On 14 February 2008, the consumer concluded with one of the financial institutions a mortgage loan agreement denominated in Swiss francs (CHF). That agreement contained a term under which the risk associated with an appreciation of the foreign currency against the Hungarian forint was placed entirely on the consumer.
On 4 April 2023, the consumer, before the court of first instance having jurisdiction, sought to obtain, on account of the failure of the bank to fulfil its obligation of information and the insufficient nature of the information provided concerning the exchange rate risk, a finding of the invalidity of the loan agreement and, in respect of the necessary legal consequences of that finding, the maintenance of the legal effects of that agreement, with the exception of the term relating to the exchange rate risk deemed not to have been agreed. The financial institutions raised an objection that the consumer’s action was time-barred and contended that the action should be dismissed. The court of first instance dismissed the consumer’s action on the ground that it was time-barred. The court of first instance did not rule on the invalidity of the agreement.
The consumer brought an appeal against the judgment at first instance before the Budapest High Court, which decided to stay the proceedings and to refer questions to the CJEU for a preliminary ruling. CJEU ruled that Article 1(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, read in the light of the principle of effectiveness, must be interpreted as precluding a judicial interpretation of national law. Accordingly, where a loan agreement is invalid and cannot continue in existence without the unfair term on the ground that that term relates to the main subject matter of the agreement, the consumer can rely, in court, on the legal consequences of the finding of the invalidity of that agreement only within a limitation period of five years from the date on which that agreement was concluded, if, on that date, the consumer was not aware or was not in a position to become aware of the unfairness of the contractual term concerned and, therefore, was not in a position to assert his or her rights under Directive 93/13 effectively.