Franak: EC establishing situation regarding foreign currency loans

Responding to a complaint by the Croatian association Franak, which gathers holders of loans denominated in the Swiss franc, European Commissioner for Justice, Consumers and Gender Equality Vera Jourova said that her staff were working to establish the situation regarding such loans in a number of EU member-states so that consumers were not prevented from contesting unfair contractual provisions before courts of law, Franak said in a statement on Tuesday.

Jourova replied in writing to Franak's complaint submitted after a Croatian Supreme Court ruling on Swiss franc-indexed loans, the association said.

Franak recalls in the statement that in mid June it reported to the EC a breach of EU law by the Croatian Supreme Court committed through its failure to consult with the Court of Justice of the EU before deciding not to apply the reasoning and court practice of the Court of Justice of the EU, thus causing serious harm to holders of Swiss franc-indexed loans in a class action. In its application, Franak had called for legal action against the Republic of Croatia for breaching the EU Treaty and the Treaty on the Functioning of the EU.

Franak said that Jourova confirmed its most important arguments related to the clarity of contractual provisions and referred to a ruling of the Court of Justice of the EU.

Jourova said in her reply that the Court of Justice of the EU had made it clear that a request for formulating contractual provisions in a clear, understandable language must be understood not only as a request for making a specific provision grammatically understandable to a consumer, but for ensuring that the contract explains in a transparent way the specific functioning of the mechanism of conversion to a foreign currency so that the consumer is able to assess, based on clear and understandable criteria, the possible economic repercussions of those provisions.

Franak said that this legal interpretation and reasoning based on the cited ruling of the Court of Justice of the EU had been refused by the Croatian Supreme Court in its class action launched to prove that the foreign currency clause in contracts on Swiss-franc loans was unfair.

"Does that means that already in the initial stage of the proceedings the EC has established a mistake, namely a serious breach of EU law by the Croatian Supreme Court in the case of Swiss franc-pegged loans?," the association wondered.

It also noted that at the end of her reply Jourova announced a possibility to take action as requested by Franak.

Last update: Tue, 03/11/2015 - 13:08

More from Business

Croatian inventors win 11 medals at London show

Six Croatian inventors and entrepreneurs won 11 medals at the British Invention Show (BIS), with Tomislav Bronzin of...

AT&T tops Bayer: the five biggest mega deals of 2016

With AT&T's offer worth over 100 billion dollars for media giant Time Warner, the US telecom firm has surpassed...

AT&T to buy Time Warner in 85.4-billion-dollar deal

Telecommunications giant AT&T on Saturday said it would buy entertainment group Time Warner in a deal worth 85.4...

AT&T agrees to buy Time Warner, reports say

Telecommunications giant AT&T has agreed to buy media conglomerate Time Warner in a deal worth 80 billion...

Bombardier announces 7,500 job cuts as part of restructuring

Canadian aircraft and train manufacturer Bombardier will cut a further 7,500 jobs as part of its ongoing...