EU court: Kúria may decide on exchange rate in forex loan cases

Issues

European Union regulations on unfair contract conditions allow the Kúria, Hungary's supreme court, to examine exchange-rate margins when scrutinizing foreign currency-based loan contracts and it is even possible for the Kúria to determine the exchange rate in certain cases, the daily Magyar Nemzet reported on Friday, citing a media official of the European Court regarding the Court's stand.

The media officer said the court did not take a decision on the questions posed by Kúria at a session on Thursday and is expected to publish its stand on the matter within three to four months.

The Kúria requested reportage of a legal stance from the European Court before continuing the review of a case initiated by a retail forex-based loan borrower against its lending bank. The supreme court had been reviewing a binding court ruling made in April 2012 at the request of the lender, OTP Bank.

Upholding an earlier decision, the appellate court ruled as unfair the lender's use of the bid rate when disbursing the forex-based loan in forints, and used the higher, offer rate when it calculated the forint value of repayments. In the appeal, the first ruling, i.e. that the same exchange rate should be used in both operations with retroactive effect, was upheld.

The case had been initiated by Árpád Kasler, head of the association defending the interest of bank debtors, and his wife.

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