Provisional text

OPINION OF ADVOCATE GENERAL

MEDINA

delivered on 12 January 2023( )

Case C‑598/21

SP,

CI

v

Všeobecná úverová banka a.s.

(Request for a preliminary ruling from the Krajský súd v Prešove (Regional Court, Prešov, Slovakia))

(Reference for a preliminary ruling – Consumer protection – Charter of Fundamental Rights of the European Union – Articles 7, 38 and 47 – Directive 93/13/EEC – Article 1(2) – Accelerated repayment clause of a loan contract – Term reflecting a mandatory statutory provision – Article 3(1), Article 4(1) and Article 7(1) – Security for credit in the form of a charge on immovable property – Consumer’s main residence – Enforcement of the charge by means of a sale by auction – Effective judicial remedy – Unfair commercial practices – Directive 2005/29/EC – Chain of credit contracts intended to reimburse an existing debt – Directive 2008/48/EC – Consumer credit – Scope – Circumvention – Determination of the total amount of the debt)





I. Introduction

1. Since the financial crisis, EU law has provided a more robust framework for consumer protection in the field of credit secured by immovable property. ( ) Meanwhile, the Court has developed an important line of case-law on the procedural protection of consumers which is also reflected in the field of housing repossession proceedings. That case-law reflects the constitutionalisation of consumer contract law. ( ) The secondary legislation serving as the ‘nexus’ ( ) between procedural law, consumer law and the Charter of Fundamental Rights of the European Union (‘the Charter’) is Directive 93/13/EEC. ( )

2. In the field of enforcement proceedings against immovable property which is the residence of the consumer, the Court examined, in the judgment of 10 September 2014, Kušionová (C‑34/13, EU:C:2014:2189; ‘judgment in Kušionová’) the compatibility of Slovak law on extrajudicial enforcement proceedings with Directive 93/13. The present reference for a preliminary ruling is essentially a continuation of that judgment. The referring court invites the Court to explore further the link between enforcement proceedings, consumer law and fundamental rights as enshrined in the Charter.

3. More specifically, by its request for a preliminary ruling, the Krajský súd v Prešove (Regional Court, Prešov, Slovakia) raises the issue of the powers of the courts to assess the proportionality of accelerated enforcement of a credit loan in the context of out-of-court enforcement proceedings. It also raises the question of the compatibility with Directive 2005/29/EC ( ) of a banking practice consisting in the conclusion of new credit contracts whereby most of the funds are not disbursed to the consumer but are intended to repay older loans, as well as the implications of that practice with regard to the determination of the scope of Directive 2008/48/EC. ( )

II. Legal Framework

A. European Union law

Directive 93/13

4. Article 1(2) of Directive 93/13 provides:

‘The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive.’

5. Article 3(1) of that directive is worded as follows:

‘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 significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’

6. Article 4(1) of that directive provides:

‘Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.’

7. Article 7(1) of Directive 93/13 states:

‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’

Directive 2005/29

8. Article 3(1) of Directive 2005/29, entitled ‘Scope’, provides:

‘This Directive shall apply to unfair business-to-consumer commercial practices, as laid down in Article 5, before, during and after a commercial transaction in relation to a product.’

9. Article 5(1) and (5) of that directive provides:

‘1. Unfair commercial practices shall be prohibited.

…

5. Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. The same single list shall apply in all Member States and may only be modified by revision of this Directive.’

Directive 2008/48

10. Recital 14 of Directive 2008/48 is worded as follows:

‘Credit agreements covering the granting of credit secured by real estate should be excluded from the scope of this Directive. That type of credit is of a very specific nature. Also, credit agreements the purpose of which is to finance the acquisition or retention of property rights in land or in an existing or projected building should be excluded from the scope of this Directive. …’

11. Article 2 of Directive 2008/48, headed ‘Scope’, provides in paragraph 2:

‘This Directive shall not apply to the following:

(a) credit agreements which are secured either by a mortgage or by another comparable security commonly used in a Member State on immovable property or secured by a right related to immovable property;

…’

12. Article 22(3) of Directive 2008/48 is worded as follows:

‘Member States shall further ensure that the provisions they adopt in implementation of this Directive cannot be circumvented as a result of the way in which agreements are formulated, in particular by integrating drawdowns or credit agreements falling within the scope of this Directive into credit agreements the character or purpose of which would make it possible to avoid its application.’

B. National law

13. Paragraph 565 of the Občiansky zákonník (Civil Code) provides as follows:

‘In the event of enforcement of a claim by means of instalments, the creditor may not ask for the payment of the entire claim for failure to comply with any monthly instalment unless this was agreed between the parties or provided in a decision. The creditor may, however, exercise that right at the latest until the date of expiry of the first following instalment.’

14. Paragraph 53 of the Civil Code governs unfair terms in consumer contracts. Its subparagraph 9 is worded as follows:

‘In the event of enforcement by means of payment of instalments of a contract concluded with a consumer, the professional may exercise the right which is conferred by Paragraph 565 of the Civil Code at the earliest three months after the delay of payment of one instalment and when he or she has notified the consumer at least 15 days before the exercise of that right.’

15. Paragraph 151j(1) of the Civil Code states:

‘Where a debt secured by a charge is not fully settled in due time, the secured creditor may commence enforcement of the charge. In enforcing the charge, the secured creditor may obtain settlement of the debt by the means specified in the contract or by sale of the security at auction pursuant to a specific law, … or he or she may seek settlement of the debt by the sale of the security pursuant to specific statutory provisions, … unless otherwise provided for by this law or a specific law.’

16. The referring court states that there is a footnote to that paragraph, inserted after the words ‘pursuant to a specific law’, which refers to Zákon 527/2002 Z.z. o dobrovoľných dražbách a o doplnení zákona Slovenskej národnej rady č. 323/1992 Zb. o notároch a notárskej činnosti (Notársky poriadok) v znení neskorších predpisov (Law No 527/2002 on Voluntary Auctions and supplementing Law No 323/1992 of the Slovak National Council on notaries and notarial activity (the Notarial Code), as amended (‘the Law on Voluntary Sale by Auction’), and a further footnote, after the words ‘specific statutory provisions’, which refers to the Code of Civil Procedure and to the Rules on Enforcement.

17. Paragraph 151m(1) and (2) of the Civil Code provides:

‘(1) The secured creditor may sell the security by the means specified in the charge agreement or at auction at the earliest 30 days from the date of the notice to the guarantor and debtor of the commencement of enforcement of the charge, where the debtor and the guarantor are not one and the same person, unless otherwise provided for by a specific law. …

(2) The guarantor and the secured creditor may, after notice of the commencement of enforcement of the charge, agree that the secured creditor is authorised to sell the security by the means agreed upon in the charge agreement or at auction even before the expiry of the period prescribed in subparagraph (1).’

18. In Paragraph 6 thereof, the Law on Voluntary Sale by Auction defines the auctioneer as ‘the person who organises the auction and meets the conditions laid down in this specific law authorising that person to conduct such business’. Paragraph 7(1) of that law defines the person requesting sale by the auction as the owner of the subject matter of the sale, the secured creditor or any other person who is authorised to request that a sale by auction be held under a specific law.

19. As regards, more specifically, the secured creditor, Paragraph 7(2) of the Law on Voluntary Sale by Auction states that such a person is required to declare in writing, not only that the subject matter of the sale may be sold at auction, but also the amount of the debt in respect of which an application for enforcement of the charge has been made under that law and that the debt is genuine and payable.

20. According to Paragraph 16(1) of that law, a sale by auction may be proceeded with only on the basis of a signed agreement between the person initiating the sale and the auctioneer.

21. Under Paragraph 17 of the Law on Voluntary Sale by Auction, the auctioneer is required to announce the sale by auction by publishing a notice. If the item put up for auction is an apartment, a house or other building, an undertaking or part of an undertaking, or if the lowest bid is greater than EUR 16 550, the auctioneer is to publish the notice of public auction at least 30 days before the auction begins and, without undue delay, forward the notice of public auction to the Ministry for publication in the Obchodný vestník (Official Trade Journal).

