September 2024 – Recognition of invalidity of interest rate adjustment terms in loan Agreements – Recognition of the obligation of the other party to pay the amount of money unduly paid

Decision No. 3161/2024 of the Court of Appeal of Athens was issued, recognizing on the one hand the invalidity of interest rate adjustment terms in a series of loan agreements between our client, a trading company, with the defendant bank (following a non-final decision of the same Court, which ordered the carrying out of an accounting expert opinion), on the other hand, the obligation of the defendant bank to pay our client the total amount of 220,868.24 euros as unduly paid (due to the invalidity of the interest rate adjustment terms). In addition, due to its total loss, the opposing bank was charged with the entire legal costs (including the fee of the Court-appointed expert) of our client, which the Court determined at the total amount of €12.540.

In particular, we had filed a lawsuit on behalf of our principal against a systemic bank, with which we disputed the amount of its (our principal’s) alleged debt from interest-reducing loan contracts. More specifically, with the adjudged action of our principal, we requested the recognition of the invalidity of specific terms of the disputed loan agreements as well as additional ammendment acts thereof, which provided the bank with the possibility to unilaterally readjust the contractual interest rate in an indefinite and completely non-transparent manner, with end result the excessive burden of the indebted company. Initially, the Court that received the case, with its non-final decision, accepting the company’s claims, ruled that: “these conditions, which were formulated in advance by the defendant in the printed text of the contested agreements … in the part that regulate the formation of the floating interest rate in the above manner, are abusive, according to the provisions of article 2§§6 and 7 para. k’ of Law 2251/1994, because … they show vagueness, allowing the supplying bank to unilaterally determine the contractual interest rate , without specific and reasonable criteria being known in advance to the consumer-customer, and, in this case, to the plaintiff-debtor company, which leads to the denial of the formal and justified expectations of the latter, regarding the development of its transactional relationship with the lender Bank … the method and criteria, on the basis of which the defendant formulates the floating interest rate of the contracts in question, are not clearly stated, only a general reference is made to the market conditions and the banking criteria and the way of publishing the above unilateral decision of the defendant, that is, reference to vague criteria on the basis of which the contracting company was not able to diagnose in advance the amount of the interest rate, which will apply to the calculation of its relevant debt”. Following the recognition of the invalidity of the terms on the adjustment of the interest rate, the Court proceeded with the supplementary interpretation of the contracts with the aim of fairly restoring the contractual balance of rights and obligations between the parties using the intervention interest rate of the European Central Bank as a reasonable criterion for the restructuring of the contractual interest rates, which were determined as the sum of the above reference rate of E.C.B. plus a fixed margin. Furthermore, with the aforementioned non-final decision, the Court ordered, following the submission of a relevant request, the carrying out of an accounting expert opinion by a certified economist, in order to calculate the exact amount of the sums that had been unduly paid to the bank by our principal due to the application of the abusive interest rate terms. After carrying out the ordered expert opinion, the case was brought back for discussion before the Court, which, despite the objections of the opposing party about legal errors in the non-final decision, validated it and its legal assumptions, and recognized that our principal had been unduly forced to pay, due to the above invalid interest rate adjustment conditions, the total amount of 220.868,24 euros. In fact, the Court fully accepted our presented and proven claims regarding the exact amount of the unduly paid, recognizing the errors in which the expert opinion had also fallen, which we duly pointed out to the Court.

In addition, due to its total loss, the opposing bank was charged with the entire legal costs (including the fee of the Court-appointed expert) of our client, which the Court determined at the total amount of €12.540.

This decision comes to be added to the modern Greek case law concerning the nullity of non-transparent contractual terms for the adjustment of the interest rate, accompanied by a multitude of decisions of the Court of the European Union, which for several years have made concessions favorable to borrowers, erecting a protective wall against abusive banking practices. For more articles on the possibilities of judicial and extrajudicial protection of the debtor, see here. For more court decisions in related cases recently handled by our office, see here, here, here, and here