Order;Information — ECLI:EU:C:2020:522
Date: 2020-07-02
Language of the case: Slovak
Court formation: Ninth Chamber
Subject matter: Consumer protection;Approximation of laws
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - inadmissible
Origin: Slovakia

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Translation  C-853/19 - 1 
Case C-853/19 
Request for a preliminary ruling 
Date lodged: 
22 November 2019 
Referring court: 
Okresný súd Poprad (Slovakia) 
Date of the decision to refer: 
25 September 2019 
Applicant: 
IM 
Defendant: 
Sting Reality s.r.o. 
      
(Omissis) 
O R D E R 
The Okresný súd Poprad (Poprad District Court, Slovakia), in the proceedings: 
IM, ... [date of birth], residing at ... [residential address] Poprad, ... (the 
applicant) v  STING Reality, s.r.o., with its seat at .... [address of the seat] 
Žilina, ... (the defendant), seeking a declaration of the invalidity of a contract 
plus interest and charges,  
has decided as follows: 
I.  The following questions are referred to the Court of Justice of the European 
Union for a preliminary ruling: 
I.   Must Directive 2005/29/EC of the European Parliament and of the Council 
of 11 May 2005 concerning unfair business-to-consumer commercial 
EN 
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practices in the internal market and amending Council Directive 
84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the 
European Parliament and of the Council and Regulation (EC) No 2006/2004 
of the European Parliament and of the Council (‘Unfair Commercial 
Practices Directive’) be interpreted to the effect that factual circumstances, 
such as those in the present case, in which a natural person who finds 
himself in financial difficulties and under time pressure and whose intention 
is to obtain credit for retaining his ownership of immovable property, which 
constitutes his sole residence, is presented with a contract by a business 
providing credit which permanently deprives him of ownership of 
immovable property, even when the wish of that person was to transfer 
immovable property to the creditor only temporarily for the purposes of 
securing a credit contract, constitute an unfair commercial practice ? 
II. Is Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer 
contracts (‘Directive 93/13’) to be interpreted to the effect that, in the factual 
circumstances described in question I, a sales contract on the transfer of 
immovable property is subject to review by the court despite the credit 
business’s argument concerning individually-negotiated contractual terms if 
the business refuses to present to the court contracts in other cases for the 
purposes of ascertaining whether they are pre-formulated standard contracts 
used by the business in other cases? [Or. 2.] 
III. If the case is covered under Directive 93/13, is the situation prior to the 
conclusion of the contract also to be considered a relevant circumstance for 
the purposes of Article 4(1) of that Directive in such circumstances where 
the defendant business obtained personal data of the applicant without the 
applicant’s agreement?  
II. The proceedings are stayed. 
Grounds 
1 Mr IM (‘the applicant’) in the past had taken out several consumer loans from 
non-bank financial services companies. It appears that some of those loans contain 
unfair contract terms and their aim was to obtain unjust enrichment at Mr IM’s 
expense. It also appears that in providing the consumer credit, there may have 
been an infringement by the creditors of their obligations to exercise due diligence 
in assessing the ability of the applicant to repay the loans, since his monthly 
income is insufficient.  
2 Mr IM is an invalid pensioner with a serious disability and has a monthly income 
of EUR 205. In the light of his living expenses, he was unable to repay the loans. 
The creditors decided to sell Mr IM’s flat by ‘voluntary’ auction due to his non-
payment. Voluntary auction is a process in which the contractual terms are not 
assessed by a court but as a general rule by the credit businesses.  The mechanism 
of voluntary auctions and their compliance with the principle of equivalence and 
STING REALITY 
 
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effectiveness has also been assessed by the Court of Justice of the European 
Union from the perspective of whether they allow the rules of EU law to be 
circumvented [judgment of 10 September 2014, Kušionová] (C-34/13, 
EU:C:2014:2189). 
3 The flat in question is the applicant’s sole residence and it is apparent that the 
applicant was in extremely serious financial difficulty and was under very 
considerable time pressure. 
4 During the voluntary auction proceedings, an unidentified man approached the 
applicant and proposed the financial aid which could be offered by the defendant 
firm STING Reality s.r.o. (‘the defendant’ or ‘STING’) in the form of credit 
refinancing. Mr IM agreed to the financial aid offered by STING. That firm deals, 
inter alia, with the provision of credit and loans, forfaiting, factoring and real 
estate. 