22. Paragraph 21(2) of the Law on Voluntary Sale by Auction provides that in the event of infringement of the provisions thereof, any person who considers himself or herself adversely affected may apply to the court for a declaration that the sale by auction is void. The right to apply to the court lapses, however, if it is not exercised within three months following the public auction, unless the grounds on which annulment is sought relate to the commission of a criminal offence and the sale concerns a house or an apartment in which the previous owner was officially permanently resident.

23. According to Article 325(1) of Zákon 160/2015 Z.z. Civilný sporový poriadok (Law 160/2015 on the Code of Civil Procedure), the court may grant interim relief where it is necessary temporarily to adjudicate on the relations between the parties or where there is a risk of the enforcement of the judgment being undermined. According to Article 325(2)(d) of the Code of Civil Procedure the court may impose interim measures on a party, in particular in order ‘for it to take action, for it to abstain from taking action or for it to allow action to be taken’.

24. Paragraph 63(3) of Zákon 233/1995 Z.z. Exekučný poriadok (Law 233/1995 on the Enforcement Code) provides as follows:

‘The enforcement by means of sale of real estate in which the debtor has his or her main or temporary residence within the meaning of paragraph 2 can only take place exceptionally, after approval by the court, if against the person concerned there are various enforcement proceedings related to debts of which the total amount exceeds EUR 2 000 and the auctioneer demonstrates the debt may not be enforced in a different way’.

III. The dispute in the main proceedings and the questions referred for a preliminary ruling

25. On 9 February 2012 Ms SP and Mr CI concluded with the defendant, the Všeobecná úverová banka, a.s.. (‘VÚB Banka’) a consumer credit loan, entitled ‘Hypo Pôžička’, which amounted to EUR 30 221.50 for a period of 20 years up to 2032 (‘the loan at issue’). The purpose of the loan at issue was not set out in the loan agreement.

26. VÚB Banka used almost the entire loan at issue to repay previous consumer loans granted since 2004, either by VÚB Banka or by the company with which the latter was economically linked in the past, namely Consumer Finance Holding a.s. (‘CFH’). The applicants in the main proceedings (‘the applicants’) took out their first loan with CFH back in 2004 still in the former currency, of 18 000 Slovak koruna (SKK) (EUR 597.49). Subsequently, other consumer credit was taken out. The applicants were not able to repay the loans. VÚB Banka therefore granted them new loans, not paying them to the applicants but using them directly for the repayment of the claims arising from the earlier consumer credit. VÚB Banka unilaterally fixed the amount of the debts. VÚB Banka also used part of the loan at issue for its own benefit in order to reimburse costs related to the granting of that loan.

27. The special feature of the loan at issue is that it is secured by a charge on immovable property – a house in which the applicants and other persons have their home. Following the grant of the loan at issue the applicants defaulted on the payment of instalments amounting to EUR 1 106.50. On the ground of default, VÚB Banka called in the totality of the loan on January 2013. The contractual terms of the loan at issue provided for the lender’s right to trigger the accelerated repayment procedure and declare due for repayment the whole of the loan. The referring court explains that Slovak law provides for a single condition for triggering that right, namely default on payment of three months of instalments, and observance by the creditor of an additional period of 15 days’ notice.

28. On 12 April 2013, VÚB Banka served notice of enforcement of the charge in the form of a voluntary auction for the sale of the applicants’ house, the value of which is at least 30 times higher than the sum for which the bank had initiated the accelerated repayment procedure of the loan and the subsequent sale of the house.

29. The applicants brought an action before the Okresný súd v Prešov (District Court, Prešov, Slovakia) for an injunction prohibiting enforcement of the charge by way of voluntary auction. The applicants alleged that VÚB Banka, inter alia, infringed their rights guaranteed by EU law in the field of consumer credit. By a first judgment, the Okresný súd v Prešov (District Court, Prešov) dismissed the action considering, in essence, that there were no obstacles to the sale of the applicants’ house in the context of an extrajudicial procedure.

30. On appeal by the applicants, the referring court set aside the judgment at first instance. It found that the voluntary auction of the applicants’ house was disproportionate, since there was another means of enforcing the charge, in the context of judicial enforcement proceedings in which VÚB Banka’s claim could be satisfied without loss of home ownership by the applicants.

31. In a second judgment, the Okresný súd v Prešov (District Court, Prešov) again dismissed the action. It referred to the judgment in Kušionová . According to the interpretation of that judgment by that court, even unfair contract terms do not preclude the applicants’ home from being sold in the context of an extrajudicial enforcement process. That court applied, in that regard, the case-law of the Najvyšší súd Slovenskej republiky (Supreme Court of the Slovak Republic) which according to the referring court, rejected the ex ante judicial protection of consumers that would consist in the suspension of the extrajudicial sale of their home by voluntary auction without limitation in time.

32. The applicants again brought an appeal before the referring court seeking an injunction against enforcement of the charge by voluntary auction. They invoked, inter alia, infringement of their rights as consumers and infringement of their right to accommodation in the event of the sale of their house.

33. The referring court explains that there is no explicit requirement under Slovak law, in connection with the accelerated enforcement of a charge, to have regard to the proportionality of the enforcement and to apply the criteria which the Court set out in paragraph 73 of the judgment in Aziz. ( ) More particularly, it states that Slovak legislation allows the accelerated repayment procedure without examination of the question whether the consumer has failed to fulfil an obligation which is of essential importance, whether such a breach is sufficiently serious in the light of the term and the amount of the loan and whether national law provides for adequate and effective means enabling the consumer to remedy the effects of the loan being called in.

34. The referring court then clarifies that Slovak legislation provides for two methods of enforcement of a charge. The first is the sale of the pledged property by means of a voluntary auction. That sale is carried out by a private person, a trader. The creditor unilaterally determines the amount of the claim. Another trader – the auctioneer – normally sells the consumers’ home without pursuing judicial proceedings and without any objective assessment of the amount of the claim and of the proportionality of the sale by auction of the consumer’s home. Despite the consumers’ opposition, the law describes that auction as ‘voluntary’.

35. The second method of enforcement is the one provided for by Law 233/1995 on the Enforcement Code. That procedure is preceded by a judicial review of the terms of the contract. The courts may authorise repayment in instalments and they must raise of their own motion the legislation on consumer protection. The creditor may pursue enforcement having resort to a bailiff, who may also authorise repayment in instalments. In the context of judicial enforcement proceedings it is thus possible to adjust the level of the initial credit instalments of long-term loans until the end of the credit period. Accordingly, the creditor may have his or her debt satisfied within the timeline agreed with the consumer while the consumer retains his or her home.

36. By contrast, the referring court considers that the procedure of sale by voluntary auction does not offer such guarantees. It may not be suspended while court proceedings on unfair contract terms are pending. Moreover, the post-auction proceedings seeking the invalidity of the auction, after the loss of rights of ownership, place a particularly high emotional strain on consumers.

37. The referring court takes the view that protection against disproportionate interference with consumers’ rights, including their right to a home, is particularly important before the auction is held. Since substantive law does not provide for any other possibility of ex ante protection, the only remaining option is an action for an injunction against enforcement of the charge during the voluntary auction.

38. With regard to the application of Directive 2005/29, the referring court observes that the loan at issue and earlier consumer credit loans were used to repay previous loans each time even though the applicants did not have sufficient income to repay them. The referring court considers that the circumstances in which the consumer credit at issue was concluded consist in unfair commercial practices which should fall within the scope of that directive.

39. With regard to the application of Directive 2008/48, the referring court notes that the single circumstance that could lead to the exemption of the loan at issue from the scope of that directive is the security over the immovable property. However, the true purpose of the security on the property is the repayment of the previous consumer credits. Under such circumstances, there is a close connection between the loan at issue and the earlier consumer credit for the repayment of which the loan at issue was agreed.

