Zabiton (Consumer protection - Unfair terms in consumer contracts - Definition of 'consumer' - Mortgage loan agreement indexed to a foreign currency - Judgment) [2024] EUECJ C-347/23 (24 October 2024)

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( Reference for a preliminary ruling - Consumer protection - Directive 93/13/EEC - Unfair terms in consumer contracts - Article 2(b) - Definition of ‘consumer’ - Mortgage loan agreement indexed to a foreign currency - Natural person who has acquired a residential property to be leased for consideration )

REQUEST for a preliminary ruling under Article 267 TFEU from the Sąd Okręgowy w Warszawie (Regional Court, Warsaw, Poland), made by decision of 8 May 2023, received at the Court on 2 June 2023, in the proceedings

composed of D. Gratsias, President of the Chamber, I. Jarukaitis, President of the Fourth Chamber, and Z. Csehi (Rapporteur), Judges,

- the Portuguese Government, by C. Alves, P. Barros da Costa and I. Gameiro, acting as Agents,

- the European Commission, by U. Małecka, I. Rubene and N. Ruiz García, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 This request for a preliminary ruling concerns the interpretation of Article 2(b) 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 the context of proceedings between, on the one hand, LB and JL and, on the other hand, Getin Noble Bank S.A., concerning an application for reimbursement of monthly instalments paid under a mortgage loan agreement indexed to a foreign currency.

‘Whereas more effective protection of the consumer can be achieved by adopting uniform rules of law in the matter of unfair terms; whereas those rules should apply to all contracts concluded between sellers or suppliers and consumers; whereas as a result inter alia contracts relating to employment, contracts relating to succession rights, contracts relating to rights under family law and contracts relating to the incorporation and organization of companies or partnership agreements must be excluded from this Directive’.

(b) “consumer” means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business or profession;

(c) “seller or supplier” means any natural or legal person who, in contracts covered by this Directive, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned.’

5 Article 22¹ of the ustawa - Kodeks cywilny (Law establishing the Civil Code) of 23 April 1964 (Dz. U. No 16, item 93), in the version applicable to the dispute in the main proceedings (‘the Civil Code’), defines a ‘consumer’ as ‘any natural person who concludes, with a seller or supplier, a legal transaction which has no direct link to that person’s business or professional activity’.

6 Under Article 43¹ of the Civil Code, a ‘seller or supplier’ is a natural person, a legal person or an organisational unit, as referred to in Article 33¹(1) of that code, carrying on in its own name a commercial or professional activity.

‘1. Terms in a contract entered into with a consumer that have not been individually negotiated shall not bind the consumer if they define the consumer’s rights and obligations in a manner that is contrary to good morals and grossly prejudices the consumer’s interests (unlawful terms). This provision shall not apply to terms setting forth the principal matters to be performed by the parties, including price or remuneration, provided they are worded clearly.

2. If a contractual term is not binding on the consumer pursuant to paragraph 1, the contract shall otherwise continue to be binding on the parties.’

‘The compliance of contractual terms with good morals shall be assessed according to the state of affairs at the time of conclusion of the contract, taking into account its content, the circumstances in which it was concluded and also other contracts connected with the contract which contains the provisions being assessed.’

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

9 In 2008, the applicants in the main proceedings, LB and JL, were a married couple residing in London (United Kingdom) where they were not carrying on a trade, business or profession. LB was a police officer and JL was a school principal.

10 In that year, the applicants in the main proceedings entered into an agreement with the legal predecessor of Getin Noble Bank for a mortgage loan indexed to the Swiss franc (CHF), which agreement provided for a variable rate of interest and repayment of that loan in Polish zlotys (PLN) (‘the mortgage loan agreement’).

11 The applicants in the main proceedings entered into the mortgage loan agreement in order to acquire a residential property, situated in Warsaw (Poland), to be leased for consideration. The rent received was used primarily to repay the monthly instalments under that mortgage loan agreement. The applicants in the main proceedings did not lease any other properties.

12 In order to proceed with that plan, the applicants in the main proceedings used the services of JP, a property manager pursuing his professional activity in Poland, who became the applicants’ agent and represented them in the conclusion of the loan agreement, the contract for the purchase of that property, the tenancy agreement relating to the rental of the property, and the tenant services agreement.

13 In 2019, the applicants in the main proceedings had repaid the entirety of the mortgage loan and sold that property.

14 On 27 December 2019, the applicants in the main proceedings made an application to the Sąd Okręgowy w Warszawie (Regional Court, Warsaw, Poland), which is the referring court, seeking reimbursement of all the sums paid in performance of that mortgage loan agreement. They claim that that agreement contains unfair terms, rendering it invalid.

