1.Loan Agreements in Swiss Francs
In 2016, the Court of First Instance of Athens (multi-judge formation or 'Polimeles Protodikio') delivered the judgment no. 334/2016, following a Representative Action, filed by consumer associations. The plaintiff associations claimed that the defendant, a major Greek bank, concluded loan agreements with consumers, which allegedly contained illegal general terms and conditions. The loan agreements in question were stipulated in Swiss franc (CHF). Consumers were required to repay these loans either in CHF or in euros (€), based on the exchange rate of the day that each instalment was repaid. However, after the significant appreciation of CHF vis-à-vis the euro in recent years, thousands of consumers could not service their borrowing.
The Court of First Instance of Athens held that the general terms of conditions of these loan agreements, insofar as they stipulated that the loans would be granted in CHF, were not transparent and hence not legal. Therefore, it ordered the defendant to re-calculate the outstanding balance of the loans it granted, based on the exchange rates of the date that each loan was granted. The court didn't apply the 'loser pays principle' in that case, but ordered that each party should cover their own costs (articles 179 and 741 Code Civil Procedure), as it considered the 'interpretation of the invoked rule of law' too be particularly difficult in that case. The defendant has filed an appeal, which is scheduled to be discussed before the Court of Appeal of Athens on 28/9/2017.
2.Special Duty on Property
In 2011, as part of the country's efforts to achieve fiscal consolidation in accordance with the Economic Adjustment Programme, the Greek government imposed a special duty on properties which contained built surfaces having electricity supply. The special tax was to be collected through the electricity bills paid by consumers. The law stipulated as a penalty for non-payment of this duty, the termination of electricity supply. Consumer associations filed a Representative Action against the main Greek electricity supplier (Public Power Corporation S.A. or 'DEI') at the Court of First Instance of Athens (multi-judge formation or 'Polimeles Protodikio'). The first instance court held that this law violates Article 4 of the Greek Constitution, which states that taxpayers contribute to public charges in proportion to their means. Furthermore, it held that the termination of electricity supply, which was the penalty for non-payment of the duty, unduly affects the private agreement concluded between consumers and electricity providers. Nevertheless, the court didn't apply the 'loser pays principle' but ordered each party to cover their own costs (article 179 Code Civil Procedure), in light of the difficulty of that case. Thereafter, the Greek government adopted legislative measures conforming to this court decision.
3.Supreme Court (Areios Pagos) 652/2010
In the case which gave rise to the decision 652/2010 of the Supreme Court, a consumer association filed a Representative Action against a Greek bank, regarding the alleged illegality of various terms and conditions used by the bank in its transactions with consumers. The Court of First Instance of Athens (multi-judge formation or 'Polimeles Protodikio') and the Court of Appeal of Athens had already delivered their judgment on the Representative Action at issue. The parties to the proceedings both filed an application for the annulment of the judgment of the Court of Appeal of Athens (no 3499/2008), on different grounds, which were joined in the same proceedings.
The Supreme Court upheld several of the claims of the representative entity and dismissed others. For instance, one of the terms at issue stipulated that bank accounts with an average monthly balance, below a limit set by the bank, will incur extra charges. The Supreme Court found this term to be illegal and thus void. On the other hand, the Supreme Court held that the term according to which the bank could change the interest rate of credit cards, was legal and hence valid, under certain conditions. In particular, the bank can justifiably change the interest rates of credit cards within a specific margin, when the ECB increases the relevant interest rate. Furthermore, the Supreme Court held that the bank may take account of the risk and the market conditions and choose not to decrease the interest rates of credits cards when the ECB decreases the relevant interest rate.
Thereafter, the Supreme Court annulled the previous decision of the Court of Appeal (no 3499/2008). The Supreme Court did not apply the 'loser pays principle' but ordered each party to cover their own costs, as it held that both parties partially won and partially lost (articles 178 and 183 Code of Civil Procedure).
In 2011, the Deputy Minister of Labour extended the res judicata of this judgment to all suppliers, therefore banks cannot legally use terms and conditions similar to the ones found to be illegal, pursuant to this judgment of the Supreme Court.
