CJEU, 9th chamber, December 8, 2022, No C-600/21

THE COURT (Ninth Chamber),

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 3(1) and Article 4(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).

2 The request has been made in proceedings between QE and the Caisse régionale de Crédit mutuel de Loire-Atlantique et du Centre Ouest, a banking institution established under French law (‘the banking institution’), concerning a repossession procedure carried out at QE’s home after the banking institution triggered the accelerated repayment procedure in respect of the loan agreement concluded between those two parties.

Legal context

European Union law

3 Article 3(1) of Directive 93/13 provides:

‘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.’

4 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.’

French law

5 Article L. 132-1 of the Consumer Code, in the version applicable to the dispute in the main proceedings provided that in contracts concluded between sellers and suppliers and persons who are not sellers and suppliers or who are consumers, terms the purpose or effect of which is to cause a significant imbalance in the rights and obligations of the parties to the contract, to the detriment of the person who is not a seller or supplier or who is a consumer, are unfair.

The dispute in the main proceedings and the questions referred for a preliminary ruling

6 By notarial act of 17 May 2006, the banking institution granted QE a loan for the purchase of immovable property in the amount of EUR 209 109 repayable over 20 years.

7 The general terms and conditions of the loan agreement provided that the banking institution could trigger the accelerated repayment procedure in respect of the loan agreement, making the outstanding amount due for immediate repayment, with no requirement for formalities or formal written demand, in the event of a delay of more than 30 days in the payment of an instalment of the principal, interest or incidental amounts. The loan agreement provided, moreover, that QE could request an amendment to the payment schedule which could, depending on the circumstances, avoid the risk of non-payment.

8 Since the instalment payable on 10 December 2012, in an amount of EUR 904.50, was not paid, nor was the January 2013 instalment, the banking institution triggered the accelerated repayment procedure in respect of the loan agreement on 29 January 2013, without a prior formal written demand having been made, in accordance with the contract at issue in the main proceedings, and carried out a repossession procedure at QE’s home on 17 September 2015.

9 QE brought an action before the court hearing enforcement proceedings on 13 October 2015, arguing, in order to have the repossession procedure set aside, that the report of the repossession contained irregularities.

10 QE brought an appeal on a point of law before the referring court against the judgment delivered on 3 October 2019 by the cour d’appel de Versailles (Court of Appeal, Versailles, France), in which that court refused to acknowledge that the term of the contract at issue in the main proceedings regarding the accelerated repayment procedure was unfair. QE maintains, in particular, that the term of that contract providing for a dispensation from making a formal written demand constitutes an unfair term having regard to the criteria established in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60).

11 The referring court states that, in accordance with its settled case-law, it follows from Articles 1134, 1147 and 1184 of the Civil Code, in the version applicable to the dispute in the main proceedings, that, while an agreement to lend a sum of money may provide that failure to pay on the part of a borrower who is not acting in the course of a business will trigger the accelerated repayment procedure in respect of the loan, that loan cannot be declared repayable to the lender without a formal written demand having been made, stating the period within which the debtor can object, and the debtor having failed to comply with that demand. That court states, however, that it accepts that it is possible to dispense with that requirement for a formal written demand where there is an express and unequivocal provision in the contract since the consumer has been informed of the consequences of failure to comply with his obligations.

12 The referring court is uncertain, however, first, whether, in the light of Article 3(1) and Article 4 of Directive 93/13, a loan agreement may provide for a dispensation from the requirement to make a formal written demand prior to triggering the accelerated repayment procedure in respect of a loan agreement. Second, it has doubts regarding whether a term of that agreement which provides for automatic triggering of the accelerated repayment procedure in respect of that agreement where there is a delay of more than 30 days in the payment of an instalment is unfair, in the light, in particular, of the criteria established in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60).

13 In that regard, the referring court notes, in the first place, that it may be argued, in favour of such a term being unfair, that it allows the lender to terminate the agreement without reasonable prior notice and without giving the borrower the opportunity to explain the failure to comply with obligations which has been attributed to him. On the other hand, in support of the view that such a term is not unfair is the fact that, in order to be valid, it must be contained in an express and unequivocal provision in the loan agreement, with the result that the borrower is fully informed of its obligations and the fact that it is always open to the borrower to bring proceedings before the court to challenge the application of the term and request that a penalty be imposed on that lender for applying it.