15 In that connection, the referring court states that the terms of that mortgage loan agreement providing for the indexing of that loan to the Swiss franc rate, which terms define the main subject matter of that agreement, are unfair on the grounds that they were not individually negotiated, were not drafted in plain, intelligible language, and are contrary to the requirement of good faith, causing a significant imbalance in the parties’ rights and obligations arising under that agreement, to the detriment of the applicants.

16 However, the referring court is uncertain as to the possibility of classifying the applicants in the main proceedings as ‘consumers’ for the purposes of Directive 93/13. In the affirmative, the provisions of Directive 93/13 would apply, with the result that that court could declare the mortgage loan agreement invalid.

17 In that regard, the referring court points out that the leasing of a property for consideration is intended to generate profit, which is the main objective of engaging in business.

18 On the other hand, it is also conceivable that, by securing a mortgage loan for the purpose of purchasing a single rental property constitutes acting for purposes which are outside someone’s trade, business or profession and that, consequently, such a borrower should be regarded as a ‘consumer’ within the meaning of Article 2(b) of Directive 93/13.

19 In the light of its restricted scope, the activity concerned is not characteristic of engaging in business. Furthermore, since the applicants in the main proceedings were, at the time when they entered into the mortgage loan agreement, employed under employment contracts and did not engage in the profession of property manager, property rental was neither an important professional objective for them nor intended to be their main source of income, but was instead a form of investment which, as such, is unconnected to a business. Lastly, declaring borrowers in a situation such as that at issue in the main proceedings to be ‘consumers’ would appear better to achieve the objective of Directive 93/13 of protecting consumers against unfair terms in contracts.

20 In those circumstances, the Sąd Okręgowy w Warszawie (Regional Court, Warsaw) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 2(b) and (c) of [Directive 93/13] be interpreted as meaning that a natural person who concludes a mortgage loan agreement in order to raise funds to purchase a single property to be rented for [consideration] (buy-to-let) is to be regarded as a “consumer” within the meaning of that directive?’

21 By its question, the referring court asks, in essence, whether Article 2(b) of Directive 93/13 must be interpreted as meaning that a natural person who enters into a mortgage loan agreement in order to finance the purchase of a single residential property to be leased for consideration comes under the concept of ‘consumer’, within the meaning of that provision.

22 As a preliminary point, it should be recalled that, as the tenth recital of Directive 93/13 states, the uniform rules of law in the matter of unfair terms should apply, subject to the exceptions listed in that recital, to ‘all contracts’ concluded between sellers or suppliers and consumers, as defined in Article 2(b) and (c) of that directive (judgment of 8 June 2023, YYY. (Concept of ‘consumer’), C-570/21, EU:C:2023:456, paragraph 33 and the case-law cited).

23 In accordance with Article 2(b), a ‘consumer’ is any natural person who, in contracts covered by that directive, is acting for purposes which are outside his or her trade, business or profession. Furthermore, in accordance with Article 2(c), a ‘seller or supplier’ is any natural or legal person who, in contracts covered by that directive, is acting for purposes relating to his or her trade, business or profession, whether publicly owned or privately owned.

24 It is by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession, that Directive 93/13 defines the contracts to which it applies (judgment of 8 June 2023, YYY. (Concept of ‘consumer’), C-570/21, EU:C:2023:456, paragraph 34 and the case-law cited).

25 Thus, the status of ‘consumer’ of the person concerned must be assessed by reference to a functional criterion, consisting in an assessment of whether the contractual relation at issue has arisen in the course of activities outside a trade, business or profession. The Court has also had occasion to state that the concept of ‘consumer’, within the meaning of Article 2(b) of Directive 93/13, is objective in nature and is distinct from the concrete knowledge the person in question may have, or from the information that person actually has (judgment of 8 June 2023, Lyoness Europe, C-455/21, EU:C:2023:455, paragraph 48 and the case-law cited).

26 In that connection, it should be borne in mind that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his or her bargaining power and his or her level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms (judgment of 21 March 2019, Pouvin and Dijoux, C-590/17, EU:C:2019:232, paragraph 25 and the case-law cited).

27 The Court has already ruled that a broad definition of the concept of ‘consumer’ for the purposes of Article 2(b) of Directive 93/13 allows the protection granted by that directive to all natural persons finding themselves in the weaker position vis-à-vis the seller or supplier (judgment of 8 June 2023, YYY. (Concept of ‘consumer’), C-570/21, EU:C:2023:456, paragraph 37 and the case-law cited).

28 In those circumstances, the mandatory nature of the provisions contained in Directive 93/13 and the specific consumer-protection requirements linked to them require that a broad interpretation of the concept of ‘consumer’ within the meaning of Article 2(b) of that directive be given preference, in order to ensure the effectiveness of that directive (judgment of 8 June 2023, YYY. (Concept of ‘consumer’), C-570/21, EU:C:2023:456, paragraph 38).

