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Constitutional Court rules on borrowers' relief law

Issues

Hungary's Constitutional Court on Tuesday said provisions in borrowers' relief legislation prohibiting unilateral changes to loan contracts did not go against the fundamental law. Judges of the Budapest Municipal Court had asked the court to review the law.

The Constitutional Court noted that the decision was taken only on the unilateral contract changes and its review did not cover the use of exchange rate margins.

The borrowers' relief legislation approved in the summer requires lenders to compensate retail clients for using exchange rate margins when calculating repayments for foreign currency-denominated loans and for making unilateral changes to both FX and forint loan contracts.

Separate legislation, approved later, outlined the way banks are to make the refunds.

Banks were allowed legal recourse regarding the unilateral changes to contracts.

The Constitutional Court noted that it had weighed the questions of whether the provisions in the borrowers' relief legislation went against the principle of introducing legislation with retroactive effect and whether the legal recourse allowed lenders was in line with fair legal process.

The review was undertaken based on motions submitted by judges in three appealable rulings.

The Constitutional Court said it was continuing its review of motions made in such cases by the Budapest Municipal Court of Appeals and would soon take a decision on them.

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