14 In the second place, the referring court compares the term at issue in the main proceedings, relating to triggering the accelerated repayment of the loan agreement on account of the debtor’s failure to comply with his obligations over a limited specific period, with the criteria established in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60) in relation to the assessment of whether that term is unfair.

15 Under the criterion whereby the seller or supplier’s right to declare the whole of the loan due for repayment is dependent on the consumer’s non-compliance with an obligation of essential importance to the contractual relationship at issue, the referring court considers that it might be accepted that the consumer’s failure to make a monthly payment at the time laid down in the agreement constitutes non-compliance by that consumer with an obligation of essential importance, since he has undertaken to pay the prescribed monthly instalments, and since that undertaking was a decisive factor in the lender’s acceptance of its own undertaking.

16 Under the criterion which calls for an assessment of whether a delay of more than 30 days in the payment of an instalment of principal, interest or incidental amounts, as contemplated by the term at issue in the main proceedings, constitutes sufficiently serious non-compliance in the light of the term and amount of the loan, the referring court states that, given the term of the loan has been extended and the interest rates have fallen, the unpaid sums are relatively modest when considered in the light of the term and the amount of the loan at the time when the accelerated repayment procedure was triggered, with the result that it is debatable whether the non-compliance is sufficiently serious and that more weight could be attributed to the overall balance of the contractual relationship. Moreover, to determine on a case-by-case basis, having regard to the term and amount of the loan, whether the non-compliance is sufficiently serious to justify the loan becoming due for immediate repayment could give rise to inequality as between consumers.

17 Under the criteria involving verifying whether the right of the seller or supplier to trigger the accelerated repayment in respect of the loan agreement derogates from the ordinary law applicable in the matter in the absence of specific contractual provisions, and whether national law provides for adequate and effective means enabling a consumer subject to such a term to remedy the effects of the loan becoming repayable, the referring court points out that the ordinary law applicable in the matter in the absence of specific contractual provisions requires a formal written demand to be sent before triggering the accelerated repayment procedure, while also allowing the parties to dispense with sending that demand, in which case reasonable notice is required to be given. In the present case, since the term at issue in the main proceedings provides for a 30 day notice period, the referring court has doubts as to whether that time limit is sufficient for the borrower to contact the lender, to explain the failure to comply attributed to him and to find a solution to clear the amount or amounts outstanding. It states, however, that the contract at issue in the main proceedings provides for the borrower to request an amendment to the payment schedule which may, depending on the circumstances of the case, enable him to avoid the risk of non-payment. Furthermore, the referring court asks whether the criteria identified in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60) are cumulative or alternative and, if they are cumulative, whether a term such as that at issue in the main proceedings can be held not to be unfair on the basis of the relative importance of only one of those criteria.

18 In those circumstances, the Cour de cassation (Court of Cassation, France) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Are Article 3(1) and Article 4 of [Directive 93/13] to be interpreted as meaning that a consumer contract may not dispense with the requirement for a formal written demand, even if it is expressly and unequivocally provided for in the contract?

(2) Is the judgment … of 26 January 2017, Banco Primus, C‑421/14, [EU:C:2017:60,] to be interpreted as meaning that a delay of over 30 days in the payment of a single instalment of principal, interest or incidental amounts may constitute sufficiently serious non-compliance in the light of the term and amount of the loan and the overall balance of the contractual relationship?

(3) Are Article 3(1) and Article 4 of [Directive 93/93] to be interpreted as precluding a clause which provides that accelerated repayment of a loan may be triggered in the event of a delay in payment of over 30 days, when national law, which requires a formal written demand to be sent before the accelerated repayment of the loan, permits the parties to dispense with that step, in which case reasonable notice is required?

(4) As to the four criteria identified by the Court … in its judgment of 26 January 2017, Banco Primus, (C‑421/14[, EU:C:2017:60], for use by the national court in assessing the potential unfairness of the term relating to accelerated repayment resulting from a failure on the part of the debtor to comply with his obligations during a limited specific period, are those criteria cumulative or alternative?

(5) If the four criteria referred to above are cumulative, can the clause nevertheless be held not to be unfair in the light of the relative importance of a particular criterion?’

