In Case C‑679/18, OPR‑Finance, the Court of Justice of the European Union (the Court of Justice of the European Union) held, in its judgment of 5 March 2020, that the national court must of its own motion verify whether the professional had assessed the consumer’s creditworthiness before granting the credit and, while respecting the adversarial principle, apply the consequences provided for by national law. The Court considered that the loss of the agreed interest and costs had a deterrent effect and held incompatible with the directive the condition that the nullity provided for by Czech law had to be invoked by the consumer within three years. The existence of an administrative fine, even a substantial one, could not justify limiting the civil protection available to the consumer, including repayment of only the principal within a period corresponding to that consumer’s means. [1]
Under Romanian law, the absence of a genuine creditworthiness assessment may, in our view, justify virtual absolute nullity of the credit agreement. Where the sanction leaves the consumer owing an outstanding principal balance, repayment of that balance should be made in instalments adapted to the consumer’s means, using the initial repayment schedule as a benchmark. In this way, the creditor loses the remuneration obtained from financing granted in breach of the law, while the consumer can repay the principal at a pace adapted to their financial situation.
From the Payment Claim to the Court’s Own-Motion Review of Creditworthiness
On 21 April 2017, a consumer entered into a renewable credit agreement with OPR‑Finance at a distance, under which the consumer received 4,900 Czech korunas. After the instalments remained unpaid, the creditor asked the Ostrava District Court to order the consumer to pay 7,839 korunas, plus statutory default interest. According to the referring court, the creditor had neither claimed nor proved that it had assessed the consumer’s creditworthiness before the agreement was concluded, and the consumer had not invoked nullity. [1, para. 10–16]
Czech Act No 257/2016 made the granting of credit conditional on an assessment showing that there were no reasonable doubts concerning the consumer’s ability to repay. In the event of a breach, Article 87(1) provided for nullity of the agreement and repayment of only the principal within a period corresponding to the consumer’s means. According to the interpretation followed by the Czech courts, the nullity was relative, and its application depended on the consumer invoking the sanction within three years of the conclusion of the agreement. The Ostrava court observed that, in practice, debtors—most of whom had no lawyer in such disputes—rarely invoked the absence of a creditworthiness assessment. [1, paras. 7–9, 12–17 and 29]
The Court began with the relationship between the obligation laid down in Article 8 of Directive 2008/48/EC and its purpose. The creditor has the information and means necessary to assess the risk before granting the financing, whereas the consumer may not even know that they were entitled to such a review or what data formed the basis for the approval. If the consumer’s protection depended on invoking the breach, that very asymmetry would prevent the application of the rule intended to prevent over-indebtedness and insolvency. Accordingly, where it has the necessary factual and legal elements before it, the court must of its own motion verify whether the professional fulfilled its pre-contractual obligation and, if it identifies a breach, determine, in adversarial proceedings, the consequences provided for by national law. In the case of the sanction under examination, the position of the consumer who opposes its application must be taken into account. [1, paras. 18–24 and 32–36] [2]
Why the Fine Did Not Replace the Civil Sanction
Article 23 of Directive 2008/48/EC leaves Member States free to choose the sanctions, provided that they are effective, proportionate and dissuasive. In the Czech case, the Court considered that the loss of the agreed interest and costs was appropriate to the seriousness of the breach and had a genuinely dissuasive effect. The creditor could recover the principal, but lost the economic benefit of financing granted without the verification required by law. The effect depended on whether the sanction could be applied in practice. A rule that left its application to the consumer’s initiative and made it subject to a three-year limitation period rendered it excessively difficult to enforce that protection in proceedings brought by the creditor. [1, paras. 24–36 and 46] [2]
