
information, where appropriate obtained from the consumer and, where 
necessary, on the basis of a consultation of the relevant database. Member States 
whose legislation requires creditors to assess the creditworthiness of consumers 
on the basis of a consultation of the relevant database may retain this 
requirement. 
… 
Article 22 
1. Insofar as this Directive contains harmonised provisions, Member States may 
not maintain or introduce in their national law provisions diverging from those 
laid down in this Directive.  
[OR.3] 
2. Member States shall ensure that consumers may not waive the rights conferred 
on them by the provisions of national law implementing or corresponding to this 
Directive. 
... 
Article 23 
Member States shall lay down the rules on penalties applicable to infringements 
of the national provisions adopted pursuant to this Directive and shall take all 
measures necessary to ensure that they are implemented. The penalties provided 
for must be effective, proportionate and dissuasive. 
III. Relevant national legislation 
8 Zákon č. 89/2012 Sb., Občanský zákoník (Law No 89/2012, the Civil Code)) 
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(1) Where the nullity of a legal act will protect the interest of a certain person, 
only that person may raise an objection of nullity in relation to that act. 
(2) If a person entitled to raise an objection of nullity in relation to a legal act 
does not do so, that legal act shall be deemed to be valid.  
9 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 
2008 on credit agreements for consumers and repealing Council Directive 
87/102/EEC (‘Directive 2008/48’ or ‘the Directive’) was transposed into Czech 
law by Law No 257/2016 on consumer credit, with effect from 1 December 2016. 
10 Law No 257/2016 on consumer credit  
Paragraph 86 
Assessing creditworthiness 
(1) Before the conclusion of a consumer credit agreement or any change of 
obligation in the agreement that entails a significant increase in the total amount 
of consumer credit, the supplier shall assess the consumer’s creditworthiness on 
the basis of essential, reliable, sufficient and proportionate information obtained 
from the consumer and, where necessary, from a database enabling assessment of 
the consumer’s creditworthiness or from other sources. The supplier shall provide 
consumer credit only where the result of a creditworthiness assessment indicates 
that there are no reasonable doubts about the consumer’s ability to repay the 
consumer credit. 
(2) When assessing the consumer’s creditworthiness, the supplier shall in 
particular assess the consumer’s ability to make the agreed regular consumer 
credit repayments, on the basis of a comparison of the consumer’s income and 
expenditure and means of meeting any existing debts. Moreover, he shall take into 
account the value of any property, if the effect of the consumer credit agreement is 
that the consumer credit is to be repaid, in part or in full, from the proceeds of 
sale of the consumer’s property rather than by regular repayments or if it is 
apparent from the consumer’s financial situation that he will be able to repay the 
consumer credit irrespective of his income. 
Paragraph 87 
Consequences of failure to fulfil the obligation to assess the creditworthiness of 
the consumer 
(1) If a supplier provides a consumer with consumer credit in breach of the 
second sentence of Paragraph 86(1), the agreement shall be null and void. The 
consumer may raise an objection of nullity within a limitation period of three 
years, running from the date of conclusion of the agreement. The consumer shall 
be obliged, at a time appropriate to his financial capacity, to return the principal 
sum of consumer credit paid out. 
REQUEST FOR A PRELIMINARY RULING OF 25.10.2018 — CASE C-679/18 
 
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... 
IV. Grounds for referring the first question for a preliminary ruling 
11 Under Article 8 of Directive 2008/48, Member States are required to ensure that, 
before the conclusion of a credit agreement, the creditor assesses the consumer’s 
creditworthiness. The Directive does not provide for the exact procedure by which 
Member States are to achieve this, nor does it establish specific penalties for 
failure to fulfil the creditor’s obligation to assess the consumer’s creditworthiness. 
However, Article 23 of the Directive requires Member States to ensure that any 
penalty chosen is effective, proportionate and dissuasive. 
[OR.4] 
12 The penalty laid down in Paragraph 87(1) of the Law on consumer credit, which is 
intended to ensure that the creditor fulfils his obligation to assess the consumer’s 
creditworthiness before the conclusion of the credit agreement, consists in the 
nullity of the credit agreement together with an obligation on the consumer to 
return to the creditor (only) the principal sum of consumer credit paid out, at a 
time appropriate to his or her financial capacity (that is, generally, a relatively 
long time). At first sight, this penalty seems quite forceful. However, the referring 
court believes that the choice of a provision designed around relative nullity must 
be regarded as highly problematic. The fact that the nullity of the credit agreement 
is a penalty applicable only if raised by the consumer totally undermines the very 
purpose of consumer protection, which lies in correcting the imbalance between 
the consumer and the creditor, as regards not only bargaining power and economic 
strength but also — and above all — level of knowledge. For the sake of 
completeness in the circumstances described, the referring court observes that it is 
fully established in Czech legal practice and thought that a court not only cannot 
but must not apply a penalty of relative nullity of its own motion (that is, without 
any request from a party to the case). Of note in this regard is, for example, the 
following commentary on Paragraph 586 of Law No 89/2012, the Civil Code (‘the 
Civil Code’), which regulates relative nullity at the general level: ‘A legal act is 
null and void where it does not meet any of the requirements laid down and where 
a failure to meet such requirements is linked to nullity by law. The Civil Code 
distinguishes between two types of nullity: absolute nullity and relative nullity.  
