In an advisory opinion dated 11 July 2024, the Second Civil Chamber of the Court of Cassation clarified several key points regarding the review of unfair terms by the enforcement judge. This decision follows increasingly strict case law from the Court of Justice of the European Union.
Cass. 2e civ., 11 July 2024, No. 24-70.001, Published in the bulletin.
The Case Giving Rise to the Request for an Advisory Opinion: A Particularly Old Consumer Credit (1998)
In this case before the Paris High Court, the matter concerned a particularly old consumer credit.
On 30 January 1998, Ms. [S] had taken out an ancillary credit facility from Finedis linked to sales contracts, drawable in installments, associated with a Printemps store card.
On 19 December 1998, the companies Finedis and UCCM merged to form the company Finaref.
By an order dated 12 November 2003, the district judge of the 14th arrondissement of Paris ordered Ms. [S] to pay various sums to Finaref under the credit agreement of 30 January 1998.
To give an idea of the stakes of the dispute: the amount of unpaid installments at the date of acceleration of the loan totaled 822.55 euros.
On 1 April 2010, Finaref was absorbed by Sofinco, which became CA Consumer Finance. On 29 July 2017, this company assigned its claim against Ms. [S] to EOS Credirec, which became EOS France.
In enforcement of this payment order, EOS France served on Ms. [S], on 17 January 2019, a writ of payment for the purpose of seizure and sale, then, on 19 October 2020, served her with a notice of unenforceability of her vehicle registration certificate.
On 9 November 2020, Ms. [S] filed an opposition to the payment order. On 18 November 2020, Ms. [S] summoned EOS France before an enforcement judge. On 24 February 2021, the enforcement judge stayed the proceedings pending the decision on the opposition to the payment order.
On 8 October 2021, a consumer protection judge of the Paris High Court declared the opposition to the payment order inadmissible.
The Borrower’s Argument: The Power of Unfair Terms
Given the age of the claim, the stakes of the dispute, and the payment order obtained 20 years earlier by the bank, some debtors, had they been in Ms. [S]’s position, would undoubtedly have given up.
Fortunately, Ms. [S], seemingly well advised, did not intend to let it go and defended herself by developing an argument aimed at having the acceleration clause declared unfair, in order to obtain, consequently, the annulment of the enforceable title.
Some might think that the res judicata authority attached to the payment order would nullify any chance of raising any challenge before the enforcement judge.
That would be to disregard the case law developed by the Court of Justice of the European Union specifying that res judicata cannot prevent a review of an unfair term, even at the enforcement stage, when such a review has not been previously carried out (CJEU 26 Jan. 2017, Banco Primus, Case C-421/14).
Issues Related to the Enforcement of a Court Decision
If res judicata must not prevent the review of unfair terms according to the European judge, this is not without consequences for the powers of the enforcement judge: what can they do if they find that the unfair nature of a clause calls into question the court decision constituting the enforceable title on which the enforcement proceedings are based?
Indeed, let us recall that the enforcement judge is bound by the following rules:
- they cannot modify or annul an enforceable title when reviewing an unfair term, relying in particular on Article R. 121-1, paragraph 2, of the Code of Civil Enforcement Procedures;
- nor can they rule on a claim for payment when the law does not permit them to do so.
The limitations of the Court of Justice’s interpretation are easily understood, as it does not always align harmoniously with the procedural law of certain Member States, particularly France.
This is why, by judgment of 11 January 2024, the enforcement judge of the Paris High Court transmitted to the Court of Cassation a request for an advisory opinion, the questions posed being as follows:
“The enforcement judge
– may they, in the operative part of their judgment, declare as deemed unwritten, as unfair, a clause in a consumer contract that gave rise to the court decision on which the enforcement proceedings are based?
If so,
– when this clause concerns the acceleration of the loan, may they annul this decision or declare it devoid of legal basis, in particular when the enforceability of the claim was the condition for its issuance? In that case, may they rule on the merits of a claim for payment?
