CELEX: 62010CO0076
Language: en
Date: 2010-11-16 00:00:00
Title: Order of the Court (Eighth Chamber) of 16 November 2010.#Pohotovosť s.r.o. v Iveta Korčkovská.#Reference for a preliminary ruling: Krajský súd v Prešove - Slovakia.#Preliminary ruling – Consumer protection – Directive 93/13/EEC – Unfair terms – Directive 2008/48/EC – Directive 87/102/EEC – Consumer credit contracts – Annual percentage rate of charge – Arbitration proceedings – Arbitration award – Power of the national court to examine of its own motion whether certain terms are unfair.#Case C-76/10.

Case C-76/10
      Pohotovosť s.r.o.
      v
      Iveta Korčkovská
      (Reference for a preliminary ruling from the Krajský súd v Prešove)
      (Preliminary ruling – Consumer protection – Directive 93/13/EEC – Unfair terms – Directive 2008/48/EC – Directive 87/102/EEC – Consumer credit contracts – Annual percentage rate of charge – Arbitration proceedings – Arbitration award – Power of the national court to examine of its own motion whether certain terms are unfair)
      Summary of the Order
      1.        Approximation of laws – Unfair terms in consumer contracts – Directive 93/13 – Application for enforcement of an arbitration
            award issued by default that has become res judicata
      (Council Directive 93/13, Art. 6(1))
      2.        Approximation of laws – Unfair terms in consumer contracts – Directive 93/13 – Unfair term – General assessment criteria
      (Council Directive 93/13, Arts 3 and 4)
      3.        Approximation of laws – Consumer protection concerning consumer credit – Directive 87/102 – Consumer credit contract – No
            mention in the contract of the annual percentage rate of charge
      (Council Directives 87/102, as amended by Directive 98/7, Art. 4, and 93/13, Arts 3 and 4)
      1.        Directive 93/13 on unfair terms in consumer contracts requires a national court hearing an application for enforcement of
         an arbitration award having become final and issued by default, in the consumer’s absence, to consider, even of its own motion,
         the fairness of the penalty contained in a credit agreement concluded by a creditor with a consumer, that penalty having been
         applied in that award, when the necessary information on the legal and factual state of affairs is available to it for this
         purpose and when, according to national procedural rules, such an assessment may be conducted in similar proceedings under
         national law.
      
      In view of the nature and importance of the public interest underlying the protection conferred on consumers by Directive
         93/13, Article 6 of the directive must be regarded as a provision equivalent to national rules which rank, within the domestic
         legal system, as rules of public policy
      
      (see paras 50, 54, operative part 1)
      2.        As to the question whether a particular term in a contract is, or is not, unfair, Article 4 of Directive 93/13 on unfair terms
         in consumer contracts provides that the answer must be reached 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
         that conclusion. In that respect, the consequences of the term under the law applicable to the contract must also be taken
         into account, which entails examination of the national legal system.
      
      It follows that, in the context of its jurisdiction under Article 267 TFEU to interpret Union law, the Court may interpret
         general criteria used by the Union legislature in order to define the concept of unfair terms. However, it is not to rule
         on the application of these general criteria to a particular term, which must be considered in the light of the particular
         circumstances of the case in question.
      
      Therefore, it is for the national court concerned to determine whether a term in a credit agreement providing for the consumer
         to pay a disproportionately high sum in compensation must, in the light of all the circumstances attending the conclusion
         of the contract, be regarded as unfair within the meaning of Articles 3 and 4 of Directive 93/13. If that is the case, it
         is for that court to establish all the consequences thereby arising under national law, in order to ensure that the consumer
         is not bound by that term. That court will also, in accordance with Article 6(1) of that directive, have to examine whether
         the contract can continue in existence without that unfair term.
      
       (see paras 59-61, 63, operative part 2)
      3.        The failure to mention the annual percentage rate (APR) in a consumer credit contract, the mention of the APR being essential
         information in the context of Directive 87/102 for the approximation of the laws, regulations and administrative provisions
         of the Member States concerning consumer credit, as amended by Directive 98/7, may be a decisive factor in the assessment
         by a national court of whether a term of a consumer credit agreement concerning the cost of that credit in which no such mention
         is made is written in plain, intelligible language within the meaning of Article 4 of Directive 93/13 on unfair terms in consumer
         contracts. If that is not the case, that court has the power to assess, of its own motion, whether, in the light of all the
         circumstances attending the conclusion of that contract, the failure to mention the APR in the term of that contract concerning
         the cost of that credit is likely to confer on that term an unfair nature within the meaning of Articles 3 and 4 of Directive
         93/13.
      
      However, the power which is given to assess that contract in the light of Directive 93/13 notwithstanding, Directive 87/102
         is to be interpreted as allowing national courts to apply of their own motion the provisions transposing Article 4 of the
         latter directive into national law and as providing that the failure to mention the APR in a consumer credit contract means
         that the credit granted is deemed to be interest-free and free of charge.
      
      (see para. 77, operative part 3)
ORDER OF THE COURT (Eighth Chamber)
      16 November 2010 (*)
      
      (Preliminary ruling – Consumer protection – Directive 93/13/EEC – Unfair terms – Directive 2008/48/EC – Directive 87/102/EEC – Consumer credit contracts – Annual percentage rate of charge – Arbitration proceedings – Arbitration award – Power of the national court to examine of its own motion whether certain terms are unfair)
      In Case C‑76/10,
      REFERENCE for a preliminary ruling under Article 267 TFEU from the Krajský súd v Prešove (Slovakia), made by decision of 19
         January 2010, received at the Court on 9 February 2010, in the proceedings
      
      Pohotovosť s. r. o.
      v
      Iveta Korčkovská,
      
      THE COURT (Eighth Chamber),
      composed of L. Bay Larsen, Acting for the President of the Eighth Chamber, C. Toader (Rapporteur) and A. Prechal, Judges,
      Advocate General: N. Jääskinen,
      Registrar: A. Calot Escobar,
      the Court proposing to give its decision by reasoned order pursuant to the first subparagraph of Article 104(3) of its Rules
         of Procedure,
      
      after hearing the Advocate General,
      makes the following
      Order
      1        This reference for a preliminary ruling relates to the interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair
         terms in consumer contracts (OJ 1993 L 95, p. 29), read in conjunction with the European Union rules applicable to consumer
         credit contracts.
      