Paragraph 586 of the Civil Code provides for the relative nullity of a legal act. A 
legal act that is null and void in a relative sense is one which will come into 
existence and will produce all its intended legal effects unless a person who is 
entitled to do so raises an objection of nullity in relation to it (unless that person 
asserts nullity). In the event that a person so entitled raises an objection of nullity, 
nullity will apply from the outset (ex tunc) and the legal act will be regarded as 
never having produced any legal effects.  
Whereas absolute nullity means that the effects of nullity start to operate 
automatically, regardless of the wishes of the parties to the legal act, in the case 
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of relative nullity, the law leaves the person affected by the defect of the legal act 
to decide whether to be bound by the legal act despite this defect or to assert the 
nullity of the legal act.’ (cf. Handlar J., in Lavický P. et al.,  Občanský zákoník 
I. Obecná část (§ 1-654). Komentář. [The Civil Code I. General Provisions 
(Paragraphs 1 to 654). Commentary.] Prague: C. H. Beck, 2014, pp. 2121.) 
13 One can perhaps realistically envisage the average consumer, in the context of 
judicial proceedings, arguing that the agreed interest (or the fee for provision of 
credit) is too high (because even people with no legal training are aware of the 
existence of rules relating to excessive interest rates) or that the claim is time 
barred (the existence of rules on lapse can also be regarded as generally known). 
However, it can scarcely be reasonable to expect a consumer to know that the 
creditor is obliged by law to assess the consumer’s creditworthiness in a given 
way before the conclusion of the credit agreement and that failure to fulfil this 
obligation gives the consumer the right to assert the nullity of the credit agreement 
concluded. In actual fact, although the referring court examines hundreds of 
similar claims each month, it knows of only three cases since the Law on 
consumer credit came into effect in which a consumer not represented by a legal 
practitioner (in the vast majority of cases, the consumer in a consumer credit 
dispute is not represented by a lawyer) has raised an objection of nullity in relation 
to the agreement on the ground that the creditor had neglected to assess his or her 
creditworthiness. Moreover, in one case the consumer was a university graduate 
working at a non-profit organisation involved in debt counselling. In the 
remaining two cases, although the individuals asserting the nullity of credit 
agreements on the ground of failure to assess their creditworthiness were not 
formally represented, it was clear from their presentations that they had consulted 
a lawyer or other practitioner when preparing for the court procedure. 1 
14 The referring court also believes that the case-law of the Court of Justice of the 
European Union (‘the CJEU’) permits the above conclusions to be drawn. A 
specific example appears in the judgment of 4 June 2015, Faber v Autobedriff 
Hazet Ochten BV, C-497/13 (cf. paragraph 42 and the case-law cited), where the 
CJEU concluded ‘that the consumer is in a weak position vis-à-vis the seller or 
supplier, as regards both his bargaining power and his level of knowledge and 
that there is a real risk that the consumer, particularly because of a lack of 
awareness, will not rely on the legal rule that is intended to protect him’. 
Similarly, in the judgment of 21 April 2016, [OR.5] Radlinger and Radlingerová 
v FINWAY a.s., C-377/14 (cf. paragraph 66 and the case-law cited), the CJEU 
concluded that ‘effective consumer protection could be achieved only if the 
national court were required, of its own motion, to examine compliance with the 
requirements which flow from EU law on consumer law’. 
 
1  The court is here drawing on informal research carried out among all judges who rule on 
disputes relating to the Law on consumer credit in this court; as a district court, the Okresní 
soud v Ostravě is one of the largest courts of first instance in the Czech Republic.  
