Unfair Terms and Limitation: Neither CJEU Judgments Nor Those of Supreme Courts Start the Clock Against the Borrower (CJEU, Ninth Chamber, 19 March 2026, Case C-679/24, ECLI:EU:C:2026:223)

Court of Justice of the European Union, Ninth Chamber, 19 March 2026, Case C-679/24, ECLI:EU:C:2026:223

What Is the Background to This Judgment?

The Facts: A CHF Loan and an Exchange Rate Risk Clause

The case that led to this judgment originates in Hungary, but its lesson goes well beyond that country’s borders. In February 2008, a consumer (referred to in the judgment by the initials HL) concluded with a bank a mortgage loan agreement denominated in Swiss francs (CHF), for an amount equivalent to approximately €12,750, repayable over 360 months, that is, thirty years, in Hungarian forints. This is a pattern that millions of European borrowers experienced in the 2000s: you borrow in a foreign currency considered stable, often at an attractive interest rate, and you repay in your national currency. The downside is that if the foreign currency appreciates, the monthly instalments in local currency rise, sometimes considerably.

In the contract concluded by HL, a clause provided that the risk linked to the appreciation of the Swiss franc against the Hungarian forint rested entirely on his shoulders, with no cap whatsoever. In other words, in the event of a sharp rise in the CHF, the whole loss was attributed to him. This clause, which the judgment calls the “exchange rate risk clause”, is at the heart of the entire dispute.

In May 2012, about four years after the contract was concluded, the bank terminated the loan because of arrears accumulated since November 2011, and then obtained an enforceable title in December 2012. It then began enforcement proceedings against HL, which were still ongoing when the question was referred to the CJEU for a preliminary ruling. In March 2017, the claim was assigned to another financial company, Momentum Credit.

Proceedings Dismissed at First Instance on Limitation Grounds

It was in April 2023, more than fifteen years after the contract was signed, that HL brought the matter before the competent court. He asked for the contract to be declared invalid on account of the unfair nature of the exchange rate risk clause, and for the effects of that contract to be maintained with the exception of that clause, deemed unwritten. He also sought an accounting between the parties and undertook to repay, from the final decision, his existing debt as at 5 September 2012, approximately €13,058, plus interest.

The court of first instance dismissed his claim without even examining the merits, and therefore without ruling on whether the clause was unfair or not. Why? Because, in its view, HL’s action was time-barred. The five-year period provided for by Hungarian law had expired long before, whether it was made to run from the conclusion of the contract in 2008, from its termination in 2012, or even from the end of the period of suspension of limitation in December 2015.

Faced with this procedural wall, the appeal court, the Budapest-Capital Regional Court, decided to refer four questions to the CJEU for a preliminary ruling, staying its judgment in order to obtain clarification on the compatibility of this limitation regime with European law.

What Does Directive 93/13 on Unfair Terms Say?

The Definition of an Unfair Term Under European Law

Council Directive 93/13/EEC of 5 April 1993 is the foundational text for consumer protection against unfair terms in Europe. Its scope is broad: it covers all contracts concluded between a professional and a consumer, and therefore all bank loan agreements.

For foreign currency loans, the CJEU has developed extensive case law. An exchange rate risk clause is not automatically unfair, but it must satisfy a heightened transparency requirement: the bank must have given the consumer clear, comprehensible and sufficient information on the real nature of the risk they were assuming. The consumer had to be able to understand concretely the potential economic consequences for them, in particular that exchange rate fluctuations could significantly increase their repayments, with no cap whatsoever.

If this information was not provided, or if it was insufficient, ambiguous or presented in a misleading way, the term may be declared unfair. And that is precisely what HL alleged in his action: the bank had failed in its obligation to inform him about the exchange rate risk.

What Are the Legal Effects of a Term Declared Unfair?

Article 6(1) of Directive 93/13 is explicit: an unfair term “shall not be binding” on the consumer. In practice, this means that the term is deemed never to have existed in the contract. The contract itself can continue to exist if, once the term is removed, it is capable of continuing in existence, which is often the case. The borrower is then entitled to claim the repayment of all sums paid under that unlawful term.

Article 7 of the Directive also requires Member States to put in place adequate and effective means to put an end to the use of unfair terms. It is on this basis that the CJEU reviews the compatibility of national procedural rules, including limitation periods, with European law.

What Is Limitation and Why Is It at the Heart of the Debate?

