Coincidentally, the first civil chamber publishes a new ruling on foreign currency-denominated loans the day before a major decision by the Court of Justice of the European Union, the comment of which will soon appear in Dalloz actualité (CJEU September 8, 2022, cases from C-80/21 to C-82/21). This new stop is destined for the News bulletin and it is the continuation of some decisions that we have commented on in recent months (see e.g., Civ. 1D., 20 April 2022, n ° 19-11.599 FS-B, Dalloz news, 12 May 2022, obs. C. Helaine; D. 2022. 789 ; RDI 2022. 382, obs. J. Bruttin ; and 20 April 2022, n ° 20-16.316 FS-B, Dalloz news, 12 May 2022, obs. C. Helaine; D. 2022. 788 ; RDI 2022. 382, obs. J. Bruttin ; RTD com. 2022, 361, ob. D.Legais ). All this makes it possible to contribute to the development of a true jurisprudence on these loans whose toxicity is sometimes consumed quickly. In the judgment of 7 September 2022, it is not a question of “Helvet Immo” loans but of “Jyske Bank” contracts, the functioning of which remains slightly different. Let’s remember the facts to better understand the problem. They are standard in this area: following the loan offer accepted on 20 June 2007 and formalized with a notarial deed of 30 October 2007, a banking company grants a so-called “multi-currency” loan to a borrower for an amount of € 500,000 or, to according to this clause, “the equivalent, at the date of disbursement of the loan, in one of the main European currencies, US dollar or Japanese yen”. The amount of the loan was used for 834,750 Swiss francs and on 16 June 2011 the bank converted it into euros. The borrower sues the bank for the cancellation of the conversion, citing an irregularity in this transaction (based on the control of unfair terms) and a failure by the bank to fulfill its disclosure obligations. On appeal, the courts of first instance rejected the request to have certain clauses of the contracts declared unfair as these clauses refer to the subject of the agreement and are drafted in a clear and understandable way. On the information obligation, the Court of Appeal excludes any violation, in particular by sending a letter informing the future borrower of possible changes in the market before the conclusion of the contract. The borrower appeals in cassation.
The sentence pronounced by the first civil section of the Court of Cassation leads to a double cassation for legal groundlessness. We will examine why through the question of unfair terms and that of informing the money lender.
On the art of control on the application of control of unfair terms
The jurisprudence of the Court of Cassation on loans denominated in foreign currencies is fairly regularly based on the discipline that protects consumers from unfair terms. As such, it should be noted that the presumed unwritten sanction of these clauses is inalienable, which the first civil chamber was able to recall recently (Civ. 1D., 30 March 2022, n ° 19-17.996 FS-B, Dalloz news, 4 April 2022, obs. C. Helaine; D.2022.974 observes J. Lasserre Capdeville ; RDI 2022. 382, obs. J. Bruttin ; Rev. the practice rec. 2022. 31, chron. K. De La Asuncion aircraft ; Civil RTD. 2022, 380, obs. H. Barber ; RTD com. 2022, 361, ob. D.Legais ) while leaving a door ajar on the transposition of this jurisprudence into common law (cf. for example for the articulation, Com. 26 Jan. 2022, n ° 20-16.782, Dalloz actualité, 1uh February 2022, ob. C. Helaine; D.2022.539 observes S. Tisseyre ; ibid. 725, obs. N. Ferrier ; ibid. 1419, chron. S. Barbot, C. Bellino, C. de Cabarrus and S. Kass-Danno ; Civil RTD. 2022. 124, ob. H. Barber ). In the dispute that led to the commented appeal, the discussion took place on the basis of the conditions for examining the unfair terms. Therefore, it should be remembered that the protection deriving from consumer law regarding unfair terms cannot refer to contractual terms, provided they are drafted in a clear and understandable way.