The Czech Government relied on the possibility of imposing an administrative fine of up to 20 million Czech korunas, approximately EUR 783,000 according to the judgment. The Court noted that, according to an uncontested statement by the European Commission, the Czech central bank had issued no decision imposing a fine for that breach. Moreover, even if it had been imposed, the fine would not have changed the situation of the consumer who had received credit without a creditworthiness assessment. The consumer would have remained bound by the same agreement, with the same outstanding balance and the same costs. Since Czech law had also provided for a civil sanction for the consumer’s benefit, the existence of the fine could not justify a rule preventing the court from giving effect to that sanction. In Case C‑303/20, Ultimo Portfolio Investment, the Court clarified that the dissuasive effect is assessed by taking into account the entire range of remedies available under national law, including the civil consequences of the breach. [1, paras. 37–39] [3]
In practice, the dissuasive force of a sanction is also assessed by reference to the decision taken by the professional after the first case in which it loses. After a court had found the level of default interest to be unfair, the general manager of a non-bank financial institution was asked whether he would change the interest rate in the standard agreement. His answer was: “If one of my cows dies, what do I do? Shoot the whole herd?” The episode concerned a different breach, but illustrates the same economic calculation. As long as the professional expects to bear the consequences in only a few cases, maintaining the practice may remain more profitable than correcting it. The court’s own-motion review changes that calculation because, when the creditor seeks payment in court, application of the civil sanction no longer depends on the debtor knowing of and invoking the obligation to assess creditworthiness.
In Case C‑755/22, Nárokuj, the Court confirmed that Directive 2008/48/EC permits a breach of the obligation to assess creditworthiness to be sanctioned by nullity of the agreement and loss of the agreed interest even where the loan has been repaid in full and the consumer has suffered no adverse consequences. The favourable outcome of a particular credit agreement cannot replace the analysis that should have preceded its granting. If repayment were to cure the breach, the creditor would bear the consequences only if the risk materialised, although the obligation is intended to prevent that risk from being assumed irresponsibly. [4]
What the Professional Creditor Must Prove under Romanian Law
Article 30(1) and (2) of OUG nr. 50/2010 privind contractele de credit pentru consumatori (Government Emergency Ordinance no. 50/2010 on consumer credit agreements) requires the consumer’s creditworthiness to be assessed before the agreement is concluded, on the basis of a sufficient amount of information, including information from the consumer and, where appropriate, by consulting the relevant database. This assessment involves verifying the consumer’s ability to repay the credit under the agreed terms, by reference to their monthly income and expenses, payment obligations already assumed and the limits applicable to the debt-service ratio. Article 19(1) of Regulamentul BNR nr. 17/2012 privind unele condiții de creditare (BNR Regulation no. 17/2012 on certain lending conditions) establishes a general cap of 40% for the total debt-service ratio, subject to the special limits and derogations provided for in Articles 19 and 20. [5] [6]
The creditworthiness assessment must also take into account the consumer’s ability to withstand adverse developments in the exchange rate, interest rate and income. For lenders to whom Regulamentul BNR nr. 17/2012 applies, Article 11⁴(1), (3) and (4) details the analysis of income and expenses, the sources of information and the obligation to take reasonable verification measures, including, where appropriate, by consulting independent sources. [5] [6]
Article 15(1)–(4) of Regulamentul BNR cu nr. 17/2012 establishes as a general rule that the eligible current income taken into account may not exceed the income earned in the previous year by more than 20%. The latter is established on the basis of documents certifying income declared to the tax authorities and/or evidencing income received in accounts opened with the lending institution. In the absence of a legal obligation to declare income for tax purposes, other supporting documents are admissible. If the lender wishes to take into account current income exceeding the 20% limit, it must obtain from the client supporting documents showing that the income is continuous in nature. For each agreement, the verification is carried out by reference to the rules applicable on the date of the assessment. [6]