REQUEST FOR A PRELIMINARY RULING OF 25.10.2018 — CASE C-679/18 
 
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15 To sum up, there are reasonable doubts as to whether the penalty of relative 
nullity of a credit agreement laid down in Paragraph 87(1) of the Law on 
consumer credit corresponds to the requirement laid down in Article 23 of 
Directive 2008/48 for a penalty that is effective and dissuasive. The referring 
court therefore asks the Court of Justice of the European Union: 
16 Do the combined provisions of Article 8 and Article 23 of Directive 
2008/48/EC of the European Parliament and of the Council of 23 April 2008 
on credit agreements for consumers and repealing Council Directive 
87/102/EEC preclude national legislation which specifies that the penalty for 
failure to fulfil the creditor’s obligation to assess the consumer’s 
creditworthiness before the conclusion of the credit agreement shall be the 
nullity of the credit agreement linked with an obligation on the consumer to 
return the principal sum to the creditor at a time appropriate to the 
consumer’s financial capacity, where such a penalty (the nullity of the credit 
agreement) is however applicable only in the event that the consumer invokes 
it (that is, raises an objection of nullity in relation to the agreement) within a 
three-year limitation period? 
17 Assuming that the Court of Justice of the European Union answers this question 
referred for a preliminary ruling in the affirmative, the referring court asks it to 
answer the further question below. 
V. Grounds for referring the second question for a preliminary ruling 
18 In the light of the long-standing case-law of the Court of Justice of the European 
Union, it may now be regarded as well known that national courts are obliged to 
interpret national law, as far as possible, in the light of the wording and purpose of 
the respective directives and in such a way as to achieve the result sought by a 
given directive; this is equally true both in vertical and in horizontal relationships 
(cf., for example, the CJEU’s judgments of 13 November 1990, Marleasing SA, 
C-106/89; of 27 June 2000, Océano Grupo Editorial SA, C-240/98 to C-244/98; 
and many others). On the other hand, the obligation on the national court to 
interpret national legislation in conformity with EU law is limited by general 
principles of law and by national methods of interpretation, which also include a 
prohibition on interpreting contra legem. 
19 In the judgment of 21 April 2016, Radlinger and Radlingerová v FINWAY a.s., 
C-377/14, specifically in paragraph 70 thereof, the CJEU concluded that, since 
‘the national courts are required to ensure the effectiveness of consumer 
protection intended to be given by the provisions of Directive 2008/48, the role 
attributed to the national court by EU law in this area is not limited to a mere 
power to rule on the compliance with those requirements, but also consists of the 
obligation to examine that issue of its own motion, where it has available to it the 
legal and factual elements necessary for that task’. In paragraph 77 of the same 
judgment, the CJEU went on to state that ‘in the present case,… the obligation to 
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examine ex officio the unfairness of certain terms and the presence of mandatory 
information in a credit agreement constitutes a procedural rule placed not on an 
individual but on the courts ...’. 
20 In the situation described here, the referring court considers that there are 
reasonable doubts as to whether the court is bound by the literal wording of the 
national legislation, which makes the penalty for failure to fulfil the creditor’s 
obligation to assess the consumer’s creditworthiness (the nullity of the credit 
agreement) conditional on the consumer raising an objection, or whether it is 
required to apply that penalty of its own motion. In other words, it is open to 
question whether an interpretation of Directive 2008/48 that conforms with EU 
law permits the court to apply of its own motion the penalty laid down in 
Paragraph 87(1) of the Law on consumer credit or whether this application of the 
penalty would require an interpretation (by the court) contra legem. The referring 
court therefore also asks the Court of Justice of the European Union: 
21 Do the combined provisions of Article 8 and Article 23 of Directive 
2008/48/EC of the European Parliament and of the Council of 23 April 2008 
on credit agreements for consumers and repealing [OR. 6] Council Directive 
87/102/EEC require a national court to apply of its own motion the penalty 
laid down in national legislation for failure to fulfil the creditor’s obligation 
to assess the consumer’s creditworthiness (that is, even in the event that the 
consumer does not actively invoke the penalty)? 
VI. Final remarks 
22 For the sake of completeness, the court should point out that because the amount 
claimed does not exceed CZK 10 000, there is no judicial remedy under national 
law against its decisions (that is, by appeal,  cf. Paragraph 202(2) of Zákon č. 
99/1963 Sb., Občanský soudní řád (Law No 99/1963, the Code of Civil 
Procedure) ...). Therefore, in accordance with Article 267 of the Treaty on the 
Functioning of the European Union, the court was required to bring the matter 
before the Court of Justice of the European Union. 
23 Although it may be clear from the foregoing, the court would nevertheless like to 
point out, in conclusion, that the CJEU’s reply to the questions referred for a 
preliminary ruling will be of significance for a very large amount of litigation. 
24 ... 
... 
... [national procedure] 
Ostrava, 25 October 2018 
... [name, stamp, signature]