5 Mr IM does not have any desire to permanently sell his flat, which is his sole 
residence. The aid for the applicant consisted in the conclusion of several 
contracts in the course of approximately three months, namely 1./ a contract of 29 
July 2015 on the organisation of the sale of the flat., 2./ a sale contract of 13 
August 2015 on the sale of the flat to STING for EUR 21 239.17, 3./ an agreement 
concerning reservation, a reservation contract of 13 August 2015 under which the 
flat is reserved for the applicant and the applicant can buy back his own flat until 
13 October 2015 for EUR 28 200 and after that date for EUR 32 000. Closing the 
process of the presentation of documents to the applicant is a document of 13 
August 2015, drawn up at a notary’s office, containing a declaration by the 
applicant that he will move out of the flat. 
6 In the course of the conclusion of the contracts, which took place over a duration 
of approximately half a month, a possibility was agreed upon for the applicant to 
buy back his own flat, albeit for a fundamentally higher price. The increase in that 
price in three months in relation to the sale price represents more than 
EUR 10 000, which calculated in percentage terms represents an almost 50% 
increase. Furthermore, STING paid Mr IM only EUR 4 600 from the sale price. 
STING retained EUR 3500 for ‘acting as an intermediary’ and paid the remainder 
of the sale price to a non-bank past creditor, all without there being any review by 
a court as to whether the contractual terms were unfair. [Or. 3] 
7 After the contract the applicant was left without a flat and without a basic part of 
the sale price for the flat, since that was handed over to the creditors at the 
defendant’s discretion. The applicant thus argues that the aid provided by the 
credit business should be deemed to consist in the refinancing of debts by means 
of a new bank loan. 
8 As a result of the sale contract Mr IM has ceased to be registered in the Land 
Register as the owner of the immovable property and the firm STING has 
requested him to move out of the flat. The applicant is an invalid pensioner with 
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an income which scarcely covers his living costs and with a serious disability and 
he did not obtain the work and income adequate to satisfy the financial claims of 
the defendant STING. 
9 The applicant submitted an application to the court seeking that the contract be 
declared invalid. He argues, inter alia, that his intention was to obtain financing to 
pay back his debts by using his immovable property as security on a temporary 
basis, and not to permanently divest himself of his flat, which is his sole 
residence. He found support for this in the agreement on buying back his flat. He 
claims that he entered into the contract in a non-business capacity and expected a 
service providing credit. He claims protection under the provisions on consumer 
protection as well as those on consumer credit. STING contends in defence that 
the sale contract was fully valid. It is apparent that the defendant considers the 
sale contract to have been individually negotiated and disagrees with the 
application of Directive 93/13 and of the law on consumer credit. 
10 National law 
Občiansky zákonník (Slovak Civil Code) 
Under Paragraph 52(1) of the Slovak Civil Code, any agreement, regardless of its 
legal form, concluded by a supplier with a consumer is a consumer contract. 
Under Paragraph 53(1) of the Slovak Civil Code, consumer contracts must not 
contain provisions which cause a significant imbalance in the rights and 
obligations of the parties to the contract to the detriment of the consumer (‘unfair 
terms’). That does not apply in the case of contractual terms which relate to the 
main object of the contract or the appropriateness of the price, where those terms 
are expressed precisely, clearly and intelligibly, or if the unfair terms have been 
individually negotiated. 
Under Paragraph 53(2) of the Slovak Civil Code, contractual terms which the 
consumer had an opportunity to become acquainted with before the signature of 
the agreement are not regarded as individually negotiated if he was unable to 
influence their content. 
Under Paragraph 53(3) of the Slovak Civil Code, if the supplier does not prove the 
contrary, contractual terms agreed between a supplier and a consumer are not 
regarded as individually negotiated. 
Under Paragraph 553(1) of the Slovak Civil Code, the temporary transfer to a 
creditor of a right of the debtor or of a third person may be used as security for the 
fulfilment of an obligation (‘a security right’). As regards a security right given on 
a right of ownership, ownership of the article transferred is temporarily transferred 
under the general provisions on the acquirement of ownership by means of a 
contract (Paragraph 133). 
STING REALITY 
 
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Under Paragraph 53(7) of the Slovak Civil Code, the provision of security for the 
fulfilment of obligations contained in a consumer contract by means of a security 
right is not permitted in consumer contracts. [Or. 4] 
Under Paragraph 588 of the Slovak Civil Code, a sale contract gives rise to an 
obligation on the seller to surrender the subject of the sale to the purchaser and to 
an obligation on the purchaser to accept receipt of the subject of the sale and to 
pay the seller the price agreed for it. 