40. The referring court seeks finally to establish whether the approach adopted by the Court in the judgment of 21 April 2016, Radlinger and Radlingerová (C‑377/14, EU:C:2016:283; ‘judgment in Radlinger and Radlingerová’) is applicable in the present case.

41. In those circumstances, the Krajský súd v Prešove (Regional Court, Prešov) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1) Does Article 47 of the [Charter], in conjunction with Articles 7 and 38 thereof, [Directive 93/13], [Directive 2005/29] and the principle of effectiveness of EU law preclude legislation such as Paragraph 53(9) and Paragraph 565 of the Občiansky zákonník (Slovak Civil Code), pursuant to which in the event of accelerated repayment no account is taken of the proportionality of that transaction, in particular the gravity of the infringement by the consumer of his or her obligations in relation to the amount of the credit and its term?

(2) If the answer to Question 1 is in the negative (it is not precluded), the national court asks the following questions:

(2)(a) Does Article 47 the Charter, in conjunction with Articles 7 and 38 thereof, [Directive 93/13], [Directive 2005/29] and the principle of effectiveness of EU law preclude case-law which does not preclude the enforcement as to its substance of a charge by means of a private auction of immovable property, consisting of the home of consumers or of other persons and which simultaneously does not have regard to the gravity of the infringement by the consumers of their obligation in relation to the amount of the credit and its term, even where there is another way in which the credit provider’s claim may be satisfied through judicial enforcement, in the context of which the sale of the home over which the lien has been granted does not take precedence ?

(2)(b) Is Article 3(1) of [Directive 2005/29] to be interpreted as meaning that the protection of consumers against unfair commercial practices in the granting of credit to consumers extends to all forms of satisfaction of the credit provider’s claim, including the agreement on a new loan granted for repayment of the obligations arising from an earlier loan?

(2)(c) Is Directive [2005/29] to be interpreted as meaning that the conduct of a credit provider who repeatedly grants credit to a consumer who is incapable of repaying the credit such that the result is a chain of credit, which the supplier does not in reality pay to the consumer but itself receives for the repayment of the previous loans and the total costs on the credit, is also regarded as an unfair commercial practice?

(2)(d) Must Article 2(2)(a) of [Directive 2008/48], read in conjunction with recital 10 thereof, be interpreted as not excluding the application of that directive even in the case of [a] loan having all the characteristics of consumer credit, where the purpose of the loan has not been agreed upon, the entirety of which loan, with the exception of an insignificant part thereof, the credit provider used to ensure payment of previous consumer loans and as security for which a charge over immovable property was agreed upon ?

(2)(e) Is the [judgment in Radlinger and Radlingerová] to be interpreted as meaning that it also applies to a loan agreement granted to a consumer where, under that agreement, part of the credit granted was designated for the repayment of the credit provider’s costs?’

IV. The procedure before the Court of Justice

42. On 6 July 2022 the referring court, following the Court’s request, provided clarification by virtue of Article 101 of the Rules of Procedure of the Court of Justice.

43. Written observations have been submitted by VÚB Banka, the Slovak Government and the European Commission. At the hearing on 28 October 2022, oral argument was presented by the applicants, the Slovak Government and the Commission.

V. Assessment

Admissibility of the questions referred

44. VÚB Banka contends that the questions referred should be dismissed as hypothetical. In that regard, it puts forward various factual elements which, in its view, demonstrate that the consumer breached essential obligations of the contract and that the bank observed the principle of proportionality.

45. The Slovak Government and, essentially, the Commission submit that the first and second questions are inadmissible with regard to Directive 2005/29. They argue that the referring court did not set out the reasons which led it to ask the Court as to the manner in which that directive should be interpreted, but also the grounds making that interpretation necessary in order to decide the dispute in the main proceedings. More particularly, the Commission states that the referring court did not explain to what extent initiating the enforcement proceedings is liable to constitute an unfair commercial practice. The Commission states however that the referring court explains the relevance of the interpretation of Directive 2005/29 in the framework of the third and fourth questions.

46. It should be noted in that respect that, according to the Court’s settled case-law, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. ( )

47. In the first place, it should be noted that the first and the second questions referred relate, in addition to Directive 93/13, to Directive 2005/29. However, as was correctly pointed out by the Slovak Government and the Commission, the referring court merely refers to the latter directive in those questions without stating the reason why an interpretation of that directive is necessary for the resolution of the main proceedings. Moreover, it does not explain to what extent the procedure for enforcing the charge that is contested by the applicants may constitute an unfair commercial practice.

48. Therefore, I propose that the first two questions be answered solely in the light of the provisions of Directive 93/13.

49. In the second place, the fact that VÚB Banka contends that the enforcement of the charge is proportionate does not mean that those questions are hypothetical. The questions referred do not seek to ascertain whether the specific enforcement proceedings were proportionate – even if in the view of the referring court they are not – but seek to determine whether the creditor may de jure proceed with such enforcement in the absence of a statutory obligation of the courts to examine the proportionality of repossession. ( )

50. To that extent, the questions referred for a preliminary ruling are not hypothetical and the interpretation requested of the provisions of Directive 93/13 is necessary for the resolution of the main proceedings.

51. In the light of the foregoing, I take the view that the Court should find that the request for a preliminary ruling is admissible.

First question

52. By its first question, the referring court asks essentially whether Directive 93/13, read in the light of Articles 7, 38 and 47 of the Charter as well as the principle of effectiveness, is to be interpreted as precluding national legislation and more specifically Paragraph 53(9) of the Civil Code, read in the light of Paragraph 565 thereof, which allows the professional to trigger the accelerated repayment procedure in respect of the loan on account of the debtor’s failure to comply with his or her obligations during a limited specific period, without that right being subject to the requirement of proportionality, in particular with regard to the seriousness of the breach by the consumer of his or her obligations in relation to the amount of the credit and its term.

53. It is apparent from the order for reference that, under Paragraph 53(9) of the Civil Code, in the case of a consumer credit contract paid in instalments, the professional may call in the totality of the loan as provided for by Paragraph 565 of the Civil Code, if the parties have so agreed. The exercise of that right is conditional, on the one hand, on the lapse of a period of at least three months after the delayed payment of one instalment and, on the other hand, on prior notification to the consumer at least 15 days before enforcement.

54. As a preliminary point, it must be recalled that it follows from Article 1(1) of Directive 93/13 that the purpose of that directive is to approximate national provisions of the Member States relating to unfair terms in consumer contracts. As is apparent from Article 1(2) of that directive, read in the light of the thirteenth recital and Article 3(1) thereof, that directive is not intended to establish a review of national provisions as regards whether they are potentially disadvantageous for the consumer, but only a review of terms in consumer contracts which are not individually negotiated. ( )

55. In addition, in accordance with Article 1(2) of that directive, contractual terms which reflect mandatory statutory or regulatory provisions are not to be subject to the provisions of that directive.

56. In that regard, the Court has stated on several occasions that the exclusion from the scope of that directive in Article 1(2) is justified by the fact that it is legitimate to presume that the national legislature has struck a balance between all of the rights and obligations of the parties to certain contracts, a balance which the EU legislature has expressly intended to preserve. ( )

57. In the main proceedings, the provisions of national law, which are the subject of the reference for a preliminary ruling, are reflected by a clause in the consumer credit contract.

58. In that regard, it should be recalled that according to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it. ( )

59. Moreover, in its response to the request for clarification the referring court stated that it is favourable to a reformulation of the first question as seeking the interpretation of the concept of ‘unfair term’ used in Article 3(1) of Directive 93/13 and the criteria which the national court may or must apply when examining a contractual term which reflects the contested provisions of national law.

