Order — ECLI:EU:C:2019:791
Date: 2019-09-26
Language of the case: Croatian
Court formation: Sixth Chamber
Subject matter: Right of establishment;Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - inadmissible
Origin: Croatia

Translation C-277/19 - 1 
Case C-277/19 
Request for a preliminary ruling 
Date lodged: 
2 April 2019 
Referring court: 
Općinski sud u Zadru (Municipal Court, Zadar, Croatia) 
Date of the decision to refer: 
25 March 2019 
Applicants: 
R. D. 
A. D. 
Defendant: 
Raiffeisenbank St. Stefan-Jagerberg-Wolfsberg eGen 
      
Republic of Croatia 
Općinski sud u Zadru (Municipal Court, Zadar, Croatia) 
[…] 
On the basis of Article 19(3(b) of the Treaty on European Union and Article 267 
of the Treaty on the Functioning of the European Union (‘TFEU’), the Općinski 
sud u Zadru […] makes a  
REQUEST FOR A PRELIMINARY RULING 
ON THE INTERPRETATION OF EU LAW 
– brief statement of the subject matter of the dispute – 
These civil proceedings, which have been brought by applicant No 1, R.D. of Z., 
[…] acting jointly with applicant No 2, A. D. of Z., […] against the defendant, R. 
St. S.-J.-W. eG., established in the Republic of Austria, […] concerns a 
declaration as to the nullity of single-repayment-of-principal credit agreement 
EN 
REQUEST FOR A PRELIMINARY RULING OF 25.3.2019 — CASE C-277/19 
 
2  
number […], of 11 December 2007, which forms an integral part of the expression 
of will by authentic instrument […] executed before a notary that was made 
between the parties to the dispute […] on 18 December 2007, and of the single-
repayment-of-principal credit agreement number […], of 19 June 2008, which 
forms an integral part of the expression of will by authentic instrument […] 
executed before a notary that was made between the parties to the dispute […] on 
27 June 2008, and of the application to cancel the mortgage registration based on 
the expression of will by authentic instrument […].  
The applicants claim, in essence, that the credit transactions in question were 
concluded in the territory of the Republic of Croatia (‘Croatia’) before a Croatian 
notary and fall within the scope of application of Croatian law. In their view, the 
credit agreements are invalid because they are contrary to mandatory legal 
provisions, to the Constitution of Croatia and to the Law on banking. The 
applicants state that the agreements at issue are agreements which were concluded 
and authenticated before Croatian notaries and formed the basis of mortgages 
created on immovable properties situated in Croatia. They submit that, as 
consumers, they were not adequately informed of the legal consequences of the 
legal transactions concluded and that, by virtue of their status as natural persons 
and Croatian citizens, they are in a weaker position than the defendant in its 
capacity as a legal person the very business of which consists predominantly in 
the grant of consumer credit. The applicants consider that, although the defendant, 
which is a foreign legal person, operates as a bank in the territory of Croatia, it 
does not have approval or authorisation from the Hrvatska Narodna Banka 
(Central Bank of Croatia) to carry out credit transactions. The defendant, on the 
other hand, contends that the referring court has no jurisdiction whatsoever and 
that Croatian law is not applicable, and considers that the law applicable is 
Austrian law, since the defendant operates and has its registered office in the 
Republic of Austria. It further submits that it does not provide banking services in 
Croatia, the Republic of Austria having been the place where the loan was 
exclusively managed and signed and where the amount of the loan was actually 
paid out. All of those claims, together with the contention as to the lack of 
territorial jurisdiction of the referring court, were dismissed as unfounded by that 
court by orders of 22 February 2019, which have now become final. 
Consequently, at this stage of the proceedings, it is established that the referring 
court has jurisdiction to decide on the application of the rules of Croatian law and 
of the EU acquis. It is also established that the credit agreements at issue were 
concluded before the entry into force of the Zakon o potrošačkom kreditiranju 
(Law on consumer credit, Narodne novine (Croatian official state gazette) 
numbers 75/09, 112/12, 114/13, 147/13, 09/15, 78/15 and 102/15; ‘Law on 
consumer credit’). 
The matter in dispute between the parties is the determination of the territory in 
which the credit transactions were principally concluded, and this forms part of 
the facts of this case. That the defendant held no authorisation from the Central 
Bank of Croatia to conclude credit transactions or grant consumer credit is not in 
dispute, although it is the defendant’s contention that it did not need any such 
R. D. AND A. D. 
 