– may they modify this court decision, by ruling that it is wholly or partly incapable of enforcement? In that case, may they rule on the merits of a claim for payment?“
The Solutions Adopted by the Court of Cassation
It is interesting to note that the Second Civil Chamber did not opt for a preliminary reference, as the answers depend primarily on the interaction between national law and the Court of Justice’s interpretation.
It was therefore incumbent upon it to find solutions to reconcile European law with French procedural law.
It may be noted that, in their opinion, the Advocate General proposed an original solution to address the specific issue of the unfairness of the acceleration clause: “When the unfair clause concerns the acceleration of the loan, the enforcement judge may modify the court decision on which the enforcement proceedings are based by recalculating the sums due, pursuant to that decision and their decision deeming the unfair clause unwritten, up to the first act constituting a seizure” (p. 20). However, this formulation was not adopted in the advisory opinion, probably to preserve the fundamental principles of the field.
It is in this context that the Court of Cassation issued the following advisory opinion:
“1/ The enforcement judge may declare, in the operative part of their decision, that an unfair clause is deemed unwritten.
2/ The enforcement judge who deems an unfair clause unwritten may neither annul the enforceable title nor modify it. Nor may they rule on a claim for payment, except in cases provided for by law.
3/ The enforceable title being deprived of effect insofar as it applies the unfair clause deemed unwritten, the enforcement judge is required to recalculate the amount of the claim in accordance with the provisions specific to the enforcement measures before them. They then draw all the consequences of the assessment of this claim on the challenges to the enforcement measures before them. When they find that the debtor no longer owes any sum, they must order the discharge of the measure.”
This case illustrates the power of unfair terms law, which makes it possible to challenge res judicata and the very application of the fundamental principles of enforcement proceedings. It also shows the willingness of the Court of Cassation to preserve the fundamental principles of enforcement proceedings in the face of unfair terms law.
Whether one is on the side of banks or consumers, the lesson to be drawn is that an enforceable title is never fully secured as long as no challenge has been raised at the enforcement stage, including when it involves an old court decision.
One can only welcome this increasingly significant expansion of unfair terms law which, while it disrupts our fundamental procedural principles, guarantees effective consumer protection.
Read online:
- Court of Cassation, Civil Chamber 2, 11 July 2024, 24-70.001, Published in the bulletin
- https://www.legifrance.gouv.fr/juri/id/JURITEXT000049989303
The main preparatory documents (Advocate General’s opinion and Reporting Judge’s report) are freely accessible on the Court of Cassation website:
Full text of the decision:
Court of Cassation, Civil Division, Civil Chamber 2, 11 July 2024, 24-70.001, Published in the bulletin
Court of Cassation – Civil Chamber 2
Appeal No.: 24-70.001
ECLI:FR:CCASS:2024:C215008
Published in the bulletin
Ruling: Advisory opinion upon referral
Public hearing of Thursday, 11 July 2024
Decision under review: Paris High Court, 11 January 2024
Presiding Justice
Mrs. Martinel
Counsel
SCP Le Guerer, Bouniol-Brochier, Me Carbonnier, SCP Boucard-Maman
Full text
FRENCH REPUBLIC
IN THE NAME OF THE FRENCH PEOPLE
THE COURT OF CASSATION, SECOND CIVIL CHAMBER, has rendered the following judgment:
Request for advisory opinion
No. J 24-70.001
Referring court: the Paris High Court
LC12
Advisory opinion of 11 July 2024
No. 15008 P+B
F R E N C H R E P U B L I C
_________________________
COURT OF CASSATION
_________________________
Second Civil Chamber
Having regard to Articles L. 441-1 et seq. of the Code of Judicial Organization and Articles 1031-1 et seq. of the Code of Civil Procedure;
On 11 January 2024, the Paris High Court submitted a request for an advisory opinion, worded as follows:
Statement of the request for advisory opinion
1. The Court of Cassation received on 7 February 2024 a request for an advisory opinion filed on 11 January 2024 by an enforcement judge of the Paris High Court, pursuant to Articles L. 441-1 et seq. of the Code of Judicial Organization and Articles 1031-1 et seq. of the Code of Civil Procedure, in proceedings between Ms. [S] and the company Eos France.
