Limitation period for consumer claims

The Court of Justice of the EU (hereinafter: CJEU) on 22 April 2021 issued a judgment that may prove significant for Polish borrowers. This is because it should be applied directly to the interpretation of Polish regulations by the courts, regarding, inter alia, the following.  the limitation period for consumer claims. In particular, it refers to the commencement of the limitation period for consumer credit. Thus, the judgment in question may have a bearing on Polish proceedings involving consumers, while at the same time increasing the range of protection measures available to them. They have a chance to recover their debts from businesses using so-called abusive clauses (prohibited provisions). Unfortunately, the entities that most frequently engage in this type of practice are banks and insurance companies.

CJEU judgment

The judgment was delivered in the case of Profi Credit Slovakia (C-485/19). It points out that the principle of effectiveness of EU law precludes national legislation that links the commencement of the limitation period to the time of undue payment by the consumer. What does this mean?

In the Court's view, two important moments must be distinguished. The one when the limitation period starts to run and the moment when the payment is made to the entity using the unfair term. As a consequence, the statute of limitations for consumer claims may run much later than most people have so far assumed.

In order to understand the crucial nature of the judgment, it is worth pointing out the key facts of the case in which the CJEU judgment was handed down:

  • The case concerned a Slovak consumer who, after paying off the loan in full, realised that the contractual provisions were unfair. He therefore brought an action for the reimbursement of the - in his opinion - unduly charged fees.
  • The loan company raised the statute of limitations on his right to pursue the claim. (The Slovak statute of limitations applicable to consumer actions provides, inter alia, for a three-year limitation period, which is calculated from the time of unjust enrichment).
  • Therefore - according to Slovak law - the event that triggers the time limit is the payment made by the consumer with the intention of performing the contract. The time limit must be calculated separately for each payment made by the consumer during the performance of the contract.

The Court finds that, in this case, there is a substantial risk that the consumer concerned will not be able to rely on the rights conferred on him by EU law within the period prescribed for that purpose. At the same time, he is therefore unable to exercise his rights. In addition, in its reasoning, it referred to a fundamental premise of consumer law. He emphasised that consumers are at a disadvantage compared to a trader. Both in terms of negotiation possibilities and in terms of the degree of information. In addition, it is possible that consumers are not aware of the extent of their rights.

Limitation period for consumer claims in light of CJEU judgment

Rules which require the consumer to bring an action within a specific period of time from the date on which the unjust enrichment occurred, where such enrichment may occur in the course of the performance of the contract over a substantial period (a credit agreement is a long-term commitment) - make it excessively difficult to exercise the rights conferred on the consumer by Directive 93/13, thereby infringing the principle of effectiveness.

According to the CJEU, "the principle of effectiveness must be interpreted as precluding national legislation which provides that an action brought by a consumer for reimbursement of sums wrongly paid on the basis of unfair contractual terms within the meaning of Directive 93/13 or terms contrary to the requirements of Directive 2008/48 is subject to a three-year limitation period starting on the date on which the unjust enrichment occurred".

In addition, the Court points out that the intention of a trader who has applied a contractual term deemed unfair does not affect the rights which consumers have under the provisions of Directive 93/13, as does Article 10(2) of Directive 2008/48. Therefore, the consumer cannot be required, in order to rely on the rights under those provisions, to prove the intentional nature of the trader's conduct.

The CJEU judgment may play a significant role in the proceedings of Polish borrowers, including in cases of pseudo-currency loans.

Summary - Limitation period for consumer claims

The CJEU has once again stood up for consumer rights in its case law. In the judgment in question, it took the view that it would be contrary to the principle of effectiveness for Member State regulations to provide that the limitation period for a consumer's claims starts to run already on the day on which the bank's unjust enrichment occurred. If a consumer does not know that someone has applied prohibited clauses to him, the limitation period for the consumer's claims against that trader could not start to run. It should only run from the moment the borrower makes an informed and binding decision to challenge the credit agreement. Accordingly, the consumer will be able to claim compensation for losses incurred as a result of the trader's unfair behaviour for a longer period of time.

Remote working from another country Office of Legal Advisers BKT

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