3 
authorisation because it carried on its credit activities not in the territory of 
Croatia but in the territory of the Republic of Austria.  
By document of 18 August 2016, applicant No 1 proposed that the referring court 
make a request for a preliminary ruling on the interpretation of EU law, that 
proposal having been supported by applicant No 2 acting through his 
representative and accepted by the referring court. 
– statement of the grounds for making the request for a preliminary ruling – 
The grounds given by applicant No 1, acting through his representative, for 
making the aforementioned proposal are, in essence, as follows: ‘Article 169 in 
conjunction with Article 114 TFEU provide for a high level of consumer 
protection. Directive 2011/83/EU of the European Parliament and of the Council 
of 25 October 2011 on consumer rights, amending Council Directive 93/13/[E]EC 
and Directive 1999/44/EC […] was adopted against the background of the 
increase in business opportunities in many Member States and, in particular, the 
fact that small and medium-sized enterprises and individual traders must comply 
with the provisions on consumer protection. That directive was also adopted with 
a view to ensuring and increasing legal certainty for both consumers and traders. 
The preamble to that directive states that the definition of ‘consumer’ must cover 
natural persons who are acting outside their trade, business, craft or profession. 
Directive 2014/17/EU of the European Parliament and of the Council of 4 
February 2014 on credit agreements for consumers relating to residential 
immovable property and amending Directives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010, which was adopted in accordance with Article 
114 of the TFEU, [...] expressly regulates consumer protection across the entire 
spectrum of the EU mortgage credit market, including the conduct of those 
involved in the conclusion of such agreements, such as credit intermediaries and 
non-credit institutions. That directive was transposed into Croatian law [...] by the 
Law on consumer credit. Other problems addressed by that directive are the 
ineffectiveness or inconsistency of the regimes applicable to credit intermediaries 
and non-credit institutions that provide credit for residential immovable property 
but do not at the same time verify the solvency of customers or provide the latter 
with adequate information on the legal consequences of the agreements 
concluded. 
– statement of the content of the national legislation applicable to the   
dispute – 
1. Articles 1, 6, 102 and 103 of the Zakon o zaštiti potrošača (Law on 
consumer protection, Narodne novine numbers 79/07 and 125/07; 
‘Law on consumer protection’), the law in force at the time when the 
credit agreements at issue were concluded; 
Article 1 of the Law on consumer protection provides: ‘This Law 
governs the protection of the basic rights of consumers in connection 
REQUEST FOR A PRELIMINARY RULING OF 25.3.2019 — CASE C-277/19 
 
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with the purchase of goods and services with other forms of 
acquisition of goods and services on the market, including: 
1. the right to the protection of the economic interests of consumers, 
2. the right to protection from threats to life, health and property, 
3. the right to legal protection for consumers, 
4. the right to consumer education and information, 
5. the right of consumers to organise themselves for the protection 
of their interests, 
6. the right to consumer representation and to participation by 
consumer representatives in the activities of the authorities that 
adjudicate on matters of interest to consumers.’ 
Article 6 of the Law on consumer protection provides that ‘contract 
terms which are contrary to the provisions of this law shall be void’. 
Article 102 of the Law on consumer protection provides: 
‘(l) Any unfair contract term shall be deemed void. 
(2) The nullity of a specific contract terms shall not entail the 
annulment of the contract itself if the latter can continue in being 
without the void term.’ 
Article 103 of the Law on consumer protection provides that: ‘(1) Any 
authorised person shall be entitled to seek from the courts an 
injunction prohibiting the use of a particular contract term in standard 
contracts which is unfair within the meaning of this Chapter of the 
Law, whether or not those terms infringe the rights and interests of 
consumers in the Republic of Croatia or in some Member State of the 
European Union. (2) The proceedings referred to in paragraph 1 of this 
article may be initiated against individual traders or a group of traders 
from the same economic sector who use certain unfair terms in their 
standard contracts, against chambers of commerce and other 
associations of traders that promote the use of certain unfair terms and 
against authors of codes of commercial conduct who promote the use 
of unfair contract terms.’ 
2. Article 3(1)(a) of the Law on consumer credit provides: ‘This Law 
shall not apply to: a) credit agreements the total amount of credit under 
which exceeds Kuna 1 000 000.00’. 
3. Articles 1(1), points 1 and 2, and (2), 2 and 28(1), (2), (3), (4), (5) and 
(6) of the Zakon o deviznom poslovanju (Law on foreign exchange) 
R. D. AND A. D. 
 
