On Friday, the Budapest-Capital Regional Court has rejected a claim filed by Kéthely és Vidéke Savings Co-operative against the Hungarian state in connection with the lawfulness of unilateral changes to foreign currency loan contracts.
The first-instance ruling established the unlawfulness of every unilateral contract modification of foreign-exchange denominated loan contracts issued by the Savings Co-operative. The Co-operative initiated the suspension of the procedure and asked the Budapest-Capital Regional Court to have recourse to the Constitutional Court, claiming the relevant law was unconstitutional. However, the Court declared that no constitutional rights had been infringed.
Under the ruling, the Savings Co-operative must pay the expenses of the court within 15 days. “It is most likely that the Savings Co-operative will not appeal the ruling”, the bank’s legal representative said. Under the so-called Debtors' Relief Act adopted in July, financial institutions must compensate clients for the damages caused by the unilateral loan contract amendments unless they prove their fairness in court. The July act also invalidated the use of differing exchange rates when calculating dues and obligations on FX contracts and obliged banks to make refunds to clients calculated through the central bank's daily exchange rates.
“The government is fully prepared to protect foreign currency borrowers”, Parliamentary State Secretary of the Ministry of Justice Róbert Répássy stated. The Act has made the necessary legislative changes and precisely adheres to the decision of the Curia. Now, the law requires banks to prove that they have not been unfair to clients and not the other way around. The State Secretary emphasised that all conditions, rules and deadlines are clearly indicated by the law. If courts comply with all of the above, there is no doubt that the interests of foreign currency borrowers will be enforced.