60. In those circumstances, in order to give a useful answer to the referring court, it seems necessary to reformulate the first question referred for a preliminary ruling. That question seeks, in essence, to ascertain whether Article 1(2) of Directive 93/13 is to be interpreted as meaning that that directive applies to a contractual term reflecting a provision of national law which allows the professional to trigger the accelerated repayment procedure in respect of the loan on account of the debtor’s failure to comply with his or her obligations during a limited specific period, without that right being subject to the requirement of proportionality. If that question is answered in the affirmative, the national court seeks to ascertain the criteria for the assessment of the potential unfairness of such a term according to Article 3(1) and Article 4 of Directive 93/13.

Whether the contested term reflects a ‘mandatory statutory or regulatory provision’ within the meaning of Article 1(2) of Directive 93/13

61. In order to determine, in the first place, whether the contested term reflects a ‘mandatory statutory or regulatory provision’ within the meaning of Article 1(2) of Directive 93/13, it should be recalled that that provision introduces an exclusion from the scope of Directive 93/13. As with all derogations and having regard to the purpose of that directive, namely the protection of consumers against unfair terms included in contracts concluded with consumers by sellers or suppliers, such an exclusion is to be interpreted strictly. ( )

62. The exceptional nature of that exclusion is pointed out in the judgment in Kušionová ( ) where the Court interpreted Article 1(2) of Directive 93/13 as meaning that a contractual term included in a contract concluded by a seller or supplier with a consumer falls outside the scope of that directive only if that contractual term reflects the content of a mandatory statutory or regulatory provision, which is a matter for the national court to determine.

63. It is apparent that two conditions must be met in order for that exclusion to apply: first, the contractual term must reflect a statutory or regulatory provision and, secondly, that provision must be mandatory. ( )

64. In order to establish whether those conditions are met, the Court has held that it is for the national court to determine whether the contractual term concerned reflects mandatory provisions of national law that apply between the parties to the contract independently of their choice or provisions that are supplementary in nature and therefore apply by default, that is to say, in the absence of other arrangements established by the parties. ( )

65. In its written submissions, the Slovak Government contends that Paragraph 53(9) of the Civil Code is such a mandatory provision. It states, on the one hand, that that provision affords enhanced protection to the consumer to the extent that it sets out additional safeguards in the event of accelerated repayment of a consumer credit contract. On the other hand, pursuant to Paragraph 54(1) of the Civil Code, the parties may not derogate from the application of the contested provision to the detriment of the consumer.

66. The referring court does not share the position of the Slovak Government. In its response to the request for clarification, it explained that the combined provisions of Paragraph 53(9) and Paragraph 565 of the Civil Code do not apply by default. Their application depends on the choice of the parties. The referring court also pointed out that even when the parties agree on the possibility of accelerated repayment of the loan, that remains an option for the creditor, without there being any legal obligation to accelerate enforcement. In that regard, it points out that the provisions of Paragraphs 53(9) and 565 of the Civil Code use the term ‘may’ (‘môže’) which indicates a possibility for the creditor to initiate enforcement and not an obligation. The referring court considers, moreover, that Paragraph 54(1) of the Civil Code referred to by the Slovak Government does not lead to a different interpretation. That provision does not preclude a derogation from the provisions of the Civil Code in favour of the consumer. It explains that it is only in circumstances where the parties include an acceleration clause in their contract that the creditor is obliged to observe the minimum requirements set out in Paragraph 53(9) of the Civil Code before initiating enforcement.

67. At the hearing, the applicants and the Commission emphasised that the application of the contested provisions of the Civil Code is subject to a prior agreement between the parties. The applicants stated that it is the choice of the professional whether to exercise his or her right to trigger the accelerated repayment procedure. If the professional chooses to exercise this right, then he or she has to observe the minimum procedural requirements set out under Paragraph 53(9) of the Civil Code. Compliance with the deadline of three months before initiating enforcement of a claim is mandatory but the prior condition of its application, namely the decision to enforce, falls upon the professional.

68. I am convinced by the explanations by the referring court and the arguments of the applicants and the Commission. In my view, they support the conclusion that the contested provisions of national law do not apply by default, that is to say, in the absence of other arrangements established by the parties, in order to be qualified as ‘mandatory’ within the meaning of Article 1(2) of Directive 93/13. Instead, they require an explicit agreement of the parties. In the absence of such agreement, Paragraph 565 of the Civil Code sets as a rule that the creditor may not ask for the payment of the entire claim for failure to comply with any monthly instalment.

69. It is also important to point out that although Paragraph 53(9) of the Civil Code refers to a consumer contract performed by instalments, it does not specifically envisage accelerated enforcement of a long-term credit contract or the existence of a security of that loan by a charge on the family home of the consumer. Under those circumstances, the choice of the professional to include in a loan contract secured by the family home of the consumer a non-negotiated term which reflects that provision may not be equated to the establishment by the national legislature of a balance between all the rights and obligations of the parties to the contract.

70. In any event, it is common ground that, in proceedings under Article 267 TFEU, which are based on a clear separation of functions between the national courts and the Court, the national court alone has jurisdiction to interpret and apply national law. ( )

71. Under those conditions, it is apparent that the contractual term at issue providing for the right of the creditor to accelerate enforcement does not reflect a mandatory statutory or regulatory provision within the meaning of Article 1(2) of Directive 93/13. I conclude, therefore, that such a term falls within the scope of Directive 93/13.

On the criteria for the assessment of the contractual term related to accelerated repayment

72. Pursuant to Article 4(1) of Directive 93/13, the unfairness of a contractual term is to be assessed taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of it. It follows that, in that respect, the consequences of the term under the law applicable to the contract must also be taken into account, requiring consideration to be given to the national legal system. ( )

73. The referring court asks more specifically whether, in order to assess the unfairness of the contested contractual term, it is possible to take into account the proportionality of the exercise of the right of the professional to call in the totality of the loan and in particular the seriousness of the infringement by the consumer of his or her obligations in relation to the amount of the credit and its term. The national court refers, in that regard, to one of the criteria set out in paragraph 73 of the judgment in Aziz. ( )

74. That judgment establishes a number of criteria regarding the assessment by a national court of the possible unfairness of the term relating to the accelerated repayment procedure in a long-term contract, and more particularly a mortgage loan contract, resulting from a failure on the part of the debtor to comply with his obligations during a limited specific period. Those criteria were further developed in the judgment in Banco Primus. ( ) The Court has ruled that it is for the referring court to examine, inter alia, first whether the right of the seller or supplier to call in the totality of the loan is conditional upon the non-compliance by the consumer with an obligation which is of essential importance in the context of the contractual relationship in question; second, whether that right is provided for in cases in which such non-compliance is sufficiently serious in the light of the term and amount of the loan; third, whether that right derogates from the applicable common law rules, where specific contractual provisions are lacking and fourth, whether national law provides for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in. The Court has further clarified in its judgment in Caisse régionale de Crédit mutuel de Loire-Atlantique et du Centre Ouest( ) that the judgment in Banco Primus must be interpreted as meaning that the criteria it establishes for assessing the unfairness of a contractual term, as provided for in Article 3(1) of Directive 93/13, in particular the significant imbalance in the rights and obligations of the parties to the contract which that term causes to the detriment of the consumer, cannot be understood either as being cumulative or as being alternative, but must be understood as forming part of all the circumstances surrounding the conclusion of the contract at issue, which the national court must examine in order to assess the unfairness of a contractual term, as provided for in Article 3(1) of Directive 93/13.

75. The contractual term at issue concerns acceleration in a long‑term contract which was concluded for 20 years and is secured on the family home of a consumer. Under those circumstances, the assessment of the unfairness of that term should be carried out in the light of the case-law set out in the previous paragraph.

