Foreign Currency Loans – Good Finance Bank Postpones Judgment in Foreign Currency Lending Litigation

The court of first instance postponed the delivery of the first instance judgment in the Good Finance Bank v. Hungarian State Foreign Currency Credit Court on Monday.

The court also rejected the bank’s motion for a stay of proceedings and recourse to the Constitutional Court (Ab) and the Court of Justice of the European Union.

The law underlying the lawsuit is in many respects unconstitutional

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According to Good Finance, the law underlying the lawsuit is in many respects unconstitutional, such as violation of the rule of law, the right to a fair trial, the prohibition of retroactive legislation and certain “static rules” of judicial independence.
The financial institution also suggested that the Tribunal request a preliminary ruling from the Court of Justice of the European Union.
The applicant’s lawyer also argued that this was a retrospective modification of contract terms known and widely practiced by the legislature, the government, and the former Financial Supervisory Authority, which in their view was unconstitutional.
The bank’s attorney pointed out that not only the recently adopted FX loan law, but also the current regulatory environment between 2004 and 2014, should be considered when considering the invalidity of contracts, bearing in mind that these laws have changed significantly several times.

Changes in legislation are unpredictable 

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He also said that changes in legislation are unpredictable and that it is impossible to determine in the contract the impact of a future change in legislation not known at the time of the conclusion of the contract on the fees to be paid by the consumer.
The bank’s lawyer also suggested that not only the contracts could be invalid or invalid, but also partial invalidity.

The plaintiff’s side said in a lawsuit that they considered “static” the law applicable to foreign currency loans, the defendant responded to their 500-page claim the next day, according to the bank’s lawyer, indicating that the defendant was not substantively, he responds in virtually the same way in similar cases. And another 200-page defendant’s document was received shortly before the trial, making it impossible to respond to the merits.

Even during the trial

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The court received another bulky document from the bank’s lawyers.
The legal representative of the defendant Hungarian State has requested that the action be dismissed and that Ab be referred to the Court of Justice of the European Union.
The legal representative of the Hungarian state, against the plaintiff, emphasized that the recently adopted law on foreign currency loans complies with the provisions of the Fundamental Law and, since it does not change the legal position of the parties, there is no prejudice to retrospective legislation. He added that, in his view, the preparation period was adequate and that the law did not violate judicial independence or legal certainty.

The legal representative of the Hungarian state also noted that there are still half a million such contracts.
In the final phase of the trial, a member of the Judiciary asked a number of specific questions to the bank’s legal representative about the terms set out in the Curia’s unity ruling and then transposed into law, which could provide a fair amount of unilateral contract modifications, such as changes in money market interest rates.