Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts is the cornerstone of this protection. Its application, and in particular the role of the national court, is regularly clarified by the CJEU.
The judgment of the Court of Justice of the European Union (CJEU) of 3 July 2025 in Case C-582/23 [Wiszkier], viewed in light of French case law examples, notably from the Courts of Appeal of Rouen and Versailles, provides essential insight into the review of unfair terms in credit agreements, particularly within the framework of personal over-indebtedness proceedings.
CJEU, 3 July 2025, Wiszkier, No. C-582/23
CA Rouen, ch. de la proximite, 16 March 2017, No. 16/01849
Cour d’appel de Versailles, Chambre civile 1 8, 6 September 2024, No. 23/07296
I. The CJEU’s Clarifications: The [Wiszkier] Case (C-582/23)
The [Wiszkier] case (C-582/23), decided on 3 July 2025, concerns the personal bankruptcy of a Polish consumer, R.S., a significant portion of whose debts arose from a mortgage credit agreement indexed to the Swiss franc. The list of his debts, including those of bank G. S.A., had been approved by a supervisory judge, and the consumer had acknowledged all of these claims. The bankruptcy court, tasked with establishing a repayment plan, questioned the potentially unfair nature of the credit agreement clauses, the examination of which had not previously taken place.
The Court provided two major clarifications:
The Court’s Obligation to Conduct an Ex Officio Examination (Despite Approval of Claims)
- The CJEU reaffirms that Article 6(1) of Directive 93/13 is a mandatory provision, equivalent to a rule of national public policy. The national court is required to assess of its own motion whether a contractual term is unfair as soon as it has the necessary elements of law and fact at its disposal. This obligation aims to remedy the imbalance between the consumer and the professional.
- The Court held that national legislation which prevents the bankruptcy court from assessing of its own motion the unfairness of contractual terms and binds it to a list of claims already approved by another judicial body (without prior examination of the terms) is contrary to the principle of effectiveness of EU law.
- The fact that the list of claims has acquired the force of res judicata does not necessarily preclude an ex officio examination. Effective review of the unfairness of terms cannot be guaranteed if the force of res judicata were to attach to judicial decisions that had not incorporated such a review. The bankruptcy court must therefore be able to assess the unfairness of terms and draw the necessary consequences, unless the previous court had explicitly conducted such an examination.
- The requirement for the bankruptcy court to stay proceedings and refer the matter to another body was held to be liable to deter the bankrupt from asserting their rights, due to the prolongation of proceedings and their precarious financial situation, making the application of the directive excessively difficult. The consumer’s acknowledgment of claims or failure to object, without having been informed of the potentially unfair nature of the terms and without a free and informed waiver, does not constitute total passivity preventing them from asserting their rights.
The Need for Interim Measures
- The Court also held that Articles 6(1) and 7(1) of Directive 93/13 preclude national legislation which does not allow interim measures to be ordered in the context of bankruptcy proceedings.
- The full effectiveness of the rights conferred on the consumer by the directive requires that the national court be able to grant appropriate interim measures. Such measures are necessary where there is a risk that the consumer may suffer significant financial harm (for example, substantial wage deductions) during the course of proceedings. This aims to avoid deterring the consumer from asserting their rights.
- The bankruptcy court must be able to assess, on a case-by-case basis, whether such measures (such as reducing wage deductions) are necessary to ensure consumer protection, taking into account all relevant circumstances, including the financial situation of the bankrupt and the existence of indications of abuse.
II. French Case Law: Synergy and Nuance
French law incorporates the principle of ex officio examination of unfair terms, but its implementation within the specific framework of over-indebtedness and enforcement proceedings may involve certain nuances.
The General Principle of the Court’s Ex Officio Power in French Law:
Article R.632-1 of the Consumer Code provides that “The court may raise of its own motion all provisions of this Code in disputes arising from its application. It shall dismiss of its own motion, after having heard the observations of the parties, the application of a term whose unfair nature is apparent from the elements of the proceedings.” This provision is a direct transposition of the European obligation and enshrines the ex officio power of the national court in this area.
Application of the Ex Officio Power in Over-Indebtedness Proceedings: A Confirmation (CA Rouen, ch. de la proximite, 16 March 2017, No. 16/01849)
The Court of Appeal of Rouen, in a judgment of 16 March 2017 (No. 16/01849), upheld the decision of the Tribunal d’instance d’Evreux in an over-indebtedness case involving a vehicle financed by a loan from SA CREDIPAR.
The Court of Appeal held that the retention of title clause with subrogation in favor of the lender, as set out in the credit agreement of December 2013, should be “regarded as an unfair term and dismissed ex officio” pursuant to Article L.141-4 (now R.632-1) of the Consumer Code. The court relied on an opinion of the Cour de cassation of 28 November 2016.
This decision concretely illustrates the power of the over-indebtedness court to raise of its own motion the unfair nature of a term affecting a claim within the framework of a recovery plan, prior to any final enforcement proceedings regarding the disputed claims.
The Limits of the Ex Officio Power in Light of Res Judicata and Legal Certainty of Enforcement (Cour d’appel de Versailles, Chambre civile 1 8, 6 September 2024, No. 23/07296)
The Court of Appeal of Versailles, in a judgment of 6 September 2024 (No. 23/07296), examined the case of a consumer, Ms. [N], contesting a claim by CFCAL following completed real estate seizure and auction proceedings. She invoked the unfair nature of the acceleration clause.
The Versailles Court upheld the position of the first-instance judge that the over-indebtedness court was not competent to examine the unfair nature of the acceleration clause once the real estate enforcement proceedings had been “definitively completed” and the property sold at auction and the proceeds distributed.