2. The request is worded as follows:
“The enforcement judge
* may they, in the operative part of their judgment, declare as deemed unwritten, as unfair, a clause in a consumer contract that gave rise to the court decision on which the enforcement proceedings are based?
* if so,
– when this clause concerns the acceleration of the loan, may they annul this decision or declare it devoid of legal basis, in particular when the enforceability of the claim was the condition for its issuance? In that case, may they rule on the merits of a claim for payment?
– may they modify this court decision, by ruling that it is wholly or partly incapable of enforcement? In that case, may they rule on the merits of a claim for payment?”
SCP Le Guerer, Bouniol-Brochier, counsel, filed written observations on behalf of the company Eos France.
Mr. [K], counsel, filed observations on behalf of Ms. [S].
SCP Boucard Maman filed a brief in voluntary intervention on behalf of the French Banking Federation.
The Second Civil Chamber of the Court of Cassation issued this advisory opinion on the report of Mrs. Jollec, Reporting Judge, and the submissions of Mr. Adida-Canac, Advocate General, heard in their oral observations;
Grounds
3. The request for an advisory opinion relates to the consequences arising from an enforcement judge’s finding that an unfair clause is deemed unwritten when the enforceable title, the enforcement of which is being pursued, is a court decision.
4. This legal question, which is new and presents a serious difficulty, is likely to arise in many disputes. The request for an advisory opinion is therefore admissible.
5. As a preliminary matter, the Second Civil Chamber recalls that in its Simmenthal judgment of 9 March 1978 (Case 106/77 ECLI:EU:C:1978:49), the Court of Justice of the European Communities (CJEC) held:
“- that it follows from the foregoing that every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals, leaving unapplied any provision of national law which may potentially conflict with Community law, whether the national provision predates or postdates the Community rule;
– that, accordingly, any provision of a national legal system or any legislative, administrative or judicial practice which might impair the effectiveness of Community law by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions which might prevent Community rules from having full force and effect would be incompatible with the requirements inherent in the very nature of Community law.”
I. The obligation for the enforcement judge to raise unfair terms of their own motion
6. Under Article 7(1) of Council Directive 93/13/EEC of 5 April 1993, Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by a seller or supplier.
7. Under Article 6(1) of the same Directive, Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.
8. By a judgment of 26 January 2017 (C-421/14 ECLI:EU:C:2017:60 Banco Primus), the Court of Justice of the European Union held that res judicata does not in itself preclude the national court from being required to assess, at the request of the parties or of its own motion, the potentially unfair nature of a term, even at the stage of an enforcement measure, provided that this examination has not already been carried out during the previous judicial review resulting in the decision having the force of res judicata.
9. Concerning more specifically the case of a payment order, by a judgment of 17 May 2022 (C-693/19 and C-831/19 ECLI:EU:C:2021:615 SPV Project), the CJEU held that Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national legislation which provides that where a payment order issued by a judge at a creditor’s request has not been the subject of an opposition filed by the debtor, the enforcement judge may not, on the ground that the force of res judicata attaching to that order implicitly covers the validity of those terms, thereby excluding any subsequent examination of the validity of those terms, review the potentially unfair nature of the terms of the contract which served as the basis for the said order.
10. By a judgment of 18 January 2024 (C-531/22 ECLI:EU:C:2024:58 Getin Noble Bank), the CJEU, clarifying this case law, held that Article 6(1) and Article 7(1) of Directive 93/13 must be interpreted as precluding national legislation providing that a national court may not carry out of its own motion an examination of the potentially unfair nature of terms in a contract and draw the consequences therefrom, when it reviews enforcement proceedings based on a decision granting a payment order having the force of res judicata:
– if that legislation does not provide for such an examination at the stage of the issuance of the payment order, or
– when such an examination is provided for only at the stage of the opposition filed against the payment order concerned, if there is a non-negligible risk that the consumer concerned will not file the required opposition either because of the particularly short time limit provided for that purpose, or having regard to the costs which legal proceedings would entail in relation to the amount of the disputed debt, or because the national legislation does not provide for the obligation to communicate to that consumer all the information necessary to enable them to determine the extent of their rights.
