The Court of Justice of the European Union issued a decision important for Polish consumers in which it assessed Polish provisions on order for payment proceedings in terms of compliance with Article 7(1) of the Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.
The judgment of 13 September 2018 in case C-175/17 (Profi Credit Polska SA in Bielsko Biala v Mariusz Wawczosek) was made as a result of preliminary ruling of District Court in Siemianowice Śląskie.
Why is the CJEU judgment so important?
The Court stated that Polish legislation which permits issue of an order for payment founded on a valid promissory note that secures a claim arising from a consumer credit agreement does not comply with the provisions of the directive.
First of all, in the order for payment proceedings, the court dealing with an application for an order for payment does not have the power to examine whether the terms of the agreement are unfair.
Secondly, the manner of exercising the right to lodge an objection against such an order do not enable observance of the rights which the consumer derives from that directive to be ensured.
How is the order for payment from promissory note regulated?
Based on art. 485(2) of the Polish Code of Civil Proceedings, the court issues an order for payment against a person bound by obligation under a duly completed promissory note where there is no doubt as to its authenticity and content. Examination of the case and issuing of the order for payment takes place in chambers. Such an order shall have the status of provisional enforcement order that is enforceable without the enforcement clause and shall be enforceable immediately upon expiry of the period for satisfying the claim.
If the defendant disagrees with the order, he may lodge objections within two weeks. What’s important, the applicant has to pay one quarter of the court fee when filing an application and the defendant must pay three quarters of the court fee where he lodges an objection against the order for payment.
What exactly was challenged by the CJEU in the Polish regulation?
In the Court’s opinion such a solution should not be applicable to the dispute between an entrepreneur and a consumer because it does not secure consumer’s interests and is inconsistent with the right of effectively lodging a legal remedy.
The CJEU has underlined that according to the settled case-law, a national court is bound to assess of its own motion whether a contractual term falling within the scope of Directive 93/13 is unfair and by doing so to compensate for the imbalance existing between the consumer and the entrepreneur if the national court has available to it the legal and factual elements necessary for that task. Such assessment does not take place in the order for payment proceedings founded on a valid promissory note, therefore the consumer does not have sufficient protection.
The procedure of lodging objections against order for payment was assessed negatively. The Court stated that there was a risk that consumers concerned will not lodge the objections required, be it because of the particularly short period prescribed for that purpose, or because they might be dissuaded from defending themselves in view of the costs which legal proceedings would entail in relation to the amount of the disputed debt, or because they are unaware of or do not appreciate the extent of their rights, or indeed because of the limited content of the application for the order for payment lodged by the entrepreneur, and thus the incomplete nature of the information available to them.
The result of the CJEU judgment should be an introduction of appropriate changes into the Polish Code of Civil Proceedings. Before this happens, it can expected that courts will refrain from issuing orders in the order for payments proceedings under a promissory note when the defendant is a consumer.
judgment of the CJEU of 13 September 2018, C-176/17