The Consequences of the Unfairness of Contract Terms in Business-to-Consumer Contracts: A Study of Directive 93/13/EEC in the Context of Foreign Currency Loans

In the context of European private law, particular attention must be given to Council Directive 93/13/EEC of 5 April 1993 (Unfair Contract Terms Directive), relating to the approximation of the laws and administrative provisions of Member States concerning unfair terms in consumer contracts. Its relevance is such that it calls for a dedicated study, that moves beyond a neutral description of its content or a simple survey of how its rules have been implemented within the various national legal systems. The implications that can be drawn from the case law of the Court of Justice, which is particularly extensive with regard to foreign currency linked loans, prompt us to undertake a renewed reflection on this long-standing Directive. Arguably, there are three core issues that make the Unfair Contract Terms Directive a topic of definite current interest. First, the Unfair Contract Terms Directive compels a reconsideration, both in structural and functional terms, of the role of consumer protection within European legislation and, more specifically, within the emerging configuration of European private law. Second, the Unfair Contract Terms Directive is the only existing consumer-related directive still based on a minimum-harmonization approach. Tentatively, this feature mirrors downstream what has been described upstream as the ‘pointillist’ and ‘fragmentary’ nature of European private law legislation. Third, the Unfair Contract Terms Directive offers a particularly illuminating lens through which to revisit contemporary debates on legal pluralism, in terms of competing sources of law, as well as legal categories and legislative policies. In conclusion, the purpose of the present analysis is not to determine whether contract terms fall within the realm of judicial control under the Directive per se, but rather to examine the consequences of a judicial finding of unfairness. Indeed, when a contract term is found to be unfair, a first fundamental issue arises concerning its substitution. Furthermore, if the removal of the unfair term then prevents the contract from continuing in force and leads to its complete annulment, further questions arise regarding the restitutory effects. In particular, this concerns the restitution of amounts that were unduly paid as a result of the unfair clause imposing them, raising complex issues about the scope and limits of restitutionary claims under both domestic and European law.