Constitutional Court to continue hearing contract defense case referrals soon

Issues

Hungary's Constitutional Court on Tuesday started hearing cases on unilateral changes to loan contracts referred by lower courts, but took no decision on the matter, Constitutional Court's general secretary, Botond Bitskey, told MTI. The court will continue discussing the cases soon, Bitskey said.

The Constitutional Court has 90 days to pass a decision in the cases, that is, it has to arrive at a decision in the first half of December. Including a decision taken by the Budapest Municipal Court of Appeals on Tuesday, five cases were referred to the Constitutional Court to clarify whether the law on refunds due from banks to borrowers violates the principle that legislation cannot be applied retroactively.

The former four cases – three first-instance court decisions and one appeals court decision – had been merged into a single procedure. Dozens of lenders have defended such contract changes in court recently to avoid paying refunds to affected retail clients under borrowers' relief legislation approved in the summer. On October 2, Justice Minister Lászlo Trócsányi said that the appeals cases were expected to be completed by mid-November.

The judges asked the Constitutional Court to clarify whether the law on refunds due from banks to borrowers violates the principle that legislation cannot be applied retroactively. They also said that the refunds law harms legal safety, the requirement that norms should be made clear, and unnecessarily curbs the appellant's right to a fair procedure. In a letter sent to the Constitutional Court after the first court reference, in September, the Justice Minister defended the constitutionality of the summer law and argued that the judges' initiatives were baseless.

The Hungarian Banking Association also sent its detailed opinion, arguing that the law violates the constitution, to the Constitutional Court. Legislation allows the minister as well as professional associations to send their opinion to the Constitutional Court.

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