October 2023 – Decision of the Multi-Member First Instance Court of Athens – Recognition of the Invalidity of the Loan Agreement Termination due to abusive exercise of the bank’s rights

Decision under no. 2848/2023 of the Multi-Member First Instance Court of Athens was issued, by which the lawsuit of our client, the borrower, against the special liquidator was accepted thus rendering null the termination of the housing loan agreement due to abusive exercise of the bank’s right to terminate the loan agreement.

Specifically, our client, following the bank’s placement under special liquidation, initiated negotiations voluntarily with the employees of the opposing party to settle his outstanding payments of its housing loan. After submitting all his financial information for evaluation, he received a settlement agreement from the special liquidator for signing. He promptly complied by making the requested advance payment to the opposing party and sent back the signed settlement agreement, expecting to receive the repayment schedule. During the subsequent period, he repeatedly contacted the opposing party’s employees to inquire about the completion of the settlement, and they responded that they were not aware if the agreement had been approved by the special liquidator. While our client awaited the execution of the settlement of his debt, the opposing party, contrary to its previous behavior, terminated the loan agreement without following the procedure set out in the Banking Code of Ethics.

Thus, the Multi-Member First Instance Court of Athens concluded that the lawsuit should be accepted, and the invalidity of the loan agreement termination due to the abusive exercise of the special liquidator’s rights should be recognized. It was acknowledged that the opposing party had been supportive to the borrower, as evidenced by the aforementioned settlement agreement and never rejected his proposal for settlement, thereby establishing a situation of trust with the borrower. Furthermore, the court determined that our client’s actions fell within the characterization of a “cooperative borrower” according to the provisions of Law 4224/2013, while the opposing party did not adhere to the Delinquency Resolution Procedure of the Banking Code of Ethics. Based on the above, the court resolved that the opposing party’s termination of the loan agreement clearly violated the principles of good faith, fair dealing, and the economic and social purpose of the right, resulting in adverse consequences for the plaintiff, and constituted an abuse of rights. Since the opposing party had no interest in exercising her right, given that her claim was already secured and there was the possibility of repaying the loan, and in light of her previous supportive behavior, she had created a reasonable belief in the plaintiff that she would not exercise her right. Therefore, the termination of the housing loan agreement is invalid and does not have any legal consequences.