Both Supreme Court judgments discussed in this commentary address the issue of defects in loan agreements indexed to the CHF exchange rate. In these cases, the entrepreneurs used unfair contractual terms in their relationships with consumers, allowing said entrepreneurs to unilaterally determine the amount of the weaker counterparty’s liability without simultaneously specifying the criteria or mechanism for determining the foreign currency exchange rate in the contract. As identical panels heard both cases pending before the Supreme Court and similar arguments were presented, including the Supreme Court advocating the need for national courts to apply Article 56 of the Civil Code when addressing the consequences of abusive contractual terms, these judgments will be discussed together in this commentary.

The legal views expressed in the discussed judgments, primarily concerning the legal nature of the sanction of abusive provisions being non-binding, as provided for in Article 385¹(1) of the Civil Code, and the relationship of this sanction to domestic civil law institutions, including the norm of Article 56 of the Civil Code, should be considered as contradicting the principle of the primacy of Community law and neglecting the need to interpret national law in conformity with EU law (the so-called consistent interpretation). Consequently, in my opinion, these views are erroneous and inconsistent with the extensive case law developed over the years by both national courts: the Constitutional Tribunal and the Supreme Court, as well as by the Court of Justice of the European Union (CJEU). The approach advocated in the discussed judgments, which requires the national court to validate the defective contractual term in to maintain validity of the obligation, has been definitively rejected with respect to CHF loan agreements - in the operative part of the judgment of the full bench of the Civil Chamber of the Supreme Court dated 25 April 2024 (III CZP 25/22).