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Constitutional Court Rejects Request To Annul Legislation On Forex Loans

Tamás Székely 2015.01.30.

Hungary’s Constitutional Court has rejected a request to annul some parts of legislation on retail loan contracts. The Metropolitan Appeals Court had submitted the request in connection with court cases involving four banks. The request was made based on the argument that the legislation violated the principles of the division of power and legal security.

The legislation laid the groundwork for requiring lenders to compensate retail borrowers for making unilateral changes to contracts and for using exchange rate margins when calculating repayments for foreign currency denominated loans. By specifying the state as the defendant of the lawsuit, the legislator did not favour the state over the other party to the proceedings, but simply introduces special rules of procedure to protect the interests of the consumer, the court said.

“What happened was not that the state abused its power to create a situation whereby the opposing party is in a disadvantageous position as against the other party, but that the financial institutions had to initiate legal proceedings against the state to overturn the assumption,” it added.

The ruling Fidesz party welcomed the decision as a victory of Hungarian families.

via photo: public domain