bne IntelliNews – CJEU ruling on forex loans could open legal pandora’s box in Hungary

The Court of Justice of the European Union (CJEU) in a ruling issued on April 30 found that passing the full currency risk onto borrowers, without adequate prior information, constitutes an unfair contractual term and, as a result, such contracts can be rendered void. The CJEU made clear that national courts must re-examine previous cases.

The verdict could invalidate a vast number of consumer leasing and loan contracts, prompting calls to restore the pre-contractual financial position.

The decision, centred on a 2007 Swiss franc-based car leasing contract, is described as the most borrower-friendly judgment to date in Hungary’s forex loan saga.

Before the 2008 financial crisis, Swiss franc-based loans, with rates 5-7pp under forint loans, were the most popular product among retail borrowers; but instalments ballooned as the forint weakened amid the global market turmoil leading to la wave of defaults and severe financial distress for households, at one point, 62% of retail mortgages were denominated in foreign currency, mainly Swiss francs, and the non-performing loan (NPL) rate for those loans surged to 25%.

The CJEU ruled that a foreign currency leasing contract must be considered fully invalid if it contains an unfair term that places exchange rate risk on the consumer and cannot function without that clause. If national law only removes the unfair clause but allows the rest of the contract to stand, that is not sufficient under EU law. Instead, the consumer must be returned to the legal and financial position they would have been in had the contract never been signed.

The ruling opens the door to a wave of lawsuits and compensation claims. Legal experts say the entire jurisprudence around forex loans in Hungary may need to be reassessed, with courts potentially forced to reopen closed cases and ensure that consumers receive full redress.

National Economy Minister Marton Nagy was asked to comment on the news after officially presenting the 2026 budget bill to Parliament. He said the government sees no need for intervention, stressing that this is “now a matter for the courts”. The key question is whether banks informed customers of the exchange rate and interest rate risks before signing, or not, he added. Nagy noted that Kuria, Hungary’s highest court, should enable the reopening of closed cases.

The National Bank respects the decisions of both domestic and international courts and refrains from commenting on them, it told Telex. In a separate response, the Kuria stated that rulings by the Court of Justice of the European Union are always acknowledged and upheld by the relevant judicial chambers.

Hungary’s largest lender OTP said that earlier court rulings confirmed that its communication about exchange risks to clients was satisfactory.  

Opposition parties are pressing for immediate action. Two independent MPs submitted a bill to suspend all foreclosure proceedings related to forex loans. Right-wing Jobbik called for a parliamentary inquiry and leftist-liberal DK resubmitted its long-standing proposal allowing borrowers to settle debts at the original exchange rate retrospectively, even for closed loans.