      2        The reference has been made in the course of proceedings between Pohotovosť s. r. o. (‘Pohotovosť’) and Ms Korčkovská concerning
         the enforcement of an arbitration award ordering her, under the provisions of a credit agreement for the sum of SKK 20 000
         (EUR 663.88) concluded between those parties, to pay the company the sum of SKK 48 820 (EUR 1 620.53) plus default interest
         and costs.
      
       Legal context
       European Union legislation
       Directive 87/102/EEC
      3        The twenty-fifth recital in the preamble to Council Directive 87/102/EEC of 22 December 1986 for the approximation of the
         laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48), as
         amended by Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998 (OJ 1998 L 101, p. 17, ‘Directive
         87/102’) reads as follows:
      
      ‘Whereas, since this Directive provides for a certain degree of approximation of the laws, regulations and administrative
         provisions of the Member States concerning consumer credit and for a certain level of consumer protection, Member States should
         not be prevented from retaining or adopting more stringent measures to protect the consumer, with due regard for their obligations
         under the Treaty.’
      
      4        Article 1 of Directive 87/102 provides:
      
      ‘1.      This Directive applies to credit agreements.
      2.      For the purpose of this Directive: 
      (a)      “consumer” means a natural person who, in transactions covered by this Directive, is acting for purposes which can be regarded
         as outside his trade or profession;
      
      (b)      “creditor” means a natural or legal person who grants credit in the course of his trade, business or profession, or a group
         of such persons;
      
      (c)      “credit agreement” means an agreement whereby a creditor grants or promises to grant to a consumer a credit in the form of
         a deferred payment, a loan or other similar financial accommodation.
      
      …
      (d)      “total cost of the credit to the consumer” means all the costs, including interest and other charges, which the consumer has
         to pay for the credit;
      
      (e)      “annual percentage rate of charge” means the total cost of the credit to the consumer expressed as an annual percentage of
         the amount of the credit granted and calculated in accordance with Article 1a.’
      
      5        Article 1a of that directive provides:
      
      ‘1.      (a)      The annual percentage rate of charge, which shall be that equivalent, on an annual basis, to the present value of all commitments
         (loans, repayments and charges), future or existing, agreed by the creditor and the borrower, shall be calculated in accordance
         with the mathematical formula set out in Annex II. 
      
            (b)      Four examples of the method of calculation are given in Annex III, by way of illustration.
      2.      For the purpose of calculating the annual percentage rate of charge, the “total cost of the credit to the consumer” as defined
         in Article 1(2)(d) shall be determined, with the exception of the following charges:
      
      (i)      charges payable by the borrower for non-compliance with any of his commitments laid down in the credit agreement;
      …
      (iii) charges for the transfer of funds and charges for keeping an account intended to receive payments towards the reimbursement
         of the credit, the payment of interest and other charges except where the consumer does not have reasonable freedom of choice
         in the matter and where such charges are abnormally high; this provision shall not, however, apply to charges for collection
         of such reimbursements or payments, whether made in cash or otherwise;
      
      …
      4.      (a)      The annual percentage rate of charge shall be calculated at the time the credit contract is concluded, without prejudice to
         the provisions of Article 3 concerning advertisements and special offers.
      
            (b)      The calculation shall be made on the assumption that the credit contract is valid for the period agreed and that the creditor
         and the consumer fulfil their obligations under the terms and by the dates agreed.
      
      6.      In the case of credit contracts containing clauses allowing variations in the rate of interest and the amount or level of
         other charges contained in the annual percentage rate of charge but unquantifiable at the time when it is calculated, the
         annual percentage rate of charge shall be calculated on the assumption that interest and other charges remain fixed and will
         apply until the end of the credit contract.
      
      …’
      6        Article 4 of Directive 87/102 provides:
      
      ‘1.      Credit agreements shall be made in writing. The consumer shall receive a copy of the written agreement.
      2.      The written agreement shall include:
      (a)      a statement of the annual percentage rate of charge;
      (b)      a statement of the conditions under which the annual percentage rate of charge may be amended;
      (c)      a statement of the amount, number and frequency or dates of the payments which the consumer must make to repay the credit,
         as well as of the payments for interest and other charges; the total amount of these payments should also be indicated where
         possible;
      
      (d)      a statement of the cost items referred to in Article 1a(2) with the exception of expenditure related to the breach of contractual
         obligations which were not included in the calculation of the annual percentage rate of charge but which have to be paid by
         the consumer in given circumstances, together with a statement identifying such circumstances. Where the exact amount of those
         items is known, that sum is to be indicated; if that is not the case, either a method of calculation or as accurate an estimate
         as possible is to be provided where possible.
      
      In cases where it is not possible to state the annual percentage rate of charge, the consumer shall be provided with adequate
         information in the written agreement. This information shall at least include the information provided for in the second indent
         of Article 6(1).
      
      …’
      7        Article 6(1) and (2) of Directive 87/102 provides:
      
      ‘1.      Notwithstanding the exclusion provided for in Article 2(1)(e), where there is an agreement between a credit institution or
         financial institution and a consumer for the granting of credit in the form of an advance on a current account, other than
         on credit card accounts, the consumer shall be informed at the time or before the agreement is concluded:
      
      –        of the credit limit, if any,
      –        of the annual rate of interest and the charges applicable from the time the agreement is concluded and the conditions under
         which these may be amended,
      
      –        of the procedure for terminating the agreement.
      This information shall be confirmed in writing.
      2.      Furthermore, during the period of the agreement, the consumer shall be informed of any change in the annual rate of interest
         or in the relevant charges at the time it occurs. Such information may be given in a statement of account or in any other
         manner acceptable to Member States.’
      