11. The Court of Cassation, seized of this question, ruled in two judgments.
12. In a first judgment of 8 February 2023, the Commercial Chamber of the Court of Cassation, on the opinion of the Second Civil Chamber, (Com., 8 February 2023, appeal No. 21-17.763, published) held that a debtor subject to insolvency proceedings against whom an irrevocable decision has been rendered admitting a claim to its liabilities in respect of a mortgage loan, which the debtor had previously taken out as a consumer, may, at the hearing on directions before the enforcement judge during proceedings for the judicial sale of the debtor’s property initiated by the creditor to whom the declaration of unseizability of the debtor’s principal residence is unenforceable, notwithstanding the res judicata authority attached to that decision, raise a challenge concerning the unfair nature of one or more clauses of the notarized loan deed, provided it appears from the decision having the force of res judicata that the judge did not carry out this examination.
13. In a second judgment (2nd Civ., 13 April 2023, appeal No. 21-14.540, published), the Second Civil Chamber of the Court of Cassation held that, when seized of a challenge relating to the claim, the enforcement judge is required, even in the presence of a decision having the force of res judicata on the amount of the claim, to examine of their own motion whether the terms inserted in the contract concluded between the professional and the non-professional or consumer are unfair, provided they have the necessary elements of law and fact for that purpose, unless it appears from the entirety of the decision having the force of res judicata that this examination was carried out.
II. The enforcement judge’s finding that an unfair clause is deemed unwritten
14. The application of European Union law implies that the enforcement judge who finds that a clause is unfair must, in application of the principle of effectiveness, draw all the consequences therefrom and deem it unwritten. It must be apparent from the entirety of their decision that they carried out this examination.
15. The CJEU case law does not require the enforcement judge to include in the operative part of their decision a provision deeming the clause unwritten. Nor does it prohibit it.
16. It is therefore appropriate to apply the domestic rules of civil procedure.
17. It follows that the enforcement judge may declare, in the operative part of their decision, that an unfair clause is deemed unwritten.
III. The consequences of the enforcement judge’s finding that a clause is unfair, when the enforceable title is a court decision
European Union law
18. By a judgment of 10 June 2021 (C-776/19 to C-782/19. ECLI:EU:C:2021:470 BNP personal finance), the CJEU held that the modalities for implementing the consumer protection provided for by Directive 93/13 fall within the domestic legal order of the Member States by virtue of the principle of their procedural autonomy, but that those modalities must not be less favorable than those governing similar situations of a domestic nature (principle of equivalence) nor be arranged in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by the legal order of the Union (principle of effectiveness).
19. It specified that the obligation for Member States to ensure the effectiveness of the rights that individuals derive from the rights flowing from Directive 93/13 constitutes a requirement of effective judicial protection, reaffirmed in Article 7(1) of that Directive and also enshrined in Article 47 of the Charter.
20. By a judgment of 13 July 2023 (CAJASUR Banco, C-35/22, ECLI:EU:C:2023:569), the CJEU held that, given the nature and importance of the public interest constituted by the protection of consumers, who are in a position of weakness vis-a-vis professionals, Directive 93/13 requires the Member States, as is apparent from Article 7(1) of that Directive, read in conjunction with the twenty-fourth recital thereof, to provide adequate and effective means to prevent the continued use of unfair terms in contracts concluded with consumers by a seller or supplier.
21. By a judgment of 17 May 2022 (C-869/19 ECLI:EU:C:2022:397 Unicaja Banco), the CJEU held that, as regards the principle of effectiveness, each case in which the question arises as to whether a national procedural provision renders the application of EU law impossible or excessively difficult must be analyzed by taking into account the place of that provision in the procedure as a whole, its conduct and its specificities viewed as a whole, as well as, where appropriate, the principles which underlie the national judicial system, such as the protection of the rights of the defense, the principle of legal certainty and the proper conduct of the proceedings.
22. As regards the consequences of the judicial finding of an unfair term, by a judgment of 15 June 2023 (C-520/21, ECLI:EU:C:2023:478 Bank M.), the CJEU held that a contractual term declared unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer. The contract must subsist in principle, without any modification other than the removal of the unfair terms.