As regards evidence, by way of example, a document certifying income declared to the tax authorities retains its evidentiary value when submitted by the consumer. A statement made on the consumer’s own responsibility, if it remains the sole support for the income used in the calculation, does not fulfil the function of a supporting document. In Case C‑449/13, CA Consumer Finance, the Court held that the burden of proving compliance with the obligation lies with the creditor and that information supplied by the consumer may be sufficient if it is adequate and the consumer’s mere statements are supported by documentary evidence. Accordingly, an internal credit-scoring sheet may record the outcome of the analysis, but its evidentiary value depends on whether it is possible to identify the information used, the documents supporting it and the time at which the creditor analysed them. [6] [7, paras. 21–32 and 34–39]
The Legal Basis for Virtual Absolute Nullity under Romanian Law
For breach of the pre-contractual obligation under Article 30(1) and (2), Article 89¹ of OUG nr. 50/2010 provides for a fine of between RON 10,000 and RON 80,000, imposed by the authorised representatives of the Autorității Naționale pentru Protecția Consumatorilor (ANPC) (National Authority for Consumer Protection). Separately, Article 24 of Regulamentul BNR nr. 17/2012 refers, for breach of the regulation, to the measures and sanctions provided for by the sector-specific legislation applicable to the lender. The Ordinance also provides for supplementary contravention measures under Articles 88 and 89. The fine, in itself, neither reduces the consumer’s outstanding balance nor releases the consumer from the contractual interest and fees, so it remains necessary to determine what effect the breach of the obligation has on the agreement. [5] [6]
In our view, where the assessment was absent or purely formal, virtual absolute nullity may be based on Articles 1.247, 1.250 and 1.253 C. civ. (Civil Code), interpreted in the light of the purpose of the pre-contractual obligation. The mandatory nature of the rule is the premise of the analysis. The absolute nature of the nullity is justified by the general interest protected by the rule. The assessment obligation protects each borrower against over-indebtedness and, through its preventive nature, seeks to prevent irresponsible lending practices at market level. This purpose supports classification as absolute nullity in light of the presumption of relative nullity under Article 1.252 C. civ. The virtual nature of the nullity requires, in turn, an explanation of why setting aside the agreement is necessary in order to achieve the purpose of the law. If the professional may claim the full remuneration for credit granted without a genuine analysis, the breach has no consequences for the benefit that the agreement procures for the professional. The reservation in Article 1.246(1) C. civ., concerning the existence of another sanction provided for by law, must be read in this context. In our view, the fine provided for by the Ordinance sanctions the contravention and may coexist with nullity, which operates in the relationship between the parties and removes the creditor’s right to the agreed remuneration. [1, paras. 19–31 and 37–39] [4] [8]
The seriousness of the breach matters in this assessment. The absence of an assessment and approval based on decisive information that was not verified may justify setting aside the agreement, whereas a documentation deficiency that leaves a genuine and sufficient analysis verifiable requires a separate assessment. The legal basis for nullity remains Romanian law. The OPR‑Finance judgment establishes the requirements that application of the sanction must satisfy and requires the court to use the methods of interpretation recognised by national law, within the limits of interpretation in conformity with EU law. [1, paras. 24–28 and 40–46] [8]
Repayment of the Principal after Nullity Has Been Established
Under Article 1.254(3) and Article 1.635 et seq. C. civ., setting aside the agreement entails restitution of the performances. To determine the balance, the principal actually made available to the consumer and the principal already repaid are identified first. Separately, the interest, fees and other sums collected by the creditor under the agreement that has been set aside are determined, to the extent that they are subject to restitution. If the conditions under Article 1.617 C. civ. are met, including those concerning the reciprocal claims being certain, liquid and due, they are extinguished by set-off up to the amount of the smaller claim. The accounts must be settled before the timetable for the net balance is established. If a grace period is granted for payment of one of the debts, Article 1.619 C. civ. provides that this does not prevent the set-off from taking effect. [8]
For example, if, from a loan of RON 30,000, the consumer has repaid RON 12,000 in principal and the creditor owes repayment of RON 8,000 collected as interest and fees, RON 10,000 remains payable after set-off. If the consumer’s claim exceeds the outstanding principal, the creditor repays the difference. In the case of a loan whose principal has been repaid in full, the accounts concern the sums owed by the creditor.
