{"id":55499,"date":"2018-03-14T11:46:52","date_gmt":"2018-03-14T10:46:52","guid":{"rendered":"https:\/\/www.nzp.de\/?p=55499"},"modified":"2026-08-07T12:00:05","modified_gmt":"2026-08-07T10:00:05","slug":"federal-court-of-justice-damages-may-be-awarded-even-where-a-foreign-currency-loan-is-valid","status":"publish","type":"post","link":"https:\/\/www.nzp.de\/de\/federal-court-of-justice-damages-may-be-awarded-even-where-a-foreign-currency-loan-is-valid\/","title":{"rendered":"Federal Court of Justice: Damages May Be Awarded Even Where a Foreign Currency Loan Is Valid"},"content":{"rendered":"

The German Federal Court of Justice (Bundesgerichtshof<\/em> \u2013 BGH) recently published the written grounds of its judgment dated 9 December 2017<\/strong>.<\/p>\n

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According to the judgment, a court must still examine a damages claim brought by a borrower indebted in a foreign currency, even where the underlying loan agreement itself was validly concluded. Before a loan agreement is entered into, an advisory relationship necessarily arises between the bank and the consumer. If the bank breaches its obligations under that advisory relationship, for example by providing inadequate information regarding the risks involved, it may become liable to compensate the consumer for the resulting damage.<\/p>\n

The Essence of the Case<\/h2>\n

A municipality in North Rhine-Westphalia refinanced its existing borrowings through a Swiss franc-denominated loan.<\/p>\n

Following the significant appreciation of the Swiss franc, a dispute arose as to whether the bank had adequately explained the relevant risks and the alternatives available to mitigate or manage those risks. The municipality argued that, even if any shortcomings in the bank’s disclosures were insufficient to render the loan agreement invalid, it should nevertheless be entitled to pursue a claim for damages against the bank.<\/p>\n

The municipality’s claim was dismissed both by the Regional Court (Landgericht<\/em>) and by the Higher Regional Court (Oberlandesgericht<\/em>). Ultimately, however, the BGH referred the matter back to the lower courts for a fresh examination of the amount of damages that may be payable.<\/p>\n

A Hungarian consumer may immediately ask the following question: when taking out a foreign-currency loan in Hungary, why were borrowers not provided with similarly detailed information concerning the risks involved and the available means of avoiding or mitigating those risks?<\/p>\n

The lower courts were of the view that the information provided by the bank was sufficient both to establish the validity of the agreement and to shield the bank from liability for damages.<\/p>\n

The BGH, however, did not share that conclusion. In its view, a foreign-currency loan is not an ordinary transaction.<\/p>\n

The BGH itself acknowledged that the disclosures made in this case, which were significantly more detailed than the standard risk-disclosure notices commonly used in Hungary, were sufficient to ensure that the contract had been validly concluded.<\/p>\n

Nevertheless, the Consumer May Claim Damages<\/h2>\n

Despite the validity of the agreement, the BGH held that the consumer could still be entitled to damages.<\/p>\n

The Court found that no investment-advisory agreement had arisen between the parties. Consequently, the rules specifically applicable to investment advice were not directly applicable.<\/p>\n

However, before a written loan agreement is concluded, a separate financial advisory relationship<\/strong> necessarily comes into existence between the bank and the prospective borrower. Within the framework of that advisory relationship, consumer disclosures are subject to a stricter standard than the standard applied when determining whether a contract is valid or invalid.<\/p>\n

Accordingly, compliance with the requirements for contractual validity does not automatically mean that the bank has discharged all of its advisory obligations.<\/p>\n

What Must Be Examined?<\/h2>\n

The BGH held that, in the renewed proceedings, the lower court must determine the precise amount of damage suffered by the consumer as a result of the bank’s failure to recommend adequate safeguards against exchange-rate risk.<\/p>\n

In other words, the central question is not whether the agreement was valid, but rather whether the borrower suffered additional losses that could have been avoided if the bank had provided proper advice and appropriate risk-management solutions.<\/p>\n

Relevance for Hungary<\/h2>\n

Since the relevant European legal framework is substantially the same in both Germany and Hungary, and because the underlying civil-law principles are broadly similar, the reasoning of the judgment may also be relevant in the Hungarian legal context.<\/p>\n

Possible Consequences for Hungarian Case Law<\/h2>\n

The case may support the following conclusions:<\/p>\n

    \n
  • Consumer status may potentially be recognised not only for private individuals but also for companies and other organisations.<\/li>\n
  • A borrower may pursue a damages claim against a bank even where the loan agreement itself remains valid and enforceable.<\/li>\n
  • A previous final judgment rejecting an invalidity claim should not necessarily constitute an absolute barrier to a subsequent damages action.<\/li>\n
  • Damages claims may fall outside both the scope of the Hungarian foreign-currency loan settlement legislation and the earlier consumer-unfavourable decisions of the Hungarian Supreme Court (K\u00faria<\/em>).<\/li>\n<\/ul>\n

    Should you have any further questions or require legal advice regarding the subject, please feel free to contact us.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

    The German Federal Court of Justice (Bundesgerichtshof \u2013 BGH) recently published the written grounds of its judgment dated 9 December 2017. According to the judgment, a court must still examine a damages claim brought by a borrower indebted in a foreign currency, even where the underlying loan agreement itself was validly concluded. Before a loan […]<\/p>\n","protected":false},"author":32,"featured_media":55503,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-55499","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t