From 2006 to 2009, the bank BNP Paribas Personal Finance marketed approximately 4,650 loans denominated in Swiss francs and repayable in euros, called Helvet immo, to finance the acquisition of real estate. The bank released a total of almost 800 million euros. During 2010, the Swiss currency increased significantly, which accelerated borrowers’ indebtedness. Schematically, the mechanism of the offer is as follows: the bank has designed a product whose repayment dates have been calculated according to a variable interest rate indexed to the Swiss currency. To this is added an indexation clause of the loan on the value of the Swiss franc. Citing the irregularity of this provision as well as the failure by BNP Paribas Personal Finance to comply with the information obligation, the borrowers sued the bank for liability in the hope of obtaining the nullity of the indexation of the capital and of being compensated. These requests are difficult to accept if we consider the fifteen sentences pronounced on February 20, 2019 by the Court of Cassation, as the latter considered the disputed loan offers legitimate. A major setback for borrowers whose cases are pouring into the courts (The Agefi Actifs, n ° 729, p.16).
Indexing mechanism. On paper, the amortization of the loan takes place by converting the fixed installments paid into euros according to an exchange rate susceptible to upward or downward evolution. With the Swiss franc soaring, repayments and residual capital increased in proportion to exchange rate fluctuations. Consequently, customers who had not amortized all the capital at maturity saw their financing extended for five years with the total removal of the monthly payment ceiling. A mechanism that makes BNP Paribas Personal Finance clients claim that the indexation clause is illegal because it is unfair as the borrower assumes the exchange risk alone and in an unlimited way. An argument that has not won neither the sentence of the Court of Appeal of Paris nor that of the Court of Cassation.
A lawful clause. “In March 2017 (1), the Court of Cassation opened the doors to unfair terms. However, on 20 February it just closed it abruptly, believing that the indexation clause was the essential obligation of the Helvet Immo contract and that, understandably, it could not be abusive.notes Arnaud Métayer-Mathieu, associate attorney at Dillenschneider Favaro & Associés, who has defended several plaintiffs in similar cases ( The Agefi Actifs, n ° 701, p.17 ). Please note that the Consumer Code (2) excludes from the scope of unfair terms any clause that concerns an essential obligation of the contract, unless it is demonstrated that it is not clear and intelligible for a normally diligent consumer. Otherwise, there is no abuse unless the clause relates to a secondary obligation of the contract and creates a significant imbalance between the parties. In this case, the clause will be deemed unwritten. A law of public order confirmed by the CJEU. Therefore, the whole question of those judgments was to establish whether the indexation mechanism constituted a sufficiently understandable essential obligation, or on the contrary whether it was the subsidiary object of the contract. On February 20, the Court of Cassation found that the preliminary loan offer, in which the contested clause was inserted, provided for the conversion into Swiss francs of the balance of the monthly payments in euro upon payment of the accessory charges to the loan, which the essential characteristic of the loan was that it was a loan in Swiss francs repayable in euros and that the exchange rate risk inherent in this type of loan affected the repayment terms of the loan; under these conditions the magistrates concluded that the indexation clause was indeed the main object of the contract. A position disputed by the lawyers of the borrowers, including Arnaud Métayer-Mathieu who argues, on the contrary, that “the indexing mechanism is only a condition of payment of the loan and as such can only be ancillary. This clause is only a way to change the main object, which is the obligation of repayment of the debtor“.
Understandability of the clause. Having defined the essential object of the contract, it remained to be ascertained that the contractual clause was drafted in a sufficiently clear and intelligible manner. According to the valuation standards established by the CJEU, financial institutions have an obligation to provide borrowers with sufficient information to enable them to make their decisions with prudence and full knowledge of the facts. With regard to Helvet Immo loans, this requirement implies that an exchange risk clause must be understood by the consumer both in formal and grammatical terms, but also in terms of concrete scope, in the sense that an average consumer cannot only be aware of the risk of currency depreciation, but also being able to assess the economic consequences of this clause. In light of these elements, the Court of Cassation confirmed that the preliminary loan offer presented in a transparent way the practical functioning of the currency conversion mechanism, and that the Paris Court of Appeal had legitimized the indexation mechanism. After this conclusion, the Court of Cassation could not, without ruling, accept the second reason with which the borrowers complained of the bank’s failure to provide information.
Providing detailed instructions. Also in this case, the Court of Cassation confirmed the appeal decisions and rejected the request for compensation made by the borrowers as the contract unequivocally explained the currency loan operation. The bank’s lawyers, Ludovic Malgrain and Philippe Métais, associate lawyers of White & Case, add that their client has fully complied with the Châtel law, which since 1uh October 2008 requires establishments that market variable rate loans to provide alerts simulating possible changes in the exchange rate and interest rate. For this reason, a quantified appendix has been attached to the loan offer, which informs customers of the risk of changes in the exchange rate and its influence on the duration of the loan, on the amortization of capital and on the total cost of credit. The Court of Cassation concluded that the bank had not failed to comply with its obligation to provide information, both before and after the entry into force of the Châtel reform.
Scope of the decision. “With this series of sentences, the Court of Cassation established acorpusof rules that form a unitary jurisprudence. It makes any action against Helvet Immo loans eminently complicated, unless you can prove that the customer has not received all the attachments and explanatory communications. In the future, it is with good reason that the bank will oppose us with the reasons of the Court of Cassation which, it must be emphasized, is committed to taking up the arguments of the courts of appeal, thus blocking the procedures in progress.»Observes Arnaud Métayer-Mathieu. For their part, the lawyers of the White & Case firm believe that the debate on unfair terms and the possible failure to inform the bank is closed. BNP Paribas Personal Finance will appear in November 2019 before the Paris Criminal Court to answer the charge of misleading business practices due to loan offers and training materials distributed to 720 credit intermediaries, including CGPs, which BNP has trained and supported in their propaganda. “However, since February 20 there is a judicial truth that is imposed on the criminal judge. While the prosecution has been able for some time to raise the question of the deceptive nature of the bank’s business practices, the doubt is now cleared. The civil courts have ruled that there has been no violation by our client, no fraud or lack of consent. It should be noted that the prosecution intervened to transmit various elements of the investigation to the civil courts. It is therefore in full knowledge of the facts that the trial judges pronounced their decision.“Says Ludovic Malgrain.
(1) Cass, civ., 29 March 2017, n ° 15-27231.
(2) arts. L.212-1 Consumer Code.