76. From the foregoing considerations, I conclude that Article 1(2) of Directive 93/13 is to be interpreted as meaning that that directive applies to a contractual term reflecting a provision of national law which allows the professional to trigger the accelerated repayment procedure in respect of the loan on account of the debtor’s failure to comply with his or her obligations during a limited specific period without that right being subject to the requirement of proportionality. Article 3(1) and Article 4(1) of Directive 93/13 are to be interpreted as meaning that as regards the assessment by a national court of the possible unfairness of the term relating to the accelerated repayment procedure resulting from a failure on the part of the debtor to comply with his or her obligations during a limited specific period, it is for the referring court to examine, inter alia, the following criteria: first, whether the right of the seller or supplier to call in the totality of the loan is conditional upon the non-compliance by the consumer with an obligation which is of essential importance in the context of the contractual relationship in question; second, whether that right is provided for in cases in which such non-compliance is sufficiently serious in the light of the term and amount of the loan; third, whether that right derogates from the applicable common law rules, where specific contractual provisions are lacking and, fourth, whether national law provides for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in.

77. If the Court gives an affirmative answer to the first question as reformulated, the referring court states that it will no longer be necessary to answer the remaining questions. However, for reasons of completeness, I will turn to analyse the remaining questions.

Second question

78. By its second question, the referring court asks in essence whether Article 7(1) of Directive 93/13, read in light of Articles 7, 47 and 38 of the Charter and the principle of the effectiveness of EU law, precludes national case-law according to which it is not possible to suspend, as to its substance, the enforcement of a charge by means of a private auction of immovable property, consisting of the home of consumers or of other persons.

79. As a preliminary point, it must be borne in mind that the system of protection implemented by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his or her bargaining power and his or her level of knowledge, which leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms. In addition, Article 38 of the Charter provides that European Union policies must ensure a high level of consumer protection. That requirement applies to the implementation of Directive 93/13. ( )

80. Moreover, given the nature and significance of the public interest constituted by the protection of consumers, Directive 93/13, as is apparent from Article 7(1) thereof, read in conjunction with its twenty‑fourth recital, obliges the Member States to provide for adequate and effective means to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. ( )

The background to the question: the judgment of the Court in Kušionová

81. Following those preliminary observations, it is necessary to refer to the background to the question asked. This is not the first time that Slovak courts have sought the guidance of the Court as to the compatibility with Directive 93/13 of the Slovak rules allowing a creditor to obtain payment of a debt by means of an extrajudicial enforcement of a charge on immovable property provided as security by the consumer. The first such instance was in Case C‑482/12, Macinský and Macinská. That case was removed from the register of the Court following withdrawal of the reference for a preliminary ruling, ( ) while the Opinion of Advocate General Wahl had already been delivered. ( ) The case in Macinský and Macinská raised more particularly the issue of whether it is contrary to Directive 93/13 for a Member State to have procedural rules which allow for a claim based on an unfair term in a consumer contract to be enforced by out-of-court means and therefore – potentially – without any judicial oversight. On the basis of the elements of the file and the submissions of the parties at the hearing, the Advocate General concluded that Directive 93/13 does not preclude such a procedure. That conclusion was based, in essence, on the following considerations. On the one hand, effective procedural protection of consumers does not require a compulsory ex ante judicial review of unfair terms. ( ) On the other hand, the procedure at issue provided to a sufficient degree for the effective protection of the rights of consumers as required under Directive 93/13. ( )

82. The Opinion of Advocate General Wahl in Macinský and Macinská was essentially followed by the judgment in Kušionová. That judgment ruled that the Slovak regime of extrajudicial enforcement proceedings, or ‘voluntary’ sale by auction, is compatible with Directive 93/13 in so far as that legislation does not make it excessively difficult or impossible in practice to protect the rights conferred on consumers by that directive, which is a matter for the national court to determine.

83. The Court’s finding in the judgment in Kušionová is conditional upon the existence of effective means to contest an enforcement based on potentially unfair terms. On the basis of the elements available, the Court considered that Slovak legislation afforded provisional judicial protection allowing the adoption of interim measures to prevent a sale from going ahead as well as ex post judicial protection. The Court relied mainly on the following elements: first, the possibility to contest a sale by auction within 30 days of the notice of enforcement of the charge, according to Paragraph 151m(1) of the Civil Code, read in conjunction with Paragraph 17(3) of the Law on Voluntary Sale by Auction; second, the possibility for a person who contests the conditions under which the sale by auction took place to apply to the court, within a period of three months following the public auction, for a declaration that a sale is void, under Paragraph 21(2) of that law; and, third, the fact that, during the procedure for the extrajudicial enforcement of a charge, the national court with jurisdiction may, under Paragraphs 74(1) and 76(1) of the Code of Civil Procedure, adopt any interim measure to prevent such a sale from going ahead. ( )

84. With regard to the possibility of the national court to assess the proportionality of the enforcement, the judgment in Kušionová essentially includes that review in the overall assessment by the national court of the adequacy and effectiveness of the means available within the legal order in order to prevent the continued application of unfair terms pursuant to Article 7(1) of Directive 93/13. ( )The reasoning of the Court demonstrates the constitutional dimensions of Directive 93/13 in the context of consumer litigation. The Court stated that it is necessary to give particular attention to the fact that the property at which the procedure for the extrajudicial enforcement of the charge at issue in the main proceedings is directed is the consumer’s family home. ( ) The reasoning in light of the fundamental rights is reinforced with reference to the case-law of the European Court of Human Rights (‘ECtHR’). The ECtHR has held, first, that the loss of a home is one of the most serious breaches of the right to respect for the home and, secondly, that any person who risks being the victim of such a breach should be able to have the proportionality of such a measure reviewed. ( ) The Court pointed out that the national courts when interpreting Directive 93/13 have to take into account Article 7 of the Charter which guarantees the right to respect for one’s home. ( ) Finally, recalling its judgment in Aziz, ( ) the Court emphasises the importance for the national court to provide for interim measures by which unlawful enforcement proceedings may be suspended or terminated in order to ensure the effectiveness of the protection intended by Directive 93/13, taking into account the consequences of the eviction of the consumer and his or her family from the accommodation forming their principal family home. ( )

85. In view of all the elements referred to in point 83 of the present Opinion and particularly in view of the fact that it seemed possible for the competent national court to adopt interim measures, the judgment in Kušionová rules that in the framework of the Slovak extrajudicial enforcement procedure ‘adequate and effective means exist to prevent the continued use of unfair terms, which is a matter for the national court to determine’.

Testing the premisses of the judgment in Kušionová

86. The referring court explains that the Najvyšší súd Slovenskej republiky (Supreme Court of the Slovak Republic) has interpreted the judgment in Kušionová as allowing the extrajudicial sale of an immovable property, including a consumer’s home. Moreover, it follows from that national case-law that a creditor cannot be obliged indefinitely to refrain from enforcing the charge. ( )The referring court considers, in essence, that such national case-law is not correct and tests the premisses on which the judgment in Kušionová was decided. It considers that the voluntary sale by auction does not offer the same guarantees as judicial enforcement. It states that it is a method of enforcement organised exclusively by private persons, precluding the judicial review of the debt owed and the proportionality of the sale. The referring court points out that the voluntary sale by auction may not be interrupted by judicial proceedings in the framework of which the fairness of the contractual terms may be challenged.

87. On the contrary, in its written submissions, the Slovak Government supports that the Slovak legislation, as set out in the judgment in Kušionová, ensures effective judicial protection for the consumers before and after the forced sale and that the courts may adopt measures of interim relief.

88. In its response to the request for clarification, the referring court disagrees with the legal analysis of the Slovak Government. At the outset, the referring court rejects the view that the regime on extrajudicial sales ensures enhanced consumer protection by mere reason of the fact that direct sale of the property by the creditor is excluded. It considers that the provisions to which the Slovak Government refers, namely Paragraph 17(3) and (5) of the Law on Voluntary Sale by Auction and Paragraph 151m(1) of the Civil Code do not recognise the right to challenge enforcement before the sale takes place. Those provisions, according to the referring court, govern the formal conditions for the enforcement of a voluntary sale by auction as well as organisational aspects related to that sale. With regard to the possibility to adopt provisional measures, the referring court points out that Article 325(1) and (2) of the Code of Civil Procedure provide for the power of courts to adopt interim measures only in relation to adversarial proceedings. Therefore, it explains that that provision is not applicable in the framework of extrajudicial enforcement proceedings. Moreover, the referring court stated that Paragraph 63(3) of Law 233/1995 on the Enforcement Code is unconnected with the procedure set out by the Law on Voluntary Sale by Auction and that generally professionals do not have to abide by Law 233/1995 on the Enforcement Code in the context of extrajudicial enforcement proceedings.

