Invalidation of the Act on Bank Accountability?

According to HVG, a Hungarian weekly on economics, judges attempted to invalidate the Act on Bank Accountability – they said it infringed several provisions of the Constitution

The Constitutional Court of Hungary repelled initiatives to invalidate key elements of the Act on Bank Accountability.

This was the act that removed the exchange rate gap clause from the foreign currency loan contracts concluded by various banks and that declared that all unilateral contract amendments enabling banks to raise their interests, expenses and fees are unfair. It followed from this act that banks were compelled to repay the exchange rate gap and all amounts paid by clients on account of raised interests, expenses and fees.

The only way out the government left for the banks was that they were free to prove the fairness of their unilateral contract amendments in court processes initiated against the State. According to judges behind the initiative the Act infringes the Constitution on account of the fact alone that the State makes the banks sue the State itself, whereas the State is the holder of all legislative, executory and judicial powers. The judges also asserted that the act infringes the principle of legal certainty because it interferes with already existing contracts.

However, the Constitutional Court ruled that the initiatives were unfounded. In the opinion of the Constitutional Court this was not a case where the State abused its power to create a situation where the financial institutions suing the State found themselves in a less favourable position than the State.

According to the Constitutional Court the fact that the State took over the task of claims enforcement in relation to a specific contractual provision from consumers and from parties who are entitled to put forward an appeal of common interest is in line with the constitutional requirement of consumer protection.

The Constitutional Court ruled that considering the fact that the unfair provisions were null and void at the conclusion of the loan contracts, they could not have had any legal effect at all. This is why it was necessary for the State to interfere with these contracts. The real reason of debtors’ trust in legal certainty faltering would have been if an unfair practice had remained without consequences – even if on account of its legal effect.