5 
(Narodne novine numbers 96/03, 140/05 and 132/06; ‘ZDP’) were in 
force at the time when the legal acts at issue were concluded. Article 
1(1), points 1 and 2, and (2) of the ZDP provide: 
‘1. This Law governs: 
1. transactions between residents and non-residents which are concluded 
by foreign means of payment and in Kunas; 
2. transactions between residents which are concluded by foreign means 
of payment; 
(2) The transactions referred to in paragraph 1 of this article include current 
payments and movements of capital and their execution by means of payment, 
collection or transfer. 
Article 2 
(1) In accordance with this Law, the following shall be considered to be 
residents: 
1. legal persons having their registered office in the Republic of Croatia, with 
the exception of their subsidiaries abroad; 
2. the subsidiaries of foreign companies and individual traders entered in a 
register managed by the competent State administration or authority in the 
Republic of Croatia; 
3. individual traders, craftspersons and other natural persons established or 
residing in the Republic of Croatia who are self-employed and perform the 
economic activity for which they were registered (‘individual operators’); 
4. natural persons residing in the Republic of Croatia; 
5. natural persons residing in the Republic of Croatia on the basis of a 
residence permit valid for a minimum period of 183 days; 
6. diplomatic and consular officials and other persons representing the 
Republic of Croatia abroad who are financed by the public budget, and other 
Croatian citizens employed in Croatian representations, as well as members of 
their families. 
(2) Any other person not mentioned in paragraph 1 of this article shall be 
considered to be non-resident.’ 
Article 28 of the ZDP provides: 
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‘(1) Banks may conclude credit transactions with non-residents in their own 
name and on their own behalf, in their own name and on behalf of the customer 
and in the name of the customer and on behalf of the customer. 
(2) Residents having the status of legal persons or individual operators under 
this Law may conclude credit transactions with non-residents in their own name 
and on their own behalf and in their own name and on behalf of the customer. 
(3) Other residents may conclude credit transactions with non-residents in their 
own name and on their own behalf. 
(4) Residents shall transfer the funds from financial credits granted abroad to an 
account in a bank established in the Republic of Croatia or to an account abroad, 
in accordance with Article 29 of this Law. Exceptionally, residents may use banks 
abroad for financial credits from abroad, provided that the credit agreement 
stipulates that payment for goods and services is to be made directly to the 
supplier [of the goods] or the provider of the service or that the financial credit is 
to be used to repay another loan previously granted abroad (refinancing). 
(5) When granting credits and issuing guarantees and sureties in the name of 
non-residents, residents shall ensure that those instruments come with the 
guarantees necessary to support the credit transaction, guarantee and surety 
offered.  
(6) The grant to non-residents of financial credits with a maturity of less than a 
year is prohibited. That prohibition shall not apply to banks, to residents granting 
financial credits to non-residents in connection with direct investments in capital 
instruments or to residents granting financial credits to non-residents to whom 
they are related (spouses, parents, children, brothers, sisters).’ 
4. Article 4 of the Zakon o obveznim odnosima (Law relating to obligations) 
(Narodne novine numbers 35/05, 41/08, 125/11 and 78/15; ‘ZOO’) provides that: 
‘When creating obligations and exercising the rights and obligations arising from 
such obligations, the parties shall act in accordance with the principles of good 
faith and loyalty.’ Article 10(2) and (3) of the ZOO provides: ‘When exercising 
obligations relating to their professional activities, the parties to the obligational 
relationship shall act with utmost diligence, in accordance with the rules and 
practices of the profession (diligence of a good professional). When exercising 
their rights, the parties to the obligational relationship shall refrain from engaging 
in action that might make it difficult for the other party to discharge its 
obligations.’  
5. Article 2(1), (2) and (3) of the Zakon o kreditnim institucijama (Law on 
credit institutions) (Narodne novine numbers 117/08, 74/09, 153/09, 108/2012, 
54/2013 and 159/2013; ‘Law on credit institutions’) provides that: ‘Credit 
institutions are legal persons which have obtained authorisation to operate from 
the competent authority and whose business is the receipt of deposits or repayable 
funds from the public and the grant of credits on their own behalf. (2) Credit 
R. D. AND A. D. 
 