Consideration of the questions referred

Admissibility

19 Following the assertion by the banking institution in its written observations submitted to the Court that ‘on 17 June 2021, that is to say, on the day following the [request for a preliminary ruling], [QE] paid all the sums due [to the banking institution]’, the President of the Court, by decision of 11 March 2022, sent a request for information to the referring court requesting confirmation of whether that was correct and, if so, to make a ruling on the effect of that fact on the subject matter of the dispute in the main proceedings. The referring court was also asked, if it considered the dispute in the main proceedings then to be devoid of purpose, to inform the Court whether it wished to maintain its request for a preliminary ruling and, if so, to state the reasons why.

20 The referring court replied that QE had not withdrawn his appeal, such that the proceedings remained pending before it. It also stated that an answer to the questions referred appeared to be necessary in order to rule on the appeal before it.

21 By letter of 21 April 2022, the Registry of the Court of Justice requested QE, in the first place, to inform it whether he intended to maintain his appeal before the referring court and, in the second place, to give his view on the banking institution’s assertion that the dispute in the main proceedings had become devoid of purpose since he had paid all the sums due under the loan at issue in the main proceedings and under the court decisions previously made as regards himself and that institution.

22 QE confirmed he intended to maintain his appeal on a point of law and argued that the dispute in the main proceedings had not become devoid of purpose, in particular, on the ground that a finding by the referring court that the term at issue in the main proceedings is unfair could make it possible for him to bring proceedings against the banking institution for recovery of overpayments.

23 It should be noted that, according to settled case-law, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court of Justice is, in principle, bound to give a ruling (judgment of 7 April 2022, Avio Lucos, C‑116/20, EU:C:2022:273, paragraph 37).

24 It follows that questions relating to EU law enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court for a preliminary ruling only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 7 April 2022, Avio Lucos, C‑116/20, EU:C:2022:273, paragraph 38).

25 Taking account of the information provided both by the referring court and by the parties to the main proceedings, it must be held, first, that the dispute in the main proceedings continues to be pending before the referring court and, second, that it is not quite obvious that the problem described in the request for a preliminary ruling has become hypothetical, in so far as, in particular, it cannot be ruled out that QE has an interest in obtaining, in the context of that dispute, a decision on whether the term at issue in the main proceedings is unfair.

26 It follows that the questions referred by the referring court are admissible.

Substance

The fourth question

27 By its fourth question, which it is appropriate to examine first, the referring court asks, in essence, whether the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), must be interpreted as meaning that the criteria – which it establishes for assessing whether a term in a contract is unfair, as provided for in Article 3(1) of Directive 93/13, in particular due to the significant imbalance in the rights and obligations of the parties to the agreement caused by that term to the detriment of the consumer – are cumulative or alternative.

28 Under Article 3(1) of Directive 93/13, 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.

29 In paragraph 66 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), the Court held, in essence, that in order to establish whether a term in a contract causes a significant imbalance to the detriment of the consumer as provided for in Article 3(1) of Directive 93/13, the national court must examine, inter alia, whether the right of the seller or supplier to call in the totality of the loan is conditional upon the non-compliance by the consumer with an obligation of essential importance in the context of the contractual relationship in question, whether that right is provided for in cases in which such non-compliance is sufficiently serious in the light of the term and amount of the loan, whether that right derogates from the ordinary law applicable, in the absence of specific contractual provisions, and whether national law provides for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in.

30 First of all, it should be noted that it is not apparent from that paragraph 66 whether those criteria for assessing the unfairness of a contractual term relating to the triggering of the accelerated repayment procedure on account of the debtor’s failure to comply with his obligations during a limited specific period, are cumulative or alternative.

31 Next, it should be noted that the phrase ‘inter alia’ in paragraph 66 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), suggests that those criteria are not exhaustive.

32 Lastly, in the first indent of paragraph 67 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), the Court ruled that Article 3(1) and Article 4 of Directive 93/13 must be interpreted as meaning that the examination of the possible unfairness of a term of a contract concluded between a seller or supplier and a consumer, which requires it to be determined whether that term causes a significant imbalance in the rights and obligations of the parties to a contract to the detriment of the consumer, must be carried out in the light, inter alia, of all the circumstances surrounding the conclusion of the contract.

