franak - swiss_franck.jpg
Photograph: Faes

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.

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