Opinion of the Advocate General — ECLI:EU:C:2015:621
Date: 2015-09-17
Language of the case: Hungarian
Subject matter: Right of establishment;Free movement of capital;Internal market - Principles
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - decision unnecessary
Origin: Hungary

summary of some apparently pertinent provisions of Hungarian law also appear in the document, but nothing more. 11 According to the observations of the debtors, the main litigation seems to concern recovery of the loan by the bank. Mr Márton Lantos is the principal debtor but Mrs Mártonne Lantos has also been sued by the bank on the basis of national provisions concerning joint liability of spouses for credit relating to matrimonial property. Their observations also include a description of the contractual terms, with only a brief discussion of the pertinent clauses of the loan contract. The latter is annexed to the written observations of debtors.. 12 While the order for reference is silent on the foreign currency in issue, according to various written observations the arrangements were made in Swiss francs. 13 Personally, I have difficulties in understanding why the debtors needed a loan from the bank if they were able to sell to the bank the relevant sum in Swiss francs. It is stated in in the reference that ‘[Next], the bank purchased from the client that currency’. However, the Commission notes, on the basis of the national case file, that a loan in Swiss francs was granted but it was advanced and repayable in Hungarian forints. According to the observations of the debtors, the set-up in issue amounts, at least partially, to an instrument concerning investment in Swiss francs. 14 I observe that the written observations of Hungary describe the legal framework in greater detail than the order for reference but that government considers the reference as inadmissible, inter alia, because of the lack of clarity relating to the pertinence of the national provisions referred to therein. 15 See Article 4, point 6, of Law CXXXVIII of 2007, which entered into force on 1 December 2007, transposing into Hungarian law Directive 2004/39 (a befektetési vállalkozásokról és az árutőzsdei szolgáltatókról, valamint az általuk végezhető tevékenységek szabályairól szóló 2007. évi CXXXVIII. Törvény). 16 In the written observations of the defendants in the main proceedings it is submitted that Mr Márton Lantos agreed on 11 June 2008, with the bank, a consumer credit agreement denominated in Swiss francs in order to finance acquisition of a motor vehicle. 17 Advocate General Wahl further explained (in footnote 2 of the Opinion) that according to the referring court in that case the debts of Hungarian households with credit institutions amounted to 32.56% of the gross national product (GNP), according to data for the second half of 2012 from the Magyar Nemzeti Bank (National Bank of Hungary), and, among them, the equivalent of 18.54% of the GNP, a sum of HUF 5 289 billion, related to loans in foreign currencies like the one at issue in the main proceedings in Kásler. With specific regard to loans denominated in Swiss francs, they have been offered on a large scale not only in Hungary, but also in other Member States including Poland and Croatia. 18 See among other initiatives Act LXXV of June 2011 on fixing the exchange rate used for the calculation of instruments of foreign exchange denominated mortgage loans and the forced sale of residential properties, Government Decree No 341/2011 on housing interest subsidy and Act CLXXIII of 2013 on an exchange rate cap facility. 19 Mann on the Legal Aspect of Money, Proctor, Ch., Kleiner, C., and Mohs, Fl. (eds.), Seventh edition, Oxford University Press, Oxford 2012, at page 127. 20 Mann on the Legal Aspect of Money, at page 104. Directive 2014/17, Article 4(28), defines a ‘foreign currency loan’ as a credit agreement where the credit is either denominated in a currency other than that in which the consumer receives the income or holds the assets from which the credit is to be repaid or denominated in a currency other than that of the Member State in which the consumer is resident. 21 The order for reference refers to several national provisions on forward currency transactions carried out on the over-the-counter (OTC) market. 22 See recitals 2 and 31 of Directive 2004/39. 23 See point 16 above. Moreover, the defendants in the main proceedings claim that the arrangement contains a mixed contract embodying, on the one hand, a credit contract and, on the other, a forward exchange rate transaction and a transfer of currency risk, these latter elements being financial services concerning financial instruments. 24 As Germany observes, there is no single legally binding EU law definition of derivative instruments but many EU law instruments refer to the notion. In financial and economic literature there are many definitions. For example, according to the definitions adopted by the International Monetary Fund there ‘are two broad types of financial derivatives. In a forward contract, which is unconditional, two counterparties agree to exchange a specified quantity of an underlying item (real or financial) at an agreed-upon price (the strike price) on a specified date. In an option contract, the purchaser acquires from the seller a right to buy or sell, (depending on whether the option is a call or a put) a specified underlying item at a strike price on or before a specified date. Unlike debt instruments, financial derivatives do not accrue investment income; nor are principal amounts advanced that must be repaid.’ See paragraph FD3 of Financial Derivatives. A Supplement to the fifth edition (1993) of the Balance of Payments Manual, International Monetary Fund, 2000). It can be consulted from a link at http://www.imf.org/external/pubs/ft/fd/2000/finder.pdf. 25 If A grants to B a loan of EUR 100 000 (money of account) repayable in US dollars (money of payment) at the rate applicable on the date of payment, B must pay back USD 100 000 if the rate of that date is 1 USD/EUR but USD 120 000 if the rate is 1.2 USD/EUR. If A and B agree in the loan contract the rate applicable to repayment to be 1.2 USD/EUR independently of the actual rate applicable on that date, something which legally amounts to a forward currency transaction, the forward currency transaction clause has on the day of repayment a value of zero dollars if the actual rate is 1.2 USD/EUR (because EUR 100 000 equals USD 120 000). However, if the rate on that date is 1 USD/EUR, the forward transaction part of the deal has a separate value of EUR/USD 20 000 because the creditor gets in addition of the capital of 100 000 euro (being equal to USD 100 000 payable by the debtor) also USD 20 000 (being an equal sum in euros) representing the difference between the fixed rate and the actual rate. 26 Assuming that there are no restrictions concerning capital movements or currency controls. 27 However, it does not hedge the creditor against the depreciation of the relevant foreign currency against the national currency. 28 Article 4 of Directive 2008/48 provides for extensive obligations with respect to advertising. Articles 5 and 6 set down obligations with respect to information that must be provided to the consumer prior to entry into a credit agreement. This information includes, in particular: the conditions governing the application of the borrowing rate (Article 5 (1) (f)); the obligation to enter any ancillary agreement to obtain credit or obtain in on the terms marketed (Article 5 (1) (k)). Finally, Article 8 requires creditors to assess the creditworthiness of consumers prior to entering into contracts with them.