33 To hold that the criteria established in paragraph 66 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60) are either cumulative or alternative would amount to restricting that examination by the national court.

34 Article 4(1) of Directive 93/13 gives a particularly wide definition of the criteria for making such an assessment, by expressly including ‘all the circumstances’ surrounding the conclusion of the contract concerned (see, to that effect, judgment of 15 March 2012, Pereničová and Perenič C‑453/10, EU:C:2012:144, paragraph 42.) Accordingly, the unfairness of a contractual term is to be assessed taking account of all the circumstances which could have been known to the seller or supplier at the date of conclusion of the contract at issue and which were of such a nature that they could affect the future performance of the contract, since a contractual term may give rise to an imbalance between the parties which manifests itself only during the performance of the contract (see, to that effect, judgment of 20 September 2017, Andriciuc and Others (C‑186/16, EU:C:2017:703, paragraph 54).

35 In the light of the foregoing, the answer to the fourth question is that the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), must be interpreted as meaning that the criteria it establishes for assessing the unfairness of a contractual term, as provided for in Article 3(1) of Directive 93/13, in particular the significant imbalance in the rights and obligations of the parties to the contract which that term causes to the detriment of the consumer, cannot be understood either as being cumulative or as being alternative, but must be understood as forming part of all the circumstances surrounding the conclusion of the contract at issue, which the national court must examine in order to assess the unfairness of a contractual term, as provided for in Article 3(1) of Directive 93/13.

The fifth question

36 In view of the answer to the fourth question, there is no need to answer the fifth question, which concerns the situation where the criteria established in paragraph 66 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60) are cumulative.

The second question

37 By its second question, the referring court asks, in essence, whether Article 3(1) and Article 4 of Directive 93/13 must be interpreted as meaning that a delay of more than 30 days in the payment of an instalment of a loan may, in the light of the term and amount of the loan, constitute, in itself, sufficiently serious non-compliance with the loan agreement, as referred to in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60).

38 In that regard, it should be recalled that, in accordance with settled case-law, the jurisdiction of the Court extends to the interpretation of the concept of ‘unfair term’ used in Article 3(1) of the directive and in the annex thereto, and to the criteria which the national court may or must apply when examining a contractual term in the light of the provisions of the directive, bearing in mind that it is for that court to determine, in the light of those criteria, whether a particular contractual term is actually unfair in the circumstances of the case. It is thus clear that the Court must limit itself to providing the referring court with guidance which the latter must take into account in order to assess whether the term at issue is unfair (judgment of 26 January 2017, Banco Primus, C‑421/14, EU:C:2017:60, paragraph 57 and the case-law cited).

39 As is apparent from paragraph 66 of the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), regarding the assessment by a national court of the possible unfairness of the term relating to the accelerated repayment procedure resulting from a failure on the part of the debtor to comply with his obligations during a limited specific period, it is for that court to examine, inter alia, whether, in the light of the term and amount of the loan, the failure to comply alleged against the debtor is so serious as to justify the lender’s right to trigger the accelerated repayment procedure in respect of the loan, making the sums due for immediate repayment.

40 Accordingly, it cannot be ruled out that a national court may find it necessary to conclude that a delay of more than 30 days in the payment of a single instalment of principal, interest or incidental amounts constitutes sufficiently serious non-compliance with the contract.

41 Therefore, the answer to the second question is that Article 3(1) and Article 4 of Directive 93/13 must be interpreted as meaning that a delay of more than 30 days in the payment of an instalment of a loan may, in principle, in the light of the term and amount of the loan, constitute, in itself, sufficiently serious non-compliance with the loan agreement, as referred to in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60).

The first and third questions

42 By its first and third questions, the referring court asks, in essence, whether Article 3(1) and Article 4 of Directive 93/13 must be interpreted as precluding the parties to a loan agreement from inserting into that agreement a contractual term which expressly and unequivocally provides that the accelerated repayment procedure in respect of that agreement may be triggered automatically in the event that the delay in paying an instalment exceeds a certain period.

43 In that regard, it should be recalled that it is apparent from Article 3(1) of that directive that a contractual term which has not been individually negotiated is to 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 (order of 2 July 2020, STING Reality, C‑853/19, not published, EU:C:2020:522, paragraph 52).