89. The parties that participated at the hearing were asked to elaborate on the means available to consumers to contest the potential unfairness of the enforcement instrument in the context of the extrajudicial sale proceedings. They were also asked to identify the legal basis for allowing the courts hearing the declaratory proceedings on the potential unfairness of the contractual terms included in the enforcement instrument or hearing matters related to the enforcement to grant interim relief capable of staying the enforcement proceedings in order to guarantee the full effectiveness of the final decision on the substance.

90. The Slovak Government stated that there is no obstacle in the law with regard to the powers of the courts to raise unfair terms of their own motion. It observed that Article 298(1) of the Code of Civil Procedure recognises explicitly such powers. The Slovak Government referred to a number of provisions of the Civil Code as well as Law No 250/2007 on consumer protection from which it follows that consumers may bring proceedings in order to seek a declaration of invalidity of unfair terms. Moreover, that government stated that the Code of Civil Procedure recognises the possibility to bring an action in order to determine whether a right exists.

91. The applicants did not contest that all the provisions referred to by the Slovak Government exist. However, they maintained that those are general rules and they do not apply to extrajudicial enforcement. In their view there is no legal basis that would require courts to suspend a voluntary sale by auction purely on the basis of unfair terms. The applicants also argued that the entire procedure lacks transparency and that there is no public authority involved at any stage of the procedure. With regard to the possibility to contest the sale ex post, the applicants explained that this is a lengthy and painful process for consumers, ( )with very little prospect of success.

92. The Commission maintained that it remains unclear whether the extrajudicial enforcement procedure based on the Law on Voluntary Sale by Auction allows the suspension of the enforcement on the grounds of unfair terms. Even if it were accepted that such a possibility exists in national legislation, it observed that there is tension between what the law is meant to provide for and the way in which the law is interpreted and applied by the courts. This renders the exercise of consumer rights excessively difficult in practice.

93. Whilst, under Article 267 TFEU, the Court has jurisdiction to draw from Article 7 of Directive 93/13 the criteria which define the framework for a court to assess whether the obligations resulting from that directive have been complied with, it is the referring court which must determine whether the provisions of the Law on Voluntary Sale by Auction are capable of providing it, where appropriate, with such a framework. ( )

94. I will limit myself, therefore, to the following observations. The extrajudicial enforcement procedure applies irrespective of the status of the debtor and irrespective of the type of asset concerned. It may relate (as is the case in the main proceedings) to an asset that meets an essential need of the consumer, namely, provision of a dwelling. ( )That procedure may be initiated by a seller or supplier merely on the basis of the credit contract serving as an enforceable instrument, without the contents of that instrument being subject to judicial scrutiny in order to determine whether one or more of the clauses are unfair. Moreover, the creditor determines the debt unilaterally and a private actor (the ‘auctioneer’) carries out the enforcement under no supervision by a public authority. Such a powerful and unqualified right of the seller to initiate enforcement renders it all the more necessary that the consumer, in the position of a debtor against whom enforcement proceedings are brought, can avail himself or herself of effective judicial protection. ( )As one commentator aptly puts it, possession proceedings against one’s home have to ensure ‘the highest degree of procedural stringency’. ( )

95. The case file before the Court and the debate at the hearing reveal, in my view, that the existence and scope of the judicial powers in the specific context of a challenge of extrajudicial enforcement on the basis of unfair terms remains unclear and complicated for courts and consumers. More specifically, it does not seem clear what procedural avenue is available to consumers in order to obtain suspension of enforcement so as to allow the competent court to examine the potential unfairness of the contractual terms contained in the enforcement instrument. The lack of a clear legal framework disregards, first of all, the principle of legal certainty. In that regard, it should be recalled that the principle of legal certainty, which is one of the general principles of EU law, requires that rules of law be clear, precise and predictable in their effect, especially where they may have negative consequences for individuals and undertakings, so that persons may ascertain unequivocally what their rights and obligations are and may take steps accordingly. ( )

96. T he legal framework on extrajudicial enforcement as described by the referring court does not appear to afford a high degree of procedural safeguards. Due to its fragmentation, it creates a significant risk that the consumer concerned will either not lodge an objection against extrajudicial enforcement that would allow the judicial assessment of unfair terms or that he or she will make a procedural mistake. ( ) That risk is exacerbated by the fact that all the steps in the extrajudicial enforcement procedure, including the determination of the amount of the debt, are carried out without any oversight by a public authority.

97. In that regard , it should also be pointed out that recent case-law of the Court indicates that the standards of what constitutes an effective review of unfair terms are particularly high. The Court has stated that the obligation on the Member States to ensure the effectiveness of the rights that individuals derive from EU law, particularly the rights deriving from Directive 93/13, implies a requirement for effective judicial protection, reaffirmed in Article 7(1) of that directive and also guaranteed in Article 47 of the Charter, which applies, inter alia, to the definition of detailed procedural rules relating to actions based on such rights. ( )

98. More specifically, in the context of ex parte proceedings for the issuance of a payment order, the Court has ruled that the requirement of effective judicial protection necessitates that the court hearing the enforcement proceedings is able to assess, including for the first time, whether the contractual terms which served as the basis for an order for payment issued by a court at the request of a creditor, and against which the debtor did not lodge an objection, are unfair. ( ) In the context of mortgage enforcement proceedings, the Court considered that an effective review of the possible unfairness of contractual terms, as required by Directive 93/13, could not be guaranteed if the force of res judicata extended also to judicial decisions which do not indicate such a review. ( )

99. It follows from that case-law that even where there is a judicial decision authorising enforcement, the effective review of unfair terms may not be guaranteed in circumstances where such decision does not contain any grounds attesting to the examination of the unfairness of contractual terms by the court of its own motion. On that basis, I consider, a fortiori, that an effective review may not be guaranteed where enforcement proceedings are initiated without an ex ante judicial review, where they are carried out exclusively by private professionals and where the rules governing the available means for the consumer to challenge the enforcement proceedings and the respective powers of the courts are unclear and complex. Therefore, it seems to me that the procedural rules governing extrajudicial enforcement proceedings, at least the way in which they apply in Slovak legal practice, do not meet the standards of effective judicial protection of consumers.

100. As a final remark, I would point out that Directive 2014/17, which was adopted, as is mentioned in recital 3, with regard to property loans to consumers following the international financial crisis, although it is not applicable ratione temporis, ( )demonstrates the desire of the EU legislature to strengthen the protection of consumers in the context of residential enforcement proceedings. According to Article 28(1) of Directive 2014/17, Member States are to adopt measures to encourage creditors to exercise reasonable forbearance with consumers in arrears before initiating foreclosure proceedings. The objective of forbearance is to resolve payment difficulties at an early stage so as to avoid the initiation of such proceedings. Foreclosure should be the last resort when all other means of regularising payment arrears have failed. ( )

101. From the foregoing considerations, I conclude that Article 7(1) of Directive 93/13, read in light of Articles 7, 47 and 38 of the Charter and the principle of the effectiveness of EU law, is to be interpreted as precluding national case-law according to which it is not possible to suspend, as to its substance, the enforcement of a charge by means of a private auction of immovable property, consisting of the home of consumers or of other persons, to the extent that the grant of interim relief is necessary in order to guarantee the full effectiveness of a decision of the court which has jurisdiction to assess the unfairness of a contractual term.

Third and fourth questions

102. By its third and fourth questions, which it is appropriate to examine together, the referring court asks essentially whether, on the one hand, the repetitive granting by a credit institution to a consumer of loans the objective of which is to repay previous loans and which the consumer is unable to repay falls within the scope of Directive 2005/29 and, on the other hand, whether such an act constitutes an unfair commercial practice within the meaning of Article 5 thereof.