      8        Article 14 of that directive provides:
      
      ‘1.      Member States shall ensure that credit agreements shall not derogate, to the detriment of the consumer, from the provisions
         of national law implementing or corresponding to this Directive. 
      
      2.      Member States shall further ensure that the provisions which they adopt in implementation of this Directive are not circumvented
         as a result of the way in which agreements are formulated, in particular by the device of distributing the amount of credit
         over several agreements.’
      
      9        Article 15 of that directive states:
      
      ‘This Directive shall not preclude Member States from retaining or adopting more stringent provisions to protect consumers
         consistent with their obligations under the Treaty.’
      
       Directive 2008/48/EC
      10      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 (OJ 2008 L 133, p. 66) imposes a general obligation on the lender to provide the consumer,
         at the pre‑contractual stage and in the credit agreement, with certain information including the annual percentage rate of
         charge (‘the APR’). Annex I to that directive sets out a harmonised method of calculating the APR.
      
      11      In accordance with Articles 27 and 29 of Directive 2008/48, the transposition period for that directive expired on 12 May
         2010, the date on which Directive 87/102 was repealed.
      
       Directive 93/13
      12      Article 3 of Directive 93/13 provides:
      
      ‘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 significant imbalance in the parties’ rights and obligations arising under the contract, to the
         detriment of the consumer.
      
      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. 
      
      The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application
         of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless 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. 
      
      3.      The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair.’
      13      Article 4 of that directive provides:
      
      ‘1.      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.
      
      2.      Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract
         nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange,
         on the other, in so far as these terms are in plain intelligible language.’
      
      14      Article 5 of that directive reads as follows:
      
      ‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted
         in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the
         consumer shall prevail. This rule on interpretation shall not apply in the context of the procedures laid down in Article
         7(2).’
      
      15      Under Article 6(1) of that directive ‘Member States shall lay down that unfair terms used in a contract concluded with a consumer
         by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract
         shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms’.
      
      16      Article 7 of Directive 93/13 provides:
      
      ‘1.      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.
      
      2.      The means referred to in paragraph 1 shall include provisions whereby persons or organisations, having a legitimate interest
         under national law in protecting consumers, may take action according to the national law concerned before the courts or before
         competent administrative bodies for a decision as to whether contractual terms drawn up for general use are unfair, so that
         they can apply appropriate and effective means to prevent the continued use of such terms.
      
      3.      With due regard for national laws, the legal remedies referred to in paragraph 2 may be directed separately or jointly against
         a number of sellers or suppliers from the same economic sector or their associations which use or recommend the use of the
         same general contractual terms or similar terms.’
      
      17      Under Article 8 of Directive 93/13 ‘Member States may adopt or retain the most stringent provisions compatible with the Treaty
         in the area covered by this Directive, to ensure a maximum degree of protection for the consumer’. 
      
      18      Point 1(e) of the annex to that directive, concerning the terms referred to in Article 3(3) thereof, mentions ‘[T]erms which
         have the object or effect of ... (e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately
         high sum in compensation’.
      
       The Slovakian rules
      19      Article 52 of the Slovakian Civil Code provides:
      
      ‘(1)      “Contract concluded with a consumer” means any contract, in whatever legal form, concluded between a supplier and a consumer.
      (2)      The terms of a contract concluded with a consumer and any other provision governing a legal relationship involving a consumer
         shall always apply in favour of the consumer who is party to the contract. Separate treaties or contractual agreements the
         substance or object of which aims to circumvent those provisions shall be invalid.
      
      ...
      (4)      “Consumer” means a natural person who, in the conclusion and enforcement of a consumer contract, is acting for purposes outside
         his trade or profession.’
      
      20      Article 53 of that code provides:
      
      ‘(1)      A contract concluded with a consumer must not contain provisions causing a significant imbalance in the rights and obligations
         of the parties to the detriment of the consumer (unfair term). A contractual term relating to the principal subject of the
         transaction or the appropriateness of the price shall not be deemed to be unfair if that term is precisely formulated in plain
         and intelligible language or if the unfair term has been individually negotiated.
      
      …
      (4)      Unfair terms used in a contract concluded with a consumer include in particular provisions which: 
      …
      (k)      impose a penalty on any consumer who fails to fulfil his obligations requiring him to pay a disproportionately high sum in
         compensation,
      
      …
      (5)      Unfair terms used in a contract concluded with a consumer shall be invalid.’
      21      Article 4 of Act No 258/2001 on consumer credit, as it applied on the date of the facts in the main proceedings, provides:
      
      ‘Consumer credit contract
      (1)      The consumer credit contract must be drawn up in writing, otherwise it shall be invalid; the consumer shall receive a copy.
      (2)      The consumer credit contract must contain, in addition to the general items,
      …
      (j)      the annual percentage rate of charge and the total costs associated with the credit to be borne by the consumer, calculated
         on the basis of data valid on the date on which the contract is concluded,
      
      ...
      If the consumer credit contract does not contain the items indicated in paragraph 2 ... (j), the credit granted shall be deemed
         to be interest-free and free of charge.’
      
      22      Article 45 of Act No 244/2002 on the arbitration procedure, as it applied on the date of the facts in the main proceedings,
         provides:
      
      ‘(1)      A court competent in enforcement proceedings under specific legislation shall, upon an application from the party against
         whom enforcement of an arbitration award is ordered, discontinue the enforcement proceedings.
      
      ...
      (c)      if the arbitration award binds a party to arbitration proceedings to provide performance which is objectively impossible,
         unlawful or contrary to basic morality.
      