The applicant considered that the aforementioned protection should also apply as regards the concrete scope of those clauses. The First Civil Section therefore recalls the latest jurisprudence of the Court of Justice of the European Union on the matter (CJEU 10 June 2021, cases from C-776/19 to C-782/19, Dalloz news, 9 July 2021, obs JD Pellier , sentence cited in paragraph 8 of the commented sentence, D. 2021. 2288 note C. Aubert de Vincelles ; ibid. 2022. 310, ob. R. Boffa and M. Mekki ; ibid. 574, obs. H. Aubry, E. Poillot and N. Sauphanor-Brouillaud ; RDI 2021. 650, obs. J. Bruttin ; RTD com. 2021. 641, ob. D. Legeais ). According to this decision, one has to check whether the bank has provided the borrowers sufficient and factual information to understand the functioning of the financial mechanism of the loan denominated in foreign currency, ÂÂ on the one hand and, on the other, whether the bank has done so sufficient information on the risk of these contracts, in particular in the event of a depreciation of the currency in which the borrower receives his income against the currency of the account. The trial judges had, here, clearly noted that the clause had been drafted in a clear and understandable way despite being related to the subject of the contract. But however correct this reasoning is in the classic litigation of unfair terms, it does not correspond to the 2021 jurisprudence cited above; the appeal ruling of February 6, 2020.
There is therefore no error of motivation on the merits, which explains the cassation for lack of legal basis. In short, it is necessary to verify in concrete termsÂ This double information (functioning of the financial mechanism and risks incurred) to be able to reject the request on the basis of a clause relating to the subject of the contract. The referring court could also issue a decision along the same line but with different reasons, depending on the information provided in the file. However, in the event of a lack of either of these two pieces of information, the control of unfair terms will have to come into effect. Its result is uncertain because the clauses are not all drafted in the same way (see for example, Civ. 1D.20 April 2022, n ° 19-11.599 FS-B and 20 April 2022, n ° 20-16.316 FS-B, prev.).
On the information released by the lender
The second plea criticized the sentence for having rejected the request based on the lack of information on the part of the banking institution. The argument was based on the inadequacy of the correspondence sent which had been used by the trial courts to deny any breach of that obligation. The Court of Appeal had, however, also found that a normally prudent investor knew the consequences of such a loan, in particular because of the possible rate of change in the exchange rate. The plaintiff complained that the trial judges did not seek effective information on the risks inherent in this type of loan.
Also in this case, we find a cassation due to lack of legal basis based on the basis of contractual liability, or article 1147 of the civil code in its formulation prior to the ordinance n ° 2016-131 of 10 February 2016 since the contracts were concluded in 2007 The first civil chamber recalls its usual jurisprudence: “when it grants a loan denominated in foreign currency, providing that this is the accounting currency and that the euro is the payment currency and having the effect of posing the exchange risk on the borrower, the bank is required to provide the latter with sufficient and accurate information enabling it to understand the practical functioning of the financial mechanism in question and therefore to assess the risk of potentially significant negative economic consequences of this clause on its obligations throughout the duration of the the same contract, in particular in the event of a significant depreciation of the currency that is legal tender in the State in which the latter is domiciled and an increase in the foreign interest rate (emphasis added). We find, unsurprisingly, a correspondence between the control of unfair terms and the obligation to inform on this issue since the reasons given in these two different parts of the sentence overlap. This very thorough check required of the background judges often implies that the bank is criticized for insufficient information on the risks of contracts concluded to the detriment of borrowers.
In hollow, the first civil chamber refuses to believe that mail sent prior to signing would be a determining factor in verifying sufficient and accurate information for understanding the financial mechanism of the foreign currency-denominated loan. To reject any breach of the bank’s information obligation, the decision should have been motivated by the search for factual elements capable of justifying the issuance of such “sufficient and correct” information. Otherwise, the breach would then be consummated and the liability of the lender will then be sought.
Here is a nuanced jurisprudence that requires the vigilance of all interested professionals. To banking institutions in the first place, to protect themselves written proof of the release of this information “Sufficient and precise” on the functioning of the financial mechanism of the loan denominated in foreign currency. It is then up to the lawyers to focus their reasoning before the trial judges on these specific points justifying a large fee. Finally, to the magistrates, in the reasons for their decisions because the Court of Cassation, due to that of the Court of Justice of the European Union, keeps an eye on things. These scales of complexity therefore do not facilitate the task of legal professionals. But jurisprudence is still being forged in an ever more precise way. Case to follow.