23. It deduced therefrom that the judicial finding of the unfair nature of such a term must, in principle, have the consequence of restoring the consumer to the legal and factual situation that they would have been in had that term not existed, in particular by establishing a right to restitution of advantages unduly obtained, to the consumer’s detriment, by the professional on the basis of said unfair term.
24. The CJEU held that the principle of proportionality, which constitutes a general principle of EU law, requires that national legislation implementing this right must not go beyond what is necessary to achieve the objectives pursued.
National law
25. Directive 93/13 was transposed into domestic law by Law No. 95-96 of 1 February 1995, which introduced Article L. 132-1 of the Consumer Code, now Article L. 212-1 of the Consumer Code, currently in force.
26. Article L. 241-1 of the Consumer Code, as amended by Ordinance No. 2016-301 of 14 March 2016, provides that unfair terms are deemed unwritten and that the contract remains applicable in all its provisions other than those found unfair if it can subsist without those terms.
27. Article R. 121-1, paragraph 2, of the Code of Civil Enforcement Procedures prohibits the enforcement judge from modifying the operative part of the court decision on which the enforcement proceedings are based or from staying its enforcement.
28. The enforcement judge may not, therefore, annul an enforceable title or modify it (2nd Civ., 25 March 1998, appeal No. 95-16.913, Bull. 1998, II, No. 107; 2nd Civ., 13 September 2007, appeal No. 06-13.672, Bull. 2007, II, No. 219; 2nd Civ., 28 September 2017, appeal No. 15-26.640, Bull. 2017, II, No. 184). Nor may they issue an enforceable title except in cases provided for by law (2nd Civ., 19 November 2020, appeal No. 19-20.700, published; 2nd Civ., 3 December 2015, appeal No. 13-28.177, Bull. 2015, II, No. 265).
29. Accordingly, it follows, on the one hand, from the powers of the enforcement judge, and, on the other hand, from EU law and CJEU case law, that the enforcement judge who deems an unfair clause unwritten may neither annul the enforceable title nor modify it. Nor may they rule on a claim for payment, except in cases provided for by law.
30. The enforceable title being deprived of effect insofar as it applies the unfair clause deemed unwritten, the enforcement judge is required to recalculate the amount of the claim in accordance with the provisions specific to the enforcement measures before them.
31. The enforcement judge draws all the consequences of the assessment of this claim on the challenges to the enforcement measures before them.
When they find that the debtor no longer owes any sum, they must order the discharge of the measure.
ACCORDINGLY, the Court is of the opinion that:
1/ The enforcement judge may declare, in the operative part of their decision, that an unfair clause is deemed unwritten.
2/ The enforcement judge who deems an unfair clause unwritten may neither annul the enforceable title nor modify it. Nor may they rule on a claim for payment, except in cases provided for by law.
3/ The enforceable title being deprived of effect insofar as it applies the unfair clause deemed unwritten, the enforcement judge is required to recalculate the amount of the claim in accordance with the provisions specific to the enforcement measures before them. They then draw all the consequences of the assessment of this claim on the challenges to the enforcement measures before them. When they find that the debtor no longer owes any sum, they must order the discharge of the measure.
Done at Paris and made available at the Registry of the Court on 11 July 2024, after examination of the request for an advisory opinion at the session of 9 July 2024, at which were present, in accordance with Article R. 431-5 of the Code of Judicial Organization: Mrs. Martinel, Presiding Justice, Mrs. Jollec, Reporting Judge, Mrs. Grandemange, Mrs. Vendryes, Mrs. Caillard, Mr. Waguette, Judges, Mrs. Bohnert, Mr. Cardini, Mrs. Latreille, Mrs. Bonnet, Mrs. Chevet, Reporting Judges, Mr. Adida-Canac, Advocate General, and Mrs. Cathala, Clerk of the Chamber;
This advisory opinion is signed by the Reporting Judge, the Presiding Justice, and the Clerk of the Chamber.
The Reporting Judge The Presiding Justice
The Clerk of the Chamber ECLI:FR:CCASS:2024:C215008