      (2)      A court competent in enforcement proceedings shall discontinue the enforcement of an arbitration award or enforcement proceedings
         of its own motion if it finds irregularities in the arbitration proceedings pursuant to paragraph (1)(b) or (c).’
      
       The dispute in the main proceedings and the questions referred for a preliminary ruling
      23      On 26 February 2008, Ms Korčkovská, who is disabled and receives an invalidity pension amounting to approximately EUR 370
         per month, entered into a credit agreement with Pohotovosť, the general terms and conditions of which were as follows. The
         sum borrowed was SKK 20 000 (EUR 663.88) and the fees relating to the credit were SKK 19 120 (EUR 634.67). Ms Korčkovská was
         required to repay the principal and the costs over one year in monthly instalments of SKK 3 260 (EUR 108.21). According to
         the national court, the APR on the credit was thus 95.6%, but it was not mentioned as such in the general terms and conditions
         of credits granted by Pohotovosť or in the credit agreement concluded.
      
      24      Under Article 4 of those general terms and conditions, the whole debt becomes immediately payable if the debtor defaults,
         in part or in full, on two consecutive instalments. Moreover, in such a case, Article 6 of those general terms and conditions
         provides for the payment of daily default interest amounting to 0.25% of the sum due, starting from the date on which the
         debt becomes payable until the date it is finally paid off. The penalty thus corresponds to an annual rate of 91.25%. In that
         regard, the national court points out that, under Slovakian law, the penalties laid down in the form of default interest in
         civil cases must not exceed the base rate of the European Central Bank, which is currently fixed at 1%, plus eight percentage
         points, that is, a total of 9%.
      
      25      Article 17 of the same general terms and conditions provides that disputes arising from a credit agreement are to be settled
         either in Bratislava by the Stály rozhodcovský súd (Permanent Court of Arbitration) or by a national court with jurisdiction
         chosen by the contracting party bringing an action. Moreover, under Article 19 of those general terms and conditions, all
         relations between the lender and the borrower are governed by the provisions of the Commercial Code and not by those of the
         Civil Code. The national court adds that the agreement at issue in the main proceedings contained a power of attorney for
         a lawyer to represent Ms Korčkovská.
      
      26      As Ms Korčkovská failed to pay two consecutive monthly instalments, on 9 October 2008 Pohotovosť filed an action before the
         Stály rozhodcovský súd, which, on 3 November 2008, delivered an arbitration award, in which it ordered the party concerned
         to pay the company in particular the sum of SKK 48 820 (EUR 1 620.53) plus default interest amounting to SKK 39 120 (EUR 1 298.55)
         and costs of SKK 9 928 (EUR 329.55). The award became final on 15 December 2008 and became enforceable on 18 December 2008.
      
      27      On the basis of that award, on 9 March 2009 a bailiff applied to the Okresný súd Stará Ľubovňa (Stará Ľubovňa District Court)
         for an enforcement order to recover the sum of EUR 3 467. By order of 31 July 2009, that court discontinued the enforcement
         proceedings on the grounds that they contravened basic morality as regards the costs of the applicant’s legal representative
         in the enforcement proceedings, which exceeded the sum of EUR 94.61, and as regards the recovery of default interest amounting
         to 0.25% per day on a sum of EUR 1 298.52, from 21 July 2008 until full payment of the debt.
      
      28      On 26 August 2009 Pohotovosť appealed against that order before the Krajský súd v Prešove (Regional Court in Prešov). In support
         of Ms Korčkovská, the Asociácia spotrebiteľských subjektov Slovenska (Association of Consumer Organisations of Slovakia, ‘the
         Asociácia’) was granted leave to lodge a statement in which in particular it informed that court of the large number of enforcement
         proceedings brought in Slovakia by Pohotovosť. The Asociácia considers that the general terms and conditions of the credit
         granted by that company contain unfair terms and amount to unfair business practices, and it proposed to the national court
         that it should make a reference to the Court of Justice pursuant to Article 267 TFEU.
      
      29      Moreover, taking the view that the complaint submitted by the Asociácia contains facts which it must examine of its own motion,
         the Krajský súd v Prešove decided to stay the proceedings and to refer the following questions to the Court of Justice for
         a preliminary ruling:
      
      ‘1.      (a)      Is information about the total cost to the consumer in percentage points (the annual percentage rate – APR) of such importance
         that failure to mention it in the contract could render the cost of consumer credit non‑transparent and insufficiently clear
         and comprehensible?
      
            (b)      Is it possible, under the consumer protection framework provided by Council Directive 93/13 …, to regard the price as an unfair
         condition in a credit contract on the grounds of insufficient transparency and clarity if the contract fails to set out information
         on the total cost of consumer credit in percentage points and the price is expressed solely as a financial sum consisting
         of various fees specified both in the contract and in the General Terms and Conditions?
      
      2.      (a)      Must Council Directive 93/13 … be interpreted as meaning that a national court, hearing an application for enforcement of
         a final arbitral award issued without the participation of the consumer, is required of its own motion, where the necessary
         information on the legal and factual state of affairs is available to it for this purpose, to consider the fairness of a penalty
         contained in the credit agreement concluded by a creditor with a consumer if, according to national procedural rules, such
         an assessment may be conducted in similar proceedings under national law?
      
            (b)      If the penalty for a violation of the consumer’s obligations is disproportionate, is it for this court to draw the necessary
         conclusions arising therefrom under national law to ensure that the consumer will not be bound by that penalty?
      
            (c)      Can a penalty of 0.25% per day on outstanding credit, i.e. 91.25% p.a., be regarded as an unfair condition on the grounds
         that it is disproportionate?
      
      3.      In the application of EU legislation (Council Directive 93/13 …, Directive 2008/48 … repealing Directive 87/102 …) is the
         consumer protection framework of such a nature in relation to consumer credit agreements that, if a contract circumvents regulations
         designed to protect consumers in the field of consumer credit and if, under such a contract, an application is submitted for
         the enforcement of a ruling under an arbitral award, the court may discontinue enforcement proceedings or permit enforcement
         proceedings at the creditor’s expense only up to the outstanding amount of the credit granted, if, under national rules, such
         an assessment of an arbitral award is admissible and the court has the necessary information about the factual or legal state
         of affairs at its disposal?’
      
