September 2023 – Final judicial annulment of a Payment Order issued for an amount of 100.000 euros due to abusive exercise of the bank’s rights

September 2023 – Final annulment of the payment order due to abusive exercise of the bank’s right to terminate the loan agreement without complying with the provisions of the Banking Code, while creating the belief in the borrower that the loan would be settled.

Recently, Decision No. 431/2023 was issued by the Single-Member Court of Appeals of Piraeus, which, after examining the appeal of the special liquidator, essentially rejected it, confirming the initial Decision No. 25/2022 of the Single-Member First Instance Court of Piraeus, which had annulled the payment order of the opposing party against our principal.

Specifically, the initial decision, accepting the legal and substantive validity of our counterclaim, had annulled the payment order due to the abusive termination of the loan agreement by the special liquidator. More specifically, our principal, following the bank’s placement under special administration and desiring the settlement of his loan, contacted the employees of the opposing party, and after sending all his financial information for evaluation, he was sent a document for an additional settlement agreement to sign. After making a down payment for the imminent settlement of the debt and sending back the signed document, he was later informed that the document sent to him was not binding and needed approval from the approval committees of the special liquidator. While our principal awaited the signing of the settlement agreement, the opposing party, in contradiction to her previous behavior, terminated the loan agreement without going through the process outlined in the Banking Code.

The Court of Appeals rejected the opposing party’s first ground for appeal, in which it claimed that the exercise of the right to terminate the contract was deemed abusive due to a misjudgment of the evidence and a wrong application and interpretation of the law. Specifically, according to the reasoning of the appellate decision, it was proven that the special liquidator, contrary to the impression it had created in the borrower, who was expecting the signing of a settlement agreement for his debt, terminated the loan agreement before completing the Settlement Process outlined by the Banking Code. The conflicting behavior of the special liquidator, combined with the actual situation that had developed in the meanwhile, led our principal to the reasonable belief that the opposing party would not terminate the loan agreement before the completion of the Settlement Process, due to the convening of the parties to negotiate the settlement of the debt. As a result, the premature exercise of the right to terminate the loan agreement by the opposing party was deemed to have adverse consequences for the debtor and rendered it unacceptable, according to legal and ethical standards of an average member of society. Therefore, the Court of Appeals ruled that the first-instance court correctly deemed the specific annulment reason, according to which the payment order is cancelable due to the lack of legal prerequisites for its issuance and the expiry of the debt as of July 12, 2019, because the termination of the loan agreement by the bank on that date was abusive under Article 281 of the Civil Code, due to the failure of the special liquidator to follow the Settlement Process as required by the Banking Code. Furthermore, the second-instance court also rejected the opposing party’s second ground for appeal, in which it claimed that the termination of the contract by it was deemed abusive and that the claim of abusive behavior by the borrower should have been accepted because allegedly he knew that no settlement agreement had been concluded, as inadmissible under Article 527 of the Civil Procedure Code, because the contentious claim was not raised in the first-instance court.