Swiss franc loan borrowers, that sustained damages due to bank’s unilateral changes of the interest rates, finally have the possibility to seek compensation from the banks for the overpaid amounts. The Commercial Court of Appeal of Croatia issued a judgement in June 2014 in the case in which Croatian Confederation of Associations for Consumers Protection (Confederation Consumer) filed a collective claim against eight Croatian banks for the violation of the collective interests and rights of the loan borrowers. The said judgement determined the violation of the collective rights and interests of the consumers, the loan borrowers, caused by the banks’ use of unfair contractual terms in the loan contracts, except the sued Sberbank d.d. for which a violation was not determined.

The unfair contractual term consisted in the fact that a regular interest rate, variable depending on the unilateral bank decision, was contracted, and this contractual term was not individually negotiated with the consumers. This resulted with the violation, because the sued banks didn’t provide complete information to the consumers during the pre-contractual period or during the stipulation of the contract, about all the parameters necessary to make an informed decision on whether to conclude the loan contract, The consequence of the violation was the imbalance in the parties’ rights and obligations, meaning that the risk of exchange rates rise of the Swiss franc was bared solely by the borrowers.

The judgement contains an injunction to stop with the use of the terms containing the variable interest rates, and prohibits the use of such or similar practice in the future.

Borrowers of Swiss franc loans that sustained damages because of the said bank practice are entitled to seek fair compensation for the damages in individual cases, on the basis of the judgement issued by the The Commercial Court of Appeal of Croatia which declared void such a term that contained a variable interest rate in all the consumer loan contracts. The judgement takes into consideration all the Swiss franc loans that contained the terms that included the variable interest rates, concluded with the following banks: Zagrebačka banka d.d., Privredna banka Zagreb d.d., Erste &Steiermarkische Bank d.d., Raiffeisenbank Austria d.d., Hypo Alpe-Adria-Bank d.d., OTP Banka Hrvatska d.d. i Societe Generale – Splitska Banka d.d term.

In the said individual cases it is necessary to specify the damages the consumer sustained, that is, the exact overpaid amount in relation to the amount that should have been paid if the variable interest rate wasn’t stipulated.

It is also important to underline that the judgement only applies to consumer loans, concluded by banks with a natural person who is acting for purposes which are outside his trade, business or profession.

It is important to mention the amendments of the Consumer Credit Act, that entered into force on the 1st of January 2014, obliging all the banks to harmonize the interest rates and define in a clear and precise manner the variable elements for the calculation of the variable interest rates in all the loan contracts that were already concluded, until that date, as well as to apply this to all the future consumer loan contracts.

The European Court of Justice decided upon similar cases that were brought before the national courts of other Member States of the European Union. In the Spanish case Caja de Ahorrosin 2008 a confederation of associations for the protection of consumers of bank services filed a claim against the Spanish saving house because of the use of the contractual term that contained a variable interest rate that could change according to the unilateral bank decision, for which they claimed to be unfair. The Court issued a decision allowing to the national court, the Spanish court, to declare void the said contractual term, if it finds that such term is unfair, meaning that the term is imprecise, unclear and not prominent enough and that it has not been individually negotiated.