First ruling - overpaid interest for converted loan must be returned

The first ruling of the Supreme Court was passed on the right to consumer compensation after loan conversion. Banks must return the amount of overpaid interest along with the associated default interest to a consumer with a converted loan, announced the Franak Borrowers Association. That decision is a big step forward ahead of a new session of the Civil Department of the Supreme Court of Croatia on the right of consumers with conversions to full compensation, they add.

The Council of the Supreme Court of Croatia, consisting of Ivan Vučemil, President of the Council, Jasenka Žabčić, Judge-Rapporteur, and Viktorija Lovrić, Marina Paulić and Darko Milković, members of the Council, rejected on November 15, 2022, by decision Rev-174/2020, the audit of Privredna banka Zagreb (PBZ), and thus confirmed the final judgment of the County Court in Rijeka, which established that Privredna banka Zagreb must return 6,600 euros of overpaid interest with the associated default interest to a consumer with a converted loan, reported the Franak Association.

That consumer is now starting a new procedure, in which he will request a determination of the nullity of the entire contract and that is, compensation with a secondary payment of the exchange rate difference based on the void CHF currency clause, because this specific decision only confirms his right to overpaid interest, they added and explained the details.

The issue of the bank that was dismissed

"1. Is there a legitimate and justified interest for merit decision making on the invalidity of certain provisions of the loan agreement that is no longer in force, which concern the change in the currency of the loan and the change in the interest rate, if the issue of such provisions of the agreement was resolved by concluding an Addendum to the loan agreement, that is, does the court ex officio have the authority to make a declaratory decision on the determination of the nullity of a contract or its individual provisions that is no longer legally valid, and secondarily to decide on payment and on the basis of acquisition without a basis, if such an issue is resolved by concluding an Addendum to the loan agreement?"

Reasoning of the Council of the Supreme Court of Croatia

"1. The defendant questions the existence of a legal interest in filing a lawsuit to determine the invalidity of certain provisions of the contract after concluding the addendum to the loan agreement.

2. In the decision of the Supreme Court No. Rev-2868/18 of February 12, 2019, the legal understanding was expressed that the very fact that the parties concluded an addendum to the credit agreement on the basis of the Law on Amendments to the Law on Consumer Credit ("Official Gazette" No. 102/ 15) by which they changed the provisions of the basic contract regarding the currency obligation, the interest rate and the amount of the remaining unpaid principal of the loan and reached an agreement on the disposal of the overpayment, does not mean that the loan beneficiary has lost his legal interest in determining that certain provisions of the loan contract are null and void.

3. Since the understanding expressed in the contested decision is consistent with the understanding of the Supreme Court expressed in the cited and numerous other decisions, there is no reason for the intervention of the revision court to standardize judicial practice".

No discussion of the merits of the right to compensation

What is missing in the explanation of the Council of the Supreme Court of Croatia is an explanation of the merits of the right to compensation after conversion. The panel did not specifically deal with this, although in the question posed by the representative of the PBZ there is also a question related to the payment based on the acquisition without a basis. We believe that the specific council did not deal with this on November 15, 2022, aware of the fact that a session of the Civil Department of the Supreme Court will take place at which a legal interpretation must be made, which is why the specific council did not want to go into the very merits of the right to compensation, noted the Franak Association.

However, they conclude - "the Supreme Court's biggest step forward has taken place towards a final decision on the right of consumers with conversions to compensation. The concrete decision says exactly that the consumer has the right to overpaid interest that he has already legally won at the County Court in Rijeka, regardless of that fact that the panel of the Supreme Court did not delve deeply into the merits of the problem, but referred to the already passed decisions of the Supreme Court on the legal interest of consumers with conversions".

Source: HRT