29 It should also be recalled that, in the context of a loan agreement concluded with a seller or supplier, since the co-debtor is in a situation analogous to that of the debtor, in terms of contractual obligations, vis-à-vis the seller or supplier with whom they have signed a contract, there is no distinction to be made between the debtor and the co-debtor in so far as concerns the application of Directive 93/13 to that specific contract. Accordingly, a natural person in the situation of a co-debtor also falls within the concept of ‘consumer’ within the meaning of Article 2(b) of Directive 93/13, since he or she is acting for purposes which are outside his or her trade, business or profession (see, to that effect, judgment of 8 June 2023, YYY. (Concept of ‘consumer’), C-570/21, EU:C:2023:456, paragraph 52 and the case-law cited).

30 In accordance with settled case-law, it is for a national court before which an action relating to a contract which may be covered by Directive 93/13 has been brought to determine, taking into account all the evidence and in particular the terms of that contract, whether the person concerned may be categorised as a ‘consumer’ within the meaning of that directive. In order to do that, the national court must take into account all the circumstances of the case, particularly the nature of the goods or service covered by the contract in question, capable of showing the purpose for which those goods or that service is being acquired (judgment of 8 June 2023, Lyoness Europe, C-455/21, EU:C:2023:455, paragraph 49 and the case-law cited).

31 Consequently, where two natural persons enter into a mortgage loan agreement in order to finance the acquisition of a residential property, it is for the national court to establish, taking into consideration, inter alia, the nature of the property which forms the subject matter of that agreement, whether those natural persons acted within their trade, business or profession or acted for purposes outside that trade, business or profession.

32 In the present case, it is apparent from the request for a preliminary ruling that the applicants in the main proceedings are natural persons who, at the time when they entered into the mortgage loan agreement, were employed, respectively, as a police officer and as a school principal. Furthermore, they were not carrying on a trade, business or profession in a professional capacity in the field of property management. It is also apparent that they entered into that mortgage loan agreement in order to finance the acquisition of a single residential property, situated in Warsaw, to be leased for consideration, and that the rental income was used primarily to repay the monthly instalments in respect of that loan. The applicants in the main proceedings did not lease any other properties.

33 Accordingly, it is apparent, subject to the verifications which it will be for the referring court to carry out, that the conclusion of the mortgage loan agreement at issue did not, for the applicants in the main proceedings, pursue a professional purpose, but rather was intended to consolidate their private assets, since the acquisition of the residential property financed by that loan was a form of investment for them.

34 That finding cannot be called into question by the fact that the applicants in the main proceedings had the intention of leasing that residential property for financial gain, or by the fact that they called on the services of a specialist in order to make the purchase and manage the leasing of that property.

35 In particular, as is clear from the case-law, an interpretation of the concept of ‘consumer’, within the meaning of Article 2(b) of Directive 93/13, which excludes from that concept a natural person acting for purposes which are outside the scope of a trade, business or profession on the ground that he or she derives certain financial benefits from his or her participation in the scheme concerned would be tantamount to preventing the protection granted by that directive to all natural persons in a weak position vis-à-vis a seller or supplier and making non-professional use of the services offered by the latter, from being ensured (see, to that effect, judgment of 8 June 2023, Lyoness Europe, C-455/21, EU:C:2023:455, paragraph 53).

36 In the light of all the foregoing considerations, the answer to the question referred is that Article 2(b) of Directive 93/13 must be interpreted as meaning that a natural person who enters into a mortgage loan agreement in order to finance the purchase of a single residential property to be leased for consideration comes under the concept of ‘consumer’, within the meaning of that provision, where that natural person acts for purposes that are outside his or her trade, business or profession. The mere fact that that natural person seeks to earn income from the management of that property cannot, in itself, lead to the exclusion of that person from the scope of the concept of ‘consumer’, within the meaning of that provision.

37 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.

Article 2(b) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

must be interpreted as meaning that a natural person who enters into a mortgage loan agreement in order to finance the purchase of a single residential property to be leased for consideration comes under the concept of ‘consumer’, within the meaning of that provision, where that natural person acts for purposes that are outside his or her trade, business or profession. The mere fact that that natural person seeks to earn income from the management of that property cannot, in itself, lead to the exclusion of that person from the scope of the concept of ‘consumer’, within the meaning of that provision.

i The name of the present case is a fictitious name. It does not correspond to the real name of any party to the proceedings.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Zabiton (Consumer protection - Unfair terms in consumer contracts - Definition of 'consumer' - Mortgage loan agreement indexed to a foreign currency - Judgment) [2024] EUECJ C-347/23 (24 October 2024) URL: http://www.bailii.org/eu/cases/EUECJ/2024/C34723.html Cite as: [2024] EUECJ C-347/23, EU:C:2024:919, ECLI:EU:C:2024:919

Court of Justice of the European Communities (including Court of First Instance Decisions)