103. At the outset, it should be pointed out, first, that the practice at issue, as described by the referring court, consists in the repetitive granting by the credit institution of consumer credit loans which covered the repayment of previous loans to the same credit institution as well as the costs of those loans. The referring court states that the amount of each new loan in the ‘chain’ of loans was unilaterally determined by the bank and that the borrowers were unable to repay it. Second, it follows from the order for reference that the response to the question whether the practice at issue consists in an unfair commercial practice is necessary for the national court in order to examine the circumstances in which the loan at issue was concluded as part of the assessment of the unfairness of contractual terms under Article 4(1) of Directive 93/13. ( )

104. As regards the question whether the repetitive granting of consumer credit loans with the objective to repay previous loans is liable to fall within the scope of Directive 2005/29, it should be borne in mind, first, that Article 2(d) of that directive defines, using a particularly broad formulation, the concept of ‘commercial practices’ as ‘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’. ( )

105. Next, in accordance with Article 3(1) of Directive 2005/29, read in conjunction with Article 2(c) thereof, that directive applies to unfair business-to-consumer commercial practices before, during or after a commercial transaction relating to any goods or service. ( )

106. Consequently, the words ‘directly connected with the sale of a product’ cover any measure taken in relation not only to the conclusion of a contract but also to its performance, and in particular the measures taken in order to obtain payment for the product. ( )

107. Therefore, the granting of credit with the objective of repaying previous consumer credit loans, such as the one in the main proceedings, must be regarded as a ‘product’ within the meaning of Article 2(c) of Directive 2005/29. ( )

108. Under those conditions, I agree with the Slovak Government and the Commission that the repetitive granting by a credit institution to a consumer of loans the objective of which is to repay previous consumer credit loans and which the consumer is unable to repay falls within the scope of Directive 2005/29.

109. With regard to the question whether the practice at issue constitutes an unfair commercial practice, it should be recalled that Article 5 of Directive 2005/29 prohibits, in paragraph 1 thereof, unfair commercial practices and lays down, in paragraph 2, the criteria for determining whether a commercial practice is unfair.

110. Article 5(4) of that directive provides, in particular, that commercial practices which are ‘misleading’, within the meaning of Articles 6 and 7 of Directive 2005/29, and those which are ‘aggressive’ within the meaning of Articles 8 and 9 of that directive, are unfair.

111. In that regard, it should be recalled that Directive 2005/29 carries out a complete harmonisation at EU level of the rules relating to unfair commercial practices of undertakings vis-à-vis consumers and establishes, in Annex I thereto, an exhaustive list of 31 commercial practices which, in accordance with Article 5(5) of that directive, are regarded as unfair ‘in all circumstances’. Consequently, as recital 17 of that directive expressly states, those commercial practices alone can be deemed to be unfair in themselves without a case-by-case assessment pursuant to the provisions of Articles 5 to 9 of that directive. ( )

112. The commercial practice in question is not included in the list of commercial practices which must be regarded as unfair in all circumstances. Therefore, its classification as ‘unfair’ requires a case-by-case assessment. In that regard, the Commission and the Slovak Government rightly point out that, generally, the refinancing of a loan is a legitimate practice. That may be the case, as the Slovak Government observes, in the example of refinancing of credit in order to replace an older credit with a newer one with a lower interest rate, or in the case of consolidation of various credits into a new single one.

113. In the present case, in its written submissions, VÚB Banka claims that the credit granted consisted of a refinancing operation with the objective of reducing the financial charge to the applicants. The referring court, on the contrary, considers that the ‘chain’ of contracts granted to the applicants led to their overindebtedness and created the risk of loss of their home.

114. Although it is ultimately for the referring court to give a ruling on the nature of the commercial practice at issue in the main proceedings, the Court may provide the referring court, on the basis of the information set out in the request for a preliminary ruling, with considerations that may be useful for the purposes of classifying that practice. ( )

115. In that regard, it should be taken into account that the various credit loans were granted to the applicants despite the fact that they were not creditworthy. I agree with the Commission that such a factor may be taken into account by the national court in order to determine, more specifically, whether the practice at issue is aggressive through the exertion of ‘undue influence’ within the meaning of Articles 8 and 9 of Directive 2005/29.

116. In that regard, it should be recalled that the concept of ‘undue influence’, defined in Article 2(j) of Directive 2005/29, covers the exploitation of 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. ( )

117. In the present case, the applicants’ situation of overindebtedness could be considered to render them vulnerable and to consist of a ‘specific misfortune or circumstance of such gravity as to impair the consumer’s judgment, of which the trader is aware, to influence the consumer’s decision with regard to the product’ according to Article 9(c) of Directive 2005/29.

118. At the hearing, the Commission used a strong expression to classify the bank’s practice of granting credit repetitively as a ‘snowball’ of loans. In response to a question in order to clarify how the debt piled up, the applicants stated that they did not ask for the loans but they were proposed to them automatically as a means of repaying former debts. Each time the applicants received a minimal amount and the rest of the monies was allocated to the bank. That seems to me to be a rather startling revelation. It could demonstrate that not only was the trader aware of the consumer’s misfortune (within the meaning of Article 9(c) of Directive 2005/29) but that the trader contributed to it and did so repeatedly.

119. Account should also be taken of the fact that the objective pursued by Directive 2005/29 is, inter alia, to achieve a high level of consumer protection against unfair commercial practices and is based on the assumption that, in relation to a trader, the consumer is in a weaker position, particularly with regard to the level of information, it being pointed out that it cannot be denied that there is a major imbalance of information and expertise between those parties. ( ) The consumer must be considered to be economically weaker and less experienced in legal matters than the other party to the contract, particularly in the context of credit services afforded by a bank. ( )

120. In the light of the foregoing, I consider that Directive 2005/29 is to be interpreted as meaning, on the one hand, that the repetitive granting by a credit institution to a consumer of loans the objective of which is to repay previous loans and which the consumer is unable to repay falls within the scope of Directive 2005/29 and, on the other hand, that such an act is liable to constitute an unfair commercial practice within the meaning of Article 5 thereof, and more specifically an aggressive commercial practice within the meaning of Articles 8 and 9 thereof, if the referring court finds that such a practice, in its factual context, taking account of all its features and circumstances, involved undue influence on the ground of the trader’s exploitation of the consumer’s overindebtedness over a long period of time.

Fifth question

121. By its fifth question the referring court asks, in essence, whether Article 2(2)(a) of Directive 2008/48, read together with recital 10 of that directive, is to be interpreted as not excluding the application of that directive in the case of a credit agreement the purpose of which consists in the reimbursement of previous consumer loans even if it is secured by a right related to immovable property.

122. In that regard, it should be pointed out that, according to Article 2(2)(a) of Directive 2008/48, that directive does not apply to credit agreements which are secured by a right related to immovable property. According to recital 14 of that directive, that type of credit should be excluded from its scope due to its ‘very specific nature’.

123. However, as is clear from recital 10 of that directive, the Member States may, in accordance with EU law, apply provisions of that directive to areas not covered by its scope. The Court has thus already held that Member States may, in respect of credit agreements not coming within the scope of Directive 2008/48, maintain or introduce national measures corresponding to the provisions of that directive or to some of them. ( )

124. The loan at issue in the main proceedings is a credit agreement secured by a charge on the applicants’ residence. The referring court does not state that national law extends the application of Directive 2008/48 to credit agreements secured by a right related to immovable property. This was confirmed by the Slovak Government in its written and oral submissions.

125. In view of those elements, the parties that submitted written observations take the view that the credit agreement at issue in the main proceedings is excluded from the scope of Directive 2008/48.

126. It is already apparent from the text of the question that the referring court does not contest that, in general, credit agreements secured by a right related to immovable property are excluded from the scope of Directive 2008/48. However, it follows from its explanations that its doubts arise due to the specific conditions under which the loan at issue was concluded. The purpose of that loan was to reimburse previous loans to the bank without the relevant amounts being disbursed to the applicants. The referring court explains that from an economic point of view there is a link between the loan at issue concluded in 2012 and the previous loans concluded since 2004.

