Legislation on foreign currency loans has recently accelerated. Firstly, the Parliament passed a law on interest rate increases and unfair contract accounting for unfair contract terms. Then the law on the conversion of foreign currency loans was the last. Is this really the end of litigation on foreign currency loans, or are there cases where it is still worth referring to the invalidity of the contract?
What was the law?
At the beginning of the summer and in the autumn, the FX law provided for interest rate hikes and exchange rate mismatches in such credit agreements to be considered unfair, and these amounts would be returned to the borrowers. Banks were required by law to settle accounts. Thus, these provisions did not cover all or part of the foreign currency loan contracts.
Most recently, the law on forint conversion of foreign currency loans obligates, in some cases, optional exchange of foreign currency loans by banks, mainly at market rates. That is, foreign currency settlement of these loans is terminated.
Are the lawsuits over?
Part of the lawsuits will certainly be closed, as many court cases were based on the earlier practice of the courts, which considered the exchange rate gap to be a cost related to foreign currency lending. Thus, according to the previous practice, contracts, which are the exchange rate slippage or the price difference, were considered void. its extent is not shown.
In this practice, he changed the summer unity decision of the Mansion. In this, the highest judicial forum ruled that the parts of foreign exchange loan contracts were unfair. This has been enshrined in law by the National Assembly, and the banks have been required to make a compulsory settlement. All this is relevant to the lawsuits because if these points are considered unfair, then this will not lead to the nullity of the whole contract, but only the part concerning the exchange rate gap will be null and void. Thus, the actions based on total invalidity caused by the exchange rate gap may indeed be terminated and may become unnecessary due to the mandatory settlement.
For other reasons, null and void contracts
Many people forget that banks and other financial institutions have not only made serious collapses in foreign currency lending due to interest rate hikes and exchange rate slippages. There may be other errors in the FX loan contract that lead to the nullity of the entire contract.
For example, several contracts have already been established by the court that the loan amount has been determined in such a way that, at the time of signing, the borrower was unaware of the amount of the loan taken in foreign currency. There may be formal errors, for example, because the person signing the bank (eg a car dealer) did not have a power of attorney or the power of attorney did not comply with the law. There was also a case in which the invalidity of the option contract stipulated in the contract decided the whole contract.
These other reasons may also cause the contract to be null and void, since such cases are not covered by these FX-laws. Conversion to the forint does not in any case remove the invalidity if the court concludes retroactively at the time of the conclusion of the contract that the contract is null and void. In this case, subsequent modifications may not apply. Thus, it can be said that foreign currency lending laws do not completely eliminate such lawsuits.