7 
institutions established in the Republic of Croatia may, subject to the conditions 
laid down in this Law, set themselves up as: banks, savings banks or housing 
savings banks. (3) For the purposes of this Law, the term “credit institution”, 
when not accompanied by the expression “of a Member State” or “of a third 
country”, refers to a credit institution which is established in the Republic of 
Croatia and has been authorised to operate by the Central Bank of Croatia. 
Exceptionally, for the purposes of this Title, the term “credit institution” shall be 
used to refer to all credit institutions irrespective of the country in which they are 
established. For the purposes of Title XXIII, “Supervision on a consolidated 
basis”, the term “subsidiary credit institution” shall be used in connection with 
any credit institution having the status of a subsidiary credit institution, 
irrespective of the country in which it is established.’ Article 5(1), points 1 and 2, 
of the Law on credit institutions provides: ‘For the purposes of this Law, the 
following shall be considered to be basic financial services: the receipt of deposits 
or other repayable funds, the grant of credits and loans, including consumer 
credits and loans and mortgage credits and loans, where permitted by a specific 
law.’ 
QUESTIONS REFERRED FOR A PRELIMINARY RULING 
I) What is the scope and extent of the consumer protection granted by 
Directive 2[0]11/83/[EU] of the European Parliament and of the 
Council of 2[5] October 2011 on consumer rights, amending Council 
Directive 93/13/EEC and Directive 1999/44/EC [of the European 
Parliament and of the Council and repealing Council Directive 
85/577/EEC and Directive 97/7/EC of the European Parliament and of 
the Council], and by Directive 2[0]14/17/EU of the European 
Parliament and of the Council of 4 February 2014 on credit agreements 
for consumers relating to residential immovable property and 
amending Directives 2008/48/EC and 2013/36/EU and Regulation 
(EU) No 1093/2010? 
II) Are the applicants consumers within the meaning of the provisions of 
Directive 2011/83/EU of the European Parliament and of the Council 
of 25 October 2011 [on consumer rights], amending Council Directive 
93/13/EEC and Directive 1999/44/EC [of the European Parliament and 
of the Council and repealing Council Directive 85/577/EEC and 
Directive 97/7/EC of the European Parliament and of the Council], and 
Directive 2[0]14/17/EU of the European Parliament and of the Council 
of 4 February 2014 on credit agreements for consumers relating to 
residential immovable property and amending Directives 2008/48/EC 
and 2013/36/EU and Regulation (EU) No 1093/2010, account being 
taken of the fact that the defendant denies the applicants the status of 
consumer? 
III) Are the national provisions contained in Article 3(1)(a) of the Law on 
consumer credit […] at odds with the provisions contained in Article 4 
REQUEST FOR A PRELIMINARY RULING OF 25.3.2019 — CASE C-277/19 
 
8  
of Directive 2014/17/EU of the European Parliament and of the 
Council of 4 February 2014 [on credit agreements for consumers 
relating to residential immovable property and amending Directives 
2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010], and 
Article 3 of Directive 2008/48/EC, and with the remaining consumer 
protection objectives and purposes established in the preamble to 
Directive 2014/17/EU, in so far as they fix the maximum limit for 
consumer protection at a certain amount, namely Kuna 1 000 000? 
IV) [Must] Article 5(1) of Directive 2014/17/EU of the European 
Parliament and of the Council of 4 February 2014 [on credit 
agreements for consumers relating to residential immovable property 
and amending Directives 2008/48/EC and 2013/36/EU and Regulation 
(EU) No 1093/2010] be interpreted […] as meaning that a situation in 
which the defendant is a credit cooperative registered in the Republic 
of Austria which held no authorisation from the Central Bank of 
Croatia to grant consumer credit in 2007 and 2008, nor any special 
authorisation from the Ministry of Finance in accordance with Article 
22 of the ZPP, and does not have a registered representative or a 
subsidiary in the Republic of Croatia, constitutes a ground for a 
declaration as to the nullity of the credit agreement and an 
infringement of the provisions of that directive because that situation 
has the (potential) effect of directly jeopardising the rights of 
consumers who are natural persons in the territory of the Republic of 
Croatia, in so far as the defendant was not subject to the supervision 
provided for in law for the purpose of protecting consumers and 
establishing uniform rules and criteria for the grant of consumer credit 
in the case of mortgage credits, as mentioned in the preamble to 
Directive 2014/17/EU of the European Parliament and of the Council 
of 4 February 2014? 
V) May the view be taken that this is a situation in which there is an 
infringement of Articles 18, 19 and 20 of Directive 2014/17/EU, 
account being taken of the fact that the principles of good faith and 
loyalty constitute a legal standard, which is to say that, at the time 
when the credit agreement was concluded, an infringement of the 
aforementioned directive occurred, given that the credit was granted at 
an actual interest rate of 9.4 %, while the defendant grants domestic 
consumers of Austrian nationality an interest rate of 4 % ― Article 
1000 of the ABGB (Allgemeines bürgerliches Gesetzbuch, Austrian 
Civil Code) ―, and given, moreover, that that this is a variable rate, 
meaning that the defendant, as a credit institution, changes it 
unilaterally, and that the defendant grants credit only on the basis of a 
mortgage? 
VI) May the view be taken that there has been an infringement of the 
provisions of Directive 2014/17/EU in conjunction with Directives 
R. D. AND A. D. 
 