44 Accordingly, it is the fact that the term of a contract concluded between a seller or supplier and a consumer has not been individually negotiated which allows the national court, before which such an application has been made, to examine whether such a term is unfair, in accordance with the functions incumbent on it under the provisions of Directive 93/13 (see, to that effect, order of 2 July 2020, STING Reality, C‑853/19, not published, EU:C:2020:522, paragraph 54).

45 By contrast, the mere fact that a term contains an express and unequivocal obligation cannot mean it escapes review of whether it is unfair in the light of Article 3(1) of Directive 93/13, save where Article 4(2) of that directive applies.

46 Article 4(2) of that directive provides that the assessment of the unfair nature of the terms may 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 supplied in exchange, on the other hand, in so far as those terms are in plain, intelligible language (judgment of 3 October 2019, Kiss and CIB Bank, C‑621/17, EU:C:2019:820, paragraph 31).

47 In that regard, the Court has already held that contractual terms coming within the notion of the ‘main subject matter of the contract’, within the meaning of that provision, must be understood as being those that lay down the essential obligations of the contract and, as such, characterise it. By contrast, terms ancillary to those that define the very essence of the contractual relationship cannot fall within that concept (judgment of 3 October 2019, Kiss and CIB Bank, C‑621/17, EU:C:2019:820, paragraph 32).

48 For the sake of completeness, it should be added that it does not appear that the term at issue in the main proceedings comes within the notion of ‘main subject matter of the contract’ within the meaning of Article 4(2) of Directive 93/13, which it is for the referring court to verify.

49 Furthermore, in order to ascertain whether a term which provides for the seller or supplier to have the right to declare due for repayment the whole of the loan causes a ‘significant imbalance’ in the parties’ rights and obligations arising under the contract, to the detriment of the consumer, the national court must examine, as mentioned in paragraph 35 of the present judgment, all the circumstances surrounding the conclusion of the contract at issue, including whether that right derogates from the ordinary law applicable in the matter in the absence of specific contractual provisions. Such a comparative analysis will enable the national court to evaluate whether and, as the case may be, to what extent, the contract places the consumer in a legal situation less favourable than that provided for by the national law in force (judgment of 26 January 2017, Banco Primus, C‑421/14, EU:C:2017:60, paragraph 59).

50 In that context, the national court must also assess whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to such a term in individual contract negotiations (judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164, paragraph 69).

51 In the light of all of the foregoing, the answer to the first and third questions is that Article 3(1) and Article 4 of Directive 93/13 must be interpreted as precluding, save where Article 4(2) of that directive applies, the parties to a loan agreement from inserting into that agreement a term which expressly and unequivocally provides that the accelerated repayment procedure in respect of that agreement may be triggered automatically in the event that the delay in payment of an instalment exceeds a certain period, in so far as that term has not been individually negotiated and creates a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

Costs

52 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Ninth Chamber) hereby rules:

1. The judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60), must be interpreted as meaning that the criteria it establishes for assessing the unfairness of a contractual term, as provided for in Article 3(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, in particular the significant imbalance in the rights and obligations of the parties to the contract which that term causes to the detriment of the consumer, cannot be understood either as being cumulative or as being alternative, but must be understood as forming part of all the circumstances surrounding the conclusion of the contract at issue, which the national court must examine in order to assess the unfairness of a contractual term, as provided for in Article 3(1) of Directive 93/13.

2. Article 3(1) and Article 4 of Directive 93/13

must be interpreted as meaning that a delay of more than 30 days in the payment of an instalment of a loan may, in principle, in the light of the term and amount of the loan, constitute, in itself, sufficiently serious non-compliance with the loan agreement, as referred to in the judgment of 26 January 2017, Banco Primus (C‑421/14, EU:C:2017:60).

3. Article 3(1) and Article 4 of Directive 93/13

must be interpreted as precluding, save where Article 4(2) of that directive applies, the parties to a loan agreement from inserting into that agreement a term which expressly and unequivocally provides that the accelerated repayment procedure in respect of that agreement may be triggered automatically in the event that the delay in payment of an instalment exceeds a certain period, in so far as that term has not been individually negotiated and creates a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.