       The questions referred
      30      Pursuant to the first subparagraph of Article 104(3) of the Rules of Procedure, where the answer to a question referred to
         the Court for a preliminary ruling may be clearly deduced from existing case-law, the Court may, after hearing the Advocate
         General, at any time give its decision by reasoned order.
      
      31      The Court considers that that applies in the present case.
      
       Admissibility
      32      Pohotovosť argues in its written observations, first, that the replies to some of the questions referred may be provided by
         means of an order adopted on the basis of Article 104(3) of the Rules of Procedure. Secondly, it submits in particular that
         the first and third questions do not relate to the interpretation of European Union law and that, in general, the national
         court did not fulfil the obligation incumbent on it to settle the questions of national law prior to making the reference
         to the Court under the mechanism provided by Article 267 TFEU.
      
      33      In that regard, it suffices to observe that, first, while it may be convenient, in certain circumstances, for questions of
         purely national law to be settled at the time the reference is made to the Court, national courts have the widest discretion
         in referring matters to the Court if they consider that a case pending before them raises questions involving interpretation
         of provisions of EU law, or consideration of their validity, necessitating a decision on their part (Joined Cases C‑188/10
         and C‑189/10 Melki and Abdeli [2010] ECR I‑0000, paragraph 41 and the case-law cited).
      
      34      As regards the questions referred by the national court, it must be said that they relate to the interpretation of European
         Union law.
      
      35      Consequently, the Court must reply to those questions raised by the Krajský súd v Prešove.
      
       The second question, part (a)
      36      By part (a) of its second question, which should be examined first of all, the national court asks whether, pursuant to Directive
         93/13, a national court, hearing an application for enforcement of a final arbitration award issued by default and without
         the participation of the consumer, is required of its own motion, where the necessary information on the legal and factual
         state of affairs is available to it for this purpose, to consider the fairness of a penalty contained in a credit agreement
         concluded by a creditor with a consumer, that penalty having been applied in that award, if, according to national procedural
         rules, such an assessment may be conducted in similar proceedings under national law.
      
      37      According to settled case-law, the system of protection introduced 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 bargaining power and his level of knowledge. This
         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 (Joined Cases C‑240/98 to C‑244/98 Océano Grupo Editorial and Salvat Editores [2000] ECR I‑4941, paragraph 25, and Case C‑168/05 Mostaza Claro [2006] ECR I‑10421, paragraph 25).
      
      38      As regards such a weaker position, Article 6(1) of Directive 93/13 provides that unfair terms are not to be binding on the
         consumer. As follows from the case-law, it is a mandatory provision which aims to replace the formal balance which the contract
         establishes between the rights and obligations of the parties with an effective balance which re-establishes equality between
         them (Mostaza Claro, cited above, paragraph 36, and Case C‑243/08 Pannon GSM [2009] ECR I‑4713, paragraph 25).
      
      39      In order to guarantee the protection intended by Directive 93/13, the Court has also stated on a number of occasions that
         the imbalance which exists between the consumer and the seller or supplier may be corrected only by positive action unconnected
         with the actual parties to the contract (Océano Grupo Editorial and Salvat Editores, cited above, paragraph 27; Mostaza Claro, cited above, paragraph 26; and Case C‑40/08 Asturcom Telecomunicaciones [2009] ECR I‑9579, paragraph 31).
      
      40      It is in the light of those principles that the Court has therefore held that the national court is required to assess of
         its own motion whether a contractual term is unfair (Asturcom Telecomunicaciones, cited above, paragraph 32).
      
      41      A court’s power to determine of its own motion whether a term is unfair must be regarded as constituting a proper means both
         of achieving the result sought by Article 6 of Directive 93/13, namely, preventing an individual consumer from being bound
         by an unfair term, and of contributing to the attainment of the objective of Article 7, since, if the court undertakes such
         an examination, that may act as a deterrent and contribute to preventing unfair terms being used by traders in contracts concluded
         with consumers (Case C‑473/00 Cofidis [2002] ECR I‑10875, paragraph 32, and Mostaza Claro, cited above, paragraph 27).
      
      42      That power of the national court has been regarded as necessary for ensuring that the consumer enjoys effective protection,
         in view in particular of the real risk that he is unaware of his rights or encounters difficulties in enforcing them (Cofidis, cited above, paragraph 33, and Mostaza Claro, cited above, paragraph 28).
      
      43      The protection which the directive confers on consumers thus extends to cases in which a consumer who has concluded with a
         seller or supplier a contract containing an unfair term fails to raise the unfair nature of the term, whether because he is
         unaware of his rights or because he is deterred from enforcing them on account of the costs which judicial proceedings would
         involve (Cofidis, cited above, paragraph 34).
      
      44      Such protection is all the more justified where, as the national court appears to consider in its reference for a preliminary
         ruling, the credit contract at issue in the main proceedings contains a power of attorney for a lawyer chosen by the creditor
         who is to represent the consumer or debtor, who may not choose to be represented by another lawyer unless he pays a contractual
         penalty equal to 15% of the amount of the credit.
      
      45      It is true that, according to the case‑law of the Court, European Union law does not require a national court to disapply
         domestic rules of procedure conferring finality on a decision, such as an arbitration award, even if to do so would make it
         possible to remedy an infringement of a provision of European Union law, regardless of its nature, on the part of the decision
         at issue (Asturcom Telecomunicaciones, cited above, paragraph 37).
      