The Court invoked the principle of res judicata and legal certainty of property transfers, noting that the CJEU itself had stated that national legislation may not authorize the court to examine the unfairness of a contractual term where previous enforcement proceedings have been completed and have transferred property rights to a third party (CJEU, 17 May 2022, Ibercaja Banco, Case C-600/19, paragraphs 52 and 59).
However, the Versailles Court specified that if Ms. [N] could still “invoke the unfair nature of the disputed contractual term in order to obtain compensation for the harm caused to her by the application of that term,” such a claim did not fall within the jurisdiction of the over-indebtedness court. This nuance is crucial: the possibility of challenging the term to obtain financial compensation remains, but not the possibility of overturning a completed real estate enforcement to annul the transfer of property.
III. Implications for Consumers
These decisions highlight the importance of several points for consumers:
- Strengthened protection: The [Wiszkier] judgment provides a powerful lever for the defense of consumers in over-indebtedness or bankruptcy situations. It is imperative to systematize the examination of contractual terms underlying claims, even if those claims have been acknowledged or entered on a list.
- Application for interim measures: The CJEU judgment highlights the possibility of obtaining interim measures to alleviate the debtor’s situation during the examination of the unfairness of terms, which is a valuable tool for ensuring the effective protection of the consumer.
- Procedural strategy and timing: Although the Versailles Court recalls the limitations of the over-indebtedness court once forced enforcement proceedings have been completed and property has been transferred, the CJEU’s [Wiszkier] judgment insists on the need for an ex officio examination before the closure of bankruptcy or over-indebtedness proceedings if such an examination has not previously taken place. It is crucial to raise the unfairness of terms as early as possible in the proceedings. In the event of completed forced enforcement, an action for compensation for financial harm remains available, albeit before a different court.
In conclusion, the legal landscape of consumer protection regarding unfair terms is marked by an increasing demand for effectiveness. National courts, under the guidance of the CJEU, are called upon to play a proactive role in detecting and setting aside unfair terms, even in the complex contexts of bankruptcy or over-indebtedness proceedings. This dynamic requires banking law practitioners, whether representing institutions or consumers, to maintain constant legal monitoring and adapt their strategies to ensure compliance with contractual balance and the protection of the most vulnerable parties.
FAQ: Your Rights as a Consumer Against Unfair Terms and Over-Indebtedness
What is an unfair term in a contract?
An unfair term is a term in a contract concluded between a professional and a consumer that has the object or effect of creating, to the detriment of the consumer, a significant imbalance between the rights and obligations of the parties to the contract. For example, an acceleration clause (which allows a bank to demand immediate full repayment of a loan in the event of a payment default) may be considered unfair if it does not require a prior formal notice or reasonable notice period.
How does a court intervene in the case of an unfair term?
The court is required to raise of its own motion (i.e., on its own initiative) all provisions of the Consumer Code in disputes arising from its application. If it has the necessary elements of law and fact, it must assess the unfair nature of a contractual term. After hearing the observations of the parties, the court dismisses ex officio the application of a term whose unfair nature is apparent from the elements of the proceedings. European Directive 93/13/EEC on unfair terms requires Member States to ensure that unfair terms do not bind the consumer and do not produce binding effects on the consumer, unless the consumer objects.
What happens if an unfair term is identified in a contract during over-indebtedness proceedings?
In the context of over-indebtedness proceedings, the court may, even of its own motion, verify the validity of the claims and the instruments evidencing them, as well as the amounts claimed. Claims whose validity or the validity of whose instruments is not recognized are excluded from the proceedings. For example, the Court of Appeal of Rouen held that a retention of title clause with subrogation to the lender was unfair and dismissed it ex officio, thereby allowing the debtor to retain the financed vehicle. The Court of Justice of the European Union (CJEU) also held that in personal bankruptcy proceedings, if the list of claims was approved by a body without examining the unfairness of the terms of a credit agreement, the bankruptcy court must be able to assess the unfairness of its own motion and draw the necessary consequences, even if this may delay the proceedings.
Can a court re-examine an unfair term even if a prior decision has already been rendered?
Yes, this is possible. Although the principle of res judicata is important for legal stability, the CJEU has stated that if a previous judicial decision did not explicitly examine the unfairness of the term, that decision does not necessarily preclude a new examination by the national court. The obligation of such an ex officio examination is justified by the public interest in consumer protection. However, there are limits: if enforcement proceedings (such as a real estate seizure) have been definitively completed and property rights have been transferred to a third party, the court can no longer conduct an examination that would lead to the annulment of the property transfer instruments. In that case, the consumer may nevertheless invoke the unfairness of the term in separate and subsequent proceedings to obtain compensation for financial harm.
Can interim measures be ordered during over-indebtedness or bankruptcy proceedings? Yes, the national court must be able to grant interim measures to ensure the full effectiveness of the rights conferred on the consumer by the directive on unfair terms. Such measures may be necessary to adjust the consumer’s situation pending the examination of the unfairness of the terms. For example, a measure aimed at reducing deductions from the debtor’s salary in bankruptcy may be necessary to ensure their protection, especially if invoking the unfairness of terms prolongs the proceedings and unfairly worsens their financial situation. The court must assess whether such measures are necessary taking into account all relevant circumstances, including indications of abuse and the consumer’s financial situation.
As a consumer, what is my role in asserting my rights?
Although the court has an obligation to act ex officio, your total passivity cannot be entirely compensated for. It is imperative to seek advice from a lawyer who will help you identify the unfair terms in your contracts.