The initial repayment schedule provides a benchmark for repayment of the balance because it reflects the economics of the transaction agreed by the parties. The consumer obtained the principal immediately in exchange for payments distributed over time, so instalment payments formed part of the way in which the parties structured the financing from the outset. By analogy with the preservation principle in Article 1.255 C. civ., the effects of nullity may be organised so as to preserve the agreed payment schedule, insofar as it remains affordable. In the event of nullity of the entire agreement, the schedule serves as a benchmark for establishing a new method of repayment, whose legal basis is the court judgment. The monthly frequency and remaining term may be preserved if they result in instalments compatible with the consumer’s available income and necessary expenses. When establishing the timetable, requiring immediate payment in full could reintroduce precisely the risk of over-indebtedness that the assessment was intended to prevent, if the debtor had to borrow again in order to repay the principal. [1, paras. 8, 29–30 and 46] [8]
Article 1.495(2) C. civ., which allows the court to set a time limit where the nature of the performance requires it, provides support for this solution. Article 2.162 C. civ. concerns a loan for which the parties have not agreed a repayment term and provides, by analogy, criteria such as the purpose of the loan and the parties’ circumstances. The possibility of fixing successive due dates remains debatable in relation to Article 1.490 C. civ., which enshrines the creditor’s right to refuse partial payment. The argument in favour of instalment payments is that the judge would determine the due date of each tranche, so that each instalment would represent full payment of the amount due on that date. Article 397(3) C. proc. civ. (Code of Civil Procedure) regulates how a time limit is to be granted where the court has that power. The proposed solution is for the court to establish in the operative part of the judgment the net balance, the value of the instalments and their due dates, on the basis of the consumer’s proven financial situation, and for the creditor to incorporate those elements into the repayment schedule. [8] [9]
An express provision would allow the courts to apply this solution consistently and would preserve together the two effects of the model examined by the Court. The creditor that granted financing without a genuine assessment would lose the related remuneration, while the consumer would repay only the net balance, at a pace they can sustain. The issue remains relevant under Directive (EU) 2023/2225, which details the assessment obligation in Article 18 and, as a general rule, makes the granting of credit conditional on an outcome indicating the likelihood of repayment under the agreed terms. The Directive provides for the application of the transposition measures from 20 November 2026 and maintains, as a general rule, the application of Directive 2008/48/EC to agreements existing on that date until their termination. [10]
References
1. CJUE (CJEU), C‑679/18, OPR‑Finance, judgment of 5 March 2020, EU:C:2020:167. EUR-Lex
2. Directive 2008/48/EC on consumer credit agreements, Articles 8 and 23. EUR-Lex
3. CJUE, C‑303/20, Ultimo Portfolio Investment, judgment of 10 June 2021, EU:C:2021:479, paras. 30–45 and operative part. EUR-Lex
4. CJUE, C‑755/22, Nárokuj, judgment of 11 January 2024, EU:C:2024:10, paras. 31–39 and 40–52. EUR-Lex
5. OUG nr. 50/2010 privind contractele de credit pentru consumatori, Articles 30(1) and (2), 88, 89 and 89¹. Portalul Legislativ (Legislative Portal)
6. Regulamentul BNR nr. 17/2012 privind unele condiții de creditare, Articles 1, 11⁴, 15, 19, 20 and 24, consolidated version of 10 November 2026. Portalul Legislativ
7. CJUE, C‑449/13, CA Consumer Finance, judgment of 18 December 2014, EU:C:2014:2464. EUR-Lex
8. Codul civil (the Civil Code), Articles 1.246, 1.247, 1.250, 1.252–1.255, 1.490, 1.495, 1.616–1.619, 1.635 et seq. and Article 2.162. Portalul Legislativ
9. Codul de procedură civilă (the Code of Civil Procedure), Article 397(3). Portalul Legislativ
10. Directive (EU) 2023/2225 on consumer credit agreements, Articles 18, 47 and 48. EUR-Lex