Extinctive Limitation: Definition and Operation

Limitation does not eliminate the right as such (the term remains unfair), but it deprives its holder of the possibility of enforcing that right in court. In other words, a consumer whose action is time-barred can no longer obtain a judgment against the bank, even if the term is manifestly unfair.

Hungarian law also provided for two important procedural mechanisms: suspension of limitation (the period is paused for a set time) and interruption (the period starts again from zero). In the context of foreign currency loans, the Hungarian legislature had adopted special laws, known as the “DH1 Act” and the “DH2 Act”, which provided in particular for a suspension of limitation until 31 December 2015, corresponding to the period of collective settlement of disputes relating to foreign currency loans.

The Problem of the Starting Point: When Does the Period Begin?

The question of the starting point is crucial. Under Hungarian law, according to the interpretation adopted by the court of first instance, there were two theses:

The first thesis, the least favourable to the consumer, made the five-year period run from the conclusion of the contract in 2008. Since the grounds of invalidity, that is, the lack of information on the exchange rate risk, existed from the signing, the period would have started to run from that moment. In that case, it had expired in 2013.

The second thesis, more favourable, made the period run from the end of the contract (termination in May 2012), in accordance with a special provision of the DH1 Act. But even in that case, the five-year period expired in May 2017, well before HL brought the matter before the court in April 2023.

In both cases, HL’s claim was time-barred according to the Hungarian courts. It was this double impasse that the CJEU was called upon to resolve.

Does the CJEU Prohibit a Limitation Period Running From the Signing of the Contract?

The Principle of Effectiveness: A Shield for the Consumer

The CJEU first recalls that, in the absence of EU rules on limitation periods, it is for each Member State to lay down its own procedural rules. This is what is known as the principle of procedural autonomy. But this freedom is not unlimited. It stops where the principle of effectiveness and the principle of equivalence begin.

The Court notes that raising a limitation period against claims for repayment is not, in itself, contrary to EU law. A State may perfectly well provide that, from a certain point, the borrower can no longer claim the repayment of sums paid under an unfair term. Legal certainty, which also benefits professionals, justifies this. What is, on the other hand, inadmissible is for that period to start running at a time when the consumer could not yet be aware of their rights.

The Court’s Answer to the First Question

The CJEU’s answer to the first question referred for a preliminary ruling is clear. It rules that Articles 1 and 7 of Directive 93/13, read in the light of the principle of effectiveness, preclude a national rule under which, where a loan is void, the consumer may rely on the legal consequences of that nullity only within a period of five years running from the date of conclusion of the contract, if on that date they did not know, and could not reasonably have known, that the term was unfair.

The Court stresses several elements that justify this solution. First, the consumer’s structural position of inferiority vis-à-vis the bank, both in terms of bargaining and of information. A borrower who signs a mortgage loan agreement adheres to standardised conditions that they did not draft and over which they have no control. Second, mortgage loans are long-term contracts (thirty years in HL’s case), which means that limitation may be acquired even before the contract has ended, systematically depriving consumers of any possibility of redress. The Court had already ruled on this point in earlier cases concerning foreign currency mortgage loans.

The Court nevertheless specifies that the bank retains the ability to prove that the consumer knew or could reasonably have known of that fact before a court decision established it. The burden of proof therefore rests on the professional, not on the consumer.

Can the Date of a Court Judgment Trigger Limitation?

The second and third questions put by the referring court concerned a particular hypothesis: what if the date of a judgment (of the CJEU or of the national supreme court) that had declared similar terms unfair were used as the starting point of the limitation period? This would be an apparently balanced solution: from the moment case law has clearly established that this type of term is unfair, the consumer could have known it, and the period could run. The CJEU firmly rejects this approach.

Judgments of the National Supreme Court Are Not Enough

The Court first recalls a fundamental distinction. A decision of the national supreme court finding standardised terms to be unfair does not automatically allow the conclusion that every consumer who concluded a similar contract knew of their rights. The reason is twofold.

On the one hand, even well-established case law on standard terms does not dispense with a case-by-case assessment: it is still necessary to check that the term contained in that specific consumer’s contract is indeed equivalent to the one the supreme court declared unfair. This is not a step that can reasonably be expected of an ordinary consumer.

On the other hand, the Court emphasises that a consumer, who takes out a mortgage loan only occasionally, or even only once in their lifetime, cannot be required to regularly monitor the supreme court’s case law on standardised terms and to deduce the consequences for their own contract. That expectation would be reasonable for a professional, who would insert this type of term as part of their usual commercial activity, but not for an individual.