4.Supreme Court (Areios Pagos) 2123/2009
In the case which gave rise to the decision 2123/2009 of the Supreme Court, a consumer association filed a Representative Action against a bank, alleging that the bank used terms and conditions in its transactions with consumers, which were allegedly illegal. The Supreme Court held that the contract term, according to which consumers are liable to pay extra costs for transactions regarding withdrawals or depositing cheques above a certain limit, was illegal. Furthermore, the Supreme Court ruled that the contract term, regarding the payment of interest in loan agreements, was illegal. According to this term, the bank would deposit the amount of the loan in a special account but the consumers would not immediately have access to the entire amount. On the contrary, the amount of the loan would become available to the consumers gradually. Nevertheless, the bank would charge consumers with interest payments for the entire amount since the moment of depositing the loan, even though consumers would use only part of that amount.
The Supreme Court also accepted the pleadings of the bank, insofar as it claimed the Court of Appeal erred in relation to the claim of the consumer association regarding non-pecuniary compensation. In particular, the Court of Appeal issued an order of injunction, whereas the representative entity had filed an order for declaration. Therefore, the Supreme Court annulled the previous judgment of the Court of Appeal and referred the case back to it.
In respect to the costs, as both parties had won and lost to a different extent, the Supreme Court order the parties to pay costs as follows: the consumer association was ordered to pay €2,700 and the bank was ordered to pay €1,300. In 2011, the Deputy Minister of Labour extended the res judicata of this judgment to all suppliers, therefore banks cannot legally use terms and conditions similar to the ones found to be illegal, pursuant to this judgment of the Supreme Court.
5.Supreme Court (Areios Pagos) 430/2005
In the case which gave rise to the decision 430/2005 of the Supreme Court, a consumer association filed a Representative Action against a bank, alleging that the defendant bank used illegal terms and conditions. The Supreme Court ruled that the term according to which the bank would calculate interests based on the assumption that the year has 360 days (as opposed to 365) is illegal. Furthermore, it ruled that the contract term, according to which consumers were liable to pay compensation to the bank if they repaid the entire loan before the stipulated contract duration, is illegal. The aforementioned term, concerned floating-rate loans. Finally, it held that any term which made the premature repayment of the loan depends upon additional cost incurred by consumers is illegal.
On the other hand, the Supreme Court upheld the contract term according to which the bank could pass a special duty laid down by law (Law 128/1975) to consumers, ruling that this term is legal. However, despite this ruling of the Supreme Court, lower courts which subsequently ruled on individual actions found that this contract term is illegal.
In relation to costs, as both parties had filed two different applications for annulment, which were joined, and as both applications were partially accepted and partially dismissed, the Supreme Court ordered each party to pay €1,500 as costs.
It should be noted, that the Minister of Development issued a Ministerial order in 2008, pursuant to Article 10(21) of the Law on Consumer Protection, specifying the conditions under all suppliers must abide by this judgment of the Supreme Court. Hence, banks are prohibited from using the terms which were found to be illegal with this judgment of the Supreme Court, as well as any other similar terms.
1.See the website of the 'Association of Borrowers in Swiss Franc' <http://www.daneia-chf.gr/archiki.html>
2. Law 4021/2011 (Government Gazette A/218 3 October 2011)
3. Court of First Instance of Athens 1101/2012 (NOMOS Legal Database); See also Areios Pagos (Supreme Court) 293/2014 (NOMOS Legal Database), which upheld the decision of the first instance court.
4. See Ministerial Orders ΥΑ Ζ1-21/2011 (Government Gazette 21/Β 18 January 2011)
5. See Ministerial Orders ΥΑ Ζ1-21/2011 (Government Gazette 21/Β 18 January 2011)
6. Court of Appeal of Lamia 124/2007; Court of Appeal of Lamia 125/2007; Court of Appeal of Athens 1431/2004; Small Claims Court (Irinodikeio) of Athens 358/2011
7. Ministerial Order ΥΑ Ζ1-798/25-06-2008 (Government Gazette Β/1353 11 July 2008)
Merricks v Mastercard Inc : Collective Actions Re-invigorated...