      46      Indeed, the Court has already had occasion to observe that, in order to ensure stability of the law and legal relations, as
         well as the sound administration of justice, it is important that judicial decisions which have become definitive after all
         rights of appeal have been exhausted or after expiry of the time-limits provided to exercise those rights can no longer be
         called into question (Asturcom Telecomunicaciones, cited above, paragraph 36, and the case-law cited).
      
      47      Thus, in the absence of European Union legislation in this area, the rules implementing the principle of res judicata are
         a matter for the national legal order, in accordance with the principle of the procedural autonomy of the Member States. However,
         those rules must not be less favourable than those governing similar domestic actions (principle of equivalence); nor may
         they be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred
         by European Union law (principle of effectiveness) (Asturcom Telecomunicaciones, cited above, paragraph 38).
      
      48      In accordance with the principle of equivalence, the conditions imposed by domestic law under which the courts and tribunals
         may apply a rule of European Union law of their own motion must not be less favourable than those governing the application
         by those bodies of their own motion of rules of domestic law of the same ranking (Asturcom Telecomunicaciones, cited above, paragraph 49, and the case-law cited).
      
      49      In that regard, it must be pointed out that Article 6(1) of Directive 93/13 is a mandatory provision. It should also be noted
         that, according to the Court’s case‑law, that directive as a whole constitutes a measure which is essential to the accomplishment
         of the tasks entrusted to the European Union and, in particular, to raising the standard of living and the quality of life
         throughout the Union (Mostaza Claro, cited above, paragraph 37, and Asturcom Telecomunicaciones, cited above, paragraph 51).
      
      50      Accordingly, in view of the nature and importance of the public interest underlying the protection which Directive 93/13 confers
         on consumers, Article 6 of the directive must be regarded as a provision of equal standing to national rules which rank, within
         the domestic legal system, as rules of public policy (Asturcom Telecomunicaciones, paragraph 52).
      
      51      It follows from this in particular that, inasmuch as the national court or tribunal seised of an action for enforcement of
         a final arbitration award is required, in accordance with domestic rules of procedure, to assess of its own motion whether
         an arbitration clause is in conflict with domestic rules of public policy, it is also obliged to assess of its own motion
         whether that clause is unfair in the light of Article 6 of that directive, where it has available to it the legal and factual
         elements necessary for that task (Pannon GSM, cited above, paragraph 32, and Asturcom Telecomunicaciones, cited above, paragraph 53).
      
      52      In the main proceedings, it appears that, according to the information provided by the national court, the national rules
         on arbitration proceedings require the court to discontinue the enforcement of a payment laid down by an arbitration award
         where that payment is prohibited by law or where it contravenes basic morality. Moreover, that court considers that any unfair
         term appearing in a contract concluded with a consumer would, in terms of national law, contravene basic morality since, contrary
         to the requirement of good faith, it would cause a significant imbalance in the rights and obligations of the supplier and
         of the consumer to the detriment of the consumer.
      
      53      Thus, as in the context of the Asturcom Telecomunicaciones judgment, in a situation such as that in the main proceedings, where the court seised with a view to the enforcement of an
         arbitration award may, of its own motion, discontinue the application of that arbitration award where that award imposes on
         the party concerned an objectively impossible payment, prohibited by law or contrary to basic morality, that court must, where
         it has available to it the legal and factual elements necessary for that task, examine, of its own motion, within the context
         of the enforcement proceedings, whether the penalty laid down by a credit contract concluded between a creditor and a consumer
         is unfair.
      
      54      The answer to part (a) of the second question is therefore that Directive 93/13 requires a national court, hearing an application
         for enforcement of a final arbitration award issued by default and without the participation of the consumer, of its own motion,
         where the necessary information on the legal and factual state of affairs is available to it for this purpose, to consider
         the fairness of a penalty contained in the credit agreement concluded by a creditor with a consumer, that penalty having been
         applied in that award, where, according to national procedural rules, such an assessment may be conducted in similar proceedings
         under national law.
      
       The second question, parts (b) and (c)
      55      By its second question, parts (b) and (c), the national court asks, first, whether a term contained in a credit agreement
         providing, in the event of non-payment by the consumer, for a daily penalty of 0.25% of the amount of the credit, that is
         to say 91.25% of that amount per year, may be regarded as unfair within the meaning of Articles 3 and 4 of Directive 93/13
         on the grounds that it is disproportionate, and, secondly, if that is the case, whether it is for a national court which finds
         that it is disproportionate to ensure that the consumer will not be bound by that term.
      
      56      It should be noted in that regard that, in referring to concepts of good faith and significant imbalance between the rights
         and obligations of the parties, Article 3 of Directive 93/13 merely defines in a general way the factors that render unfair
         a contractual term that has not been individually negotiated (see, to that effect, Case C‑478/99 Commission v Sweden [2002] ECR I‑4147, paragraph 17, and Case C‑237/02 Freiburger Kommunalbauten [2004] ECR I‑3403, paragraph 19).
      
      57      Article 3(2) of that directive provides, however, that a term is always to 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, which appears to be the case in the main proceedings.
      
      58      The annex to which Article 3(3) of Directive 93/13 refers contains an indicative and non-exhaustive list of the terms which
         may be regarded as unfair, including, under point (1)(e) of that annex, those ‘which have the object or effect of ... requiring
         any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation’.
      
      59      As to the question whether a particular term in a contract is, or is not, unfair, Article 4 of Directive 93/13 provides that
         the answer should be reached 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.
         It should be pointed out in that respect that the consequences of the term under the law applicable to the contract must also
         be taken into account. This requires that consideration be given to the national law (Freiburger Kommunalbauten, cited above, paragraph 21).
      
      60      It follows that, in the context of its jurisdiction under Article 267 TFEU to interpret European Union law, the Court may
         interpret general criteria used by the European Union legislature in order to define the concept of unfair terms. However,
         it should not rule on the application of these general criteria to a particular term, which must be considered in the light
         of the particular circumstances of the case in question, and so it is for the national court to decide whether a contractual
         term such as that at issue in the main proceedings providing, according to the findings of the national court, for a disproportionately
         high sum in compensation, is to be regarded as unfair in the light of all the circumstances attending the conclusion of the
         contract (see, in that regard, Freiburger Kommunalbauten, cited above, paragraphs 22 and 25).
      