Nor Are CJEU Judgments

The same reasoning applies, a fortiori, to the judgments of the Court of Justice of the European Union itself. The Court says so clearly: its preliminary rulings do not decide on the unfair nature of particular terms, but only on the interpretation of EU law. The concrete examination of each term is systematically left to the national court. A consumer, even one directly concerned by proceedings in which the CJEU has ruled, cannot infer from such a judgment any certainty as to whether their own contractual term is unfair.

CJEU judgments, however well publicised, therefore cannot be regarded as a sufficient source of information for the average consumer about the unfair nature of a specific term in their own contract.

When Can the Period Validly Begin to Run?

Here the Court provides a decisive and constructive clarification. While general judgments, whether of the CJEU or of national supreme courts, cannot be the starting point of the period, there is nevertheless one event that can: a final judicial decision finding the specific term in the person’s contract to be unfair, duly notified to that consumer.

Once such a decision has become final and has been notified, the consumer is presumed to have full knowledge of the irregularity of their term. They are then in a position to assess for themselves whether to bring an action for the repayment of the sums paid, and the limitation period can run.

Resumption of the Period After Suspension: The Same Safeguards Apply

The third question put by the Hungarian court also concerned the resumption of the limitation period after a period of statutory suspension, such as the one provided for by the DH1 and DH2 Acts in Hungary, which had frozen limitation until 31 December 2015.

The Court gives an answer that is logical and consistent with the principles it has just laid down. The very purpose of suspending limitation is to protect the holder of a right who, for objective reasons, is unable to exercise that right. It prevents the passage of time from extinguishing a right that its holder was prevented from asserting. Its rationale is therefore identical to that which justifies the rule on the starting point.

A direct consequence follows: the safeguards governing the determination of the starting point of the limitation period apply equally to the resumption of that period after its suspension. In other words, the suspension could not have ended on a given date (31 December 2015) if, on that date, the consumer still did not know that their term was unfair. The resumption of the running of the period must be subject to the same conditions as its initial start.

What Is the Significance of This Judgment for French Borrowers?

The judgment of 19 March 2026 was delivered in a Hungarian context, but its scope is European. The Court of Justice of the European Union interprets EU law, and that interpretation is binding on all Member States. The principles laid down are therefore directly applicable in France.

In France, the issue of foreign currency loans is well known, particularly for loans in Swiss francs or yen taken out in the 2000s and 2010s. The ordinary limitation period is five years from the day the holder of a right knew or should have known the facts enabling them to exercise that right (Article 2224 of the Civil Code). This knowledge criterion is already part of French law.

However, the CJEU judgment clarifies two essential points that apply in all Member States: first, the date the contract was signed cannot, on its own, constitute the starting point of the period; second, neither CJEU judgments nor those of national supreme courts are sufficient to establish that the consumer knew that their specific term was unfair.

For a French borrower against whom the bank raises limitation, this judgment is a strong argument. It is for the bank, not the borrower, to demonstrate that the borrower knew or could reasonably have known that the term was unfair, before any judicial decision finding it so in their particular case.

It should also be noted that an action to have a term declared unfair is, for its part, not subject to limitation according to the CJEU: the consumer may, at any time and without any time limit, ask the judge to find that a term is unfair. Only the action for repayment of the sums paid (the claim to be reimbursed) is subject to a limitation period.

Conclusion

The judgment delivered by the Court of Justice of the European Union on 19 March 2026 in Case C-679/24 is a major step forward in the protection of borrowers who took out foreign currency loans. By clearly laying down that the limitation period for the action for repayment can only run from the moment the consumer knew or could reasonably have known that the term imposed on them was unfair, the Court gives concrete and effective force to the rights arising under Directive 93/13.

In doing so, the Court sends a clear message to banks: you cannot raise limitation against a consumer whom you yourselves kept in ignorance of their rights. Nor can you shelter behind general case law to claim that this consumer should have known. The burden of proving knowledge, and therefore the ability to act, rests on your shoulders.

For borrowers in a similar situation, whether it is a loan in Swiss francs, in euros indexed to a foreign currency, or any other contract containing a term that makes them bear a disproportionate risk, this judgment is a strong signal. Limitation is not an insurmountable obstacle if you could not have been aware of your rights at the time when it is supposed to have started running.

If you think you are affected, the priority is to act: consult a lawyer specialising in banking law who can analyse your contract, identify potentially unfair terms, and assess the situation in light of the limitation periods applicable to your particular case.

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