Zákon č. 250/2007 Z. z. o ochrane spotrebiteľa (Law No 250/2007 on consumer 
protection) 
Aggressive commercial practices 
Under Paragraph 9 of Law No 250/2007 on consumer protection, in the 
determination of whether harassment, coercion, including the use of physical 
force, or undue influence are used in an aggressive commercial practice, account 
shall be taken of: 
(a) its timing, location, nature or persistence; 
(c) the exploitation by the trader of any specific misfortune or 
circumstance of such gravity as to impair the consumer’s judgement, of 
which the trader is aware, to influence the consumer’s decision with regard 
to the product; 
(d) burdensome or unfair non-contractual barriers put in place by the 
trader if the consumer wishes to exercise his or her rights under the contract, 
including the right to terminate the contract or to change the product or 
trader.  
Information obligations 
Under Paragraph 10a(1)(a) of Law No 250/2007 on consumer protection, before 
the conclusion of the contract or, if the contract is concluded on the basis of the 
consumer’s order, before the consumer submits the order, the trader is required to 
notify the consumer by a clear and comprehensible means, where such 
information is not obvious having regard to the character of the product or service, 
of the main characteristics of the product or the character of the service, to an 
extent appropriate to the product or service. 
11 EU law 
Charter of Fundamental Rights of the European Union 
Under Article 47 of the Charter of Fundamental Rights of the European Union, 
everyone whose rights and freedoms guaranteed by the law of the European Union 
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are violated has the right to an effective remedy before a tribunal in compliance 
with the conditions laid down in that article. 
Directive 2005/29/EC of the European Parliament and of the Council of 11 May 
2005 concerning unfair business-to-consumer commercial practices in the 
internal market and amending Council Directive 84/450/EEC, Directives 
97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the 
Council and Regulation (EC) No 2006/2004 of the European Parliament and of 
the Council 
Preamble: 
This Directive respects the fundamental rights and observes the principles 
recognised in particular by the Charter of Fundamental Rights of the European 
Union. In particular, this Directive seeks to ensure full respect for the rules on 
protection of personal data, the right to property, non-discrimination, protection of 
family and professional life, and consumer protection pursuant to the Charter of 
Fundamental Rights of the European Union. 
Under Article 2 
(a) “consumer” means any natural person who, in commercial practices 
covered by this Directive, is acting for purposes which are outside his trade, 
business, craft or profession; 
(c) “product” means any goods or service including immovable property, 
rights and obligations; [Or. 5] 
(d) “business-to-consumer commercial practices” (hereinafter also referred 
to as commercial practices) means any act, omission, course of conduct or 
representation, commercial communication including advertising and 
marketing, by a trader, directly connected with the promotion, sale or supply 
of a product to consumers; 
(e) “to materially distort the economic behaviour of consumers” means 
using a commercial practice to appreciably impair the consumer’s ability to 
make an informed decision, thereby causing the consumer to take a 
transactional decision that he would not have taken otherwise; 
(j) “undue influence” means exploiting a position of power in relation to 
the consumer so as to apply pressure, even without using or threatening to 
use physical force, in a way which significantly limits the consumer’s ability 
to make an informed decision; 
Under Article 5 
Prohibition of unfair commercial practices 
STING REALITY 
 
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1. Unfair commercial practices shall be prohibited. 
2. A commercial practice shall be unfair if: 
(a) it is contrary to the requirements of professional diligence, 
(b) it materially distorts or is likely to materially distort the economic behaviour 
with regard to the product of the average consumer whom it reaches or to 
whom it is addressed, or of the average member of the group when a 
commercial practice is directed to a particular group of consumers. 
Under Article 9 
Use of harassment, coercion and undue influence 
In determining whether a commercial practice uses harassment, coercion, 
including the use of physical force, or undue influence, account shall be taken of: 
(a)  its timing, location, nature or persistence; 
(c) the exploitation by the trader of any specific misfortune or 
circumstance of such gravity as to impair the consumer’s judgement, of 
which the trader is aware, to influence the consumer’s decision with regard 
to the product; 
Under Article 12 
Courts and administrative authorities: substantiation of claims 
Member States shall confer upon the courts or administrative authorities powers 
enabling them in the civil or administrative proceedings provided for in Article 
11: 
(a) to require the trader to furnish evidence as to the accuracy of factual 
claims in relation to a commercial practice if, taking into account the 
legitimate interest of the trader and any other party to the proceedings, such 
a requirement appears appropriate on the basis of the circumstances of the 
particular case; 
(b) to consider factual claims as inaccurate if the evidence demanded in 
accordance with (a) is not furnished or is deemed insufficient by the court 
or administrative authority. 