      61      Consequently, if that court reaches the conclusion that the term at issue in the main proceedings is unfair within the meaning
         of Directive 93/13, it should be pointed out that, in accordance with Article 6(1) of that directive, and as provided for
         under national law, such a term is not to be binding on the consumer and that, moreover, under the same provision, that court
         will have to examine whether the contract can continue in existence without that unfair term.
      
      62      In such a situation, it is therefore for that court to establish all the consequences thereby arising under national law,
         in order to ensure that the consumer is not bound by that term (see Asturcom Telecomunicaciones, paragraph 59).
      
      63      In the light of the foregoing, the answer to parts (b) and (c) of the second question is that it is for the national court
         to determine whether a term in a credit agreement such as that at issue in the main proceedings providing, according to the
         findings of that court, for the consumer to pay a disproportionately high sum in compensation, must, in the light of all the
         circumstances attending the conclusion of the contract, be regarded as unfair within the meaning of Articles 3 and 4 of Directive
         93/13. If that is the case, it is for that court to establish all the consequences thereby arising under national law, in
         order to ensure that the consumer is not bound by that term.
      
       The first question 
      64      By its first question, the national court asks, in essence, whether the mention of the APR in a consumer credit contract,
         as laid down in Article 4(2)(a) of Directive 87/102, constitutes essential information in that type of contract and consequently
         whether the failure to mention that information means that, within the meaning of Article 4(2) of Directive 93/13, the terms
         of that contract are not drafted in plain, intelligible language, so that the term concerning the cost of that credit may
         then be assessed by that court as to whether it may be unfair within the meaning of Article 3 of the latter directive.
      
      65      First of all, it should be noted that, bearing in mind the date on which the credit agreement at issue in the main proceedings
         was concluded and the details set out in paragraph 11 of this order, this question must be answered in the light of Directive
         87/102 and not Directive 2008/48.
      
      66      In that regard, the Court has previously ruled that the objective pursued by Directive 87/102 consists in ensuring that a
         minimum standard of consumer protection in matters of consumer credit is complied with (Case C‑429/05 Rampion and Godard [2007] ECR I‑8017, paragraph 47, and Case C‑509/07 Scarpelli [2009] ECR I‑3311, paragraph 25). That directive, as is clear from Article 15 thereof and from the 25th recital in the preamble
         thereto, according to which the directive does not prevent Member States from maintaining or adopting stricter provisions
         for the protection of consumers, provides for only minimum harmonisation of the provisions of national law relating to consumer
         credit (Rampion and Godard, cited above, paragraph 18).
      
      67      The Court has also repeatedly found that, as is clear from the recitals in the preamble thereto, Directive 87/102 was adopted
         with the dual aim of ensuring both the creation of a common consumer credit market (3rd to 5th recitals) and the protection
         of consumers who avail themselves of such credit (6th, 7th and 9th recitals) (Case C‑208/98 Berliner Kindl Brauerei [2000] ECR I‑1741, paragraph 20, and Case C‑264/02 Cofinoga [2004] ECR I‑2157, paragraph 25).
      
      68      It is with a view to protecting the consumer against unfair credit terms and to enabling him to have full knowledge of the
         terms of the future performance of the agreement entered into that Article 4 of Directive 87/102 provides that, at the time
         of concluding such an agreement, the borrower must have to hand all information which could have a bearing on the implications
         of his undertaking (Berliner Kindl Brauerei, cited above, paragraph 21).
      
      69      Article 4(1) and (2) of Directive 87/102 provides that the credit agreement must be made in writing and that the written agreement
         must include a statement of the APR and the conditions under which it may be amended. Article 1a of that directive lays down
         the methods of calculation of the APR and stipulates, in paragraph 4(a), that it is to be calculated ‘at the time the credit
         contract is concluded’ (see, to that effect, Cofinoga, cited above, paragraph 23).
      
      70      Informing the consumer of the total cost of credit, in the form of an interest rate calculated according to a single mathematical
         formula, is of critical importance in this regard. First, this information, which, under Article 3 of Directive 87/102, must
         be stated in any advertising, contributes to the transparency of the market, as it enables the consumer to compare offers
         of credit. Secondly, it enables the consumer to assess the extent of his liability (Cofinoga, cited above, paragraph 26).
      
      71      Consequently, in a situation such as that in the main proceedings, the failure to mention the APR in the credit agreement
         at issue, the mention of the APR being essential information in the context of Directive 87/102, may be a decisive factor
         in the assessment by a national court of whether a term of a credit agreement concerning the cost of that credit in which
         no such mention is made is written in plain, intelligible language within the meaning of Article 4 of Directive 93/13.
      
      72      If that is not the case, a national court is empowered to assess the unfair nature of such a term within the meaning of Article
         3 of Directive 93/13. Even if such a term may be assessed as falling within the scope of the exclusion referred to in that
         article, it should be observed that the terms referred to in Article 4(2) of that directive, while they come within the area
         covered by Directive 93/13, escape the assessment as to whether they are unfair only in so far as the national court having
         jurisdiction should form the view, following a case-by-case examination, that they were drafted by the seller or supplier
         in plain, intelligible language (see Case C‑484/08 Caja de Ahorros y Monte de Piedad de Madrid [2010] ECR I‑4785, paragraph 32). 
      
      73      In the main proceedings, an examination of the unfair nature of the term of the credit agreement which fails to mention the
         APR could also be considered in the light of Directive 93/13 and, in that regard, as was found in paragraph 53 of this order,
         the national court has the power to examine such a term of its own motion. In such a situation, as was observed in paragraph
         60 of this order, it is for the national court to assess whether, in the light of all the circumstances attending the conclusion
         of the contract at issue in the main proceedings, the failure to mention the APR in a term of a consumer credit contract concerning
         the cost of that credit is likely to confer on that term an unfair nature within the meaning of Articles 3 and 4 of Directive
         93/13.
      
