Court of appeals refers EvoBank contract case to Constitutional Court

Issues

The Budapest Municipal Court of Appeals is turning to the Constitutional Court in an appeal brought by EvoBank against a ruling rejecting its defense of unilateral changes made to loan contracts.

In its referral on Monday, the court asked the Constitutional Court to establish whether a number of points in recently approved borrowers' relief legislation are unconstitutional, particularly those pertaining to the legal recourse available to lenders affected by the law. The court said these parts of the law violate the principle of the division of powers in an independent, democratic state under the rule of law. They also go against the right to the adjudication of litigation within a reasonable time in a fair and public trial by an independent and impartial court, the court added.

The case will be suspended until the Constitutional Court takes a decision on the matter.

In an appealable ruling announced on September 2, the Municipal Court of Budapest said EvoBank's general contract conditions did not meet transparency requirements. Retail borrowers could not ascertain whether their increased costs were fair, and they could take no steps against the lender if changed circumstances affected them unfavourably, the court explained.

Under the borrowers' relief legislation approved in the summer, Hungarian banks must compensate borrowers for unilateral changes made to loan contracts unless they can successfully defend the practice in court.

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