9 
2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, 
account being taken of the provisions of Articles 2 and 5(1), point 2, of 
the Law on credit institutions, if the defendant, as a credit institution, is 
allowed to grant consumer credit to Croatian citizens in the territory of 
the Republic of Croatia without authorisation from or supervision by 
the national authorities, and may the view be taken that, in such a 
situation, the aforementioned national provisions do not afford 
adequate protection  to natural persons who are consumers in the 
manner prescribed in Article 5 of Directive 2014/17/EU ― competent 
authorities ―, and that the defendant did not act in accordance with 
the principles of good faith and loyalty provided for in Article 4 of the 
ZOO, meaning that the provisions of the credit agreement are therefore 
void? 
VII) [Was there] a formal defect in the conclusion of the credit agreement, 
which is to say that, in the main proceedings, there was an 
infringement of Articles 13, 14 and 16 of Directive 2014/17/EU, 
inasmuch as clause A of the single-repayment credit agreement 
stipulates ― on page 2―: ‘Actual annual interest rate of 9,4 %. For 
the notional annual interest in the event of late repayment, see the 
counter notice’? 
VIII) May the view be taken that, in a situation such as that in the main 
proceedings, there is an infringement of Articles 13, 14 and 16 of 
Directive 2014/17/EU, account being taken of the fact that the credit 
agreements at issue are pre-formulated standard contracts which are 
drafted by the defendant, printed in German and not fully translated 
into the applicants’ mother tongue, and the fact that the conclusion of 
the agreement is preceded by advertising via the defendant’s network 
of intermediaries (cooperative) in the Republic of Croatia, who, like 
the defendant, did not, in accordance with Croatian law, hold any 
authorisation from the Central Bank of Croatia to conclude credit 
transactions, nor any authorisation  from the Ministry of Finance to 
grant consumer credit in the territory of the Republic of Croatia? 
IX) May the view be taken that, in a situation [such as] that in the main 
proceedings, there is an infringement of the provisions of Directive 
2014/17/EU in conjunction with Directives 2008/48/EC and 
2013/36/EU and Regulation (EU) No 1093/2010, where the national 
provisions, that is to say Article 2(1), (2) and (3) and Article 5(1), 
points 1 and 2, of the Law on credit institutions allow the defendant, as 
a credit institution under Austrian law, to conclude consumer credit 
transactions for Croatian citizens in the territory of the Republic of 
Croatia without authorisation from the Croatian national supervisory 
authority, and may the view be taken that, in such a situation, those 
national provisions do not afford adequate protection to natural 
persons who are consumers in the manner prescribed in Article 5 of 
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Directive 2014/17/EU ― competent authorities ―, and that the 
defendant did not act in accordance with the principles of good faith 
and loyalty provided for in Article 4 of the ZOO, meaning that the 
provisions of the credit agreement are therefore void? 
X) Has the fact that, at the time when the 2007 and 2008 credit 
agreements were concluded, the Croatian legal system lacked any 
adequate implementing provisions laying down detailed rules 
governing the right, and the conditions applicable to the right, of 
Croatian citizens to incur debt abroad caused a significant imbalance in 
the position of borrowers, on the one hand, and banks, on the other, 
which is contrary to the provisions of Directive 2014/17/EU of the 
European Parliament and of the Council of 4 February 2014, in 
particular Article 13 thereof? 
Zadar, 25 March 2019. 
[…] 
[…]