127. In that regard, it should be pointed out that the wording of Article 2(2)(a) of Directive 2008/48 is clear. ( ) Harmonisation in the field of credit secured by a right related to immovable property was achieved only at a later stage, with the adoption of Directive 2014/17, ( ) triggered by the international financial crisis which has shown that irresponsible behaviour by market participants can undermine the foundations of the financial system. ( )

128. However, it must be observed that the loan at issue was concluded under very particular circumstances. Its conclusion follows a pattern of behaviour whereby, according to the description of the facts by the referring court, the bank repeatedly granted loans to the applicants, the amount of which was not disbursed to them but was used to cover previous loans. The amount and the costs of the loan were determined unilaterally. As mentioned in point 118 of the present Opinion, the applicants stated at the hearing that those loans were not even requested by the consumer but were proposed automatically by the bank. At the end of that ‘snowballing’ of loans, as the Commission put it at the hearing, when the applicants were ‘trapped’ in debt, the bank granted them the loan at issue.

129. It must be recalled that the Court has consistently held that Directive 2008/48 is intended to guarantee a high level of consumer protection. That system of protection is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his or her bargaining power and his or her level of knowledge. ( )

130. In order to guarantee that protection, Article 22(3) of Directive 2008/48 requires the Member States to ensure that the provisions they adopt in implementation of that directive cannot be circumvented as a result of the way in which agreements are formulated, ( ) ‘in particular by integrating drawdowns or credit agreements falling within the scope of this Directive into credit agreements the character or purpose of which would make it possible to avoid its application’.

131. It follows from the explanatory memorandum to the Commission proposal for Directive 2008/48 ( ) that the aim of that provision was to ensure that the exemptions to the application of that directive, including the exemption for housing credit, cannot be circumvented so that the transactions it covers can be included in such contracts. The example provided in that explanatory memorandum was the request by the consumer of a credit drawdown under the terms of his or her housing credit.

132. The case in the main proceedings concerns a credit loan which was economically linked to the previous ones. Indeed, as the referring court explains, the purpose of the loan at issue consisted exclusively in refinancing the previous ones. It falls upon the national court to determine whether by dint of that operation the creditor integrated the previous loans into the loan at issue so as to avoid the application of Directive 2008/48. In that regard, the national court should take into account the national provisions implementing Article 22(3) of Directive 2008/48 in the national legal order. At the hearing, the Slovak Government stated that the national legislation on consumer protection contains provisions which penalise credit institutions for circumventing consumer law. More specifically, it stated that Slovak legislation prohibits banks from bundling contracts in order to circumvent the law or from including misleading references to the contracts.

133. In view of the above, Article 2(2)(a) of Directive 2008/48 is to be interpreted as not excluding the application of that directive in the case of a credit agreement the purpose of which consists in the reimbursement of previous consumer loans, even if it is secured by a right related to immovable property, in circumstances in which the national court determines that the loan agreement at issue was formulated in such way as to avoid the application of that directive, pursuant to Article 22(3) thereof.

Sixth question

134. By its sixth question, the referring court asks essentially whether the approach adopted by the Court in the judgment in Radlinger and Radlingerová is applicable to a consumer credit contract by virtue of which part of the credit is not disbursed to the consumer but is allocated to the payment of the costs of the creditor, with the result that the total amount of the credit may not include those costs.

135. I would point out, at the outset, that the response to that question is relevant only if the Court follows my conclusion with regard to the response to the fifth question.

136. It should be recalled that in the judgment in Radlinger and Radlingerová the Court held that within the meaning of Article 3(1) and Article 10(2) of Directive 2008/48, none of the sums intended to meet the commitments agreed under the credit concerned, such as the administrative costs, interest, commissions and any other type of cost which the consumer is required to pay, can be included in the total amount of the credit. ( ) The Court concluded that those provisions as well as point I of Annex I to that directive must be interpreted as meaning that the total amount of the credit and the amount of the drawdown together designate the sums made available to the consumer, which excludes those used by the lender to pay the costs connected with the credit concerned and which are not actually paid to that consumer. ( )

137. The referring court explains that it needs to determine the amount of debt for which the enforcement procedure was initiated by the creditor. It also explains that the creditor maintains that the sums of the credit that were allocated to the costs of that credit were genuinely paid to the applicants and that it included those amounts in the amount of credit granted.

138. In that regard, it clearly follows, in my view, from the judgment in Radlinger and Radlingerová that the creditor may not include the costs in the total amount of the credit.

139. Therefore, the approach adopted by the Court in the judgment in Radlinger and Radlingerová is applicable to a consumer credit contract by virtue of which part of the credit is not disbursed to the consumer but is allocated to the payment of the costs of the creditor, with the result that the total amount of the credit may not include those costs.

VI. Conclusion

140. In view of all the foregoing considerations set out above, I propose that the Court answer the questions referred by the Krajský súd v Prešove (Regional Court, Prešov, Slovakia) as follows:

(1) Article 1(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

is to be interpreted as meaning that that directive applies to a contractual term reflecting a provision of national law which allows the professional to trigger the accelerated repayment procedure in respect of the loan on account of the debtor’s failure to comply with his or her obligations during a limited specific period without that right being subject to the requirement of proportionality.

Article 3(1) and Article 4(1) of Directive 93/13

are to be interpreted as meaning that, as regards the assessment by a national court of the possible unfairness of the term relating to the accelerated repayment procedure resulting from a failure on the part of the debtor to comply with his or her obligations during a limited specific period, it is for the referring court to examine, inter alia, the following criteria: first, whether the right of the seller or supplier to call in the totality of the loan is conditional upon the non-compliance by the consumer with an obligation which is of essential importance in the context of the contractual relationship in question; second, whether that right is provided for in cases in which such non-compliance is sufficiently serious in the light of the term and amount of the loan; third, whether that right derogates from the applicable common law rules, where specific contractual provisions are lacking and, fourth, whether national law provides for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in.

(2) Article 7(1) of Directive 93/13, read in light of Articles 7, 47 and 38 of the Charter of Fundamental Rights of the European Union and the principle of the effectiveness of EU law,

is to be interpreted as precluding national case-law according to which it is not possible to suspend, as to its substance, the enforcement of a charge by means of a private auction of immovable property, consisting of the home of consumers or of other persons, to the extent that the grant of interim relief is necessary in order to guarantee the full effectiveness of a decision of the court which has jurisdiction to assess the unfairness of a contractual term.

(3) 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 (‘Unfair Commercial Practices Directive’)

is to be interpreted as meaning that, on the one hand, the repetitive granting by a credit institution to a consumer of loans the objective of which is to repay previous loans and which the consumer is unable to repay falls within the scope of Directive 2005/29 and, on the other hand, that such an act is liable to constitute an unfair commercial practice within the meaning of Article 5 thereof, and more specifically an aggressive commercial practice within the meaning of Articles 8 and 9 thereof, if the referring court finds that such a practice, in its factual context, taking account of all its features and circumstances, involved undue influence on the ground of the trader’s exploitation of the consumer’s overindebtedness over a long period of time.

(4) Article 2(2)(a) 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

is to be interpreted as not excluding the application of that directive in the case of a credit agreement the purpose of which consists in the reimbursement of previous consumer loans, even if it is secured by a right related to immovable property, in circumstances in which the national court determines that the loan agreement at issue was formulated in such way as to avoid the application of that directive, pursuant to Article 22(3) thereof.

(5) The approach adopted by the Court in the judgment of 21 April 2016, Radlinger and Radlingerová (C‑377/14, EU:C:2016:283), is applicable to a consumer credit contract by virtue of which part of the credit is not disbursed to the consumer but is allocated to the payment of the costs of the creditor, with the result that the total amount of the credit may not include those costs.