Council Directive 93/13/EEC on unfair terms in consumer contracts 
Under Article 3 
1. A contractual term which has not been individually negotiated shall be 
regarded as unfair if, contrary to the requirement of good faith, it causes a 
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significant imbalance in the parties’ rights and obligations arising under the 
contract, to the detriment of the consumer. [Or. 6] 
2. A term shall always be regarded as not individually negotiated where it 
has been drafted in advance and the consumer has therefore not been able to 
influence the substance of the term, particularly in the context of a pre-
formulated standard contract. [...] Where any seller or supplier claims that 
a standard term has been individually negotiated, the burden of proof in this 
respect shall be incumbent on him. 
The question referred for a preliminary ruling 
12 The issue before the court is an important one, namely whether there was in fact 
circumvention of a prohibited security right, that right in the present case being 
the applicant’s right to ownership of a flat. Questions are raised by the clause on 
the possibility for the applicant to buy back his flat at a higher price. Under the 
Slovak Civil Code, such a security right is nevertheless prohibited in relation to 
immovable property in consumer cases. It is noted that a contract creating a lien is 
generally of a standard type and that the immovable property is not sold on the 
date of the contract, which is possible in the case of the security right. 
13 Cases similar to that of the applicant are relatively common in practice and the 
notion has taken root, tacitly, in society’s subconscious, that such sale contracts 
are acceptable. Obviously however, it is not in the interest of citizens not acting in 
a business capacity to permanently divest themselves of ownership in their 
immovable property, in particular that which is their residence, but in court 
proceedings it is exceptionally difficult, if not impossible, to prove the real, credit-
granting, aim of the purchasing service under investigation if the contract is 
designated as a ‘sale contract’. 
14 If in the present case there is held to be a consumer contract and circumvention of 
a prohibited security right, then that conclusion will have an impact on the 
outcome of the dispute.  The defendant describes the sale contract as fully valid 
and denies that there was a consumer credit relationship. 
15 The referring court thus asks, first, whether the Unfair Commercial Practices 
Directive (2005/29), in particular Article 9 thereof, must be interpreted as 
meaning that circumstances such as that described in points 1 to 9 above satisfy 
the objective of the directive, that objective namely being to consider that practice 
a prohibited procedure, and even whether that practice constitutes an aggressive 
practice. The issue whether the applicant is a consumer under that directive is 
also of legal relevance and, if that is the case, the court must settle the issue of the 
prohibition on circumventing the security right, since in a consumer’s case use of 
a security right is forbidden. 
16 Secondly, the issue of the justification for the application of Directive 93/13 and 
its protective provisions is also of relevance. If it is to be applied, the applicant 
would have the status of a consumer, which has the same significance for the 
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purposes of the use of legal norms prohibiting the security right. In this 
connection, the court raises the issue of the interpretation of the Directive having 
regard to the fact that the defendant refused to submit contracts concluded with 
other natural persons not acting in a business capacity. On that basis, the court 
tends towards a finding that the case concerns pre-formulated standard contracts 
under Directive 93/13 and thus also the provision of consumer services. Article 
12(b) of Directive 2005/29 makes express provision for the consequences of the 
submission of insufficient evidence. 
17 The court considers the interpretation of EU law to be important with respect to 
the issue of whether there is a consumer relationship. If there is such a 
relationship, the court would have to deal with the issue of whether in fact there 
was circumvention of a prohibited security right and, if that was the case, to thus 
infer the consequences associated with the prohibition of a security right given on 
a right of ownership in the context of a consumer relationship.  [Or. 7] 
18 For the above reasons, the court, under Paragraph 162(1)(c) of the Civilný 
sporový poriadok (Slovak Code of Civil Procedure), has stayed the proceedings 
and refers the case to the Court of Justice of the European Union. 
(Omissis) [reference to the impossibility of bringing an appeal] 
Poprad, 25 September 2019 
(Omissis) [Judge’s name and signature] 
(Omissis)