      74      However, it follows from the information supplied by the national court that, in accordance with Article 4 of Act No 258/2001,
         which transposes Directive 87/102, a consumer credit contract must mention the APR and, in the absence of such mention, the
         consumer credit granted is deemed to be interest-free and free of charge.
      
      75      Article 14 of that directive requires Member States to ensure that credit agreements do not derogate, to the detriment of
         the consumer, from the provisions of national law implementing or corresponding to that directive.
      
      76      Consequently, in circumstances such as those in the main proceedings, without its being necessary to examine the unfair nature
         of the term which fails to mention the APR in the light of Directive 93/13, Directive 87/102 is to be interpreted as allowing
         national courts to apply of their own motion the provisions transposing Article 4 of that directive into national law and
         as providing that the failure to mention the APR in a consumer credit contract means that the credit granted is deemed to
         be interest-free and free of charge (see, by analogy, as regards Article 11(2) of Directive 87/102, Rampion and Godard, cited above, paragraph 69).
      
      77      Accordingly, the answer to the first question is that, in circumstances such as those in the main proceedings, the failure
         to mention the APR in a consumer credit contract, the mention of the APR being essential information in the context of Directive
         87/102, may be a decisive factor in the assessment by a national court of whether a term of a consumer credit agreement concerning
         the cost of that credit in which no such mention is made is written in plain, intelligible language within the meaning of
         Article 4 of Directive 93/13. If that is not the case, that court has the power to assess, of its own motion, whether, in
         the light of all the circumstances attending the conclusion of that contract, the failure to mention the APR in the term of
         that contract concerning the cost of that credit is likely to confer on that term an unfair nature within the meaning of Articles
         3 and 4 of Directive 93/13. However, notwithstanding the power which is given to assess that contract in the light of Directive
         93/13, Directive 87/102 is to be interpreted as allowing national courts to apply of their own motion the provisions transposing
         Article 4 of the latter directive into national law and as providing that the failure to mention the APR in a consumer credit
         contract means that the credit granted is deemed to be interest‑free and free of charge.
      
       The third question
      78      By this question, the national court asks whether, in circumstances such as those in the main proceedings, and in so far as
         it reaches the conclusion that the provisions of Directives 87/102 and 93/13 have not been complied with, it has the power,
         under the European Union’s consumer protection rules, to discontinue or limit the enforcement of a definitive arbitration
         award adopted under an arbitration clause set out in the credit agreement.
      
      79      In that regard, it must be observed that, under Article 267 TFEU, the Court has no power to apply rules of European Union
         law to a particular case, but only to rule on the interpretation of the Treaty and of acts adopted by European Union institutions
         (Case C‑291/03 MyTravel [2005] ECR I‑8477, paragraph 43 and the case-law cited). 
      
      80      By the present question, the national court is asking the Court of Justice to indicate to it whether, in circumstances such
         as those at issue in the main proceedings, taking account of the replies given by the Court to the first and second questions,
         it may, under European Union law and national law, limit the enforcement of the definitive arbitration award at issue in the
         main proceedings solely to the outstanding amount payable under the consumer credit agreement.
      
      81      In so far as the reply to that question would involve the Court ruling on the actual application to the facts of the case
         at issue of the rules of law interpreted in the context of the first two questions and, in any event, on the basis of the
         replies given to those questions, the national court has available to it the means of interpretation necessary to resolving
         the dispute before it, there is no need to reply to this question.
      
       Costs
      82      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
         the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court of Justice, other
         than the costs of those parties, are not recoverable.
      
      On those grounds, the Court (Eighth Chamber) hereby rules:
      1.      Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts requires a national court, hearing an application
            for enforcement of a final arbitral award issued by default and without the participation of the consumer, of its own motion,
            where the necessary information on the legal and factual state of affairs is available to it for this purpose, to consider
            the fairness of the penalty contained in a credit agreement concluded by a creditor with a consumer, that penalty having been
            applied in that award, where, according to national procedural rules, such an assessment may be conducted in similar proceedings
            under national law.
      2.      It is for the national court concerned to determine whether a term in a credit agreement such as that at issue in the main
            proceedings providing, according to the findings of that court, for the consumer to pay a disproportionately high sum in compensation,
            must, in the light of all the circumstances attending the conclusion of the contract, be regarded as unfair within the meaning
            of Articles 3 and 4 of Directive 93/13. If that is the case, it is for that court to establish all the consequences thereby
            arising under national law, in order to ensure that the consumer is not bound by that term.
      3.      In circumstances such as those in the main proceedings, the failure to mention the annual percentage rate in a consumer credit
            contract, the mention of the annual percentage rate being essential information in the context of Directive 87/102/EEC of
            22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning
            consumer credit, as amended by Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998, may be
            a decisive factor in the assessment by a national court of whether a term of a consumer credit agreement concerning the cost
            of that credit in which no such mention is made is written in plain, intelligible language within the meaning of Article 4
            of Directive 93/13. If that is not the case, that court has the power to assess, of its own motion, whether, in the light
            of all the circumstances attending the conclusion of that contract, the failure to mention the annual percentage rate in the
            term of that contract concerning the cost of that credit is likely to confer on that term an unfair nature within the meaning
            of Articles 3 and 4 of Directive 93/13. However, notwithstanding the power which is given to assess that contract in the light
            of Directive 93/13, Directive 87/102 is to be interpreted as allowing national courts to apply of their own motion the provisions
            transposing Article 4 of the latter directive into national law and as providing that the failure to mention the annual percentage
            rate in a consumer credit contract means that the credit granted is deemed to be interest-free and free of charge.
      [Signatures]
      * Language of the case: Slovakian.